BRITISH MERCANTILE MARINE.

HC Deb 10 July 1934 vol 292 cc179-303

3.26 p.m.

Sir STAFFORD CRIPPS

I beg to move, That this House views with concern the plight of the British Mercantile 'Marine, and is prepared to consider proposals for the improvement of shipping and shipbuilding. I do so in order to give the House an opportunity of discussing the statement which was made on 3rd July, and in the White Paper that has since been issued by the President of the Board of Trade. It is unfortunate that this Motion should have to be moved from this side of the House. It would have been more convenient if the President of the Board of Trade could have introduced the discussion, and could have given us a little more detail in regard to his proposal than we have already bad. We have only the statement which was made on 3rd July and the White Paper, and we must, therefore, make our criticism in a somewhat general way, without the possibility of dealing in detail with facts and figures that he may put before us as to the reasons why the Government have adopted this method of approach.

All hon. Members will probably agree that it is essential to maintain our merchant services of all kinds, whether liners, tramps or coastwise shipping. We are necessarily dependent, as an island community, upon those great community services, and we have built up over a long period of years a great seafaring population of merchant officers and seamen who depend for their livelihood upon the services that they render the community in that way. Perhaps one should say that they might depend for their livelihood upon services that they would like to render for the community in that way, if only the community could provide them with the opportunity which at the present time many of them lack. Most hon. Members will also agree that, under our existing economic system, it is almost impossible to carry on these services unless something be done by the nation as a whole towards their survival. As a mere profit-making enterprise, they have broken down, and it is, therefore, necessary—the hon. Member for Farnham (Sir A. M. Samuel) laughs, but I suggest that he is going t o vote £2,000,000 by way of subsidy because those services have broken down.

Sir ARTHUR MICHAEL SAMUEL

I was laughing because the hon. and learned Member has a bee in his bonnet about Socialism.

Sir S. CRIPPS

The hon. Baronet and his friends have bees in their bonnets about subsidies and tariffs. The difficulty and the differences arise, of course, as soon as one starts discussing the means for achieving the continuance of these services, if we are all agreed that the services must be continued. Difficulties also arise, and are bound to arise, in regard to the selection of this particular form of activity within the nation, and the reason why ships should be subsidised in preference to coal, or cotton, or engineering, or any other great branch of industrial activity. No doubt the answer that the right hon. Gentleman will give will be that this is partly a matter of defence, that we are bound to maintain these services more particularly because they form part of our national defence in times of emergency. But the House will realise that, whatever the particular reason may be, this, of course, will form a precedent. When other industries find themselves in difficulties, they will come along and say, "Shipping was given a subsidy, and we must have the same treatment." I think it is necessary also for the House to note that in approaching the problem of subsidies they may be entering, so far as industry is concerned, upon a new course of action. We have, of course, become accustomed to it now as regards agriculture. It is an everyday matter for this House to vote a few millions to the farmer here arid there; it has become something which we hardly notice. But we are now embarking on that policy with industry as well as with agriculture.

The right hon. Gentleman, when he made his statement on the 3rd July, accurately pointed out that the present difficulties arise from two different aspects, the aspect of international competition and the aspect of national com- petition. Naturally every nation like our own desires to maintain and increase its own merchant navy, and naturally, too, every device of competition is used in order to encourage the growth and maintenance of those services in each particular nation, so that one gets what one expects, namely, the fierce economic com- petition which is the underlying basis of economic nationalism. One notices in all these arguments and discussions that it is always the other country that is indulging in what we call unfair competitive methods. Our tariffs are fair and reasonable tariffs; the other nation's' tariffs are unfair and aggressive tariffs, which ought to be done away with; and so, in this question of international ship- ping competition, our methods are fair methods, but the methods of the other nation are unfair. The right hon. Gentle- man said, in his speech on the 13th December last: Unless we can bring home to the aggressive countries, who are fighting us with finance as well as with ships and men, the fact that we can hit, and hit hard, that our resources can be put at the disposal of this great and essential industry, I do not believe we can make any progress at all."—[0mciAt REPORT, 13th December, 1933; col. 441, Vol. 284.] That was a speech which envisaged fierce economic war, in which your method is to hit, and hit hard, at the other man, and there is no doubt that that is the method upon which economic trade is run among capitalist nations. But it is a mistake to think that, even in this particular industry, international competition is all created by outside sources. Indeed, it is well known that there are many cases in which ships are transferred under foreign flags and are substantially used by British shipowners, because the conditions upon which those foreign countries insist are easier conditions with which to comply than the conditions of the Board of Trade in this country. On many occasions in the course of discussion instances have been given—it is not necessary to cite them—in which great quantities of tonnage have been transferred from one flag to another in order that the conditions of the seamen may be reduced, and, therefore, in order that lower freights may be charged and greater competition put up. Some of this international competition is, therefore, in fact the creation of the nationals themselves. There is also the very large area of international competition which is created by the sale of old vessels under foreign flags, such as the Greek, which is the well-known instance, whereby those vessels, bought at almost scrap prices, are able to compete on unfavourable terms so far as our industry is concerned.

This fierce competition, which is wasteful in the extreme, is inherent in the economic system in which the majority of people in this country believe. Competition is the lifeblood of capitalism; it has always been stated to be so. It is that, we have been told, which makes capitalism efficient. Apparently, however, we are now reaching a stage when it is being realised that it does not. make capitalism efficient, but inefficient and wasteful, and that this race in economic armaments, in which you hit, and hit hard, at your opponent, is bound eventually to lead to that diminishing standard which one sees coming about in countries all over Europe, and from which the common people in the various countries have to suffer. As long as such competition goes on, that suffering will necessarily continue. It is clear that the only ultimate solution of this problem of international competition in shipping, as in other matters, will be the organisation on a co-operatve and not a competitive basis of the whole merchant shipping of the world, so that it can serve the interests of the people of the world, and not be used as a weapon in national economics. As regards the question of national competition, the right hon. Gentleman said on 13th December: Indeed, you may find competition being conducted between various classes of shipping under the British flag just as keenly as between vessels sailing under different flags."—[OFFICIAL REPORT, 13th December, 1933; col. 433, Vol. 284.] That, again, is obviously one of the prime causes of the difficulties under which British shipping is suffering at the present moment. It is very interesting, however, to note what the right hon. Gentleman really thinks about this competition. We had an example of his views the other day, when he was speaking on the Petroleum Bill. The House will remember that we were discussing the difficulties of competition between home-produced oil and oil imported from abroad, and the necessity for correlating the two by giving in some form Government ownership of the exploitation of petroleum in this country in order to avoid the harmful competition. The right hon. Gentleman then said: One of the worst complications is that most of the oil comes from abroad, and that there is very keen competition in the selling and distribution of oil, and, as a consumer of oil, I am delighted that that should remain SO."—[OFFICIAL REPORT, 2nd July, 1934; col. 1642, Vol. 291.] Here we have the right hon. Gentleman as a consumer of oil, presumably in the capacity of his past association with shipping. I do not suppose he was dealing with that other type of oil which is also consumed, but consumed in a different way; he was dealing, no doubt, with fuel oil, of which, when he was associated with shipping, he was a consumer; and, 'as a consumer, he is delighted to see other people competing one against another to reduce his prices. But what about the person who wants to buy freights No, says the right hon. Gentleman; then the shipping interests must eliminate competition, because it is harmful to producers when they compete one against the other, and prices are liable- to fall. That is the difficulty in which the National Government are always finding themselves, especially people who are in the position of the right hon. Gentleman, who finds himself embarrassed between his position as a consumer and a producer. In one way he wants competition preserved, and on the other side he wants it wiped out. That is typical of the difficulties into which industry has got and typical of the varying interests which have somehow or other to be dealt with under the economic system that we now have.

If it be true that competition is the life and soul of the efficiency of our economic system, why do we wish to eliminate it, and why, as the right hon. Gentleman says, is it essential that it must be eliminated before the Government help the tramp industry at all? Why do we want to eliminate it in this instance? The truth, of course, is that when industry under our system gets into difficulties it begins to realise that its difficulties have been caused, in fact, in the past and in the present by this very competitive spirit. Then, when assistance is asked for, the condition for giving assistance has to be made that this competitive spirit must be eliminated. In fact, it is the most complete admission of the breakdown of the whole economic process under which our industry is run, and, witnessing that breakdown, the right hon. Gentleman is somehow seeking to patch up this shaky and crazy concern to see whether he cannot make it run a little longer. It is interesting to see the views that he expressed last December as regards how this patching up is to be done, Speaking on the question of the subsidy, he said: it is possible it may go in a direction we may never have intended, and I think it is really up to the shipping community as a whole to find means which they recommend to us with certainty, and which we can accept, by which any financial aid that we give shall not he dissipated in that way. That is the part they can play, and I have no doubt, as they are very able men and know their business very well, and as they are in the habit of acting quickly, they will very soon have some suggestion to make to us under that heading."—[OFFICIAL REPORT, 13th December, 1933; col. 441, Vol. 284.] Now we find the right hon. Gentleman in this position, that, after having discussed this matter for seven months with these very intelligent gentlemen who always act quickly, no scheme of any sort or kind has been agreed. The best he can do is to make a statement that, if they will prepare a scheme which will comply with certain requirements of the Government, the Government will be prepared to consider the granting to them of some form of assistance in the way of subsidy. It only illustrates that, when you get down to the hard facts of trying to work out a system by which you are to apply this subsidy without waste, it becomes a very difficult if not an almost impossible task. There are, indeed, among the shipping interest such very divergent interests that it is almost impossible apparently to get even these quick acting gentlemen within seven months to agree to any system at all.

The two conditions which the right hon. Gentleman laid down in his statement of 3rd July as regards the granting of a subsidy make it almost necessary to have a complete amalgamation of all tramp interests. The first is that such a scheme must prevent as far as possible the subsidy from being dissipated by the domestic competition of British ships carrying tramp cargo. The second is to ensure that it is effectively directed to securing the greater employment of British tramp shipping at the expense of foreign subsidised shipping. It is very difficult to see how either of those objectives can be reached unless there be some form of amalgamation of the tramp interests. You cannot eliminate competition unless you bring them under a common control of some sort or another. You cannot present a united front to foreign tramp shipping unless you have a united control of the interests of shipping in this country. Therefore, it really entails the setting up of some form of monopoly to oust, first of all, internal competition, and, secondly, to present a united front to the foreigner in order that we may get back the business from the subsidised foreign industry. In fact, we are, when we consider this question of subsidy, necessarily in the region of a monopoly, and, as regards that again, we get a little assistance from the right hon. Gentleman's speech on the Petroleum Bill when he told us that it is only when you get into the region of monopoly that there may be an arguable case for Socialism. So here we are in a region where the right hon. Gentleman is good enough to concede to us that we have an arguable case for Socialism. We agree not only that it is arguable, but that it is over- whelming when the arguments are put forward.

According to our present economic arrangements, the competitive difficulties in the shipping trade ought to be solved by the elimination of the least effective and least efficient ships, and that should bring about such an automatic reduction of tonnage that freight rates would rise to a remunerative level, and then you would get profit making again arriving in the shipping industry, and you would be able to continue with your productive enterprise. That, of course, is the whole argument that lies at the basis of the so-called efficiency of capitalism. But it is now admitted that you cannot let that happen. You cannot allow the elimination of that tonnage which would be necessary before you could get the reaction in the price of your freights. So the right hon. Gentleman is suggesting putting something new in its place, as he says, for a period, but I think most Members would be very surprised if at the end of the temporary period the tramp owners did not come back and say, "You must continue now you have once started," and I am glad to see the hon. Member who knows so much about shipping nodding his head in approval. The right hon. Gentleman says, first, that we must maintain the service, and, secondly, that we cannot by any device force up freights and, therefore, we cannot provide a remunerative price level to carry on this service of the provision of sea-transport. If we tried to force up the charges, of course we should diminish the area of consumption and thereby automatically reduce the rates.

At present prices, he says, these people who desire to run ships, and whom we wish to run ships, are unable to get a sufficiently large return from their enterprise to enable them to continue doing so, and so the rest of the nation, the taxpayers of all classes, are required by the Government to provide for these people a certain share of the national wealth, in addition to what they get by the price at which they sell their services, in order to enable those services to be maintained. In other words, we entirely abandon all the past principles upon which we have been told we have to rely for the efficiency and the continuance of these great industrial services, and we are introducing now a completely new economic method for securing their continuance. In order to safeguard ourselves from that money being completely wasted, or, as the right hon. Gentleman said, being simply given away to the foreign merchant, we try and fence round the grant which we are making with a whole lot of complicated conditions such as he specified in the statement which he made, and the object of which is to try and prevent, as he stated, the worst type of abuse.

It would be far simpler for this House to say that we will take over responsibility for the continuance of this essential national service, fix the price of the service to be supplied so as to give the maximum service we desire to render, and so make our financial plans or arrangements that those who work this service shall be assured of a profit and a fair share of the national wealth. That would be a far simpler proposition than to try, through the indirect channels of profit, to assure the same results. Once one attempts to re-allocate by subsidy the national wealth one inevitably gets into the critical and crucial difficulties which have been experienced all over the world in the operation of subsidies. If one adopted the far more simple method, one would be adopting the direct method of Socialism. That is why the right hon. Gentleman says that there is such an arguable case for Socialism when one is dealing particularly with what is, and must be, substantially treated as a monopoly as soon as one introduces the element of subsidy.

The absolute necessity for attaching to any subsidy the most stringent conditions as regards the condition and earnings of the workers who are working in the subsidised industry is another aspect of the question of a subsidy which is of very vital importance indeed. We have protested time after time in this House against subsidies being given with no conditions attached as regards remuneration of labour or conditions of service. If this House is to re-allocate national wealth by this method and to say, "Here is £2,000,000 of it for the tramp industry,' it is absolutely vital that that re-allocation should not stop at the owner, and that the guarantee to the owner of a profit should not be the only incident of the granting of the subsidy, but that there should also be granted to the officers and seamen a fair wage and decent conditions. The trouble is that, that aspect is entirely overlooked when the necessary amount of the subsidy is being calculated in order to maintain the service. It is assumed that the present conditions will continue as regards the seamen and officers; it is only the owner who is to have his conditions bettered. We shall certainly press that if any subsidy of this kind is to be granted—perhaps it is the only way out for capitalism—it shall be made an absolute condition of the grant that, so far as those ships which are subsidised are concerned, a proper standard of wages shall be paid to the officers and the men, and that proper manning conditions shall be observed as well. It is well known, 1 believe, that w hen the figures were got out in October, 1933, of the comparison in the payment of pounds sterling to all the seamen and officers of the different merchant fleets, the British came only eighth in the list, and that certainly is not good enough if the Government are to put up a subsidy.

When the community steps in to the assistance of an industry of this sort, it must step in to assist everyone in the industry and not only a certain class of people who are engaged in that industry. It is one of the strongest and most cogent criticisms of this method, which has been adopted in this country in agriculture as well as in the industry in which we are now starting to adopt it, that the conditions of the workers have been uniformly overlooked. We hope that the right hon. Gentleman on this occasion will see that the workers and the officers are not overlooked. It is stated that to some extent the conditions of the workers will be improved in that more of them will be employed, and that by this device more ships will be occupied in carrying cargoes than otherwise would have been possible. That may be true if the subsidy succeeds, but with all the surplus productive power in this country to-day this is not a good enough argument with which to answer the demand for better conditions. It is not sufficient to say that more seamen will get back into employment under conditions which are unsatisfactory when we have available such a great surplus wealth. If it be necessary in order that the seamen as well shall get proper conditions, to increase the sum of money which is to be granted, it ought to be increased as far as we are concerned because it is absolutely vital and essential. That deals with the question of the subsidy.

We come to the White Paper which deals with the question of scrapping. It is possible that the House would agree to proposals of the kind in the White Paper if they were applied in the right quarter. Suppose, for instance, they could be applied to the National Government in scrapping three old tramps in order to put in one efficient new one, the House might think it was really quite a good arrangement. Exactly which of the right hon. Gentlemen would qualify for the title of "old tramp" I am not able to say. The Lord President of the Council looks as if he were qualifying for it by his pleased expression at the present moment. But when one turns to deal with the question, which, I understand, is intended—which is not Ministers but ships—the proposal with regard to scrapping, as we understand it, has not proved acceptable to the shipowners of this country. Therefore, a discussion of it is, to some extent, merely academic. It is not something which is likely to be put into operation but is a proposal which has been put forward by the Government but which has not been accepted by the industry, and with the material we have before us at the present time, it is impossible to say whether it is necessary or desirable to go in for a policy of scrapping. We have often heard in this House that it is a most undesirable thing merely to dig a hole and fill it in again. If, as is commonly said, the British tramp fleet is, on the whole, more efficient than any other, it does not seem necessary to start scrapping in order just to build new ships. It may be, therefore, that the right hon. Gentleman can put convincing figures before us of the necessity for entering upon such a course as this.

There is one aspect of the proposal which would have a considerable attraction for those on this side of the House. If, under the scrapping proposals, the Board of Trade were to put the conditions and the accommodation for the seamen on the new ships at a much higher standard than those in the existing ships, it would be something which we should recognise as being a great advance and a great advantage. It might well be that merely in order to obtain those better conditions for the seamen and the officers of tramp ships, it would be worth while scrapping the old ships with their admittedly inadequate accommodation and building new ships to replace them. But, again, if the Government are going to offer any kind of assistance, it must be, in our view, upon the basis of the Government seeing that ships are built which have decent accommodation for the workers.

There is one other matter with regard to this scrapping which I should like to know whether the right hon. Gentleman has thought over, and, if so, the opinion at which the Government have arrived. There is, naturally, a great deal of anxiety as to whether, if this programme were embarked upon, the new ships would be oil-burning or coal-burning ships. There is a natural anxiety among the miners as to whether the new ships would have Diesel engines, and would, therefore, deprive them of a market for coal. We are not aware whether the Government have taken this question into consideration, and whether they have any definite plan as regards the desirability of increasing the oil consumption of ships or, alternatively, increasing the coal consumption of ships. I hope that the right hon. Gentleman, if he deals with the White Paper, will deal with that aspect of it, and will be able to assure the mining population of this country that nothing that is done to help the shipping interests will be allowed to militate against the interests of the mining population.

One condition of this scrapping programme clearly would be desirable, and that would be the prevention of the selling of old ships to owners under other flags. That selling of millions of tons which has been going on over recent years has led to a certain amount of international competition of which complaint is now being made—a matter for which, of course, the shipowners have themselves largely to blame. They have been providing their competitors with a cheap form of competition of which they are now complaining. If some such scheme as this would prevent the creation of cheap competition under other flags, that would be, of course, a considerable advantage. It is quite impossible for us, with the very scanty materials so far put before the House, to come to any final judgment as regards this question of scrapping.

The main points, as they appear to us, I have shortly mentioned. Upon the whole question of the sort of policy which, it appears, the National Government are now likely to follow as regards shipping, we have at least this consolation, that it is another nail in the coffin of capitalism. It is an acknowledgment of its inability to cope with present conditions, and the very people who to-day will support a subsidy for shipping, will be the very people who will oppose a subsidy when some other industry happens to get it out of the taxes provided by shipping. As long as one's own industry is assisted by the nation it is all very pleasant and nice, but when that industry is called upon to pay higher taxes in order to provide a subsidy for another industry, it is all very unpleasant and wasteful. If we are going to embark upon this programme of assisting industries by subsidy, as apparently we are, we must remember that we shall not be able to limit it to shipping merely. We have gone widely into it in agriculture already, and no doubt sooner or later the cotton industry will come along and say, "Look what you did for shipping. You must do the same for us. Why should not the cotton workers of Lancashire be assisted as much as seamen in the ports on the North-East Coast?" The realisation is gradually coming upon the National Government that in existing circumstances some method of pooling the surpluses of certain industries has to be arranged. This is only a method of pooling the surpluses of certain industries, which is bound to lead to the logical conclusion of pooling the surpluses of all the industries, and when the right hon. Gentleman has reached that stage, he and the National Government will find that they have embarked upon Socialism.

4.5 p.m.

Sir HERBERT SAMUEL

When the right hon. Gentleman the President of the Board of Trade a week ago made his important statement, there was a general feeling in the House that it ought to be discussed here as soon as might be. I am sure, therefore, that the opportunity to-day is welcomed on all sides, and there is, I feel sure, an agreement throughout the House that this matter is one of the most important which could be brought to our consideration, affecting as it does not only great numbers of officers and men engaged in the shipping services and shipowners, but also a great population in our ports and a great population in our shipbuilding centres. There will be also unanimous agreement in the House that the situation is a grave one, that it has not been exaggerated, and that it is one which demands the immediate attention of Parliament and of the country. I hardly think that there will be the same agreement with the diagnosis of the situation, or with the cures, just given to us by the hon. and learned Member for East Bristol (Sir S. Cripps). It might, perhaps, have been foreseen by some of us that when he spoke he would make reference to the economic system of this country, and that he would see in nationalisation the remedy for the ills of the shipping industry as of every other. But he did not explain how nationalisation would alter any of the fundamental international factors which account mainly for the present plight of the shipping industry.

The nationalisation which the hon. and learned Gentleman represents as an alternative to State subsidies would not be an alternative, but would merely be carrying the principle of subsidy to the highest point. So it has been found in the countries which have undertaken it, and which have run national shipping services in recent years, namely, the United States of America, Canada, and Australia, all of whom have had to find, not sums in the neighbourhood of £2,009,000, but the equivalent of tens of millions of pounds sterling from the taxpayers' pockets in order to meet the losses of their shipping services, that is to say, in order to subsidise them. The hon. and learned Member at the beginning of his speech, foreseeing this objection, said very truly that it would be necessary, if you were to have a State system of shipping, it should not merely be national but international, and that you should have one common, world-wick control and ownership of all the ships that sail the seas of the globe. How long it will be before that is achieved I do not think even he would venture to suggest, but the plight of our ships now laid up in our harbours and roadsteads would be settled long before this by the fact that they would all have rusted away.

Eliminating that aspect of the case which was dwelt upon by the hon. and learned Member, there is agreement also, I think, as to the three causes of the present situation as expressed by the President of the Board of Trade in his statement last week—first, that there has been an immense shrinkage in world trade; it has been reduced by one-third compared with pre-War. Secondly, that at the same time the shipping belonging to all the countries of the world has increased by 50 per cent. Those are factors affecting all shipping of all countries. Thirdly, that British shipping is particularly affected in many parts of the world by subsidies given by other countries but not given by ourselves. Just as it might have been forseen that the hon. and learned Member would have laid chief emphasis on the economic system of the world and the need of nationalisation, so, possibly, hon. Members might. have foreseen that when I rose to address the [louse I should lay emphasis on the fact that the major cause for the present plight is that the seaborne commerce of the world has diminished by one-third since the War. But that is not a view which has been overlooked, for the President of the Board of Trade recognised that fact, and said in his statement that "the efforts of the Government were primarily bent upon an increase in international trade." So there, also, we shall have a considerable measure of agreement.

But the Government have not yet realised that the best way to increase international trade is not to impose ever new restrictions upon that trade. Dimly that truth is getting home to some Members, although, I am afraid, my right hon. Friend the Member for Hillhead (Sir R. Horne) has not fully realised it. Even the Minister of Agriculture yesterday told an astonished House that the agriculturists of this country must realise that, continuous restriction of foreign imports which compete with them can only result in injury to our export trade, in injury to British industries, and, therefore, injury to their own most important market. It was a very different note he was singing yesterday from that which he sounded when he began his present Ministry. I think in the future, learning from experience, we shall have to say of him that … he never could recapture The first fine careless rapture. He sees now that the situation is not nearly so simple as that of merely cutting off imports in any direction with a ruthless hand, and that there are other considerations to be borne in mind. So the essence of this whole matter is that the right remedy ultimately is not merely to cut down our shipping in order to fit our restricted trade, but by every means in our power to enlarge trade so that it shall employ our shipping.

There is agreement, also, with reference to the second cause, namely, the subsidies given by foreign countries which are undoubtedly, in the main, a form of unfair competition. That fact has been established. It is said that our shipowners have to meet subsidies of £30,000,000 a year given to our competitors. That, obviously, is a most terrible handicap to their activities. And there will be agreement in all quarters that the Government are called upon to act. It is not enough to criticise in turn each proposal that is made. There must be some definite suggestion put forward for practical, effective action in order to redress the present situation. There is general agreement almost achieved that it would not be desirable to provide anything in the nature of the old Navigation Laws, and to try to deal with this matter simply by reserving all our own and Commonwealth ports for British ships. It is being realised that if measures of that kind were to be adopted, we should, in the long run, lose in other directions more than we should gain in that direction.

When we come to the question of the subsidy, there is no such agreement. To that proposal the strongest objections are felt in many quarters. I would very briefly summarise what, in my view, those objections are. In the first place, it is a bad policy for Parliament to redress any economic grievance by the simple, lazy plan of pouring out money from the Exchequer; that in the long run it must be disastrous to the national finances; that if it is allowed in one case, it is right in another case; and that the practice adopted by this Government, and, indeed, to some extent, by previous Governments, of continually calling upon the Exchequer to find millions of money for one particular interest after another is wrong in principle. To give £6,000,000 a year to the beet-sugar industry in subsidies and rebate of taxation is wrong. To give subsidies to milk and the manufacture of oil from coal, and to such an industry as wheat growing, from the public purse is wrong, and in a Parliament such as this, which came in pledged to ruthless economy, where there are some hundreds of Members pledged to urge upon the Government the most careful administration of public finances, on almost any occasion when a particular industry finds itself in difficulties to come forward with fresh millions here and there is a policy which is most reprehensible.

Secondly, a policy of this kind defeats the end in view. If you give money to tramp shipowners you are merely giving them a bribe to keep afloat and in service ships which are not needed. There are three causes for the plight of the shipping industry: restricted trade, excessive tonnage and foreign subsidies. By dealing with the third, foreign subsidies, by giving countervailing subsidies here you strengthen the second cause, namely, excessive tonnage. You are giving out of the taxpayers' pocket bribes to shipowners to keep afloat tonnage which is already in excess; by 'endeavouring to counter one cause of the trouble you are strengthening another. State action, very often, has effects exactly the opposite of what is desired. That is the case here; and we have seen it at work all over the world. Among the main causes for the continued low and unremunerative prices in the world to-day are the steps taken in America three years ago to maintain agricultural prices. The Federal Farm Board bought up enormous quantities of wheat and cotton in order to maintain and strengthen the market, and, as a consequence, they had immense stocks which continued to depress the market and keep prices down, without any possibility of their rising. In Brazil, the government, seeking to maintain the price of coffee, bought up enormous quantities, which merely encouraged producers to produce still more, and make the stiuation worse.

What has been done in America with wheat and cotton, and in Brazil with coffee, is now being done by the British Government with regard to ships. A few years ago the British Government made advances under the Trade Facilities Act to shipbuilders to build more ships, thinking they would improve the condition of the trade. That is one of the main causes of the present position. The outcome of the action of the State in giving encouragement to more and more shipbuilding has been precisely the opposite to that which we desired to achieve. So it will be with any form of subsidy for the maintenance of ships or the encourage- ment of more shipbuilding. There is a third objection. As pointed out by the President of the Board of Trade last December, if you give £2,000,000 to shipowners you find that it percolates through and that the economic effect is a further reduction in freights. The right hon. Gentleman says that this money is only to be given if this can be guarded against. How is it possible to guard against it? Sooner or later the sum available must become a factor in the freight market in the competition between shipowners, and it will percolate through and take the form not of more employment but of lower freights in various forms.

Mr. HALES

Is the right hon. Gentleman aware that freights are being advanced by 5s. per ton to the east, as from the 1st September next?

Sir H. SAMUEL

So much the better: why give a subsidy? The next objection is that the essence of the matter is the competition between tramps and liners. The reason why tramp tonnage has gone clown so much is because there has been a transfer of business from tramps to cargo liners. It is not our business as a House of Commons to intervene in a trade competition of that sort. It is our business as a House of Commons to intervene if a great national industry is being unfairly prejudiced by action abroad, to see if we can counter it, but if it be a transfer from one British industry to another according to the ordinary process of commercial operations it is not a matter for the House of Commons. The suggestion here is that the subsidy should be given only to tramp steamers. What will be said to that by the liners?

Sir ROBERT HORNE

The cargo is to be carried by liners under tramp conditions.

Sir H. SAMUEL

We do not know what that means, and I hope the President of the Board of Trade will explain it. At all events, the complaint has come largely not only from the tramps but from the liners, and the most eloquent and effective spokesman has been our friend Mr. Shaw, the chairman of the Peninsula and Orient Company, who is well known to many of us from the days when he was a Member of this House. His complaint was on behalf of liners, who will be affected by this subsidy. If liners are to be exposed to the competition of foreign subsidised liners, and to the competion of British tramps, which are now to he subsidised, their position will be worse in the future than it has been in the past. If, on the other hand, the subsidy is to go to liners as well, then a sum of £2,000,000 will be utterly inadequate to effect the real and substantial result which is envisaged.

Those are four objections to the proposal, but they are not all. The right hon. Gentleman in his statement said that it will be necessary for tramp shipowners to observe certain conditions, which will entail, I use his own phrase, "a real measure of organisation of tramp shipping." He is more entitled than any other man in the House to tell us just what is meant by the use of the phrase, "the organisation of tramp shipping." It has always been thought that the essence of tramp shipping was that it was not organised, that tramps could go here and there, picking up cargoes where necessary, without organisation and prior arrangement. In so doing they render most useful service to mankind, by bringing abundance to scarcity wherever that happens to be. The right hon. Gentleman now contemplates that tramps are to be organised. How are they to be organised without ceasing to be tramps?

The next objection is that it will be a stimulus to other countries to give simliar subsidies. It may have the effect, as has been said, of securing a general agreement for the abolition of subsidies, but it may have the opposite effect, and other countries who do not now give subsidies, like the Scandinavian countries and Greece may say that as Great Britain is giving subsidies they must do the same; and you may have a sort of world wide war of subsidies, following a world wide war of tariffs and quotas. When the President of the Board of Trade says that it is to be a condition of the subsidy that it is to be for one year, what circumstances does he envisage at the end of the year which will enable the subsidy to be discontinued? Unless the situation has greatly changed the very same arguments which have prevailed with the Government, and which I presume will prevail with the House to-day, in favour of a subsidy of £2,000,000 in the summer and autumn of 1934 will prevail in the summer and autumn of 1935. In all these eases you always find the interests concerned at the end of what is supposed to be an absolute period coming forward and using exactly the same arguments as they did at the beginning, and insisting, and usually obtaining, a subsidy from the taxpayers' pocket.

These are the objections to subsidies. They are extremely strong and difficult to answer, and I am sure that the Government realise their force. We know that during the past seven months there has been continuous controversy as to whether a subsidy should be given or not. There are those who have said that there must be a subsidy, and those who have said that the objections were overwhelming. At the end the Government have come to the unanimous decision for a shipping subsidy, so satisfying one section. But the subsidy is to be given on conditions which cannot possibly be fulfilled. Thus the Government are satisfying the other section. Does the right hon. Gentleman, do the shipowners, believe that the conditions set out by the right hon. Gentleman can really be fulfilled? I anticipate that from various quarters of the House the strongest pressure will be brought to bear upon the Government to remove the conditions and simply give the subsidy; that is always the case in circumstances of this kind. We shall probably find the Government strongly pressed—I hope they will resist it—to remove all the conditions and give a simple and unrestricted subsidy from the public purse into private pockets.

If that is not the right line, what is the right line? I do not agree with those who propose a policy of scrap and build. It is not open to the same objections as the other, but I do not think it is really necessary in this country or would meet the needs of the situation. As a matter of fact, the United Kingdom has a larger percentage of modern ships under 10 years old than any of the chief shipping countries, and a smaller percentage of ships over 20 to 25 years than any other country, so that the process proposed is not really necessary. Many shipowners think that there is already an excess of modern tonnage in British ownership. Japan has enormously expanded her shipping by employing this method, but the situation there is entirely different, they have great difficulties iii getting capital for the building of ships. In this country credit can easily be forthcoming if the projects are credit worthy. If there be any difficulty in finding the necessary capital and financial aid, then the proposition is a doubtful one. The right course is not to imitate foreign subsidies, but to attack them, and to attack them directly.

We on these benches made our proposals about seven months ago, and we did not make them without consulting many in the trade who are well qualified to speak, or without a careful study of all the material sent to hon. 'Members by the Chamber of Shipping and other authorities. We suggested that the first step that should be taken, since this is an international matter, should be to gather together as powerful a body of opinion and as powerful an economic force as possible, and, in the first instance, to bring into co-operation the Dominions and India. This is essentially a Commonwealth matter if ever there was one, and it should never be discussed as merely a United Kingdom interest. It has an interest for the whole Empire, for the strengthening of British shipping is vital to the Commonwealth as a whole. Furthermore, we should enlist the cooperation of those countries which do not now give subsidies, important shipowning countries which do not wish to give subsidies. Together with them we could devise some form of pressure upon those other nations which have given subsidies and wish to continue to do so.

I agree that some kind of pressure is necessary, if success is to be achieved. The form of pressure is not to give competitive bonuses upon our ships, but to put penalties on their ships. That was the proposal which I made last December, a proposal to which the President of the Board of Trade did not think it necessary to make any reference at all in his survey of the situation when he replied. If we could secure a combination of the United Kingdom with the British Dominions, India, and all the important countries which do not now give subsidies and do not wish to give them, with their Colonies and possessions, we should there have command of by far the greater part of the coast lines of the whole world; and in those circumstances we could go to the other nations and say, "It is a bad thing for everyone that this system of subsidies should continue, and we do not want to be drawn into it; but at the same time we say that we cannot allow our shipping to be driven off the seas or seriously injured by this unfair competition." Therefore all those countries would agree together to insist that any subsidised ship going into their ports would, because it is subsidised, bear a countervailing port duty on entry. The precise details, of course, it would be difficult to frame, and they would have to be closely examined; but on those lines I believe that some definite, specific action might be taken.

When I made that proposal seven months ago the right hon. Member for Hillhead (Sir R. Horne) said, "Oh, here is the right hon. Member for Darwen interposing delay. He wants us to go into conference with the Dominions, with the Empire, with foreign countries, and months will pass and nothing will be done." That was in December. Seven months have gone, and not only has no direct action been taken such as the right hon. Gentleman desired then as a matter of urgency, but no steps have been taken towards common action such as I desired then as a matter of urgency. If steps had been taken then we might by now have secured the basis of some common action, and might have elaborated some effective common plan. But only now, in his statement of last week, the President of the Board of Trade said: The Government…will continue their efforts to secure international consideration of means to place shipping generally on an economic footing. What the efforts have been no one knows. Then the right hon. Gentleman said: We intend to communicate"— It is now July— with foreign countries to ascertain their views on the possibility of international measures to facilitate abolition or reduction of subsidies and the formulating of schemes for laying up or scrapping superfluous tonnage or both.…I need not add that, in considering these problems, it is essential to have the co-operation of the Dominions and India. It might have been obvious last year. We are therefore informing the Dominions and India of the position as we see it, and seeking their views as to possible lines of action."—[0mc1AL REPORT, 3rd July, 1934; col. 1725, Vol. 291.] Why was that not done last December, or before then? I am sure that the House will be disposed to regret, 'and indeed to censure, this dilatoriness in taking what should have been the obvious preliminary step towards effective co-operation. It may be that some communications have passed, and the President of the Board of Trade perhaps may tell us why his statement of last week was couched in the terms of the future—"We intend to," and "We propose to communicate." A scheme such as that which I have suggested, which has received support in some quarters, will no doubt have to face many practical difficulties, for instance, in defining what is a subsidy and what is a subsidised ship. But there is no doubt that those difficulties could be overcome.

It is necessary to be exceedingly careful in these matters and to consent to discrimination when discrimination is necessary. For example, when one discusses this matter with Americans they will always say that their subsidies, which are very considerable, are partly intended, not to give their ships an unfair advantage over other people, but to give their shipowners an equal chance, because previously, before the subsidies, they were driven off the seas, as their wage rates and cost of building were very much higher than those of European countries. I have heard Americans say: "If we choose out of our taxpayers' pockets to make good to shipbuilders and owners the difference between our wage scales and yours, you European countries have no reason to complain." The cost of building a ship in America is enormously greater than the cost here. In America they insist upon American wage rates, and insist that their ships in the Pacific and elsewhere shall pay to their sailors wages based upon the domestic scale prevalent in the United States, and that they shall not be lowered in order to meet the competition of other ships paying a much lower rate. Their claim is that their subsidies, so far as they have that result, are not a cause of inequality but a means of redressing an inequality. Of course their subsidies go far beyond that. As a matter of fact they are in some measure what we call unfair competition. Therefore, in order to discriminate in this and similar cases it is necessary, if the plan is proceeded with, that it should be studied very closely and intensively so as to find the right means of applying it.

I apologise for having detained the House so long, but these are matters of great and urgent importance, and I feel sure that the whole House will support the Government in energetic measures, so long as they are practical and effective, in order to maintain an industry which is of vital moment not only to this country but to the whole British Commonwealth.

4.37 p.m.

Major Sir HERBERT CAYZER

The hon. and learned Member for East Bristol (Sir S. Cripps) has amused himself airing his pet theories on nationalisation, but I think the right hon. Member for Darwen (Sir H. Samuel) has fully answered him. As regards his suggestion that we should scrap three old tramps on this side of the House, I would make the suggestion to him that charity begins at home. The right hon. Member for Darwen stated that a great deal of the trouble was caused by competition between liners and tramps, as though that had not always been the case. As far as I can see, there always will be a certain amount of competition. As a matter of fact, there is far more liner tonnage and less tramp tonnage than there was a certain number of years ago because the whole trade of the world has altered, largely owing to the desire of merchants to have their cargoes shipped direct at certain dates, which they want to know ahead. No doubt the trend of world trade is to make use of liners more and more at the expense of tramps. Then again we see, and I am glad to see, the great progress that the right hon. Member for Darwen has made. He wishes to put penalties on subsidised foreign ships. That is no new proposal. It has been before the Chamber of Shipping and the shipping world for many years. A great many of us are in favour of it, though a certain number are against it. But you would not put a duty on ships that were subsidised; you would put a duty on sub-subsidising nations. It is very much easier to do it.

I would like to say how much we appreciate the Government's desire to help shipping. I think it is the fist time this century or last that any Government has ever shown any desire or willingness to help British shipping. In the past it has generally been the other way about. During the War shipping was very heavily penalised as regards Excess Profits Tax, in a way that no other industry in the country was. That meant a very great loss. Hon. Gentlemen on the Labour benches laugh, but I am giving the facts. This is admittedly a most difficult problem. Whatever is decided upon, the Government intend to defend British shipping and are prepared to take measures to protect it from the unfair and uneconomic competition of subsidised ships. I am certain the proposal is bound to have material effect and weight on those subsidising countries.

I also welcome the announcement of the President of the Board of Trade, that the Government intend to confer with the Dominions and India. I agree that if we can as an Empire manage this matter together we shall have much more weight and force than if this country attempts to do it alone. I would like to ask the President of the Board of Trade whether, in any negotiations he has had up to now, he has had sympathetic consideration from any of the Dominions. I do not propose to go into the question of protection in its various forms, some of which the right hon. Member for Darwen touched on, nor shall I deal with the various ways of achieving that protection and the arguments for and against. It will take time. We have first of all to do something which will be of immediate help to shipping. The question to-day is, how are we to secure fairer conditions for British shipping?

After all, there is nothing wrong with British shipping to-day. It is well managed; its ship are well built and are as up-to-date as the ships of other countries; and the officers, engineers and seamen are still the best in the world. But the fact remains that we cannot compete to-day, with present uneconomic conditions. First of all, as was mentioned by the right hon. Member for Darwen, the enormous shrinkage in world trade has had a great effect. In 1932 cargoes in volume were 10 per cent, less than in 1913; in value they were less than half of these in 1929. Again, we have suffered from excessive overbuilding by foreign countries. Since the War foreign countries have increased their fleets by over 50 per cent. United States gross tonnage in 1914 was just under 3,000,000, but last year it was just under 11,000,000. That is an increase of 267 per cent. In the same period Japan increased her fleet by 150 per cent., Italy by 103 per cent. and France by 53 per cent. Those are the four great subsidising nations of the world. On the other hand the gross tonnage of this country in 1914 was just over 19,000,000, and to-day it is practically the same. At any rate this country is not one of the offenders. The chief offenders, the four countries I have named, go in for restrictions, reservations and subsidies of all kinds. Italy has adopted the mileage subsidy, one of the most vicious subsidies of all.

Then you have what I might call the natural advantages, by which I mean lower wages and a lower standard of living. Greece and Japan are particularly difficult to deal with on this account. What makes the position so bad to-day is the fact that while freights are less than they were in 1913 running expenses have increased by over 50 per cent. I am convinced that fair play for British shipping can only be obtained if the Government are armed with the necessary weapons and powers and if they let foreign countries know that they are prepared to use those powers. To effect a permanent remedy international co-operation will be required, and before that can be secured this country must have something with which to bargain. When we protected other industries foreign countries were ready and willing to make agreements with us as soon as they knew that this country had a tariff with which to bargain. I believe that the same thing will apply to the case of shipping and that foreign countries will only be ready to come to agreements with us when they see that our Government are determined to protect the British shipping industry.

I know that some people are nervous about this matter. They say that foreign countries have the right to discriminate, to subsidise and to make reservations against this country—which undoubtedly they have—but that this country must not defend itself for fear of hurting the feelings of those other countries or invoking retaliation. Those who take that view seem to forget that many of these foreign countries, especially America, cannot do very much more than they have already done in that direction unless they introduce a prohibition against British shipping entering their ports. America at present has the Jones Act. If there was a conference of a dozen shipping companies of different nationalities and if that conference said: "We have sufficient ships to run this trade," and refused the entry of an American company into that trade, then America would claim the right to debar all those other companies from trading with America and entering American ports.

The Government's statement refers to the need for great efforts by the industry itself. They say that more could be done with the assistance of importers and shippers to secure a greater use of British vessels. I do not know what the industry itself can do in that respect. It appears to me that that is more a matter for the Government than for the industry. I believe that shipping might be helped considerably in connection with the making of trade agreements. After all, this country is the greatest buyer in the world and foreign countries cannot afford to lose our custom. Nevertheless in practically every foreign country and in a good many of our Dominions there are large adverse balances of trade against this country. The Argentine, just to take one example, is selling to us four times as much as she buys from us, although she is buying considerably from America and America is not half as good a customer of her's as we are. If we said to the Argentine: "You must redress this adverse balance or, if you cannot do so you must ship all that we buy from you in British bottoms." I think it would help materially. That is a consideration which ought to be borne in mind when making agreements with those countries in which we have an adverse trade balance.

As regards subsidies, I say straightaway what I have said before, that I do not favour them at all. However skilfully planned they almost invariably help one industry and hit another. We had the case of the beet-sugar subsidy, an admittedly uneconomic subsidy. I believe that the Government have already given in that subsidy more than double what they propose to give to shipping to-day. Yet what has happened? The British shipowner, in common with other taxpayers has to bear his share of that subsidy but, worse than that, he also loses the benefit of the great quantities of sugar which were shipped to this country from the Dominions in former years. In this case a subsidy may help one section of the industry and hit another and we will have to be very careful to see that that does not take place. While Shipowners generally are against subsidies, the tramp shipping section stated that their position was so desperate that they could not continue without a subsidy and consequently the liner companies have agreed to support their claim provided that other sections of the industry are not prejudiced. That is a point which I wish to stress and the Government proposals do not seem to me to make adequate provision for the possibilities which the liner companies have suggested.

The Government propose a defensive subsidy of £2,000,000 for vessels carrying tramp cargoes under tramp conditions for one year but they hedge their proposal round with so many conditions that I have met hardly anyone who is clear as to what they mean. I would like to ask the President of the Board of Trade whether in speaking of carrying cargoes under tramp conditions he proposes to include liners which are carrying tramp cargoes. It would be unfair to differentiate against liners which are from day to day in direct competition with tramps for carrying tramp commodities and which are bound to carry tramp cargoes normally as a part of their business. I presume that when the Government refer to cargoes of a tramp nature they mean full cargoes such as wheat, sugar, rice, maize, kernels, ore, and so on—there are not a great many of them. I suggest that where parcels of from 1,500 to 2,000 tons upwards of these tramp commodities are carried by liners they should be included for the purposes of the subsidy as the rates for those parcels are bound to be affected by the rates for full cargoes.

I take it that contracts would come under the subsidy. Sometimes contracts for say 100,000 tons or even larger cargoes are made in connection with which the liners are in direct competition with the tramps. How is the subsidy to be worked in that ease? The shipowner cannot be expected to disclose his prospective business. Merchants often require what is known as a secrecy clause and it is rather difficult to know how the subsidy is going to be applied in those cases. In fact you cannot separate the liners and the tramps into watertight compartments. The President of the Board of Trade has said that the shipowners must formulate schemes to prevent the subsidy being dissipated by the domestic competition of British ships carrying tramp cargoes. While that appears to be safeguarding the tramps from domestic competition with each other, there does not seem to be any provision to prevent the tramps cutting in and competing with the liners.

The Government also say that the owners must ensure that the subsidy is effectively directed towards securing greater employment on British tramp ships at the expense of the foreign subsidised ships. But it may be at the expense of the liners and I admit that I do not see how the shipowners can ensure what they are asked to ensure in this respect or what methods the President of the Board of Trade has in view for achieving his object. The right hon. Gentleman will probably enlighten us shortly but at the meetings yesterday of the Chamber of Shipping and the Liverpool Steamships Owners' Association, generally speaking we were all rather hazy about a great many of these conditions and clauses. That is why I am now trying to have the ground cleared. I am not speaking with any ill will towards the tramp ship owners. I in common with a great many others interested in the liners have done my best to support their claims but both sections of the industry want to know where they stand.

I am not sure that one of the best schemes which I have yet seen put forward is not that which is known as the "Bibby scheme." The suggestion is that all tramp cargoes, cargoes of those commodities which I have named and a few others should receive subsidy. Supposing a £3,000,000 subsidy and 60,000,000 tons of cargo the subsidy would work out at is. a ton and that would be paid to all ships irrespective of whether they were tramps, or passenger or cargo liners provided the ship had at least 1,000 tons of the commodity on board. Of course, distance would have to be taken into account and it was suggested that 6,000 miles would be a good average voyage. If the voyage was say 12,000 miles the subsidy would be double, if it was only 600 miles then only one-tenth of the subsidy would he paid. That would help in making tramp owners and other owners go in for faster ships which would enable them to earn the money more quickly. If a further inducement were wanted to make shipowners build faster ships it is sug- gested that ships of 10 years of age or less should get 100 per cent. of the subsidy; those from 10 to 15 years 75 per cent.; those from 15 to 20 years 50 per cent.; those from 20 to 25 years 25 per cent. and those over 25 years no subsidy at all. That is a simple and easily worked scheme would not prejudice any section of the industry and I ask the right hon. Gentleman to look into it and to consider seriously whether it does not provide at any rate for groundwork of a plan which would be fair to the industry all round.

I should like to make some comments on the Government proposals as regards scrapping and building. When the President of the Board of Trade made his statement the other day I in common with other hon. Members thought the words which he used were that the Government "are prepared" to grant financial aid for scrapping and building but on looking at the OFFICIAL REPORT next day I saw that the words which the right hon. Gentleman used were that the Government "have been prepared" to give such aid which makes all the difference. In other words I presume that the Government have now probably deferred this scrapping and building scheme out of consideration to the views expressed to them by the shipping industry. The right hon. Gentleman knows that the industry is not in favour of the scheme.

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

indicated dissent.

HON. MEMBERS

Is this a private conversation?

Mr. RUNCIMAN

I know some people are not in favour of it.

Sir H. CAYZER

The Chamber of Shipping and the Liverpool Steamship Owners Association have never informed the right hon. Gentleman that they are in favour of it and I have not met any shipowners of any importance or of any association who have said that they arc in favour of it.

Mr. NEIL MACLEAN

On a point 'of Order. May we ask what is the conversation which is taking place between the hon. Member and the President of the Board of Trade? We would like to be taken into their confidence.

Sir H. CAYZER

The only confidence is that the right hon. Gentleman and I do not agree as to the representations which have been made upon this matter. I admit that at first blush the proposals in the Government's scheme appear attractive. They would mean work in the shipbuilding yards for the time being; they would bring into employment many unfortunate seamen who are daily losing their skill in idleness through no fault of their own. They would also provide employment in many industries directly or indirectly concerned with the manufacture of machinery and the hundred and one other things that go to the making of a ship. They would be beneficial to the liner companies who have to keep their fleets up-to-date and are bound to build a certain number of ships every year. Therefore, when I say I am against the scheme, I am speaking against something which might be for my own benefit. Shipping companies, as I say, have had to keep their fleets up-to-date, and they have done it pretty well in the past, but owing to the depression they have only been able to do it by using up their reserves and writing down their capital and in many cases there are no more reserves to be used up and no more capital to be written down. Also this proposal might mean the reemployment of officers and men who have lost their jobs through no fault of their own, but on the other hand—and we must look the facts in the face in regard to this scheme and consider it from all points of view—I think the disadvantages outweigh the advantages and in the long run, if we adopt this scheme, it will make matters worse and put off recovery for an indefinite period.

The President of the Board of Trade says the scheme is optional, but, if one or two firms adopt it, the rest must follow or lose the race, and you will soon find it is forced on the industry to adopt it. Lord Essendon, at a shipping Committee upstairs last week, made a very interesting speech, and, with the permission of the House, I will read what he said: To the extent that the scheme is put into operation, it obviously will reduce the amount of shipping under the British Flag, but, inasmuch as there are at present 3,000,000 tons of shipping laid up in this country, it will be obvious that on the basis of building one new ton for each three scrapped it would be necessary to scrap 4,500,000 tons and build 1,500,000 before there would be any difference in the amount of tonnage in commission. That is to say, there would be no increase in the employment of officers and seamen and no improvement in freight rates. On the other hand, the expense involved would be anything from £10,000,000 to £20,000,000. These facts are quite true and very cogent. Can the British Mercantile Marine to-day afford this sum? I am sure not many owners would be able if they were willing to incur the liability. Those who were tempted by big money might use the scheme as they did the Trade Facilities Act, and, as happened then, I believe the Government would be left to hold the baby. It seems to me to be putting a premium on inefficiency. The efficient owner who had built up his fleet at great expense and often at high interest for borrowed money, who scrapped or converted his ships, would be penalised because having no old ships to scrap he would be unable to take advantage of the scheme. On the other hand, the inefficient owner would have the advantage of a low rate of interest for rebuilding.

To be fair and logical, it seems to me that it would be necessary to make the scheme retrospective and to allow the efficient owner to count the ships he had scrapped in the last six years, but I doubt very much if that would be possible. The Government have said the rate of interest will not exceed 3 per cent. payable within 12 months. Round about 3 per cent. would not be much inducement, because you can to-day discount bills at about that figure though only for 6 months it is true. The British Mercantile Marine to-day is as up to date as the mercantile marine of other countries. The figures show, and the right hon. Member for Darwen mentioned it, that Great Britain's percentage of ships under 10 years of age is better than that of any other country with the exception of Norway, and, as you know, the Norwegians made millions out of the War. We are with that exception the best of all as regards ships under 10 years. Great Britain has a lower percentage of ships over 25 years of age than any country except Holland, so you cannot say but that our fleet is up to date and as efficient as any in the world. Again, there is no scarcity of modern and efficient tonnage. New ships in some cases have gone from the shipbuilding yards to the laying up works.

Mr. KIRKWOOD

Can you give one instance of that?

Sir H. CAYZER

Harrison's in Gray's Yard. There is one straight away.

Mr. KIRKWOOD

This time last year we had 15 liners in the Gairloch, and to-day we have not one.

Sir H. CAYZER

That may be only temporary. We have had that before, but they all come back again. To scrap three boats as suggested for every new one built would not replace boats that are laid up and unlikely to go out again. This scheme starts at the wrong end. As long as uneconomic freights continue new ships are subject to the same disabilities as others in the ports to-day.

It is going to cripple a shipping company's finances to build ships not required under artificial uneconomic conditions. Under the conditions of to-day these new ships would not earn dividends and the result would be that they would be worse off than before. On the other hand, if you can put shipping in a sound and healthy condition, there will be plenty of orders for the shipbuilding yards. I would like to emphasise that the welfare of shipbuilding depends first, last and always on the prosperity of the shipping industry. Being a shipbuilder as well as a shipowner, I can speak from, both points of view.

I would like to say, speaking personally and not from any associations, that would like to see the Government prohibit the sale of ships to foreigners. Many owners would agree with me, but at the same time there are very influential owners who would not. I can only say that where we are menaced by foreign competition special measures may be required. A large proportion of these subsidies have been given by foreign countries to establish their ships in the trade of the world. Most of these trades were built up and carried on by British lines before the War, but, as a result of foreign subsidies, British lines have had to surrender one third or more of their trade, and in some cases have been forced out altogether, and the trade has been carried on entirely by foreign countries, in spite of the fact that some of these trades have at least one line in the British Empire, such as America to South Africa, Australia to Italy, South Africa to New York with a large number of American ships and some with no British ships at all.

I would like to see something done for the protection of British ships whether tramps or liners. Strong measures will be necessary before you can make foreign countries see reason. Nobody realises more than I the immense difficulties of this question. The international aspect of shipping and the intense national feeling in foreign countries since the War do not lessen the difficuties of the question. The many varied interests of the liners, tramps and coasting further add to the complexity of the question, making unanimity and a common policy extremely difficult to obtain. As a 'member of the council of the Chamber of Shipping and of the small committee of the liners which was set up to try to solve this difficult problem, I have naturally been closely in touch for a considerable time with this question, and during the past year I am glad to say great progress has been made in bringing the many different features and sections of the industry to a common policy: though a great deal of ground has still to be covered there is far more unanimity in the shipping industry.

I am glad the Government are considering shipping from a national point of view. Is it worth saving or not? If so the country cannot grudge the small assistance the Government proposes at present. If the assistance be given, it must be fair to all sections of the industry. Shipping is probably more vital to this country than any other industry-. The safety of the country depends 'absolutely upon efficient and numerous ships. We should have starved in the past unless we had had this fleet, and they are invaluable as auxiliary cruisers for the Navy and help to balance the Budget. I am certain the shipping industry as a whole will whole-heartedly co-operate with the Government in trying to solve the problem, and that we shall have a policy for the furthering of British shipping which will be beneficial not only to the varied interests of the industry but to the country and the Empire.

5.13 p.m.

Mr. MACLAY

The statement of the President of the Board of Trade last Tuesday was, I think, very welcome not only to the shipping industry but to the whole country as it shows that the Government are anxious to obtain justice for the British shipping industry. The shipping industry welcomed it generally although in some respects it was critical. That was only to be expected with an industry with so many ramifications. The House has been reminded many times and we cannot repeat too often that, in the words of the President of the Board of Trade, to us an island people dependent in peace and war on sea communications, an adequate mercantile marine is the first necessity of our existence, and we have no intention of allowing its existence to be imperilled. That is the feeling of the country to-day, and we want to make it clear throughout the world, because it will solve many of our problems in conference with other nations if that fact is known to them now.

The only unfortunate thing about this Debate to my mind is that so far as the short remedy for the situation is concerned I cannot see how it will help those men and officers who are at present unemployed. The fact is that, whether we like the capitalist system or not, there is a surplus of ships, and we must have a temporary reduction. An increase of world trade is the only long-term solution, and we on this side feel that the Government, even in. spite of their Protectionist policy, are doing their best to achieve world trade. They now realise fully the dangers of Protection, even although they may use it. This after- noon we are discussing a short-term remedy for the plight of British shipping until that world-trade improvement is achieved. We have shipowners all over the world undercutting each other in a suicidal competition, with reserves running low and borrowing power decreasing, and now Britain is beginning to see her shipowners dropping out one by one, while we see foreign shipowners who are in an equally bad way being kept by their Governments. If for that reason only, I think shipowners in this country have a right to appeal to the Government to put them at least in the same position as the foreign shipowners. As the reserves of British shipowners fail, so must the industry fail, unless they can either obtain financial assistance from the Government or persuade their foreign competitors to come to some temporary agreement to adjust supply to demand.

I can see no other sane temporary solution than to get international agreement to adjust supply to demand temporarily. If the Government see fit to subsidise or help certain sections of the industry that will drop out before that is achieved, good and well. That is another matter, to which I will come in a minute, but so far as this question of international co-operation to solve the present difficulty is concerned, it is obvious that no nation to-day can act by itself on this subject. You cannot ask British shipowners by themselves to agree to lay up their ships in order to adjust supply to demand, as they would merely be handing over trade to the foreigner, and therefore it seems to me that international agreement is the crux of the problem for the moment.

Almost every nation in the world, I do not know whether officially, but at any rate unofficially, in their trade papers, has drawn attention to the need of a lead from Britain in calling some sort of conference to get this thing adjusted internationally. It may not be modest to say so, but the British nation is looked up to as the leader by the rest of the world, and I think other nations would be only too willing to come here to try to solve this problem internationally. Conditions are worse than they were a year ago. A year ago a lot of individual shipowners were not willing to discuss these matters, but to-day, with the continued depression, the position is different, and the very fact of low reserves is making not only shipowners but Governments think differently. The President of the Board of Trade, in his statement last Tuesday, gave the impression that it was up to the shipowners of this country and of other countries to get together, but I would like to press upon him respectfully, if I may, that it is for the Government of this country to take the initiative in getting a conference started, and that immediately. It seems to me that we have delayed long enough, and there is no longer time to write making suggestions or to ask other nations what they consider about it.

Let us convene a conference in this country right away, and invite the other nations, and I am convinced that they will come. The Recess will shortly be upon us, and I would like to feel that the Government will take the initiative, so that we may know before this House rises that something has been done with regard to this matter. The details of such international co-operation are too long to delay the House with this afternoon, but the main object, naturally, is to adjust supply to demand at the moment. I do not think, however, that any conference such as this will be a success unless the British nation and the British Government go into it fully realising that the other nations of the world are determined to have a larger share of the world shipping, and from their point of view quite rightly.

We must acknowledge that they have a reasonable right to a certain share, greater, I would suggest, than they had in 1914. Economic nationalism has produced that, and it is useless to go into a conference asking the United States of America, for instance, to abolish subsidies. They have no intention of doing so; they could not keep a mercantile marine at all if they did so, and they have every intention of keeping one. If that be clearly realised, and we make allowances for other nations having what we may consider to be a reasonable share of world shipping, I think the conference will have a chance of success. The main difficulty naturally will be the dovetailing of any co-operative scheme into the question of increasing world trade. That is a question of administration, but it is the key to the success of the working of any such scheme. It may be impossible to achieve, but I strongly urge upon the Government that it is worth trying and that we have not yet tried it.

On the question of temporary subsidies, the last speaker stated the case very clearly. It seems to me that a subsidy serves two purposes. It serves the purpose of giving the country a bargaining power when it goes into a conference with other nations for a temporary remedy, and it saves certain owners from dropping out of the shipping trade of this country. It is for the Government to decide whether it is in the national interest that that should happen, and, if they do not think so, I can see no other way out than by means of a- temporary subsidy. With regard to stipulations of subsidy, the attention of the House has been drawn to that question, and I would like the President of the Board of Trade, if he can, to clarify the issue when he comes to reply. The stipulation as to preventing domestic competition among British tramp ships and evolving a real measure of organisation of tramp shipping wants explaining. The essence of tramp shipping is its lack of organisation. Tramp ships might be called pirates going about the world. We as an industry, in the North at any rate, cannot understand quite what the President means when he talks of the organisation of tramp shipping. The President speaks of a defensive subsidy, but I think a subsidy ought to be an offensive subsidy. I think it is impractical to give a subsidy to tramp ships alone, because the interests of tramps and cargo liners are inextricably interwoven throughout the world, and you have the added difficulty of foreign countries taking British tramps and laying them on berth time charters in competition with British liners.

I would suggest that now that the Government have admitted the principle of a subsidy, they should not do the thing with half measures. I am not referring only to the amount. I think there is a slight misconception as to the amount of money needed. You can use a sum of under £5,000,000 spread over every cargo-carrying ship under the British flag, which would be of enormous assistance in keeping ships at sea. With regard to the conditions of subsidy, about which the right hon. Gentleman opposite talks, I think every shipowner in this country would welcome certain stipulations, so long as they are possible ones. Conditions as to crews' quarters and feeding certainly could not be objected to. The Maritime Board already have extensive agreements which are largely observed. The question of selling our old ships to foreign countries, I think, might well be considered. Those are the sort of conditions and stipulations of subsidy that British shipowners would agree to, because they are possible. I would ask the right hon. Gentleman the President of the Board of Trade to reconsider the question of the amount of the subsidy within an amount up to £5,000,000 spread over the whole industry; in other words, do not let us fix too rigidly the amount and to whom it is to apply, because I am sure that any man who knows the difficulties of discriminating between tramps and other kinds of ships would agree that it would be impossible to work such a subsidy without antagonising the various sections of the industry.

If the subsidy must be confined to tramps only, I would ask the right hon. Gentleman not to make the conditions applying to tramps too onerous. Tramp ship companies are weaker than they used to be, partly owing to changed requirements of merchants. It is for the Government to consider, along with the Admiralty, how wise it is to allow the cheaper form of tramp to disappear. The submarine campaign taught us a lesson, and no one knows better than the right hon. Gentleman that if the Germans had started earlier in the War their submarine campaign, this country might have been in a very difficult plight. Therefore, it may be wise for this country not to allow these cheaper ships to disappear. Another point is that this country is very dependent for its carriage of ore and coal at a very low cost. It is not altogether wise to allow the cheaper ships to disappear too far. The older ships can carry just as well the iron ore, wheat, and coal. If you get expensive cargo liners, the freight is bound to be more and reflect on the cost of these bulk raw materials. Another reason that I would ask the right hon. Gentleman not to be too keen on making heavy stipulations for the subsidy is that we do not want to see a breaking away from the National Maritime Board by certain owners, who might say, "Well, we will cut wages now." We have had very little of that in British merchant shipping up till now. It has been one of the best features of this industry, and it will be a sad day when owners, rather than go out of business, have to start attacking wages.

The question is hypothetical, but if such a scheme of international co-operation does not work, you may be forced to adopt certain other lines of action, such as the right hon. Member for Darwen (Sir H. Samuel) suggested, and you may have to consider British goods in British ships, the penalizing of foreign ships entering British ports, and such other things, but I trust that those remedies may never be resorted to, because this country is indeed vulnerable, as the figures given by the President of the Board of Trade at different times have shown. I trust that every effort will be made to try other methods first, but you cannot go on subsidising private firms indefinitely, and for that reason you may be forced to take such ultimate action. The question of bringing in the Dominions is talked of lightly by some people, but I think it is very doubtful whether the Dominions can give us complete help. I cannot see that it is to their interests altogether to give a complete backing to British shipping, although it would be well worth asking them to assist.

I want now to say a word about the scrapping and building proposals. I do not think, though one can speak only for oneself, that shipping generally actively opposes such a scheme. We merely say that it does not help those who really need help to-day. If the President of the Board of Trade and the Government, as a sort of sideline, like to try this to help unemployment, good and well, but we say that it does not help those in the shipping industry to-day who most need help. The hard hit shipowners dare not further build ships because they cannot provide the running costs. The President of the Board of Trade talks of modernising ships. That seems to me to be much sounder than scrapping and building. Does the right hon. Gentleman mean that where an owner modernises a ship, and spends, say, £5,000 on it, he must scrap three ships for it? That seems to be out of proportion, and I do not think that my right hon. Friend has made it clear in the White Paper. Owners who have no reserves will be only too glad to modernise their ships if they cannot get more assistance, but they cannot scrap three ships for every one modernised. The Government must have learned their lesson sufficiently well from what happened under the Trade Facilities Act, to prevent a repetition of such difficulties arising again under this new proposal.

Let us concentrate on international cooperation. It is the only sane solution for the moment. Shipping is international and therefore the solution must be international, and may I repeat, let us enter an international conference in as strong a bargaining position as we can, showing the foreigner that we do not intend half measures in this matter. I would like to utter a word of warning to the President of the Board of Trade to watch the Minister of Agriculture as closely as he can. The balancing of the two interests is a perfectly natural problem, and it is not yet apparent whether it will be better for this country to have a strong agriculture and lose its shipping, or vice versa. The problem is not yet clear. Yesterday we heard of beef and lamb being stopped from entering this country, and that must mean three or four 10,000-ton ships being cut out of cargo. Do the two Departments know constantly what the balance of advantage is between such actions? If they do and the balance is in favour of one or the other, the House will be satisfied to leave it at that, so long as they feel each Department knows what the other is doing. 1 would like to repeat an appreciation of the cooperation which the men and officers of the merchant service have given to the shipping industry during the present depression. They have voluntarily accepted a cut in wages—we hope there will be no further cuts—but their co-operation has made it easier to come through these difficult times of depression. The long-term remedy is for the Governments of the world to get world trade moving again. Only in that way can the men now ashore get to sea again, and I hope that the Government will make that their main objective.

5.34 p.m.

Mr. KIRKWOOD

I rise on behalf of the workers who build the ships. The hon. and gallant Member for South Portsmouth (Sir H. Cayzer) and the hon. Member for Paisley (Mr. Maclay) both spoke on behalf of the shipowners. I speak on behalf of the shipbuilding workers. The way in which they look at this business is that this is a maritime nation, and that until modern times we built the ships of the world. Not only that, but the British Commonwealth of Nations is a. world-wide, far-flung Empire, and that the only way of intercourse between the different parts of it is on the high seas. In that it is different from the other great Empire, Russia, which is essentially a united Empire by land. Owing to the peculiar position of the British Empire there is nothing so essential to it as shipping. It is from that point of view that I welcome the subsidy. My only quarrel with it is its smallness. What is the state of the industry to-day? The Ministry of Labour gave me some figures which show that until 1923 we had 270,000 workers in the shipbuilding industry in this country. In 1933 there were 170,000 fewer. That is a very serious position. There are only 100,000 men left in our most important industry.

If we are to have the British commonwealth of nations and to keep in contact with it, it is essential that we should have a great shipbuilding industry, but we are allowing the workers to go out of it. The position is worsened because until 1923 we owned nearly 50 per cent. of the shipping of the world, and in 1934 it had sunk to 27.9 per cent. In reply to a question as to the position on the Clyde, the Minister of Labour said that as the figures for 1923 related to men of 18 and over, while the figures for 1933 related to men between 18 and 64, it was not possible to make an exact comparison between the two dates, but it could be estimated on the basis of the figures given that the number of insured men in employment in the shipbuilding industries in the Clyde area decreased between 1923 and 1933 by no fewer than 30,000. Surely this is an industry that requires to be attended to.

On principle, I object to subsidies. I would refuse to support the subsidising of any industry to help it to gain an advantage, but when all the big Powers are subsidising to the extent of imperilling the shipbuilding industry of this country, I have to recast my ideas with regard to subsidies. The owners are partly responsible for this terrible state of affairs. When shipbuilding was being rationalised, yards were being closed and shipbuilding stopped, it meant not only scrapping machinery but scrapping human beings. It meant throwing out some of the finest types of humanity in this or any other country on to the scrapheap. They will never be employed again. They are reduced from a comfortable life to a mere existence, from a £3 to £4 a week standard of life down to a £1 a week standard. That is what happened as a result of the rationalisation of the shipbuilding yards, and the Government ask the people of the country to pay that prim for it. The shipowners played false with this country while the workers were paying that terrible price for rationalisation. The shipbuilders did hot pay the price of rationalisation; they were compensated. Even when the Prime Minister went to America to interview Hoover as a gesture to stop building cruisers, the shipbuilders in my constituency were compensated, but the men whom I represent had the Employment Exchange as compensation. That is what the workers get all the time.

What was the action of the owners of the tramp steamers, who are the greatest criminals in the matter of selling "dud "ships, "dud," that is, as far as Lloyd's inspection in this country, and even the Bureau Veritas on the Continent, are concerned? They sold those ships to Greek and Italian firms which have a lower standard, and those ships were used in competition with our own, and made it harder for British shipping. It was not Socialists who sold those ships, it was not the Labour men who let down the country in that fashion, but the Liberals and Tories; because I do not know a Labour or Socialist shipowner, no, not one. It is Tories and Liberals all along the line who have played this dirty, rotten trick, because that is what it is, on the shipping industry of the country. Instead of being sold those ships ought to have been scrapped, and I hope the President of the Board of Trade will now see to it that in future such ships are not allowed to leave this country but are scrapped. It is not true that ships built 10 or 20 years ago are able to compete with ships built to-day. One of our difficulties to-day is that after are War, and as a result of reparations, we were saddled by the statesmen of this country with the German mercantile fleet. They took from Germany all her "dud" ships, and we were saddled with them. Again it was the action of this team who are now coming to this House, and who are most artful beggars in Christendom.

They have no compunction of conscience in coming here to ask for millions, and, as a victim of circumstances, I have to support them, and I am supporting them in order to get work for the men whom I represent, because I know of no other way. I have got to compromise, because life is a compromise. What I get for the unemployed is a subsidy. It is all a subsidy. The shipowners come here pleading for £2,000,000 or £3,000,000 for this industry, but when we ask for a subsidy to maintain our kith and kin, who are unemployed through no fault of their own, to save them from becoming derelict, like the ships we are discussing here, to keep them fit and a credit to the country, they demur. They prefer to get good ships which can compete with the world on the high seas rather than that we should have a race the like of which we have never yet seen, although it would be quite possible for the British race to attain such a standard if proper methods are adopted.

My criticism of the subsidy is its smallness. The sum of £2,000,000 seems a trifle for such a vast industry. All these subsidies, quotas and tariffs are an attempt to interfere with abundance flowing to the people, trying to bolster up a system which is being defeated by nature's abundance and man's invention. Even though I am supporting it at the moment, I warn the Government that this subsidy will have only a temporary effect, even at best. World processes cannot be diverted permanently by subsidies, quotas and tariffs. I hope that through our Socialist propaganda we shall be able to get Tories to realise this and to change the system, because we must get those who voted for the Tories at the last election to vote Socialist at the next, in order that we may change this system and usher in the golden age of plenty. But I believe it is essential, as we work along those lines, to take advantage of all the palliatives which we can get and this is one of the palliatives at the moment, because it will give employment to the tens of thousands of shipbuilding workers who are unemployed. There is one point which I hope the President of the Board of Trade will not neglect, even though the Chancellor of the Exchequer overlooked it when the country gave a subsidy to a shipowning firm which is now know as the White Star-Cunard Company. When that subsidy was given we extracted from the Chancellor the wonderful statement that in drawing up the terms of the agreement he had neglected to provide for the Government or the House of Commons to have any say in the firm which was receiving the subsidy. I wish to emphasise the point, because it was the Chancellor himself who said he had neglected it. He admitted our contention, and said he should have seen that it was put in, but that it was too late in the day to make the alteration when the matter came before us. I hope that in this case the President of the Board of Trade will see that when we are giving State money away by the million we do have some control in this industry.

I am primarily concerned with the men who are going to build these ships. At the moment they are striving might and main to deal with the terrible problem with which we are faced, the problem of poverty in the midst of abundance. We have tens of thousands of workers in this industry unemployed, and their contribution is that they are wrestling with the shipbuilding employers to try to bring about a reduction of hours, in order that more workers may be employed. They are proposing to the employers that there should be a 40-hour week, with no reduction in wages. I do not think we who are supporting them are asking too much when we seek a quid pro quo. The shipowners are getting an undoubted concession. The hon. Member for Paisley, in a very nice, mild speech such as he can deliver—very nice—asked for £5,000,000. He asked for it very nicely. He never turned a hair; did not get angry, or anything like that. Such people get more than we get. They make no trouble about asking for millions—and they get them. As representing the workers in the shipbuilding industry, I am supporting them to get those millions. I supported the proposal for the Cunard Company to get millions and would do the same thing again, because I am never ashamed of what I do here or elsewhere; but while I am doing that why should I have any scruples about claiming some 'concessions for the workers? When we are giving millions to the shipowners, why cannot the President of the Board say, "I will give the Member for Dumbarton, representing the shipbuilding workers of this country, my word of honour that I will use the whole influence of the Government, as far as that is possible, with the shipbuilders to see that they concede to the workers a 40-hour week without any reduction of wages." That is my plea.

The only argument that weighs with me in these subsidy questions is that instead of the workers receiving £1 per week as unemployed they will be employed and receive £3 or £4 per week. I regard the subsidy as a means to an end. This House has no right to give away millions of money in this fashion without having some say as to how the money is to be spent and as to the condi- tions of labour of those who will be employed. We ought to safeguard the workers. The shipowners are getting a subsidy, and we ought to see that the workers get some concession. I entirely disagree with the right hon. Member for Darwen (Sir H. Samuel) who says that the taxpayer will have to pay. It is the worker who pays, and not the taxpayer. The worker produces all the wealth of this country. I support this subsidy, and I would support a bigger one, but I hope that the President of the Board of Trade, and the other representatives of the Department, will use all their influence to see that the workers' interests are safeguarded in every way.

6.4 p.m.

Colonel ROPNER

During the months in which the Government have been in office, they have achieved something even greater than saving this country from the peril of financial collapse; they have brought hope to industry and restored confidence in many trades. Tariffs and trade agreements, the provision of cheap money, the Ottawa Agreements, the encouragement of reduced taxation and of measures designed for the assistance of agriculture, all mean that in many cases there is work and wages to-day, in place of idleness and doles; but one great industry of paramount importance, the welfare of which we are considering this afternoon, has so far been entirely neglected. All industries claim to be of national importance when they seek assistance from the Government, but I do not think that any Member would deny the extreme importance of maintaining an adequate mercantile marine. In time of war, as has already been pointed out, it is essential to this island nation that we should have a large number of merchant vessels; in time of peace, the Red Ensign is, although perhaps in a more humble way, just as important a connecting link in the chain which binds the Empire as the White Ensign flown in ships of His Majesty's Navy. Too much importance cannot be attached to the contribution which shipping makes in rectifying the adverse balance of trade. Perhaps the argument in support of Government assistance for shipping which will appeal most to hon. Members is that if shipping were once again made reasonably prosperous there would he a large increase in employment, in the distressed areas perhaps more than in any others.

The position of the shipping industry to-day and the cause of the deplorable plight in which it finds itself have already been pointed out. There has been a material decline in world trade and a large increase in foreign tonnage. I do not intend to say very much about the decline in world trade. Quotas, tariffs and exchange restrictions are all manifestations of the policy of economic nationalism which is being followed by the majority of nations in the world, and in a, highly protected world we alone cannot go back to a policy of Free Trade. Such action would not be wise. Most of us look forward to the time when the new bargaining power with which the Government have armed themselves will enable this nation to conduct negotiations which will lead to a reduction of tariffs throughout the world. If the shipping industry were only suffering from a reduction in the volume of world trade there would be no special reason or, indeed, any reason at all, why we should ask for assistance. If the mercantile marine of other nations were suffering as we are, we would maintain our traditional independence, and while we would doubtless suffer with others, we should win through ultimately.

It is of the utmost importance that we should realise that not only is the absolute number of cargoes to be carried in the world less, but that the British Mercantile Marine is carrying year by year a smaller proportion of the reduced trade. Why is that? Is it a case of inefficiency; or is it due to circumstances over which we have no control and for which we have no responsibility? If the Mercantile Marine is inefficient, we deserve no sympathy and certainly no help. If circumstances over which we have no control have arisen to damage British shipping, there is a prima facie case for a Government inquiry, but it has been stated more than once this afternoon that the Brtiish Mercantile Marine are not inefficient. The average age of our ships is less than in the case of other nations, and our crews —sailors and firemen—and officers who hold responsible positions in our ships, are certainly not less efficient than those of any other nation. They are probably a. good deal more efficient. I have no reason to suppose that the management of our Mercantile Marine is any worse now than during the years when the fleets, which are large to-day, were built tip from a very small beginning. We are an efficient industry.

Before considering some of the suggestions made by the Government to assist shipping, I will deal with one matter which has been mentioned several times, and that is the supposed damage to the British Mercantile Marine of selling ships, particularly to the Greeks. The hon. Member for Dumbarton Burghs (Mr. Kirkwood) was particularly angry that this had been done. He said that owners who had sold to Greek owners had done a dirty, rotten trick.

Mr. KIRKWOOD

Hear, hear.

Colonel ROPNER

I must ask the hon. Member, who represents a large shipbuilding industry—

Mr. KIRKWOOD

The largest in the world.

Colonel ROPNER

—to remember that it is the considered view of the shipbuilders that more good than harm comes to this nation from selling old ships to the Greeks. If the Greeks are determined to buy a ship, they will buy one somewhere. It is the contention of shipbuilders—I am not one, but I believe they know their own trade—that in buying our old ships the Greeks learn to appreciate the good quality of the British-built ships, and that when the time comes to replace an old ship by a new one the Greeks are likely to place their orders in this country. Those who criticise British owners for selling to Greek owners are the very people who have accused us in the past of burdening ourselves with old tonnage. I will quote the hon. Member for Dumbarton Burghs again. He said that one of the causes of the trouble in the shipping industry was that we had saddled ourselves with dud, old ships which could not compete, and with old ships handed over to us by Germany as a result of the Peace Treaty. If those ships are really dud and a burden on the British Mercantile Marine, surely it is a most excellent thing that that burden should be transferred to Greek owners at a higher payment than could be obtained elsewhere.

Mr. KIRKWOOD

Would it not be better to destroy the ships, which are going to compete with our ships? The reason the Greeks buy them instead of buying new ships is that they are cheap. If they had to buy at the usual price for a new ship, they would not be able to undercut our shipowners in the way that they are doing at the present moment.

Colonel ROPNER

I do not deny for one moment that probably the best solution of the difficulty would be to destroy the ships, but the shipowner himself has to sell in the best market, and, if no arrangement has been made to provide him with a better price for scrapping than he gets from the Greek owner, obviously it is to his advantage, and I contend that it is probably to the advantage of the whole trade, that that sale should be effected. It may be within the knowledge of some Members of the House that I myself am intimately connected with a shipowning firm, and I would like to say that to the best of my knowledge, which does not extend back over a very large number of years, my firm have never sold a ship to the foreigner. In point of fact I believe that the feeling in the industry with regard to this matter is not strong one way or the other, and, if it would help hon. Members opposite to support our request for a subsidy, the industry would be quite ready, as a gesture and nothing more, to agree that no more sales should be effected to foreign owners.

If it be granted, as I think it must be, that the position of the British Mercantile Marine to-day is not due to inefficiency, we must next proceed to ascertain what are the causes of the extreme depression which reigns in this trade. Surely, the answer is that for years British shipping, standing alone, has had to fight the combined resources of whole nations. We are being worn down in the process, and I think it is true to say that breaking point has nearly been reached. Surely, if that be granted, it will not be denied that we are justified in asking for help from our Government for so long as, and no longer than, other Governments are subsidising their mercantile marines. The fact of the matter is that some £30,000,000 a year is being poured out by foreign Governments into the coffers of their mercantile marines. These high subsidies, combined in some instances with the additional advantage of low running costs, have led to what in every other industry would be described as unfair foreign competition on a most gigantic scale. We have to consider facts which are in many ways precisely similar to those which persuaded the Government to give protection to manufacturing industries.

The hon. and learned Member for East Bristol (Sir S. Cripps) tried to make a certain amount of capital at the beginning of his speech—I apologise to him for using the word "capital"—by asking why in this case it was necessary to subsidise. The answer, I think, is that there is no other way in which it is possible to help the shipping industry. For a very long time both shipowners and, I am sure, the Government have been searching for some other method. We all know the difficulty of justifying the grant of a subsidy. It is not easy politically. It is much harder to persuade the taxpayer that a direct subsidy of this sort is necessary than to persuade him to accept what may be, but probably is not, an additional burden through indirect taxation such as Protection. I am sure it is true to say that every possible avenue has been searched by both the Government and the shipowners to find some alternative to a temporary subsidy. After months of work, the President of the Board of Trade, on Tuesday of last week, made the announcement which gave to this country and to the world the broad outline of the Government's intentions in their efforts to assist the shipping industry.

In whatever criticisms I have to make of the Government's proposals, I can only speak as a tramp owner. It is not possible for me to pretend to represent the views of coasters, tankers, liners, or even cargo liners. But where I believe the view of the shipping industry to be unanimous I will try to draw the attention of the House to that fact. As a tramp owner, as one who has recently taken some part in the deliberations of tramp owners and represented their interests on a committee, and as one who has had some negotiations with the President of the Board of Trade himself and his very able assistants, I can only say that I am profoundly disappointed by the statement of last Tuesday if the President of the Board of Trade meant what he said. Since that statement was made, the Tramp Committee of the Chamber of Shipping has held a meeting, and an effort was made to formulate a resolution which would convey to the Government the greatest measure of facts which could be unanimously stated by the committee. To find a unanimous resolution we had to ignore all references to negotiations with foreign Governments, either on the part of our Government or by shipowners; we had to ignore the proposed "scrap and build" programme; we had to ignore the conditions which have been laid down as essential for fulfilment before the tramp industry is to get the subsidy; and the only thing we could do was to express our gratitude at the fact that the Government had seen fit to approve of the principle of a subsidy.

Why was the announcement of the Government last Tuesday so disappointing? It boiled down to three proposals. The first was a subsidy payment on conditions which could not possibly be fulfilled. The second was international negotiation, which in our defenceless condition must be difficult, and, even if successful, must take a long time; and the third was the "scrap and build" programme, forced upon the industry—

Mr. RUNCIMAN

indicated dissent.

Colonel ROPNER

I will deal a little later with the question whether it was forced or not, but I would like for the moment, if the President of the Board of Trade will allow me, to keep that word in my speech. The third proposal was the "scrap and build" programme, forced upon the industry although no section of the industry wants it and most believe that its effects would be harmful. My hon. and gallant Friend the Member for South Portsmouth (Sir H. Cayzer) said in his speech that no shipowner was in favour of the "scrap and build" programme. The President of the Board of Trade interrupted him, and said, quite rightly, that that was not the fact; I believe it is true that there are a very few individual shipowners who are not at any rate actively hostile to the "scrap and build" programme. But I believe it to be equally true that no organised body of shipowners—neither the Chamber of Shipping nor any other organisation—has ever affirmed its appreciation of the "scrap and build" programme, and at most meetings of shipowners representatives of sound shipping organisations have expressed their disapproval of the suggestion.

Let me deal with each of these three suggestions. With regard, first of all, to the subsidy, not very long ago I believe it was true to say that there was very little chance of any section of the shipping industry obtaining a subsidy, but many of us who were negotiating with the Government felt that if we persisted in our request it would ultimately be met, because in point of fact there is no alternative way of bringing immediate assistance to shipping. The Government themselves, in considering the proposal of a subsidy, met at the outset with four difficulties. In the first place there was opposition from the liner section of the industry. In the second place, they were so much in love with their own "scrap and build" proposal that they were blinded to the charms of any proposal which came from elsewhere. In the third place, I rather suspect, though this can only be a presumption, that the Chancellor of the Exchequer manfully did his duty, and, as custodian of the public purse, needed considerable pressure before he would agree to the principle of a subsidy; while the fourth difficulty was the fear, which I must confess was fostered to a certain extent by the tramp owners themselves, that the subsidy, if given, would be dissipated.

Within the last few weeks, three of those difficulties have disappeared. In the first place, the liner section, as represented by their own committee, let it be known that they would not be hostile to the tramp section of the industry receiving a subsidy, provided, quite naturally, that it did not bring that section into more active and intense competition with the liners themselves. With regard to the "scrap and build" programme, the Government, in face of the almost unanimously expressed opinion of all sections of the industry that this suggestion was, to say the least of it, inadequate standing by itself, were persuaded to look further afield and to think of other proposals; and also I imagine—it is, of course, once more an assumption that I am now making—that the President of the Board of Trade, with his well known ability and persuasive charm of manner, was able to persuade the Chancellor of the Exchequer of the absolute necessity of giving some sort of direct financial assistance to the shipping industry.

That leaves one difficulty still to be overcome—the question of dissipation. The Government have agreed to the principle of a subsidy, but on conditions which, as I have already said, cannot possibly be fulfilled. One of those conditions is that the subsidy should riot be dissipated. It is not only impossible that we should give the Government this assurance, but it is not even desirable that we should attempt to give an assurance of that nature. I have referred to the fact that some shipowners themselves are to a certain extent responsible for the fears of the Government that a subsidy, if given, would not be of any aid to shipping, hut, to be fair, we, must remember that many shipowners, after a life-time of hard toil, are to-day facing bankruptcy. Many companies are in the hands of the banks and others, perhaps a little more favourably placed, after generations of work, during which time their fleets have grown up from one ship to 50 or more, are seeing those fleets dwindle before their eyes. I am not surprised if in those circumstances some are blinded to the real nature of the problem, and want something to put in their pockets rather than a fighting subsidy. If I may interpret the mind of the industry, I am sure that it is not charity that we want. We are not afraid of domestic competition. All we ask is that we shall be put on level terms with the foreigner. The hon. and learned Gentleman the Member for East Bristol said that it was always the other country that was the aggressor. Does he attempt to deny that in this case those countries which have subsidised for many years are in point of fact the aggressors?

Sir S. CRIPPS

From our point of view it is quite right to say that they are the aggressors, but, from their point of view, they are merely carrying out ordinary economic arrangements for the good and the extension of their own marine services.

Colonel ROPNER

That is an entirely different point. I am only asking the hon. and learned Gentleman if in this case he agrees that those nations which have subsidised their merchant navies for many years are the aggressors, and if it is a legitimate request of our shipping industry that it should be put on level terms. In case there is any Member who thinks that £2,000,000 a year is like charity, let me give the House a few figures. The average subsidy paid to an Italian ship is somewhere about 17s. 6d. a ton. When we were asked to make proposals to the Government, the highest figure which the tramp section of the industry dared to suggest was 10s. a ton. £2,000,000 represents about 6s. a ton, or only a third of the subsidy given in the case of Italy. May I suggest that the Government, having agreed to the principle of the subsidy, should not play about with the idea? One of the very few weaknesses of the National Government is that it never appears to recognise its own strength. Call the bluff in the shipping world, as was done in the case of Germany only a, few weeks ago, £2,000,000 is not sufficient to frighten our competitors, and the conditions attached to the grant are best calculated to make our opponents rejoice. I am sure that unless the Government are prepared to modify their proposal, we shall get £2,000,000 next year and we shall go on getting £2,000,000 for a very great number of years, but if the Government on this occasion will say to the shipping industry, "You can have all you want for as long as you want it," and if the only condition they impose is that every penny must be dissipated, that we must cut freights, then the fight will be won with much less expenditure of public money. For what other purpose are we being given a fighting subsidy if it is not to cut freights and oust the foreigner and take the cargoes which are at present being taken by subsidised ships?

Let the Government insist that we do cut freights. If we take that action today, we shall have the representatives of Italy and France, and perhaps even America and many other countries, hopping into their areoplanes and flying over to Whitehall, as the representatives of Germany did when we had really armed ourselves in the case of debts a week or two ago. I have heard the fear expressed that, if Great Britain subsidises her mercantile marine, the Scandinavian countries, which do not at present subsidise, may follow suit. I should ask them to do so. We do not want any unfair advantage over the Norwegian, the Swede or the Dane. They do not subsidise to-day and we do not wish that we should take freights which they are taking through fair competition. We want as many nations as possible to join in this fight against the nations that subsidise. I am thoroughly convinced that, if the Government on this occasion will arm themselves with full strength, we shall very soon arrive at the time when it will not be necessary for the shipping industry to ask for any subsidy. The President of the Board of Trade, speaking in a Committee room upstairs, pointed out the pride that shipowners take in their fleets and the independent view that has always characterised them. There is nothing more distasteful to the shipping industry than to have to come to the House of Commons and ask for a subsidy, and if the Government will take action which will in the near future stop subsidies in the rest of the world, the House of Commons will hear no more suggestions from the shipping industry that they should be subsidised. So much for the subsidy.

May I say one or two words with regard to international agreements and the "scrap and build" programme? The shipping industry will naturally do its best to bring about international agreement by negotiation. I am certain that I can give that assurance, speaking for the industry, and we have confidence that the Government will do its best in international negotiation, but here again how much stronger might the position of the Government be if they had been more generous in the terms of the subsidy, and shown greater determination to help the industry to see its way right through to the end. It would have been very much easier for us and for the Government themselves in the negotiations with foreign countries. In a letter which I signed the other day, with some other Members of Parliament and one or two shipowners outside the House, we characterised this proposal, in so far as it was supposed to assist shipping, as a pretence. I cannot believe that, in the face of the almost united opinion of shipowners, any Member of the Government can still believe that this proposal is of the slightest value. I was told the other day that the Prime Minister, when he recently visited Seaham, experienced a very noisy meeting. On inquiry it was found that it was not miners from the Seaham Division, but unemployed shipbuilders from Jarrow who were the cause of the trouble, and from that moment the Prime Minister and the Government were quite rightly determined that shipbuilding should be given every encouragement.

Those who will make the first use of the "scrap and build" programme are the inefficient owners, who in better times have neglected an ordinary replacement programme. But economic necessity, when once this policy has been put into operation, will necessitate every shipowner following suit, to scrap older ships and build new ones. That is my justification for saying that this policy, which is not wanted, is being forced on the shipping industry. The Government to-day have been reminded of the very great financial loss which the country has sustained as a result of the operation of the Trade Facilities Act. I warn the Government that if this scheme be put into operation to an equal extent, the loss to the country will be equally great. If the Government will snake existing ships pay, it will not be a question of British owners scrapping three and building one. It will be a question of scrapping three and building four. Those who represent shipbuilding constituencies should think very carefully before they give any support to this "scrap and build" programme. It is madness to suppose that British shipping can be assisted by reducing the number of British ships without international agreement which will ensure that other nations take similar action.

The President of the Board of Trade made a speech recently at Cardiff. He drew attention to the fact that, if a large proportion of the British mercantile marine were scrapped, the gap would be made up by the foreigner. Just as far as the scrapping scheme is successful, so does the danger increase that, while British owners are limited to building one and scrapping three, the other two will be built by the Frenchman, or the Italian, or some other subsidising country. If the scrapping of a portion of our tonnage leads to a betterment of freights, of course, without international agreement, other nations are going to take full advantage of the better conditions. If the scheme be not successful, we have only to imagine the process being repeated on several occasions. We scrap three and build one, and then in a year or two we scrap three more and build one more, until finally there is no British mercantile marine left at all. I ask the Government once again to consider whether it would not be better to devote the whole of their energies to making British shipping pay. If they do, I can assure them that British shipowners will build all the ships which they desire to see built during the coming winter.

I have come to the end of the remarks which I wish to make, but before I sit down I should like to apologise to the President of the Board of Trade, and to the Government, for appearing ungrateful, in view of the fact that they have consented to give the industry with which I am connected a grant of £2,000,000. During the recent negotiations we have found the Government most anxious to help and reasonable on every occasion, but, I believe, frightened to face facts and adopt a bold policy. We are of the opinion that we can justify our request to the Government. We believe that, in asking the Government to be bolder than they are, in point of fact the amount it will ultimately be necessary to pay shipowners will be reduced. The points of my criticism have been made in an endeavour to help the Government to formulate some scheme which will ultimately bring reasonable prosperity to the shipping industry. Bound up with the welfare of the shipping industry is the welfare of the shipbuilding-industry, and shipbuilding largely affects the comparative prosperity or poverty of coal mining, iron and steel, and a very large number of ancillary trades. I hope that the Government before very long will put into operation a scheme which will, through shipping, bring great assistance to all those other industries. By so doing they will have earned the thanks not only of shipping, but of the whole nation, and particularly of those areas which are known as distressed areas.

Mr. PEARSON

Can my hon. and gallant Friend verify the statement that the unemployed shipbuilders of Jarrow interrupted the Prime Minister?

Colonel ROPNER

No, I cannot possibly verify that statement. I think I stated quite clearly that I heard the story. If I have offended in any way the susceptibilities of my hon. Friend the Member for Jarrow (Mr. Pearson), I am ready to admit that I cannot possibly substantiate the story.

6.49 p.m.

Captain MOSS

I welcome this opportunity of offering my humble contribution to so important a Debate, and I suggest that the discussion to-day may well be the forerunner of many more discussions upon this subject before the shipping services of this country secure that degree of prosperity upon which, I am sure the House must be agreed, may depend the welfare of these Islands and the safety of our people. I would like to say a word about the British shipowner not because I am a shipowner, but because it is now getting on for 20 years since I had the honour to command a large British ship, and during the years of such an experience I had the privilege of coming into contact with, and judging the ability of, the British shipowner to manage and to handle his ships. From my own personal experience the British shipowner takes second place to no other shipowner throughout the world in his ability to know and to handle his own business. It is true to say that, in the years of prosperity now long gone by, the British shipowner acquired very large reserves, but it is equally true to say that the British shipowner bas in his post-war experience been exceedingly loyal to his service. He has been true to himself, and he has endeavoured to keep his ships at sea and to keep his crews in employment despite the fact that voyage after voyage, and year after year, has reflected steady and continuous losses in his balance sheet. To-day it is generally accepted that in so far as the tramp shipowner is concerned, his reserves have completely evaporated, and, indeed, his power even to borrow to keep his ships at sea has become exhausted also. That is the condition in which the British tramp shipowner finds himself to-day.

I cannot but regard the decision of the Government at the present time in offering this meagre subsidy as a recognition of the condition of the tramp shipowner to-day. With regard to the subsidy which the right hon. Gentleman is now offering to the tramp shipowner, and which he made perfectly clear in his recent statement to the House, was to be of a very temporary nature and might in fact, in certain circumstances be withdrawn during its first year, it is very difficult for anyone with a knowledge of the shipping services of this country to appreciate that the Government would offer even a small subsidy for a short temporary period unless the subsidy were intended to come to the immediate assistance of the tramp shipowner because of his special and peculiar circumstances at the present time, and unless it were the intention of the Government in the meanwhile to formulate some satisfactory scheme calculated to assist the shipping services of this country to continue their existence with a greater degree of prosperity than has characterised that service in recent years. Otherwise, what will be the benefit, and of what possible assistance can a subsidy be, if it is to be of a temporary nature, unless it is the intention of the Government to formulate some other scheme?

I have listened to the Debate to-day with a great deal of interest and to speeches from the other side of the House which I thought were intended to be in opposition to the policy of the Government but which, evidently and ultimately, showed that the hon. Gentlemen to whom I am referring were actually in favour of the subsidy. Those who have spoken directly in the interests and on behalf of the shipowner have spoken in full approval of the subsidy, except that they have asked for more. Apart from the fact that I approve of the immediate subsidy because of the economic necessity for it, I would infinitely prefer to see the Government formulate, as 1 am confident the right hon. Gentleman the President of the Board of Trade is fully capable of formulating, some other sound and practical scheme of out-and-out protection for the shipping services of this country. The Government exercised courage and determination in formulating a scheme which led inevitably to a complete change of the fiscal system of this country—a change of policy which during the past two years has been proved conclusively to be right, and which has satisfied this House and the country that that policy was directly responsible for the resuscitation of the industrial undertakings of this country and for the provision of employment for nearly 750,000 of our people. There was courage, initiation and determination on the part of the Government to carry that policy into effect.

Why should the Government speak today of finding a subsidy for the shipping services in this country, one of the greatest and one of the most important industries we possess, a subsidy which in itself must inevitably prove in course of time to be effective, for one very simple reason which I do not think has been mentioned during the present discussion? May I be permitted to remind the House that during recent years certain foreign maritime countries have acquired for themselves their own mercantile fleet, and it seems to me that we are being asked to-day to consider whether the introduction of a subsidy to the British mercantile marine might not be calculated to affect the ships of small foreign maritime nations, who are endeavouring to keep their fleet in existence through the subsidy which they enjoy. Surely, we cannot be expected to appreciate for a single moment that the introduction of a British subsidy will either be calculated to secure the withdrawal of foreign subsidies, or most certainly not the withdrawal from the freight markets of the world of all those foreign ships which have come into being and which have come to stay. That is one very obvious fact which, I think, hon. and right hon. Members would do very well to keep before their minds in giving consideration to this question and to the efficacy of the subsidy.

May I refer to one or two ways in which assistance by legislation might be given to British shipping? Before I do so, I would remind the House of a statement made by the right hon. Gentleman in a recent speech, wherein he said that if the question of subsidies does not prove to be satisfactory and successful, certain other schemes will be considered by the Government. I trust that the time to consider these schemes is during the lifetime of a temporary subsidy, land I trust also that long before the time of this temporary subsidy expires, the right hon. Gentleman will be in a position to lay before the House of Commons some sound and practical scheme for the protection of this great industry. For instance, I would ask his consderation of a question that has been raised before, namely, that one port of call should be kept in this country for foreign ships. It has been said that that question is hardly worth consideration, because the amount of tonnage involved was only one per cent. of the trade. Such a statement is quite erroneous. The one per cent. refers to the tonnage of foreign ships using the coasts of this country in competition with British ships, but the actual loss in trade to the coastal service of our own country is, I understand, from 10 to 15 per cent.

In addition, there is the question of principle involved that whereas every important maritime country in the world discriminates against the shipping of this country, we allowed, for instance, recently a German ship to pick up a cargo for the Far East, and, on her way to Hull to pick up more cargo, to carry 1,500 tons of coastwise traffic at something like 5s. a ton. I trust that question will not be lost sight of by the right hon. Gentleman. I think we may take it for granted—I believe he appreciates it already—that the whole of the coastal shipowners of this country are solidly united upon the necessity of preserving our own coastal trade for our own coastal ships. I would ask the right hon. Gentleman whether it is not possible to carry this question a bit further. Is it not possible that we might introduce the question of one port of call for foreign ships throughout the whole of the Britsih Empire? It is true that our own Dominions would require to be taken into consideration, that co-operation is both necessary and desirable, but if the principle could be applied, there would be a resultant benefit to British ships, British railways and to British transport systems throughout the whole Empire.

I would like to refer to the question of the balance of trade with foreign countries. Is it not possible, where that balance of trade is in their favour and against this country, to rectify it, at least to some extent, by providing for the carrying of British cargoes in British ships, most certainly manned by British crews? Such a thing as a balance of trade in favour of a foreign country and against this country exists, I believe, in the trading relations of the majority of countries trading with ourselves. I feel satisfied that if such questions receive, as I believe they are receiving, the attention of the Government at the present time, it is possible during the lifetime of this temporary subsidy for the President of the Board of Trade to formulate some new system of protection which the British shipping services have every right to expect. I quite appreciate that the right hon. Gentleman will tell me that for a very long time, so far as these questions are concerned, there has been no unanimity of opinion among the ship- owners themselves. That I appreciate. That was the case two years ago. It is not the case to-day. It was the case when the British shipowners controlled over 50 per cent. of the world's carrying trade. Now that that figure has fallen considerably the British shipowner is losing his international outlook, is beginning to realise that foreign ships have come to stay and that the trade we once enjoyed must in future continue to be limited. The shipowner is quite prepared to consider this, and all he requires is a lead from the Government, a lead similar to that given by the protection and preservation of so many other industries, a lead which, I am satisfied, the Government are capable of giving, and which I am certain is receiving the attention of the President of the Board of Trade at the present time. I am sure the House appreciates that this subsidy to shipping is intended to be only of a very temporary nature. The Government do not desire, and, I believe, have no intention of making, this subsidy a permanent one. Therefore it will be imperative, in the interests of our shipping services, that something in the nature of a new policy—I trust an out-and-out policy of protection—may be formulated and laid before the House at as early a date as possible.

7.13 p.m.

Mr. RUNCIMAN

The House has listened with great interest to my hon. and gallant Friend who has just spoken, because he speaks with a thorough knowledge of the industry and a point of view different from that put in other quarters of the House. We have heard to-day speeches delivered by those who take an interest in shipping problems, and it is because it is a delightful subject of public political economy and can be talked about so well with so little knowledge of facts that I can quite understand that the hon. and learned Gentleman opposite enjoyed delivering the opening speech. May I say that I have seldom heard a speech from him so devoid of facts and figures. His object in rising to open this very useful discussion was to make it quite clear once more that he believed in nothing more than the nationalisation of every one of our industries. Indeed, only recently I had that drawn to my notice in a Debate on 4th July in which he dealt with all his policy. He said he had come to the conclusion that capitalism was "antiquated and rotten," and that capitalists were suffering from the consequences of their own heroic acts in trying to stand on the bridge until the ship sinks, and that they ought to be taken off the ship; the ship ought to be allowed to sink, and a better and more successful ship should be put in its place."—[OFFICIAL REPORT, 4th July, 1934; col. 1972, Vol. 291.] I have often observed in this House and elsewhere how dangerous it is to embark on a nautical simile, and I recommend the hon. and learned Member, before he goes further along that path, to apprentice himself to the hon. and gallant Member who has just sat down, who must have heard with horror the use of ships in that connection. The hon. and learned Member could not have realised that there is nothing more solemn in the whole nautical vocabulary than that which refers to the sinking of ships. Is it true to say that the British Merchant Navy is one unit in a rotten system 1 Until quite recently the British Merchant Navy was not only the greatest in the world, but under the British Flag were one-half of the vessels of the world. How did they get there I Does the hon. and learned Member think that they found their way under our Flag by mere chance, or that they came down from our shipyards by pure chance through any action of the State? It was not done by the State. It was entirely owing to the ingenuity of our ship designers and the enterprise of our shipbuilders; there is no other explanation for it. We were able to hold our own with the nations of the world, because our ships were better designed, better manned, and better managed than those of any other mercantile fleet in the world.

I would like to put in another plea for the Merchant Navy. It is said that under present conditions we are rapidly losing our hold on the trade of the world. It is true that we have now a small number of vessels under our Flag in proportion to what we had before. Indeed, it is relatively true that we have made no advance in total tonnage since the War, but I would like to remind the House that we have kept up the quality of our fleet. One of the great advantages we still have is that our steamers, whether they are passenger-carrying steamers, cargo steamers, coasters, or tankers, are the best in the world, on the whole. There are some individual ships which rival those which sail under our Flag, but in some cases even these ships cannot be kept running at their present rates without State intervention, not of the kind which the hon. and learned Member thinks of, but a subsidy given in the baldest possible form. In taking a survey of the British merchant marine we cannot leave out of account the quality of our ships, and we cannot avoid asking ourselves what is the real reason why we are not, with all the good qualities attaching to the British merchant navy, now in the same predominant position in which we were some years ago.

There are, of course, several reasons, but the simple one has been mentioned this afternoon, and that is the shrinkage in world trade. One of the things which is certain about British shipping is that it is so fluid that there is nothing which can happen in any part of the world which will not set the mercury of this industry vibrating. It is apparent to those who make a careful observation of what has been passing that not only are we subject to a shrinkage of world trade but to a surplus of tonnage. The hon. and gallant Member for Barkston Ash (Colonel Ropner) seems to have left out of account one very simple fact which applies to tramp tonnage. If there are in the world 10 more ships than world trade can fill there will be a slump, but if there are 10 fewer ships than world trade requires, there will be a boom. That is a very simple fact which one can remember without much mental effort. It is absolutely essential that we should keep that in mind when we are considering the subject of world shipping in general, and in particular our own shipping.

I propose in any dealings we have with foreign countries to lay stress on this fact. They also are suffering, as we are suffering, not through their ship-owning companies but through their exchequers. It cannot be of any permanent advantage to the exchequer of any of these foreign countries who are subsidising their shipping that that system should continue. They would like to see, probably just as much as we would, the surplus tonnage taken off the market; and I have no doubt also that they would like to see a certain amount of the surplus tonnage which does not belong to them scrapped. It is curious to find how many foreign statesmen there are who like to glory in the mere figures of their mercantile marine. I doubt whether that is the best way to reckon it; mere figures tell you very little. If you want to know whether a mercantile marine can run with success, you must ask whether it is able to pay the service on its own debts and accumulate funds, out of which to renew its fleet in the most natural and beneficial way. The hon. and gallant Member for Barkston Ash and his family, who have had a most honourable connection with merchant shipping, throughout the whole of their career have built up their fleets out of their surplus profits, as, indeed, have other fleets of which I have knowledge; those surplus profits, laid out in new ships, have enabled small concerns to grow into large concerns. That is the healthy way to build up a mercantile marine. But when that chance has gone owing to the shrinkage of world trade, or for other reasons, it is impossible to make the necessary profit 'and equally impossible to bring about the rejuvenation of the merchant fleet which is essential to our well-being.

I think that the hon. and learned Member for Bristol, East (Sir S. Cripps) a little underestimates the value of the scheme which, as far.as I can gather, he only inadequately understands. I should like to point out to him that one essential element in the scheme is that we should get rid of three more or less useless ships which are laid up and substitute one new one for them. That would under the rule I have laid down be proceeding along the right lines. We should be getting rid of surplus tonnage and be substituting more efficient tonnage. The hon. and gallant Member for Barkston Ash says that that would be a great pity; it would be imposing on the shipping industry, forcing on them a scheme which they do not want. I do not ask them to do anything with it, I only ask those who have an open mind on this subject to consider it 'and to take advantage of it if they think it worth while, but if they do not think it worth while to leave it alone. There is no pressure on them at all. If there are shipowners who are prepared to build in this way, they will not be the only people who will do it cheer- fully, because I think the shipbuilders will be prepared to co-operate.

Are we in discussing this subject to think only of the shipowners, the narrow and most selfish interest of the shipowners? Certainly not. I am sure that the hon. and gallant Member would like to think of the shipbuilders also, and so would I; not only because I want shipyards employed in doing what is legitimate business, not only because I want to see the highest class of vessels flying the Red Ensign—and the Blue Ensign occasionally—but also because want to see kept in our shipyards and in our marine engineering works the best skilled mechanics industry has ever produced, whom we are in danger of losing if the continuity of production of new ships is interrupted. We must give some attention to this other consideration. If it be suggested that I am looking after the shipbuilding interest, why should I not? I am just as much entitled to look after the interests of the shipbuilding industry as I am to look after the interests of the shipowning industry, and I say here and now that if we can do anything legitimately to have orders placed for more ships they could not be placed at a more opportune moment nor could they bring greater advantage and benefit in a more critical period in the shipbuilding industry than to-day. That is one of the reasons why I am not going to drop prematurely a scheme which I know is already being considered favourably in some directions.

If I am told that shipping organisations have not expressed themselves in favour of the scheme, I am entirely unmoved, because I know there are individual shipowners who are taking an interest in it. Does the House imagine that when a shipowner is making plans for building a new ship that he goes to the Chamber of Shipping and at the council meeting gets up and says, "I would like you to know that. I am about to build a new ship which is going to be one of the things under the scrap and build scheme." That is not the way they proceed. They make their arrangements with the shipbuilders, but they do not do it on the housetops but behind closed doors, and, when the whole thing is over and the contract signed, then there may be a paragraph in the papers to say that Messrs. So-and-so have placed an order for a couple of ships on the Clyde or on the Tyne. That is the way it is done, quietly, not with a blare of trumpets, but after discussion around a table and after some hard bargaining. They want the best ships and as soon as they cart get them; they do not think it necessary to tell all the world what their plans are. That is what is sure to go on in the future as in the past, and we shall find in the near future that there will be inquiries made as to the terms under which the scheme can apply to certain individual cases, and we shall be quite ready to tell them.

The hon. Member for Paisley (Mr. Maclay) who made a well-informed speech and a very acceptable speech, more acceptable because it was short and packed with good sense, asked one or two questions which I had better answer at once. He wanted to know whether the same rule applied with regard to modernised ships as to new ships. I would like to tell him that that is a matter on which we have no rigid view at the moment, and, if it be shown that it would be justifiable to apply an easier rule than three to one to modernised ships, we are quite prepared to consider it sympathetically. I can see the great advantages of an arrangement to preserve an old hull or even adapt an old hull which is known not only to her owners but to the trade itself. We are not closing our mind to methods by which we can adapt this system to modernised vessels as well.

May I come to the general subject of shipping policy as a whole and the extent to which agreement has been achieved in the industry. I must say, knowing the shipping industry as I do, that I never expected there would be one unified opinion, or that out of the Chamber of Shipping and the local shipping associations and the Liverpool Steamship Owners' Association you could obtain one view which would be identical. Certainly nobody who knows the industry ever imagined for a moment that you can so easily get liners to agree with the tramps, London to agree with Liverpool and Liverpol to agree with Newcastle. Unfortunately, in this industry there are rivalries which are not easily overcome. I do not say improper rivalries; I think they are quite proper, but they are not easily overcome. The tramps compete against the liners, and they sometimes complain that the liners are taking up cargoes on routes which formerly belonged to them. Liners complain of the tramps cutting in on their trades and taking away cargoes which would naturally have gone by the regular lines. There are some people who think it is quite a good plan to be extremely bold in your attitude towards foreign nations in the Antipodes and to he rather quiet in the way you do your business on the North Atlantic. All these are simple facts which have to be faced, and they show how extremely difficult it is to obtain one opinion which you can say is the shipping opinion and at the same time get all interests to pull together.

I need not point out that part of the trouble we have had in not being able to act with greater rapidity is the difficulty in obtaining all the information necessary for the formation of a judgment. My right hon. Friend the Member for Darwen (Sir H. Samuel) thought there had been undue delay, but he did not know that we had been in close communication with the shipping organisations now for something like seven months. and that it is only within the last few weeks that we have had our last and most up-to-date communication from these various organisations. I was very anxious as far as I mold to get them to act together and with us, and I do not regret the loss of time there may have been in trying to reach that end. If we have not succeeded in getting them to agree amongst themselves or with us, there remains then only the duty of our taking the responsibility ourselves, and deciding how we would deal with the situation.

Let me, therefore, take the various interests of shipping and show how they can and will be dealt with. I will get rid of two or three of the first interests at once. I do not think we need bother at the moment about the question of the tankers. The tanker owners have themselves devised a rationalisation scheme. Although it may be extremely difficult to work, I admire the attempt, and I think it is an attempt which ought to be emulated in other quarters. The House will regret that there is nothing in all these schemes that is likely to keep sailing ships alive. I confess that when I looked through the long list of those affected by our proposals it grieved me very much to observe that there is not a single sailing ship that will get a penny out, of these schemes. Their day is over. They will remain under another flag, relics of the past. We must leave to foreign owners the employment of those big three-and four-masters, which were the glory of the mercantile marine. They will be run by them and not by us. We must devote our attention entirely to steamers.

Here I come across another instance of the rivalries or antagonisms to be found on this subject in this House while we are all attempting to do the one thing that is helpful to the mercantile marine. What says the hon. and learned Member for East Bristol? He asks, What are you going to do about oil and coal? We are going to leave the owners to use oil or coal, whichever they think best. There are some cases where steam can be raised from coal more economically than from oil. There are some trades, such has been the great improvement in the design and equipment of marine engines, where it is possible to run steamers in competition with internal combustion ships. Of course there are other directions where the internal combustion ship is replacing the steamer, and where the oil burning vessel is taking the place of the coal burning vessel. It is impossible to lay down a strict rule. Our policy is to see that our mercantile marine is ready and maintained in the highest efficiency possible, and we do not want to interfere with the specialists, the experts, the scientists who are applying themselves to the use of oil or coal, whichever seems to them the more economical and beneficial.

We now come to the coasters. What can be done for them? For the moment we say nothing about them for this reason: In some of the coastal trades we have in comparatively recent times been looking after their interests. The keenest rivals of an important part of our coast traffic around these islands are not vessels flying the foreign flag, but the road and rail services. The coasters required some assistance in that controversy not very long ago, and we did give them their turn before anyone else. They might as well be patient now for the time being, and remember that if we re-open the question of coast traffic we may re-open a controversy between the shipowners and the road and rail transport people, and that will be a very dangerous thing to do. After all, many of the coasters are able to make ends meet. If later on we find that there is any material invasion into our coastal trade by foreign ships which are run under conditions that we believe to be unfair, if we find that they are simply running in competition because they ignore our Merchant Shipping Acts or have nothing to do with the conditions of the National Maritime Board, we shall have to take action. But I hope I shall not be accused by my old Liberal colleagues of being too menacing when I say that we will have to take action. Whether they like it or not we shall have to do so.

That leads me to the liners as a whole. The liners perform two great functions for which we ought to be grateful. The first is that they transport across the sea more rapidly and with greater efficiency and in as great volume as in the past, those who care to travel by steamer. The passenger liner is a class by itself. We are building some very fine passenger boats now. Even in these depressed days there are still to be found some enterprising shipowners who have been placing orders only within the last few months. We only heard of the orders after they were placed. They were placed, nevertheless. That kind of traffic is the sort of thing by which the Empire has been linked up. Regular traffic between the Dominions and this country, between this country and India, Australia, New Zealand and South Africa, has depended very largely and almost entirely upon services rendered by British ships.

But within the last three or four years we have seen bursting into two at least of these routes liners which are subsidised on such a scale that it is possible to build vessels ultra-luxurious, it is possible to run them at about three knots more than is necessary for the ordinary requirements of the trade, and at the same time they have been doing that, not on the profits made out of their passenger fares nor from the profits on cargoes, which were quite inadequate for the purpose, but out of the steady subsidy paid on a mileage basis by the Government of the country whose flag they fly. If that were to go much further it would mean that the link with that portion of the Empire would be maintained, not by a British ship or British line, but by a foreign ship or foreign line, and on Imperial grounds we cannot see that danger without taking some steps. I hope the House will not ask me to do anything more than make public what my lion. Friend called "this menace." But I believe it desirable that foreign countries should understand that, so far as the links of the Empire are concerned, we are not going to submit to present conditions without making a great effort to equalise them.

There is another section of traffic which is also of very great importance, and that is the cargo liner. It provides a very fine service in many parts of the world, not only for the carriage of goods which belong to British traders but for those which belong to foreigners. In answer to a question recently I gave the figures, as nearly as we could ascertain them, of the percentage of Imperial trade with this country which is carried in British bottoms. I am glad to say that it is still very large. I should like to see it larger still. I daresay that is possible. But the carriage of these cargoes by the regular services where they do not bother about passengers at all, is a very important means of raising our invisible exports. It provides us with a very large amount of income from overseas. It is as good as any financial transaction that can be carried through by great exporting interests, and it is invaluable to us.

It has been pointed out that the tramps very often overlap these cargo liners. I have been asked to define much more clearly what is meant by a tramp. I am not prepared to enter on that definition any more than I did in the statement that I made public last week. I think that that goes far enough for our present purposes. I am prepared to discuss the definition with anyone, but I do not think it is necessary that I should go further than the statement of last week. I recognise that it does occasionally happen that the cargo liner may go straight on to what is nothing more nor less than a tramp service, and that in some cases ships are liners for an outward voyage and tramps for the homeward voyage: and there are other cases where they will put in a tramp voyage in the middle of their service. All these matters have been considered, and if it is necessary to modify the definition we are quite prepared to think it over, but up to the present we see no reason to change the definition that is provided in that statement.

We cannot, however, leave the matter there and go no further. I am very anxious naturally that communication should go on with foreign countries and with the Dominions without further delay. Why has there been delay up to now '1 For one thing I did not care to make any important statement to foreign countries or to our own Dominions on this subject without first of all making clear to the House what we intended to say. That is one reason why, although the communications are ready, they were not sent off before to-day. There are two essentially different problems which have to be faced. In our communications with the Dominions I wish to ascertain how far they would be prepared to co-operate with us in maintaining our inter-Imperial trade on a basis which is more restricted than at present. I hope the Dominions will be helpful in these matters, but I have no right to commit them beforehand. All I can do is to point out what is the position of the British mercantile marine, and how important we think it is that these great Imperial communications should be maintained under the British flag.

I have no doubt, recognising what their view has been in the past and their attitude towards Imperial questions, that they will be prepared to co-operate with us. But we have in this matter to deal not only with Australia and New Zealand, but with South Africa, and in South Africa they have only within recent times entered into a contract with an Italian firm for running fast services up the East Coast of Africa and through the Suez Canal. In the case of India there are other problems which have to be considered and which I need not describe. But I hope the House does not imagine that it is very simple or easy to deal with subjects of this kind, with great self-governing countries like the Dominions, and to enable them to understand the problems that we have to face to-day, and to do that without a good deal of explanation.

One reason why we have not communicated with foreign countries more rapidly is that we had some experience last autumn of what comes of an international conference on this subject. Let the House remember that at the World Economic Conference we had a special sub-committee which was concerned with Shipping and shipping only. My hon. Friend the Parliamentary Secretary to the Board of Trade presided over that committee with general approval. The discussions went on for several days, papers expressing the views of the several Governments were circulated, and at the end the Scandinavian countries—Norway, Sweden and Denmark—and Holland, were prepared to co-operate with us, and not one other single country would do so. Indeed, it was made so clear to us from at least two countries that they had no intention of going on that they told us the sub-committee had better be wound up. They had nothing more to say. That was the end of the matter.

We are not in the same helpless position now that we were in then and while I am. asking the House to grant its approval of a £2,000,000 subsidy to be distributed among the tramps, I have also circulated in the most public possible way, through the OFFICIAL REPORT a. full statement on those additional sides of our policy all of which will be considered in a short time more seriously than they were 'at the Economic Conference last Autumn. I do not say that the subsidy is a weapon. I use it as a means to an end perhaps as a lever rather than a weapon but at all events it will show these foreign countries that we mean business. Last Autumn in spite of the reasonable nature of the statement circulated we were able to make no progress. Now I hope we shall find that there will be a different tone of voice to be heard on the Continent and elsewhere.

I have said that we shall be getting into communication with them at once. We shall certainly do everything in our power to avoid any loss of time. Now I must say that if we are to proceed with our programme I want the co-operation of the shipowners. Let me not put it in the first person singular. The Government want the co-operation of the shipowners. In this matter we are acting together with a unanimity of feeling which must be recognised by the shipowners. We want them to help us, to help the country and to help themselves. It is only right that, if they are receiving a gift of public money there should be conditions attached to it. In some quarters there has been a suggestion that the conditions are annoying and irritating, and that they might not be acceptable. I must say emphatically that we cannot play with the taxpayers' money and that we are not entitled to distribute the tax-papers, money, even for beneficial purposes, without attaching conditions. These conditions are not unreasonable and I believe that the tramp owners themselves are capable of finding means of complying with the conditions which we have laid down.

I say the conditions are not unreasonable for this reason. In times past, certain liner companies have had to face problems just as difficult as those which the tramp owners are now having to face. They devised schemes which now suit their trade. They have their conferences and their committees. They can act together. I know that it is quite true as has been pointed out to-day that tramp shipping is different, that it is more fluid, that it lives in the open air of competition, that it is not able to circumscribe the area of its work but goes anywhere and parries anything. All that is perfectly true but it may have to do this in the future under completely new conditions and it may have to adopt methods which are new in the tramp world, and submit to restrictions which have not been experienced before in the tramp world. After all, it is not the only industry in the country which has had 1 o face problems in a new spirit. I would remind the House that if we secure the co-operation of the shipowners, all of them, as I hope we may, we shall be able to produce schemes which are watertight in themselves and which will be effective in impressing the outside world, for that is as necessary as that we should be able to make a profit for our own shipping companies. I would like to point out that we have already received intimations from very important shipping centres and groups of their desire to co-operate. I must read one letter. It is not marked "private" and, therefore I presume I can read it to the House: We feel we would like to convey to you an appreciation of the statement made yesterday by you in the House of Commons. We are all in accord with the view implied in your statement that British shipping should not become a permanent charge upon the taxpayers and on that account value your insistence on the necessity for a return to economic conditions of ship operation by all countries and the assurance of the active steps that His Majesty's Government are prepared to take in that direction. We may add that as far as we are concerned we shall do everything possible to co-operate with the Government in giving effect to the objects that we all have in view. That letter is signed by the chairman of the Furness Withy group, Lord Essendon; by the chairman of the P. & O. Company, Hon. Alexander Shaw; on behalf of the Union Castle Company by Mr. Robertson F. Gibb; on behalf of the Orient line, by Sir Alan Anderson and on behalf of that important group the Ellerman Group by Mr. Lee Harris. Do not let the House imagine, however, that these are the only people co-operating with us and helping us to deal with this subject. Far from it. There are others who are just as active as they are but that statement is one which obviously was intended for publication and I have taken the earliest possible opportunity of letting it be known. As to when we are to proceed and how we are to proceed I would simply say that that depends on the progress of the shipowners—and of my Department—in finding a solution and in deciding on the means by which we can put it into shape to achieve the objects which we have in view. As soon as that can be done we shall proceed with the drafting of the necessary legislation and if, during the Recess, a scheme satisfactory in all respects is produced by the tramp owners, the necessary legislation to enable the payment to be made will be one of the first tasks to which the Government will ask the House of Commons to devote its time after the Recess. In these circumstances I ask the House, although they cannot do so by vote, to show in other ways their approval of the efforts which we are making and to play their part in maintaining what is without doubt one of the glories of British industry.

7.53 p.m.

Sir BASIL PETO

I wish to put before the President of the Board of Trade a view on this matter which has not yet been expressed. I have had the honour for many years of being chairman of the Parliamentary Committee of the Imperial Merchant Service Guild and I wish to convey to the House the view which is taken by the various organisations representing the officers of the merchant navy who have met to consider these proposals. May I first briefly indicate the present position with regard to employment among these people, whose work proved so essential to the safety of the country during the late War? At present experienced officers can get no employment whatever—in the majority of cases or at any rate in a great number of cases—and I wish to ask the right hon. Gentleman to consider what it means. All officers above the grade of second officer are remunerated under their agreements at a rate which puts them out of the operation of the Unemployment Act. They have, therefore, no unemployment benefit and are positively worse off in times of unemployment than the man who ordinarily works before the mast. With regard to the younger men who hold second mates' certificates the great majority of these who can get any employment at all to-day have to take employment as able seamen. Thus whereas parents were formerly anxious to get boys into what was regarded as one of the first professions in the country, parents are now doing everything they can to prevent their boys entering upon a sea career. That state of things means the destruction of an industry on which our national existence has been founded.

The right hon. Gentleman has referred to the importance of keeping at work the skilled men in the shipbuilding yards. I am alive to the importance of that matter but it is equally important to keep our merchant seamen, the personnel of our Mercantile Marine in existence under reasonably prosperous conditions, and it is from that point of view that I want to refer to what the right hon. Gentleman said the other day about the scrapping and rebuilding policy. The right hon. Gentleman said: The Government have been impressed by the improvements which have been made in the form and propulsion of cargo ships in recent years."—[OFFICIAL REPORT, 3rd July, 1934; col. 1725, Vol. 291.] That clearly indicates that the policy advocated by the Government of replacing three old vessels by one new vessel is not necessarily confined to vessels of the coal-burning type but must include the Diesel engine type, using oil. That means that we shall have a much smaller number of faster vessels carrying the same amount of cargo in less time and, therefore, requiring fewer men to move a certain tonnage over the seas for a given number of miles. It also means that a large proportion of the new vessels will be oil-burning Diesel engine vessels and in these the stokers will be displaced altogether. Therefore, I think that policy will be definitely detrimental to immediate employment and to ultimate employment as well. It has been said that this policy has not met with the approval of the shipowners generally. Neither does it meet with the approval of the organisations representing the officers of the Mercantile Marine who think that as regards the present depressed conditions of employment it would make things worse.

May I point out also how futile it would be to pursue a policy of "scrap and build" applied to this country only. Figures published by the Board of Trade show that in 1914 the total gross world tonnage of shipping was 45,404,000 and of that the United Kingdom owned 18,892,000 or 41.6 per cent. In 1933 the world tonnage has risen to 66,628,000 of which the United Kingdom owns 18,592,000 tons, or slightly less than before the War. Therefore, we have an increase in world tonnage during that period of over 20,000,000 or more than the total now owned by the United Kingdom. How, then, can a policy of "scrap and build" applied only to United Kingdom tonnage, help us in any way? If we scrap, without replacing at all, every ton of British shipping there will still be a large surplus tonnage in the world available for international trade. We have heard that international trade has gone down by 30 per cent. and yet there would he more than 45,000,000 tons of shipping left—the same amount of tonnage as the total in 1913. From that point of view it is clear that what is required is a policy which will help to put British ships on the sea again and to employ our men again. I notice that the proposed subsidy is confined to competing with foreign subsidised shipping, and it appears to me that the two conditions laid down for the grant of the subsidy of £2,000,000 are mutually contradictory. I would like the Parliamentary Secretary of the Board of Trade to tell me what is the answer to this, because condition No. 1 at the bottom of column 1724 of the Debate of 3rd July says: To prevent so far as possible the subsidy from being dissipated by the domestic competition of British ships carrying tramp cargoes."—[OFFICIAL REPORT, 3rd July, 1934; col. 1724, Vol. 291.] Now if the subsidy is not to be used to enable such ships to take cargoes and to carry them at rates of freight which they could not otherwise do, and which are possible to foreign subsidised ships, I cannot see what is the purpose of the subsidy. To put it shortly, it must mean enabling British ships so subsidised to carry a cargo at a lower rate than if they were not subsidised. Otherwise, it would not be a lever, to use the phrase of the President of the Board of Trade, nor a weapon in dealing with foreign subsidies. The next condition is: To ensure that it is effectively directed to securing the greater employment of British tramp shipping at the expense of foreign subsidised shipping."—[OFFICIAL REPORT, 3rd July, 1934; col. 1724, Vol. 291.] You cannot secure that condition unless it means enabling the ship to carry the cargo at a lower rate. It seems to me that these conditions are impossible of application, and, if it is not to be dissipated—as the phrase goes—in competition between British ships carrying tramp cargo, it cannot be used to compete with foreign subsidised ships. The subsidy should enable British tramp owners to run their ship against foreign ships run on lower wages and sometimes at almost no wages at all in conditions inferior in every way to Board of Trade conditions. I do not think the subsidy ought only to be used, as provided by one of these conditions, to fight foreign subsidies. I do not think that is the most dangerous form of competition which is at present running our ships off the seas. The worst form of competition is that of ships, in many cases old British ships sold to foreign owners and sailing under such flags as the Panama flag, where the conditions of employment and the wages paid are deplorably below what would be allowed under the British flag.

I will give the House an example which was given to me. There is a ship called the "Yvonne." It is now under the Panama flag, and it has changed hands since it was built in August, 1912. It is now being run with a captain paid £16 a month, chief engineer paid £16 a month, acting chief officer at £11 a month, and a second officer with £9. Under the Red Ensign the captain would get £25 a month, the first officer £16 4s., the chief engineer £19 16s., and the second officer £13 1s. If the last two officers held the superior certificate, which is more than likely, they would get £17 2s. and £13 1os. respectively. There is an immense difference in the pay Of officers, and, when we come to the feeding and pay of the men, I am informed that the captain of the ship now is allowed Is. 6d. per head only to feed the crew. You can imagine what sort of messing there would be on that ship for the crew. We ought to do something to enable our shipping to compete with that kind of ship, and I think this condition 'about the subsidy being only to enable our shipping to compete with foreign subsidies is entirely wrong and should be withdrawn.

I think the Government have a responsibility in this matter, because it is not only that our seamen's wages and officers' wages are settled by trade union conditions and conditions of that kind, but they are settled by the National Maritime Board, and the Government are represented on that board and are responsible for the rate of wages which is very properly insisted on in our merchant service. Therefore, it is a Government responsibility to see that our ships can be run under the conditions which they themselves are imposing. I think any scheme ought to provide practically for the prohibition of the sale of ships to foreign countries to compete under the inferior wage conditions I have indicated. The result of that policy of the sale of ships to foreign flags with almost no capital value, to be run under conditions which involve the payment of hardly any wages, is simply national suicide. Nearly 1,000,000 tons, I am told, was sold to foreign shipping last year and a large proportion of it is being sailed under the kind of conditions I have indicated to the House in competition with our own ships and running our own ships off the seas. A policy which would be really adequate should provide, I think, for the scrapping of these ships under a Government scheme so as to pay at any rate a contribution to merchant shipowners, a part of the cost of scrapping their old tonnage. More employment for British ships appears to me to be wanted until the efforts which the Government say they are making to increase international trade are able to fructify.

I am glad to hear from the President of the Board of Trade that he proposes immediately to communicate with the different Dominions to see how far they will co-operate with us in reserving the trade between one part of the Empire and another to British ships. It appears to me that as a part of Government policy this is not an alternative to the subsidy as indicated by the President in his statement the other day. He put it at the end of his statement and said that various suggestions had been put forward for the assistance of British shipping by the reservation of inter-Imperial trades, the preferential treatment of British ships or cargoes carried in British ships in Empire ports. He said these were all measures which had their own dangers, but they might have to be considered if the proposal he had outlined did not succeed in lessening the menace to the British Mercantile Marine. I do not think that should be an alternative to the subsidy. I think these measures should be put in force at the same time that the Government are giving the subsidy. I regard the carrying of cargoes between one Empire port and another as the right of the British Mercantile Marine, and I hope the Governments of the other parts of the Empire will agree with that view.

The question of keeping our British shipping doing something like its fair measure of the shrunken world trade needs emphasising from the labour point of view which is the only one I have put before the House. The President of the Board of Trade referred to the fact that the invisible exports represented by British shipping services are of enormous value in balancing the total. I look at it from the point of view of the officers and men who for weary months running into years have no employment or chance of employment. In the case of the men they are a burden to some extent on the State, no good to themselves; and the officers are in a deplorable condition, particularly the older men. But it has an economic aspect also. If you could put a reasonable proportion of these men to work again in British ships under our flag, thereby increasing the invisible exports and helping to balance our trade and to pay for the imports we want, you would be doing an immense service to the country as a whole.

I am sorry I had not the opportunity of saying these few words earlier, before the. President spoke, but I am sure my hon. Friend who is now on the Treasury Bench (Dr. Burgin) will make some reference to the employment aspect of the question when he comes to reply at the end of the Debate, and I want him to realise that this scrapping policy is considered by all the organisations representing the officers as offering no hope in terms of employment, which is the point of view from which they are bound to look at it, and they are opposed to it.

8.13 p.m.

Mr. STOREY

The President of the Board of Trade never misses an opportunity of emphasising the fact that more nonsense is talked about shipping and shipbuilding than anything else, but the President carries that belief too far. He has not confidence enough in his own opinions or the courage to produce his own plans. He does not give the country the lead for which it is entitled to ask. It was said, I think, of Queen Elizabeth that she would defer replying to the Commons as long as possible, and when it was no longer possible to defer, she would dismiss them with an answer—answerless. It may not be fair to compare this Government, that has given birth to many good things, with the Virgin Queen, but, in the matter of shipping, it is true that the Government has kept the House of Commons waiting and is now about to dismiss them with an answer—answerless.

We might have expected a scheme to be put immediately into force, instead of which we have one which will necessitate much further discussion. It is not only a matter which concerns the shipowners, and I am glad the President to-night emphasised that point. It concerns the officers and men of our Mercantile Marine; it concerns the workers in our docks and harbours; it concerns our shipbuilders, our ship repairers and marine engineers; it concerns workers in many subsidiary industries; it concerns too the whole population of this country.

The country depends upon a strong Mercantile Marine, and it is incumbent upon the Government to see that we have that strong Mercantile Marine. It is not enough for them to say, "We will do this if the shipowners will do that." We have a right to expect them to say, "We have studied this matter with the shipowners for seven months now, we have come to definite decisions, we feel that it is necessary to act, we propose to pass the necessary legislation before the House rises, and we shall expect the shipowners in the meantime to prepare the details which will enable the scheme to be put into immediate operation." It is on account of the lack of a promise of any immediate action that I deplore the statement that was made by the President of the Board of Trade last Tuesday. If he had foreshadowed action and not talk, then, although we might not have been satisfied that it was entirely adequate, we should have welcomed it as a step forward on the part of the Government, but, instead of action, we are to have further discussions, and we have only the offer of a subsidy, limited in amount, limited in time, and subject to conditions which must delay its coming into operation.

In December of last year the President of the Board of Trade told us that it was useless to bargain with other nations without weapons, and that unless we could bring home to aggressive countries the fact that we can hit and hit hard, we should make no progress at all. Yet what is the weapon that he offers to the country? Two million pounds, which, according to one for whose opinion he should have every respect, namely, his father, Lord Runciman, will not do much —a sum offered for one year only, and even within that period subject to withdrawal. Is such a weapon going to convince foreign countries and make them realise that we are determined to put our whole resources into building up once more an efficient Mercantile Marine in this country? If we had announced that our tariff would in no case exceed 10 per cent., and that it would in no case operate for more than one year, would foreign countries have shown any disposition to discuss trade agreements with us? Let the Government. act on the lesson which we have learned from tariffs; let them announce that they will make their subsidy adequate for the purpose; let them announce that they will continue it until we have achieved that purpose; and, above all, let them announce that their action is going to be immediate and not delayed until the House reassembles in the autumn.

Let the Government remember the position of those unemployed through the decline of our merchant shipping, the officers and men of the ships which are laid up at present, the shipyard workers, particularly those who specialise in the building of tramp vessels, who have faced unemployment, not for months, but for years. For nearly three years those men have looked to a National Government to save a national industry. For the last seven months they have been led to believe that the Government were preparing plans and that at any time they might expect an announcement of action; and what have they? An offer of a limited subsidy, if the shipowners will do this and the shipowners will do that, a subsidy which will convince no one that we mean business, an offer which is going to lead to further discussion and which, as the President of the Board of Trade has told us to-night, cannot lead to legislation before the autumn. But it is an offer which means worse than that. It means another winter of unemployment for men who have faced one year, two years, and even three years of unemployment, and even more, men whom action now would save from another winter of unemployment and give them a winter of work to regain their skill and their strength.

I appeal to the Government to formulate their plans at once, or at any rate to take, by legislation, the power to put such a scheme into immediate operation as soon as the details are worked out, and not to wait until the autumn before they pass the necessary legislation. It is with the knowledge of what another winter of unemployment means that I welcome the Government's offer of a scrapping and rebuilding scheme. I realise that the only real revival in shipbuilding must be based upon a prosperous shipping industry, and I feel that while that is materialising, we can do much by a scrapping and replacement policy such as has been suggested. If we do nothing, we still have to face the uneconomic payment of unemployment insurance and unemployment assistance, but if we use our credit, as has been suggested, to build a limited number of ships and to scrap a larger number of ships, then, although we are still doing something uneconomic, we are at any rate doing something to rehabilitate our shipbuilders, to train apprentices to take their places when the time comes, to lessen the laid-up tonnage and so the number of ships which are available for sale to foreigners to run in competition with our own; and we are doing something to re-equip our shipowners with vessels which they can run at lower costs.

Once again I say to the Government that their offer is not enough. Let them take power to put this scheme into force at the earliest possible moment, and, as the President has told us, there will not be wanting shipowners who will take advantage of it. I trust that the Government will reconsider this whole matter once more, that they will treat it as a matter of urgency, and arm themselves with the necessary powers before the House rises to pay subsidies as soon as the details can be got out, and to provide credit facilities for the scrapping and replacement policy, again as soon as the details can be worked out. Let them not wait until the autumn. If they do, it will delay the time when work will once more be found in our shipyards. If they will do what I have suggested, there will be plenty of time to discuss the details and all the other plans which are necessary, to discuss co-operation with our Dominions, how best we can help the liner interests in special circumstances, how we can deal with the special problems of the coastal trade and of the competition of small motor vessels run by family crews, and how we can, by trade agreements, increase the trade of the world and the share of the trade of the world which comes to British ships, as we did in the Russian Agreement. I press upon the Government that they should not lose precious months during which the tramp shipping of this country is losing its grasp on the trade of the world and hope is growing less and less in the tramp shipyards of the country.

8.25 p.m.

Vice-Admiral TAYLOR

The President of the Board of Trade during his speech more than once stressed the importance of the foreign subsidy as a cause of the very lamentable position in which our shipping industry finds itself to-day. In the Government proposals there is one to give a part of the shipping industry—the tramp steamers—a subsidy of £2,000,000 under certain conditions. There is also to be a "scrap and build" policy. If the President of the Board of Trade is right, and the subsidy is an important factor underlying the depression of the shipbuilding industry, then surely he should take adequate measures to combat the foreign subsidy in all sections of the shipping industry which is affected by it. He is not doing so. He is applying the subsidy simply and solely to the tramp steamers. Does the right hon. Gentleman suggest that the cargo liner is not in the main dependent upon its cargo for its prosperity? I do not know if the Parliamentary Secretary can answer me. I should be glad to know now if he can answer that question.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin)

The hon. and gallant Member puts me a question. I should far prefer to reply to the whole of his points at the end of the Debate rather than select one and give an answer now.

Vice-Admiral TAYLOR

I accept that at once. My point is that it is not merely the tramp steamer which is affected by the foreign subsidy, but also the cargo liner and the liner itself. I agree that the liners in the conferences to which they belong have means of meeting the position which tramp steamers have not, and that that may also refer to the cargo liner, but there is no doubt that the foreign subsidy is affecting the cargo liners, which in volume are more than the tramps steamers, just as it is affecting the tramp steamers.

Why do not the Government carry out a full policy of protection for the shipping industry as they did for other industries of the country? The President of the Board of Trade did not hesitate, when it was desired to stop the flow of imports into this country, to put on a high tariff, and it had its effect. Immediately that tariff was imposed all the foreigners who had paid no attention to us came one after the other begging for trade agreements. That was a direct result of our tariff policy and of that alone. Immediately we adopted the tariff weapon against the foreigner he sat up and took notice and came to trade agreements with us as a direct result of the tariff. I am certain that the foreigner with his subsidised shipping will pay no attention to us until we go to a conference with him armed with the subsidy weapon. How will new ships and the latest up-to-date ships enable the British shipowner to compete against the foreigner if the foreigner still has the subsidy at his back? How is the new ship going to enable the British shipowner to lower his freight as against the foreigner with his subsidy? If the greatest efficiency which we can put into our shipping industry will not enable the British shipowner to reduce his freight charge, then of what use is the actual building of these new ships to meet the present situation, which is chiefly caused by the foreign subsidy? I hope the Government will take far greater power with regard to this shipping subsidy and apply it not only to the tramp steamer but to all sections of shipping that require it.

I am entirely opposed to the scrap and build policy. There is no question that we depend upon our mercantile marine for our existence. It provides employment not only in the ships but in coal, iron and steel and many subsidiary industries. It is an immense asset to the Chancellor of the Exchequer in bringing in an enormous amount of revenue to the country. It is also in time of war absolutely essential to us. If in time of war we have not a sufficient number of ships we cannot possibly continue our national existence. Both the Merchant Service and His Majesty's Navy are a form of national insurance, and we cannot neglect either. To-day, however, one is on the edge of risk and the other is on the edge of bankruptcy. That is the position of His Majesty's Navy and the Mercantile Marine on which we depend entirely for our existence. Now the Government propose to have a scrap and build policy, and the Minister points out that it will be of great benefit to the shipping industry. Of course it will in the first instance, for when the orders are given to build ships it will give employment; but it is not the slightest use building ships unless when they are built they will be employed. Unless the Government bring in other legislation than a mere scrap and build policy for protecting the shipping industry, the ships when built will not be an asset, because they will not be used as they will be unable to compete with the lower freights of foreign Powers.

Under this policy we are to scrap three ships and build one. I would remind the House that in 1914 this country owned 40 per cent. of the total ocean-going ships of 3,000 tons and over. I think the amount was 14,500,000 tons, including 500,000 tons of tankers. It was that number of ships, not new ships, which saved this country and the world. Without that number of ships we could never have weathered the storm or have been able to sustain the loss of 17 or 18 ships which were sunk by submarines every week and still have continued to supply our needs. It was numbers alone that saved this country. I am very concerned with this point. If the Government pursue this policy of scrapping three ships for one built, then we may, from the point of view of the numbers required for the needs of this country and the Empire fall below the limit. There is a low limit as regards the number of ships required for the Mercantile Marine, just as there is a low limit to the number of ships indispensable to His Majesty's Navy. The one service is useless without the other, and I hope the Government will seriously consider this aspect of the case. It is true that there is an over-abundance of shipping tonnage in the world, but I would warn the Government against giving way to the foreigner in conferences and scrapping British tonnage to the extent of falling below that necessary limit, so that if unfortunately war should break out we should find ourselves in a position where we could no longer bring to these shores the food and raw materials on which our existence depends, nor transport to any part of the world where they might be required the troops necessary for the defence of our Empire. It is for that reason in particular that I dislike this scrap and build policy.

Further, what do the Government propose to do to help the enormous number of officers and men who will be thrown out of work by this scrapping policy? It is the stated policy to reduce the number of ships at sea, and that must throw officers and men out of work. In no other calling has the personnel been harder hit. The officer class do not come under national insurance, and there is no possibility of their getting work ashore, and many officers have had to go to sea before the mast. Their position ought to be viewed with the greatest sympathy, as I am sure it is by the Government and the House, and I ask the Government what they propose to do about it. Then there is the question of the Dominions. The Minister told us that it was absolutely essential that we should come to an agreement with the Dominions. I can only regret that the Government ruled out shipping as not a matter for discussion at the Ottawa Conference. Why was it ruled out in view of the immense importance of a maritime shipping policy? The only result was that time has been wasted. Now we are to get into communications with the Dominions. Why now, and not at the Ottawa Conference? It is deplorable that so much valuable time has been wasted. It will not be enough merely to keep in touch with the Dominions in order to tell them what we are doing and ask what they propose to do. We really ought to have a conference with them on this subject. It is only by co-operation and by agreement with the Dominions that we can do so much to employ Imperial ships for Imperial trade and Imperial crews in Imperial ships.

I hope the Government will pay attention to the necessity of employing more British crews in British ships. Nothing has been laid down about that in connection with this subsidy. One of the stipulations ought to be that British crews should be employed in the ships which are to benefit under the subsidy. I hope the Government will come to a decision on this matter very quickly. The subsidy is to be dependent upon the shipowners coming to an agreement among themselves, that is quite right, but also, as I understand it, they have to come to some agreement with the foreigner. I say that because in the statement made by the Minister in the House recently he said: It would also be a condition that the shipowners, through their international organisations and in any other ways open to them, press upon the shipowners in other maritime countries the framing of proposals tending to adjust the supply of tonnage in the world to the demand, and thus to raise freight rates once more to a remunerative level."—[OFFICIAL REPORT, 3rd July, 1934; col. 1725, Vol. 291.] That is the reason why I said some agreement by the shipowners with the foreigner was a condition of obtaining the subsidy. I notice that the Parliamentary Secretary shakes his head, and I am glad to know that that is not the case. Either the President of the Board of Trade did not mean that, or else the statement is worded in such a way that I have misunderstood it. I shall be glad of an explanation on that point. At any rate, I am glad to know that it is not so, because what chance would our shipowners, not armed with any subsidy, have of coming to an agreement with foreigners with the great advantage of a Government subsidy behind them? This Debate will do much good, and I think the Committee ought to be grateful to the Opposition for having enabled us to have this Debate now instead of later on, after the Recess. We are grateful to the hon. and learned Member for East Bristol (Sir S. Cripps) in that respect, although I totally disagree with his point of view in this matter. I beg of the Government to extend this question of the subsidy so as to have a real weapon with which to fight the foreigner, so that it may not go down to history that the National Government were afraid to take those measures which were necessary to ensure that this country should continue to be, as she has been in the past, the greatest seafaring country in the world.

8.43 p.m.

Sir LUKE THOMPSON

I have been placed at a great disadvantage during this Debate, because owing to pressure of work upstairs I was not able to get into the House until after 6 o'clock, and therefore I was not able to hear all the speeches. At the same time I have appreciated very much those which I have heard, and particularly that of the President of the Board of Trade. He has made a most important statement to-day, of great practical value to the shipping and shipbuilding industry, with which I have been associated all my life. I feel a special interest in this Debate for the reason that some seven or eight years ago I was privileged to draw up a memorandum for a very important Committee in this House which presented the views of a certain section of us on the possibility of scrapping redundant ships in this country. That memorandum met with a varied reception, even as this scheme has had a varied reception to-day, but I am one of those who are pleased with the Government for taking a clear line of action, and I shall not be hypercritical over the question of whether it will be delayed for some little time or not. I am intervening for one specific purpose. I have been asked by the British coasting and near sea trades to voice their views on this question. I am encouraged to do so because the President of the Board of Trade said in his able speech the Government wanted the co-operation of all shipowners. For that reason I wish to lay the views of this important section of shipowners before my hon. Friend the Parliamentary Secretary. I was going to say that I have him all to myself, for the House is rather depleted, but I hope that I shall catch his ear and get some response from him to what I put before him. The first point is based on a few lines in the statement made in this House on 3rd July by the President of the Board of Trade. He said: The position of the coasting and near sea trades raises considerations somewhat different from those applying to ocean-going shipping and no special measures in respect of those trades are proposed at present."—[OFFICIAL REPORT, 3rd July, 1934; col. 1724, Vol. 291.] The President of the Board of Trade has repeated that this afternoon. The trades which I am representing entirely agree that there is a complete difference between the position of passenger and cargo liners and tankers, and that there is a close connection between near sea and overseas shipping. As a matter of fact in some instances the latter can scarcely be separated, being analogous in their requirements and in their trade in every respect. That is the point to which I wish to draw the attention of the Parliamentary Secretary to the Board of Trade.

I do not intend to burden the House with figures, but the President of the Board of Trade raised a certain issue, and I want to put a point of view to him. The number a vessels engaged only in the coasting trade in both coasting and home trades, and possibly other vessels which cannot be strictly embraced within these figures, is 1,147, with a gross tonnage of 738,835. With very great generosity I am going to allow a deduction from the figures which I have given for colliers, coasting tankers and other coasting vessels, but there remains considerable tonnage sailing between home ports and the Continent, the Baltic, the Bay and the near Mediterranean ports. I know that the Parliamentary Secretary has this information. I believe it has been placed very completely before him by the Coasting Trades Association, and it is unnecessary for me, bearing that in mind, to elaborate the point. I want to ask him a specific question. The President of the Board of Trade said that it was difficult to define tramp shipping. Remembering what the President of the Board of Trade said about vessels carrying tramp cargoes under tramp conditions."—[0Frician REPORT, 3rd July, 1934; col. 1724, Vol. 291.] I am full of hope that the Government will extend the subsidy to all tramp ships whether in near seas or overseas. If it be possible to embrace them within the subsidy proposals of the Government, it will make a very great difference to the tramp steamers and will be a real concession to those who are interested in that type of steamer. My second point is relative purely to the coasting vessels which are in competition. I am encouraged by the statement made by the President of the Board of Trade in which he said that when there was an increased invasion of foreigners in this special trade, definite action by the Government would be called for. I remember introducing to the President of the Board of Trade about two and a-half or three years ago a deputation representing coastal shipowners and traders. The position was a little uncertain then, but I think I am right in saying that an agreement has been reached in regard to the United Kingdom coasting trade, at least in respect of a certain section representing about 13 per cent. which is suffering from the invasion of foreign owners. I have just been placed in possession of the fact that in the first three months of 1932 the returns respecting foreign tonnage in the United Kingdom coasting trade showed 38,660 net tons. The corresponding figure for 1933 was 52,161 and for 1934 it was 75,972. That shows that there is a continuous invasion of foreigners into our coastal trade, and I suggest that the Government must take careful cognisance of that fact.

Whatever may be the percentages of foreign competition in the United Kingdom coasting trade at any given time, it is of paramount importance that we should remember that the low rate of freight accepted by the foreigner establishes a rate for the particular trade for some time to come. Freights in the coasting tramp trade to-day are as low as, and in many cases lower than, they were in 1913, while British wages in the coasting trade are from 40 to 50 per cent. higher, stores are 10 per cent. higher, repairs are 30 per cent. higher, and port charges are from 50 to 60 per cent. higher. I think that the Parliamentary Secretary will appreciate those figures, which I believe have been supplied to him. I will only add that, although there are to be no special measures, I am glad that the door is not closed by the Government to this section of the British in-shipping industry, because the problem of the coaster is as real and the financial necessities are as urgent as in any other branch of the trade.

A memorandum from the Chamber of Shipping has been placed in my hands this afternoon. There was a meeting of the chamber to-day, and a resolution was passed unanimously. It is the first time that such a resolution has been agreed to, and it contains in a few lines practically all that I have been wishing to say within the last 10 minutes. The resolution reads as follows: That this meeting of the whole Coasting and Home Trade Tramp Section, having considered the statement of the President of the Board of Trade, trust that the coasting trade is to receive consideration for special measures at some early date. In the meantime, they urge that the coasting trade should be included in the subsidy scheme, and further that vessels engaged on international tramp voyages in the near sea trades should not be excluded from the Government subsidy. The section feel that with Government financial assistance it might be practicable to formulate a scheme for the organisation inter se of British owners engaged in these trades, and would be prepared to appoint a committee for that purpose. That is a very important unanimous statement. I hope that, when the Parliamentary Secretary replies, he will have something to say about the two points to which I have referred.

8.55 p.m.

Sir JOHN SANDEMAN ALLEN

I would like to add my word to what has been said by my hon. Friend the Member for Sunderland (Sir L. Thompson). We have had a very encouraging and firm statement by the President of the Board of Trade, and we have had a word of warning about the coasting trade; and, while I strongly support the plea that has been put forward, I feel that it can only be supported in so far as it affects those ships which are suffering from subsidised foreign competition. It is absurd for anyone to suggest that the railways of this country could in any way be drawn into competition in that connection. I grant that certain treatment and protection has been given to the coasting trade in more ways than one, but that does not touch the other question which has been brought forward to-night—the question of competition by foreigners who are being supported by funds supplied by their Governments; and, if and so far as that is found to be the case, I trust, and I feel confident, that the Board of Trade will include that question in any measures that they bring forward.

We are much indebted to the Opposition for bringing this matter forward today. It is, as we all know, a burning question in the country. Everyone takes the deepest interest in the maintenance and progress of the British mercantile marine, and I think it is very important that we should carefully think over what has been said to us, not only to-day but in the previous statement of the President of the Board of Trade. I am not a shipowner myself, but for the last 10 years I have, as a public man, been engaged internationally, on behalf of shipowners and others, in fighting subsidies in the International Chamber of Commerce. Less than two years ago, in Paris, we had a remarkable meeting of representatives of some 10 countries, under the chairmanship of Dr. Cuno, ex-Chancellor of Germany, who, unfortunately, died some 18 months ago, and we came to the following agreement about scrapping: That this Committee of the International Chamber of Commerce representing tramp and liner shipowners in 10 of the principal maritime countries, having considered the position of the shipping industry throughout the world,…note that steps for scrapping and/or laying-up tonnage have been taken in some countries, and urge that measures suited to the circumstances of each country, but designed effectively to secure a similar end, should be adopted in all other maritime countries with the least possible delay in consulting one another. Such measures will, however, be rendered useless if Governments continue to increase and/or maintain the surplus of tonnage by artificially stimulating the building of or by maintaining in commission by State aid ships which cannot otherwise be run at a profit. The shipping industry, therefore, looks to the nations by mutual agreement to put a stop to such artificial measures of assistance. That was a very admirable agreement, but, when it came to be put into practice, it failed, and that is why I feel that we ought strongly to support the points made in the admirable speech of the hon. Member for Paisley (Mr. Maclay), in which he expressed the hope that the Government would take the strongest possible measures to obtain international agreement on this very important subject. The primary essential need is agreement between the various elements of the shipowning community, for without that the Government cannot go very far, but one is very much encouraged to realise that up to a point they have accepted the proposal of the Government. The Government have brought forward a scheme for a subsidy. It is described as a defensive subsidy, but I think we all agree that, if we are to fight subsidies at all, we must have a fighting subsidy. It is only a question of terms, and, perhaps, of a certain amount of delicacy as regards the expression used. If we are to have a subsidy for the purpose of reducing other subsidies, it must, be a fighting subsidy. It is essential that we should be armed with that power, and that our Government and our shipowners, when they go into an international conference, should be in a position to let the other parties know that, if the conference fails, there is a weapon which is going to be used.

The extent of the weapon and how long it will last is another question. I think there has been some danger of exaggeration in this matter. This, I take it, is a temporary Measure to save a certain number of those in the industry who are liable to collapse entirely unless something is done promptly to save them. This, therefore, is a temporary subsidy, and, while it is a fighting subsidy, it is also a defensive subsidy, for it is really to save those people from going out. Therefore, we must all be prepared to support it, and be very thankful that the Government have seen their way to afford this assistance. As the President of the Board of Trade indicated, it is only a temporary Measure while we are facing the broad issues.

I was interested to note that the right hon. Gentleman the Member for Darwen (Sir H. Samuel), while he was referring to subsidies, referred to America, and said that in considering subsidies one had to bear in mind why they were given and the comparative value of each. I do not think he realised the very interesting case in the Imperial connection, referred to by the President of the Board of Trade, of shipping subsidies in connection with the liner trade between Australia, New Zealand and America. The argument of the right hon. Gentleman will not apply in that case, because, as a matter of fact, the wages which liners' crews get under the Australian and New Zealand authorities are somewhat higher than those which the Americans have to pay, so there can be no argument that the subsidy is given in order to compensate for the higher working expenses of the shipowner. We are all pleased that the President of the Board of Trade and the Government are facing the situation as regards the attack on our Empire routes. Some of us who have recently been out in the Empire have realised how serious is that attack on certain routes the trade of which has been built up entirely by British shipowners.

My hon. and gallant Friend the Member for South Portsmouth (Sir H. Cayzer) made a very important point when he said that it was possible for British business men and others to do a good deal more in the way of helping to select the flag under which the goods which they buy shall be carried. The Government can, and I am sure they will, do their best to bear that point in mind. In the Russian Agreement a particular point was made that a certain percentage of the goods should be carried in British ships, and I hope that the Government will try by some means or other in the various trade agreements to do something in that direction.

On the other hand, we have to remember that there is a danger of reaction, of which we must be careful. When people talk lightly of shutting down this, and not allowing that to come in, they forget that, while we only contribute something like 15 per cent. of the world's trade, we carry from 45 to 48 per cent. of it, and, therefore, we are extraordinarily vulnerable on the question of the carriage of world trade, so that, whatever we may do, any retaliation against us may be much more serious. It does not do to talk, as some people do, about putting a special tax on goods carried by subsidising nations. We do not want to discriminate more than we can help, and therefore the line that the Government is taking seems to me the right one. The Empire routes are a vital chain of communication which have to be protected and maintained. There the right hon. Gentleman is, rightly and properly, consulting with the Dominions. In other matters we have to bear in mind that we have in our Board of Trade a Government Department Which sees all these questions. They ail centre there, and those who can view the whole issue see the complications and the dangers much more clearly.

We are very delighted to know that the Government are taking firm measures and, in fairness to them, let us remember that these troubles have been gradually coming upon us. We had not the same difficulties three years ago. We are in the midst of world convulsions and the terrible state of world trade, and we have to face for the moment special circumstances. I am sure the House and the country will consider that the Government are facing those circumstances well and, after what the President of the Board of Trade said in his broad-minded speech, which shows that the country is determined to face its difficulties and not allow that most valuable asset, the British Mercantile Marine, to be destroyed by unfair or improper methods or by the attack of other nations, and at the same time to allow proper natural development in the right direction, we are all very grateful to him.

9.7 p.m.

Mr. McENTEE

I have no interest in shipping except that of a member of a community who has worked in ships both at sea and in docks. At the same time I was interested in a speech by the hon. Member for Barrow-in-Furness (Sir J. Walker-Smith) on housing when he told the Government—and he gave a great number of figures in proof of it—that the best thing they could do for industry—the building or any other industry—was to let it alone. Industry was perfectly competent to settle its own troubles if it were only let alone. On every day that the House has been sitting since then, and for many days before, we have been discussing one form of subsidy or another, and scarcely a day passes when we have not some form of subsidy either under discussion or playing a very prominent part at question time. It is obvious that the Government are determined to go on with the policy. We are subsidising almost every industry. It appears to me to prove that all the industries under private control are not able to do what the hon. Member for Barrow-in-Furness told the Government they could do, that is to manage their own affairs without inter- ference or help from the Government, because practically every one of the great industries is to-day receiving, or seeking to receive, some form of subsidy. An hon. and gallant Gentleman told us that the scrapping of any of our existing ships was going to be a danger in time of war. The hon. Gentleman who spoke last told us that this subsidy is not in any sense a fighting subsidy. It may be up to a point a protective subsidy, but it cannot be said to be a fighting subsidy.

Sir J. SANDEMAN ALLEN

I said it was a fighting subsidy, and it was a good thing to have one, but it might at the same time be considered to be a defensive subsidy owing to the fact that without it certain 'shipping companies would drop out altogether.

Mr. McENTEE

It has been stated earlier that, because of the smallness of the amount, it was not in any sense an effective fighting subsidy against the subsidies employed by foreigners. Probably everyone will agree that, if we are in this thing just as a fight with foreigners, a subsidy for one year only cannot be considered an effective fighting subsidy. I think it is highly probable that at the end of the year we shall be called upon to extend it both in amount and for a longer time. It must be apparent to everyone that, if the foreigners who are now beating us by low freights find that in a year they will be back in the position they are in to-day, they can afford to wait that year, and possibly increase their subsidies to enable their shipping to stand out until they get back to the favourable competitive conditions under which they are operating to-day.

I should like to ask the Government what they intend to do during the year and at the end of the year. An inquiry is to be held. What is to be the purpose of it? Is it just to find out how much subsidy will be required by that section of merchant shipping that we are considering if we are effectively to compete with the foreigner? If that is to be the nature of the inquiry it appears to me that we must continue our subsidy for a very much longer period than is contemplated at present. I do not think anyone will say that that is going to be an effective policy. All the years that I have been in adult life I can remember the arguments that have been put forward —I think the President of the Board of Trade has used them on many occasions —about the competition of low wages in other countries. We who were working in industry were told that we had to get down to a basis of wages which would enable us to compete with the foreigner, whose wages were very much lower than our own. I can see in this subsidy war that we shall have to get down to a rate of freights which will enable us to compete with the foreigner. We can do it either by national subsidy, in other words employing public money for private interests, or we can do it by reducing the costs of our own ships. I can sense a movement in the shipping industry to reduce wages still further. I can imagine the workers in that industry being told that if we are to compete with the foreigner and get back the trade which we enjoyed in the past, the only way to do it is not only to reduce freights, but to reduce wages to a level approximating to the level of the wages paid to the foreigners with whom we are in competition at the present time. We are apparently to have a war of freights, and on the top of it probably a war of wages. Does anybody imagine that such 11 policy will be effective in maintaining shipping in this country or in any other country?

The so called policy of a fighting subsidy reminds me of what we hear sometimes in regard to armaments. We are told that the increase of armaments is really not for fighting purposes but for defensive purposes and for protection against the foreigner. The foreigner is always the person who is going to attack us. The foreigner's wages are low, aria therefore, it is said that we should reduce wages. The foreigner's freights are low, and, therefore, it is said that we must reduce our freights, and the foreigner's armaments are high, and, therefore, we should increase our armaments. And so a competitive struggle goes on in which the Government apparently are willing to play a part, as in this case, on behalf of private property and private industry. If the nation is to pay subsidies to shipping and to other industries, is it not logical to argue that the nation should have some measure of control in accordance with the amount of subsidy given a particular industry? If anybody goes to the City and asks any of the finance companies or banks to put money into an industry or to loan money to tan industry, those concerns insist on being assured of a measure of control enabling them to determine how the industry should be run, and to ensure that they receive a guarantee in respect of the money they put into the industry. Apparently the policy of the Government is to shovel out public money for the benefit of industries, most of which appear to have failed and, having failed, to have secured public money through the Government, and no measure of control whatever is to be exercised over those industries.

I have heard speeches in this Parliament and in other Parliaments, and particularly in this Parliament, from hon. and right hon. Gentlemen standing at the Dispatch Box opposite telling us about the plight of one industry after another. Pretty well all the branches of the farming industry, the steel industry, the coal industry, the engineering industry and the cotton industry, are in such a plight in consequence of private management and control that they are all appealing to the nation to get them out of their difficulties by shovelling out public money to them. We never hear it called a dole except when it is handed out to some of the victims of the mismanagement of private industry. When the working classes who have no measure of control of industry or of management are the victims of mismanagement and are out of work and suffering in consequence, any public money which is given to them is described as a dole! They are almost told that it is criminal for them to receive it, and they are subjected to all kinds of harshness before they are allowed to receive it, to means tests and other kinds of tests which are as degrading as it is possible to make them in order to prevent them, if possible, from asking for anything in the nature of financial assistance. When the shipping industry or any other industry comes along no means test is applied and very little inquiry is made. When it comes to distribution it is not a question even of whether they are in need of the money or not. When a subsidy is given it goes to the prosperous companies as well as to those that are lacking in prosperity.

If an industry be essential to the public well-being of this country, and if through no fault of its own it is in a bad condition, I can understand the Government coming along and saying that it is essential, in the interests of the nation, that such an industry should be maintained. I can understand them saying, after inquiry, "This industry is not responsible for its position and, therefore, we are prepared, because it is essential to the well-being of the nation, to come to its assistance and to make a grant in subsidy form or in some other form." Even then it should be the duty of the Government, having made a grant to the industry, to secure some measure of control in order to see that the organisation of the industry is perfected or brought into a better condition so that public money should not be wasted. Apparently no such thing is being done. I remember the right hon. Gentleman the Member for Epping (Mr. Churchill)—I do not know whether one would say that it was in his regenerate or unregenerate days—when he was a Member of another party speak of the Conservative party as shovelling out public money by the bucketful. To-day the National Government are shovelling out public money not by the bucketful, but by the barrowful and no control of the money is undertaken at all. I agree that a section of the shipping industry is in a very bad way and that unemployment is very terrible indeed. The number of ships is to be reduced. Will that help employment by bringing more men into employment? I cannot see how that can occur if the number of ships is reduced. Although many of the ships may be in the position of having only a caretaker or a few men on board in order to keep them clean, if those ships are scrapped even the caretakers will be thrown out of jobs. I do not think that there is a likelihood of a very large increase of employment as a consequence of the policy of the Government in that direction.

If we subsidise British ships we ought at least to see that British crews are employed or that a larger number of British officers and sailors are employed on those ships than is the case at the present time. If public money is given to the industry there ought to be a measure of public control, and one of the steps in that direction would be the giving of employment to many who are out of work by increasing the number of British officers and sailors employed in subsidised ships. I do not see why we should not, even go further than that and insist that some of the industries which we are also subsidising should make more use of British shipping than they are doing at the present time. Why should we allow other subsidised industries to get away without some sort of repayment to the nation in respect of the subsidies that they are receiving? If they receive subsidies, and a subsidy is to be given to shipping, there should be an increase in the amount of goods carried in British ships.

Above all, I want to protest against the continued outpouring of public money without any measure of public control. The Government will have a day of reckoning on this very soon. The public are getting tired of reading about subsidies to this industry and that, about public money being poured into one industry after another, with nothing at all in return for those who pay for it. After all the speeches in the defence of subsidies, after the experience of a few months that we have had, Government spokesmen have not been able to prove that subsidies have produced a remunerative return for the nation. I desire to make my protest against public money being handed out without real measure of public control.

9.26 p.m.

Sir CHARLES BARRIE

No matter how important an industry or a discussion, there comes a time when nearly everything that can be said in favour of a Motion has been said. That is practically the position to-night, but I believe that I have been given the first opportunity of speaking on behalf of the shipping community since the speech of the President of the Board of Trade. The shipping community was relieved when it heard what he had to say last week and the proposals of relief. That relief has now been assisted further by what the right hon. Gentleman had to say to-day. In spite of the fact that in some quarters of the shipping community the proposals which he brought before the House last week are not received altogether with unanimity, I am one of those who, speaking on behalf of the shipping community, have to thank the President of the Board of Trade in no uncertain way for the manner in which he has brought his proposals before the country in order to help us.

I said that the shipping community was relieved to hear what the President had to say. I think the country also heard with relief that the Government were to implement promises made by Ministers from time to time in the last six months, that they would see that the existence of the British Mercantile Marine was not imperilled. I purposely use the word "existence," for, in spite of the fact that the suggestion has been made that shipowners may make a profit out of the subsidy, I would point out that so far as the shipowner is concerned no profit can be made out of this. The shipowners look on the subsidy only as a means to an end. Shipowners are against the subsidy, and only accept it in order to keep the industry going until other arrangements can be made with foreign countries to get rid of subsidies altogether.

Britain must realise that she cannot possibly expect to keep the proportion of shipping which she has had. Before the War Britain had 41.6 per cent. of the shipping in the world: to-day it has only 27.39 per cent. That is far too big a drop, inasmuch as the world tonnage before the War was 45,000,000, and today it is 66,000,000, and of that proportion Britain has reduced the amount she had before the War by 6.7 per cent., while the tonnage of other countries is up by 41.7 per cent. This subsidy is looked upon by shipowners as a means to an end, that is, to get rid of all the subsidies that foreign Governments are bestowing on the shipping industry, and to try to get back to normal trading conditions. Another feature of the policy which we have been forced to adopt in order to protect ourselves, is that we have had to apply quotas and other means of protection for our agricultural and other industries. The former Minister of Agriculture introduced the first of these Acts, the Agricultural Imports Act. I then said that I had the fullest intention of supporting the Measure, but undoubtedly if more people were put on the land, there would be less work for the sailors and fewer people discharging cargoes from the Continent in the ports of the country.

That has undoubtedly turned out to be the case. One line for which I am responsible has, during the last two years, had a drop in trade by half—£400,000—while another line to the Baltic, primarily interested in the carriage of produce, has fallen materially. I think that the President of the Board of Trade has taken the proper action in this matter so far as Continental countries are concerned, and that in agreements made with these people he is taking care that British shipping is looked after. I congratulate the President upon the stand that he has taken for this country's shipping. The growing of sugar in this country has meant a loss of £400,000 to shipowners, and the beef quotas £750,000. The shipping industry need not plead in a white sheet, because I think it is entitled to this. Other industries are being assisted to its detriment, and it should get assistance at the same time.

The question so far as this country is concerned is very simple. Do we wish to have a Mercantile Marine or not? If we wish to have a Mercantile Marine, it is possible to take a step such as this or achieve international agreement—which, to my mind, is far better—to maintain the Mercantile Marine. In saying that it is essential that we should have a Mercantile Marine, I know that I not only carry the House with me but the whole country. Among the other conditions the Government have laid down is that there shall be a framing of proposals tending to adjust the supply of tonnage to modern demand. The shipowner is constantly doing that, but the Government failed at the World Economic Conference to see alike with us, and therefore the whole force of the Government has got to be behind the shipowner in his endeavours to bring about a happier state of affairs so far as foreign subsidies are concerned. Another feature of the proposals, which I fear will minimise their full force, is their effect on the mind of the foreigner. The subsidy is only for one year. I hope the President of the Board of Trade, much as I dislike it personally, will be able to tell the House that if one year's subsidy is not sufficient, it may be possible to consider a subsidy for a further period, not with a view to subsidising the industry in the full measure of that word, but as a means to an end.

There are two other points to which I desire to direct attention. The first is in connection with the coasting trade. I appreciate what the President meant when he referred to this subject. I think it will be well for those in the coasting trade, and I am one, if we take this matter quietly. The President of the Board of Trade rightly said that the coasting trade is more allied with the railways and roads than other sections of the ship- ping industry, but there is one section which might well be assisted, and that is the small coasters who are attacked by small Dutch vessels. A small surtax on the-Le vessels might possibly have the effect of counteracting the cheaper conditions under which they are run. The second point is that with coasters vessels in the near seas trade have been included. The subsidy is to be given to vessels working under tramp conditions, and I consider that vessels taking coals from the Tyne to Brest are entitled to as much consideration as a vessel taking coal from the Tyne to Gibraltar. The Government would do well to consider the possibility of including such voyages in any arrangements they may make.

I come to my last point, the question of scrapping and building. Shipowners have been by no means unanimous on this subject. I was possibly the first member to raise this matter in the House, and I must say that the more I think about it the more I think it is a good scheme, and I am glad that the Government are considering the subject in connection with these proposals. I think that some of my shipowning friends have got hold of the wrong end of the stick. The Government are not forcing it upon them. They are offering them a. substantial subsidy in the form of £2,000,000, and they say, "Here is something extra which you can get if you choose." It is not being forced upon them. The hon. and gallant Member for Barkston Ash (Colonel Ropner) said that, shipowners were unanimous with the exception of a few, against the proposal. Not long ago I met an important shipowner in the Lobby and he said that we should not attack this scheme as he considered it a very valuable adjunct of the proposals made by the Government. One can only judge these matters by their own experience. Last year I added to our fleet a new vessel, and it may interest the House to know, when we hear so much about new vessels not being so economical as to make it worth while for owners to build, that our experience so far is that the new vessel makes exactly 6 per cent. on her cost as a, result of the savings we are able to make in coal consumption, speed and the new appliances used for loading and discharging cargo. I am sure that if any shipowner thought the matter out fully he would come to the conclusion that the suggestion made by the Government will turn out to be very valuable.

The Government, undoubtedly, have in view assisting shipbuilding areas when they are assisting shipowners. And why not? Shipbuilding and shipowning is one industry, and the Government are right, considering the distress there is in shipbuilding areas, to try and do something to relieve these areas. They have done well in introducing these practical proposals. But there is one feature which I suggest they might well reconsider. I take it that the proposal to scrap three tons for one is only to apply to tramp steamers. I suggest that it would be well not to limit the type of vessel to which they will grant a subsidy for building. There are many fleets which own both passenger and cargo steamers, and it would be unfortunate if one fleet owning two tons of tramp tonnage and one ton of passenger tonnage was not able to include that vessel amongst the others which they intended to scrap and thus qualify for the building subsidy. The same applies to the coasting trade. There are many coasting fleets which would be glad to scrap three of their older vessels and build one new one, as it would help them to fight the competition of the foreigner. Again, if India or any of the Colonies wished to take advantage of this scheme, would it not be a good thing to encourage them also to scrap their old vessels and build new ones instead?

I feel that the Government have done the country a great service in bringing forward these proposals. I have not said so before, but I happened to be one of the Tramp Committee and I can probably speak better on their behalf than anyone else, because, as far as I am concerned, I shall not get one penny advantage out of the proposals. I do not own tramp steamers, my vessels are entirely engaged in passenger or cargo liner service, and I do not get any advantage so far as the £2,000,000 subsidy is concerned. The Board of Trade have come to the aid of a sorely tried industry, an industry which requires assistance in order to keep going. It is one of the most distressing things to see the number of sailors, officers and engineers, who have to walk the streets looking for work, and it would be one of the chief joys of a shipowner to be able to go round and re-engage these men. The scheme means getting many of these men at work again and flying the British flag over many other British vessels. The Government will not do a better thing than they have done in bringing forward these proposals, which I hope will meet with the entire approval of the House and the country.

9.39 p.m.

Sir FREDERICK MILLS

I rise in order to ask the President of the Board of Trade if he has thoroughly exhausted the inquiry as to whether it would be well to re-impose the Navigation Laws. On the 3rd of July the right hon. Gentleman dealt rather sketchily with this subject, and it occurred to me that general principles might be applied to the shipping industry as they were to the steel industry, with which we dealt some time ago. I happen to come from a shipping family. For 200 years my family built ships in Devonshire and afterwards in the North. I myself was brought up as a shipbuilder and I have some knowledge of the subject. In the discussions on steel the question of a subsidy was rejected, and the industry was dealt with on general principles, namely, those of providing and keeping the ring and allowing the industry to operate in its own way within that ring. I have a suspicion that Cromwell nearly 300 years ago was probably right when he, or those associated with him, imposed the Navigation Laws, which were only abrogated 200 years later in that mid-century madness that occurred after the introduction of Free Trade into this country. I certainly believe that the subject is worthy of very careful consideration, and I am tempted to ask the question because I think the President of the Board of Trade last Tuesday had already given this subject considerable attention. I only rise, therefore, with a view to asking the Parliamentary Secretary if the Government had thoroughly exhausted that aspect of the subject. If so, and if general principles will deal with this matter, it would be an end of subsidies and of a great many of the other considerations which have been agitating the House this afternoon, and the matter could lee dealt with in a very simple way.

9.43 p.m.

Lieut.-Colonel SANDEMAN ALLEN

There is one point I wish to raise and that is the question of the officers of the mercantile marine. I do hope that the President of the Board of Trade will consult with the Mercantile Marine Service Association or the Officers' Association with a view to seeing that the officers get as much employment as possible. At present one-third of the mercantile marine officers of the country are unemployed. If there is a scrapping and building policy and one steamer is to take the place of three the likelihood of the employment of those officers will diminish. When employed their salaries are such that they do not come within the scope of the insurance scheme, and when they become unemployed they have a very hard time keeping their end up until they can get another job. The question of the crews was dealt with by the hon, Member for West Walthamstow (Mr. McEntee), but I do most earnestly ask the President of the Board of Trade to consult with the associations dealing with the employment of officers, because now he has an opportunity to see that they get the best possible deal. The pay they get is not the same as under a great many other flags, and the matter is of vital importance, because ships cannot be run without trained officers. There are many other things that I would have liked to have said, but there is not time to say them this evening.

9.49 p.m.

Mr. CRAVEN-ELLIS

I would like to say how gratified I was to hear the speech of the President of the Board of Trade. The message he has given to the country is one that will be well received. He concluded by asking the co-operation of this House in assisting a great British industry. Those who have knowledge of the terrible distress and unemployment in the mercantile marine and shipbuilding industries, and in the dock and harbour and shipping services, cannot but respond to that appeal. It is an invitation which I myself accept, and I say that I will give my very utmost to assist the right hon. Gentleman in dealing with the industry. There are over 500,000 men unemployed in this industry and allied industries. It is really an appalling situation. The right hon. Gentleman has referred to his negotiations with the Dominions. I do feel that there should be some scope in inter-Empire trade for helping British shipping. Our share in that shipping is only 60 per cent. I understand that the President of the Board of Trade is communicating with foreign countries. There should be some scope for British shipping there if the right hon. Gentleman can succeed in his negotiations. It is not pleasant to think that last year 45 per cent. of the cargoes coming to this country were carried by foreign ships, manned entirely by foreign labour. When we are the largest buyers in the world I think we should have some say as to how the goods which we buy are to be carried to this country.

We have to face the facts. The shipping industry can only be brought to prosperity by being able to charge freights which will make a profit. There are many difficulties which have brought the industry to the present depressed condition. While I have always been opposed to subsidies, because I am not certain that they always get to the people for whom they are intended, and there are many other disadvantages in them, it might be that in this particular case a temporary subsidy will have some effect. But is the suggested subsidy sufficient? I am rather inclined to think that an expenditure of more than £2,000,000 will be necessary. I would have preferred to have seen something bolder, and in fact would have gone so far as to inform the foreign countries that subsidise their ships that we are prepared to subsidise pound per pound.

I am rather inclined to support the suggestion of the right hon. Member for Darwen (Sir H. Samuel), which was to place a tax upon those ships which are coming to this country and are running under some form of subsidy. I appreciate that there are difficulties, but I do not think it is impossible to overcome them. The shipping industry is a very important factor in calculating our invisible exports. Last year, when the excess of imports over exports reached the high figure of £264,000,000, the invisible exports arising out of shipping contributed largely to the equilibrium in the accounts of the State. arid it is imperative that we should get our shipping industry in a healthy condition so as to assist in increasing our invisible exports. There is one factor which was not referred to by the President of the Board of Trade in his first statement as to the causes of the depressed condition of this industry, and that is the decline of international trade by, I think, one-third since 1929. That I believe to be due to the fact that those countries which are primary producers have lost in purchasing power. The wholesale price level throughout the world is too low. A memorandum which was signed by the Chancellor of the Exchequer and representatives of the Dominions last year stated: They therefore consider that the Governments of the British Commonwealth should persist by all means in their power, whether monetary or economic, within the limits of sound finance, in the policy of furthering a rise in wholesale prices. I submit that the shipping industry might have been more prosperous if the object indicated in that memorandum had been achieved. As a matter of fact, since December, 1931, British wholesale prices have fallen by 2.8 per cent. whereas American wholesale prices have risen by 12.6 per cent. Another factor which has not been referred to in this Debate is the effect on the shipping industry of the speculation which is going on to-day in foreign exchanges. Because people do not approve of what is taking place in the United States they sell dollars in exchange for sterling and speculators are doing this to such an extent that it is upsetting the basis of contracts, not only for the importers but for the exports. Trade is disturbed by this method of speculation—which I submit ought to be made impossible—and that is another cause of British shipping being in its present position. I have the honour to represent the great port of Southampton, the premier passenger port of Great Britain. I am pleased to say that since the National Government came into office we have seen some improvement in the shipping and general trade conditions of that port. There is no port in this country comparable with Southampton because it is in the fortunate position of being the home port and also a port of call for all the largest liners in the world and perhaps for that reason we are more favoured than many other ports. What the President of the Board of Trade has said to-day will, I can assure him, give very great satisfaction to the people of Southampton.

10.0 p.m.

Sir ADRIAN BAILLIE

I wish to resuscitate a matter which was raised by the hon. and learned Member for East Bristol (Sir S. Cripps) but which was, if I may respectfully say so, dealt with rather summarily by the President of the Board of Trade in a speech which was otherwise concise, effective and cogent. If these proposals are adopted obviously owners of obsolescent tramp vessels will take the opportunity of replacing those vessels by new vessels. I wish to ask my right hon. Friend whether he could not snake it a condition of the subsidy that these new vessels should be propelled by coal or derivatives of coal produced in this country. I am credibly informed that the owner of a tramp vessel besides doing a good turn to the coal industry would gain an advantage himself by equipping his vesesl to burn coal and using modern coal-burning appliances. I understand that my right hon. Friend has received representations to that effect and that the makers of coal-burning appliances have given an assurance that a modern tramp vessel so equipped can be run with far greater efficiency and economy than a vessel equipped with oil burners.

If these are the facts it would seem illogical that we should give a subsidy indirectly for the greater consumption of foreign oil fuel. If my right hon. Friend is able to satisfy himself that these are the facts I see no reason why he should not use his influence to tip the balance in favour of the use of coal instead of foreign fuel in the modern tramp vessels. If, however, he is not satisfied that these are the facts I agree that the field should be left open. The Parliamentary Secretary in his reply may say that if the statements of the makers of modern coal-burners are correct they will obviously get the market. All I would say is that it would help if some official lead could be given in the matter. Where public monies are being used it ought to be possible for the President of the Board of Trade at least to say to the builders of these new vessels, "Other things being equal I advise, even if I cannot command that in your replacement programme you shall, as far as possible, equip your ships to use coal burning appliances."

10.4 p.m.

Dr. BURGIN

As is inevitable in a Debate of this character, in which so many experts have taken part, the discussion has ranged over a wide area. In reply to the hon. Baronet the Member for Linlithgow (Sir A. Baillie) I can at any rate give him the assurance that the Government have very much in mind the need for stimulating in every possible way the consumption of British coal and its derivatives. The development of the internal combustion engine run on various kinds of fuel oil is in a transition stage but there is at least good ground for thinking that much British coal oil may eventually be used. So far as propulsion machinery is concerned the object of the whole of this policy is to render the British Mercantile Marine as efficient as possible and obviously the Government will not impose restrictions on the methods and machinery which an up-to-date owner desires to instal in an up-to-date ship.

The speech of the right hon. and learned Member for East Bristol (Sir S. Cripps) has already been dealt with, in so far as it was a discussion of the capitalist system. The other part of his speech made reference to the question of officers and men in the Mercantile Marine and the rates of wages in their employment. The hon. and learned Member is, I think, pushing at an open door. I understood him to say that if this House be asked to vote a subsidy from public money to an industry the least the House can do is to see that the conditions of employment, the wages and provision for accommodation within the industry should be satisfactory. That was the burden of the argument. Fortunately the rates for the employment of officers and men on British ships are arrived at by negotiation between the owners and representatives of the officers and men. They are not imposed in any way from outside by the Government and the Board of Trade has received no representations from officers or men that the wages to which they themselves have agreed are inadequate. Consequently, that point simply does not arise.

If any advantage is taken by shipowners of the policy of cheap money and facilities for building, the choice of specifications, the choice of the build and the design of the ship will be a matter, as is proper, between the firms chosen to build the vessel and the firm ordering the vessel to be built, and if in that combination the accommodation for the crew suffers it will be bad business, because nothing could be a worse advertisement than that the accommodation for the officers should not be up to standard. The same point was made from the benches opposite in the dis- cussion on the new Cunarder and the same reply was given. An assurance was given by the shipyard itself that this matter would be dealt with. The right hon. Gentleman the Member for Darwen (Sir H. Samuel) had at least a number of points of agreement with His Majesty's Government. He agreed that the idea of restoring the navigation Laws would be a mistake, and I may say, in reply to the hon. Member for East Leyton (Sir F. Mills), that it has been considered, and the Government fully subscribe to the idea that at all events in conditions as we know them to-day any return to the navigation laws would be a mistaken policy for this country.

The right hon. Gentleman proceeded to say that the right course to take was to attack foreign subsidies. He thought it essential that foreign subsidies should be attacked and agreed that some form of pressure would be necessary and that he and his friends would support energy on the part of the Government and effective measures. The right hon. Gentleman differed from His Majesty's Government in the kind of pressure, the method of attack, and the type of energy and effective measures. The right hon. Gentleman's suggestion was that, instead of assisting the British vessel in its competition with foreign subsidised shipping, the way would be to penalise the foreign subsidised shipping trade with this country. He suggested that a group of countries should be formed with the same ideas, and that effective pressure might be brought to bear. I hope the right hon. Gentleman will give that problem the same study that I have given to this and other aspects of the subject, not overlooking such questions as treaties and international law, and the more his studies approximate to the facts the more I think will his conclusions be identical with those of the Government. I would ask him to study it not with a view to rhetoric or a speech, but with reference to actualities and facts. Then I think that, as so often happens, the right hon. Gentleman's conclusions will coincide with ours just in the measure that he faces the facts.

The hon. Baronet the Member for Barnstaple (Sir B. Peto) raised a certain number of questions and asked for an explanation of some of the matters raised in the statement of the President of the Board of Trade. He asked me: If you are giving a subsidy, are you not attaching to it conditions which are themselves contradictory? He took the conditions numbered 1 and 2 and asked how it was possible for the shipowners to comply with them both. Let us look at them. The conditions are of course quite clearly those subject to which this fighting subsidy is to be granted.

Sir S. CRIPPS

I beg the hon. Member's pardon, but should he not refer to the defensive subsidy?

Dr. BURGIN

The right hon. Gentleman is absolutely accurate in using the words "defensive subsidy." Condition 1 is that the scheme put forward by the shipowners for the utilisation of the subsidy money must prevent the subsidy being dissipated by the domestic competition of British ships carrying tramp cargoes. Let me see if I can help the hon. Baronet. It would be obviously quite useless to grant a subsidy aimed at dealing with ships subsidised by foreign Governments if, instead of the tramp owners to whom the subsidy was paid utilising the money for the objective for which it was intended, they used it in intensifying cut-throat competition between the British owners themselves. The whole object of that condition is to make clear to the shipowners, and through the shipowners to the world, that the object of this defensive subsidy is definitely to wrest traffic from foreign subsidised vessels and not to intensify competition between the owners themselves.

Sir B. PETO

The point I wanted to make, and evidently I have not succeeded in making clear, is that I cannot see how the policy can be tried out except by reducing freights. Competition between individual tramps would reduce freights, and, in order to get back anything which is now carried by the foreign subsidised traffic, you must equally reduce freights. I do not see how you can do the one without the other.

Dr. BURGIN

The hon. Baronet will now see why we consider it necessary to ask the shipowners to produce a scheme. It is not intended to hand over money with a view to there being competition between the British vessels themselves. The object is to see that the vessels running in a particular trade utilise this assistance for the purpose of winning the traffic from a vessel which would undercut them; not that they should undercut each other, but that they should themselves decide how most effectively to deal with the foreign shipping. Perhaps a little discussion of this kind will be of general advantage. The second condition was to ensure that this subsidy is effectively directed to securing the greater employment of British tramp shipping at the expense of foreign subsidised shipping. In other words, we are not intending that the traffic should merely be taken away from one particular foreign subsidised tramp and carried by another ship. It is not aimed at a particular country, but it is aimed at securing that the ship that takes it away should be a British ship. I hope that on those two points I have been able to give some explanation.

The hon. Member for Barnstaple and other hon. Members have raised the question of the employment of officers and men of the Mercantile Marine, and a certain amount of criticism of the scrapping and building policy has been levelled at the idea that if you reduce the total number of ships afloat, even though some of them may be laid up, you will reduce the possible opportunities for officers and men. First of all, I think that when vessels are on a care and maintenance basis and laid up in harbours and docks, the skeleton crew in them is almost negligible, and therefore I think fewer vessels trading offer better prospects of employment than more vessels laid up; but I would like to look at this question of employment generally. Far be it from me ever to under-estimate the importance of employment or unemployment in any industry, but, of course, the Mercantile Marine, while being of the highest national advantage as an industry, is not one of the great employing industries. The total number of insured persons in the Mercantile Marine, was, on the 1st July of last year, 155,660, or about 150,000, and I have a list here of comparative figures in other trades, from which it will be found that 150,000 employed in a whole trade is a relatively low number. I make no point about that, because it is a national service and is not regarded as an ordinary employment. [Interruption.] The hon. Member opposite was going to say, perhaps, that there are other allied industries. Certainly there are, such as ship-building and ship-repairing.

Vice-Admiral TAYLOR

A large number of officers too.

Dr. BURGIN

Quite so. I am not trying in the least to minimise the matter, but I want to put it in its right perspective. All this talk of very large numbers of unemployed in the Mercantile Marine industry is not accurate. In point of fact, the percentage of unemployment is lamentably high, 31 per cent., and it is very much with an eye to having some of these officers and men back into a flourishing industry that the Government attach such extra importance to this matter. The hon. and gallant Member for South Paddington (Vice-Admiral Taylor) raised a number of points and asked me one question which is very much easier to answer than the others. He said, "What about Ottawa? Why did you not, when you were at, Ottawa, discuss shipping?" The matter is rather historical. Ottawa followed immediately on the crisis of 1031, and it was far more important for inter-Empire trade to be set moving than to consider the question of its transport. It was not desirable to overload the agenda with matters that were not absolutely within the purview of the discussion, and the main object in the opinion of those who went to Ottawa was to see that inter-Imperial trade should be stimulated and begin to flow again: and in that decision the shipowners themselves concurred.

However, that was not the main point of the hon. and gallant Member's observations. He asked me two things—How does a shipowner bring pressure upon his foreign opposite numbers for any international scheme, and how far do the Government think a question of the shipowners exercising international pressure an express condition before granting a subsidy? The point is that the Government at all times are ready and willing to communicate with foreign Governments and to use their influence to bring about an agreement, but all such efforts would be nugatory unless they were supplemented by neggtiations conducted by the shipowners themselves through their international organisation. That condition means exactly what it says, namely, that the shipowning organisation should bring pressure to bear upon their international opposite number, that they should put forward their case and their reasons, and that they should back up their case by arguments. There is no condition that some particular understanding should be reached within a particular time. That could never be guaranteed by anyone, but there is the condition that the ship-owning community should themselves through their appropriate channels assist the Government through the Government channels by making proper representations to their own opposite number.

The only other point that the hon. and gallant Gentleman asked was whether the Government realise that in the early days of the War, during the submarine menace, it was the number of the vessels rather than their state and condition which saved this country. Yes, the Government realise that, and all I need say to the hon. and gallant Member is that the Government will take very good care that the mercantile marine is not reduced by any "scrap and build" policy below the safety limit.

Vice-Admiral TAYLOR

Are the Admiralty satisfied with regard to the position of Naval reserves?

Dr. BURGIN

These are matters that are constantly borne in mind, and I tell the hon. and gallant Gentleman definitely that it is no part of any "scrap and build" policy that the essential strength of the mercantile marine shall ever be reduced below what is regarded as the safety limit. He can accept definitely that nobody is going to push matters to that extreme. The senior Member for Sunderland (Sir L. Thompson) asked about the position of the coasting trade. I am afraid we cannot consider the coasting tramps for a subsidy, for they are subject to special considerations. They are in competition with road and rail transport, and a subsidy for one method of transport may well lead to claims for other methods of transport. As regards the home trade tramp, that is the ordinary Elbe-Brest limits, the question is more difficult, and the industry itself will probably consider whether or not those vessels should be included in the scheme. The Government have an open mind on that point, and will listen to representations from the industry. I think that is the assurance that the hon. Member desires.

The junior Member for Sunderland (Mr. Storey) was, if I may be allowed to say so, a little ungracious in his observations. I acquit him of any malice, because I think it is due to an inadequate study of the offer that has been made by His Majesty's Government. I cannot believe that his observations really represent a study of the subsidy proposals or of the scrap and build proposals which have been put forward. The hon. Member seems to think that there was very much more obligation on His Majesty's Government to come down with a cut and dried proposal and to put it into force and to discuss the details with the industry afterwards. I think, when further consideration is given to the object which we really have in mind, which is to deal with these foreign subsidised vessels with the object of the subsidies being withdrawn, the hon. Member will appreciate that it is a very elastic proposal.

It is not possible to deal with a matter of that kind by a cut-and-dried formula. There may have to be more than one method adopted. The method must be worked out by collaboration, day to day, on the freight markets and the Baltic, by noticing the movements of vessels, the movements of cargoes, and the movements of traffic, and it will necessitate the very closest co-operation and, indeed, the working of the scheme by the industry itself. If the hon. Member will give the Government the credit for knowing a great deal about this industry to which they are making this proposal, for having discussed with every shade of opinion in it all those practical problems until they are almost household words in the Department, I think he will realise that the way in which this proposal has been put forward is the one most calculated to enable it to succeed. At any rate that is the belief of those of us who from this Box are spokesmen in favour of the scheme. It is definitely a bespoke scheme, prepared for the precise difficulties with which we are dealing. It is not merely a general ready-made scheme to put across the Floor of the House. If he will bear that in mind, I think he will find that it is of assistance in considering these proposals.

There need be no delay. He need have no fear that his shipbuilding constituents are likely to be unemployed during the forthcoming winter. It entirely depends on the industry itself. If the industry is ready with its scheme there need be no avoidable delay whatever, either in the legislation implementing it or in the action of the Government in following up the legislation. He may take that as a perfectly definite assurance. There need be no delay at all, and it is a quite definite ideal that during the forthcoming winter engine makers and hull builders, and all the auxiliary trades, may well benefit from numbers of orders placed under this scheme. That brings me to the end of the specific points which I have to mention. The Committee have heard this discussion on the importance of the Mercantile Marine, of its importance from the point of view of essential transport services, of its importance from the point of view of the link with the Dominions and with the Empire, and that it is an essential national possession in time of emergency and in time of war; and the Committee will agree that it is most desirable that a service having all these features should be up-to-date, should be encouraged and that, if appropriate to such conditions as exist now, Government help should be forthcoming.

10.28 p.m.

Mr. N. MACLEAN

The Parliamentary Secretary to the Board of Trade has, among other descriptions of this subsidy, spoken of it as not being a ready-made scheme but as rather a bespoke scheme. Judging from the rather mixed reception it has had from the representatives of the shipping industry, it appears as if some of them, at any rate, were feeling the garment a trifle tight in places and in other places rather loose. They do not seem to be altogether highly pleased with this particular method of tailoring. There is one point I would like to mention before going on to others. The Parliamentary Secretary referred to the opening speech of the hon. and learned Member for East Bristol (Sir S. Cripps), and particularly that portion of it relating to the wages paid in the Mercantile Marine. The hon. and learned Member for East Bristol laid it down that certain conditions must be imposed in order to safeguard the conditions of service in the Mercantile Marine.

The Parliamentary Secretary seemed to under-rate the point, and he made what, in my opinion, was a rather slighting reference to the statement. He went on to point out that those conditions did not require to be imposed by the Board of Trade because they were arranged between the shipowners and the men's representatives, and the Board of Trade was never consulted in the matter. That may be, but the hon. Gentleman must remember that since 1931 the officers of the Mercantile Marine have voluntarily accepted a 10 per cent. reduction, and the seamen one of 18s. per month. That has been done as a matter of good will, to enable the mercantile service to carry on. If portions of the service are to have a subsidy of £2,000,000 from the Government, surely the Government ought to lay down a condition that those voluntary reductions are restored. It is not a sufficient excuse to tell the House: "We, who are sponsoring the gift of public money, will lay down no conditions as to the restoration of those voluntary cuts, but we leave that to an arrangement between the shipowners and the men." The House has the right to say that a condition must be imposed for the restoration of the reductions which have been accepted by the men during the past two years to enable the industry to get over its difficulties.

The men in the Mercantile Marine have done their share towards the resuscitation of the industry, and it is unfair not to insist upon the Board of Trade laying down the condition to which I have referred. The Parliamentary Secretary has something to do with trade boards, although I know that they come mostly under the Ministry of Labour. There is not a trade board in the country which would permit employés in the trades which they supervise to work 60, 70 or 80 hours per week for the rates that are being paid in the Mercantile Marine. The Board of Trade are seeking to impose certain conditions relating to the use of the ships, and as to how the shipowners may qualify for the £2,000,000 subsidy, but the men are to be left out. Their conditions of service are to be left out, as usual, on the plea that they must be left to the play of economic forces. Men standing on the quay walls looking for jobs and masters going around with certificates and yet willing to take jobs as second or third mates are to be left to the economic forces of supply and demand at the quay head. I suggest to the Par- liamentary Secretary that he must take this matter back for further consideration before we on this side at any rate can assent without protest to the gift of this money to the shipowners of the country.

It has been stated that the number of men engaged in this industry is relatively small, only about 150,000, but it must be borne in mind that the industry is carrying a very high rate of unemployment; about one-third of the people in the industry are unemployed. In addition, moreover, to the men who are employed in the ships, there is another class of persons, who are classified differently by the Ministry of Labour, but who none the less are dependent upon the Mercantile Marine for their livelihood. I refer to the dockers at the docks and those Who are working about the various services, such as cranemen and so on. All those who are employed at or about the docks and wharves are as much connected with the Mercantile Marine, by virtue of their work in loading or unloading the ships, as the men who are actually sailing the ships themselves. Among them also there is a very heavy percentage of unemployment, and they should be included, although they do not come within the category of having anything to do with the vessels that are going to get the proposed subsidy.

The President of the Board of Trade, in reply to the discussion, spoke very highly of the Mercantile Marine, and he had every right to do so. Many hon. Members this afternoon have given their meed of praise to the Mercantile Marine of our country—to the designers who design the vessels, and to the ingenuity of those who own the fleets; but they forget to give that little meed of praise which should be given to the men who build and man those ships. The men in the shipyard towns of the country have still sufficient craftsmanship left to build some of the great floating palaces that we have, as well as some of the ordinary tramp steamers, which sometimes, uncouth and dirty, with black smoke trailing behind their funnels, seem to be ugly enough. All those vessels have been built and launched by the men working in those yards, and, when Members rise on the Floor of the House and talk about the interests—not the constituencies—that they represent, when they tell the House that they are speaking for the par- titular class of shipowners whom they represent, I think that I, as representing a constituency composed of shipyard workers, bounded on the east and west by docks and with its northern frontage taken up by shipyards, am entitled to demand of this House and of those who talk about the beautiful designs of the ships and the wonderful skill and business acumen of those who own them, that the men who built those ships, who made the name "Clyde-built" a synonym for A.1 at Lloyd's, should have their meed of praise for the work that they have done on the ships that have been built in and launched from those yards.

Sir EDWARD CAMPBELL

I think the Minister mentioned that he wanted to keep them working.

Mr. MACLEAN

Yes, but that was detached from the part of the speech in which he was talking of the ingenuity of the designers and the competence of the owners and I wanted to link the two up. The House will understand the feeling that there must be when the trade arises with a roundabout request which the Board of Trade have had to listen to. We are told of their wonderful competence and magnificent business manner and we are now told that the business they have been running requires assistance from the State. You have been giving subsidies and gifts to this and that industry and the shipowners say, "It is time we had a gift as well because our trade is in a parlous condition." I have no objection to your praising their business manner, but when they ask for a subsidy we are entitled to inquire the reasons which have evidently justified the President of the Board of Trade in resigning from his attitude of deliberately and definitely refusing to give State assistance. The shipowners have had their way. It is a complete right about face.

Dr. BURGIN

We find the greatest difference between this and any proposal that has hitherto been made. This is not a subsidy to tramp shipping in the way the shipowners have asked. It is a method of defensive subsidy against the actions of some other Governments.

Mr. MACLEAN

The appeal that was made on lath December was on very much the same lines as the statements that have been made to-day, and the reply of the President of the Board of Trade was entirely different from the statement that he has made to-day. We then had facts and figures from various chambers of shipping and centres of shipping. [Interruption.] If the right hon. Gentleman would exercise that courtesy to other Members that he expects from them he would have a rosier time in the House and would be more highly thought of. A different attitude is adopted to-day from that which was adopted on 13th December. The representatives of the shipowners were making practically the same request which has been acceded to by the Minister.

Dr. BURGIN

The point I was trying to make was that, so far from being a different attitude on the part of the Government, the Government were taking up the same attitude as they had previously announced.

Mr. MACLEAN

If the Parliamentary Secretary considers that to be logic, all the books upon logic will have to be burnt and a new theory of logic taught in the universities. The statements which have been made by the Chamber of Shipping have been that more than one-half of our shipping found employment to and from United Kingdom ports, and only one-third between the United Kingdom and other parts of the Empire, and that we owned upwards of 40 per cent. of the total ocean carrying trade of the world. With regard to tramp tonnage it was stated to be in active competition with all freights except the carrying of passengers, refrigerated cargoes and special classes of fine goods, and that it exercised a marked influence on all freight rates. There has been no definition of a tramp steamer. The admission has been made by several representatives of shipowners this afternoon that there is a period when what is a capital liner becomes a tramp steamer, that what is a passenger liner sometimes becomes a tramp, and that what is a tramp sometimes competes with a passenger or cargo liner. Consequently you have these vessels on different voyages encroaching upon one another.

When you come to a subsidy you have the shipowners asking for a different method of apportioning the subsidy. You see them coming, as they have this after- noon, and asking for so much per ton, so much per mile, and so much per voyage. They themselves have no settled policy as to what the agreement should be or what should be done with regard to the apportionment of the subsidy which the Government propose to give.

When one comes to the scrapping policy, they are being asked to accept something which they decline to consider. In 19292013;30 when the Committee dealing with obsolete tonnage was set up, and when a committee of the trades unions connected with shipbuilding approached the shipowners and the Government, and found the Government sympathetic, the matter was referred by a present Prime Minister with his love for committees to a committee. They found that they could not get an agreement between the shipowners, the shipbuilders and the Government, and consequently the Committee did not make any effective recommendation to the House, and the matter has remained there ever since. In May, 1932, the General Council approached the Board of Trade with a request that they should reconsider the scrapping policy of obsolete tonnage, but they received no sympathy from the President of the Board of Trade. In response to the last statement which they sent to him they received a courteous acknowledgment, but no reply in detail on the points which they had put forward. They submitted to him concrete proposals in place of a scrapping policy in order that something definite might be undertaken by the shipping industry of this country.

As a matter of fact, during the 10 years from 1923 to 1932 there were sold to foreign countries over 4,000,000 tons of shipping, an amount equal to three years of record output of the shipping yards of this country. That has been done by shipowners, according to the figures given to me by my right hon. Friend last December. These ships have been sold to one country in particular, Greece, which has 96 ships, and they are used in competition with ships of this country. Vessels have been sold at scrap prices between £1 10s. and £2 10s. per ton. I want to ask the President of the Board of Trade, in conditions such as these, when you find owners prepared to lay by vessels until they are sold at scrap prices, and the General Council of the Trade Unions comes forward with concrete proposals for scrap prices, for obsolete tonnage, why something could not have been done when scrap was 10s. per ton instead of to-day, when it is 50s. per ton? The Government refused the scheme proposed that a sum not exceeding £3,000,000 should be used to buy most of the tonnage laid by at scrap prices. With the increase in scrap price from 10s. to 50s., if sold now, the ships would have been sufficient to enable the Government to make a loan to the shipping industry at an exceedingly low rate of interest.

The Government could not see sufficiently far ahead to agree with that proposal. Now they come forward with scrap at 50s. a ton and talk about scrapping three vessels for every one built. I submit that the Board of Trade has been very slow in its outlook and in the manner. in which it has proceeded. It has allowed matters to drift. I am not against this subsidy being given, for we have reached a stage in this industry when it expects it in the same way that others have received it. But I am going to insist that where you are giving public money you do the same thing as you do with the unemployed man on transitional benefit, and as you do with those who apply to the public assistance committees. You lay down conditions. The shipowners have no more right to receive money without conditions than the unemployed man to receive it when he goes to the Minister of Labour to have his case examined. The House at this late hour is unable to go into the whole position of shipbuilding. We hear of 2,000 ships being sold to foreigners in ten years and then the shipowners come to this House and talk about foreign competition, and freights being undercut by the very countries to whom they have actually sold ships. When such low wages are paid to crews and there is undermanning of ships, it is time the Board of Trade took up a different policy and set up a Committee to inquire into the whole question of shipping and shipbuilding; to make a thorough examination of the whole industry and find out what is wrong. The subsidy is to last for a year, and during the year such a committee could make their inquiry and report to the Board of Trade, and we could discuss the matter in the House. In this way we should get a mercantile marine the best in the world and worthy of the past record of this country.

Question put, and agreed to.

Resolved, That this House views with concern the plight of the British Mercantile Marine, and is prepared to consider proposals for the improvement of shipping and shipbuilding.