§ Postponed Proceeding resumed on Question, "That the Bill be now read the Third time."2998
§ 7.38 p.m.
We are able to resume the discussion with regard to prices and the Government check upon the danger that we feel exists of charging far too much money to the taxpayer in respect of the armaments programme. We have had a good deal of discussion as to what should or should not be regarded as a reasonable rate of profit. There seems to be no key or direction with regard to what is reasonable profit. The Minister for the Co-ordination of Defence, who has now left, said that it would have regard to the actual capital employed, the actual amount of turnover, and the actual volume of orders and the prospect of further orders, but we have had no indication from the Government as to the standard to which the experts who are supposed to check the costings of the various Service Departments have to work. In regard to the programme upon which we have now entered, which we are told is to cost £1,500,000,000 in five years, that is a sorry condition in which to leave the situation. We have had arguments from the other benches that we are not right in charging capitalists with being unpatriotic when dealing with armaments. It is said that there will not be undue profiteering but only reasonable rates of profit, but there has been no attempt on the part of the Government, either in the reply of the Secretary of State for War or in the reply of the Minister for the Co-ordination of Defence, to answer that charge.
The fact is, whether the Members who support the Government like it or not, that the existence of the Government's armaments programme is definitely leading to exploitation in prices, to increasing profits by armament firms, and, because of this, to inflation in the prices of other commodities in other spheres besides the armaments sphere. I got from the City this afternoon the correct total profits in the last three years of ten firms who are engaged in the armaments business. The firms are John Brown, Thorneycrofts, Birmingham Small Arms, Hadfields, Vickers, Handley Page, Rolls Royce, Dorman Long, United Steel, and Hawker Aircraft. That is a fair sample of firms dealing in armaments and affected directly by the Government's programme. For the year 1933–34 their total profits amounted to 1,250,000. For 1934–35 they amounted to £2,258.000. 2999 For 1935–36, the first year in which there was a real effect of the beginning of the armaments programme, the profits amounted to £3,049,000, an increase in the case of these firms in two years of 190 per cent. That is an enormous rate of development as a consequence of the Government's armament programme. It really does not do for Members on the other side to say that the actual prices on the Stock Exchange are no indication of the profits which are being made. We are well aware that at times people who gamble on the Stock Exchange get their fingers badly burned if they are not in possession of inside information and are liable to be caught as a bull or a bear whichever way they are operating. If you take the average of the prices which companies reach during the period of 12 months, that is a fair assessment on which those who are supposed to know what is the real value of an investment in a particular company can judge what work is being done and what profits are made.
Lieut.-Colonel C. Kerr
There is one thing the right hon. Gentleman might bear in mind. A great many prices to-day are based very much on the rate of money. Many shares have come on to a basis of 4 per cent. because of the value of money. Government securities have got on to a very low rate of interest. At one time they were down almost to 3 per cent., and in all shares which pay dividends you will get a natural rise in prices and a consequently lower rate of interest to the shareholders. That must be considered in dealing with this matter.
I do not want to rule out any natural phenomenon. It is well known that if there is a current high price for a gilt-edged security, there is a tendency for it to affect industrial securities. I am afraid that does not answer my point. Take the position over the last three years since the value of money and gilt-edged securities has changed. We point to the fact that over those three years we see large increases in the aggregate profits of the armament firms, and we see an appraisement of those profits clearly indicated in the prices paid upon the Stock Exchange for their shares, and because of the length of time over which those Stock Exchange prices have endured it is within the 3000 bounds of legitimate argument to quote Stock Exchange prices as an indication of the extent to which profiteering is taking place.
It does not do to get up and say, if the price of a share is five or six times its par value, that that fact has no relation to the price of the commodities. Take the flotation of the Bristol Aeroplane Company, when shares were issued at much more than the par value. On the other hand we may have, as in the case of Vickers, which I quoted earlier in an interruption, the value of the shares written down to 6s. 8d. and then see them rise upon the Stock Exchange from 6s. 8d. to 34s. That quotation has been maintained for a considerable time and gives the market's appraisement of the rate of profit being made. We have had no answer from the other side to the general case which was submitted by my right hon. Friend the Member for West Stirling (Mr. Johnston) and was supported by other speakers on this side of the House.
Although the Minister for the Coordination of Defence was very severe upon my hon. Friend the Member for North Aberdeen (Mr. Garro Jones), nevertheless we are far from being satisfied about the case of Ransomes and Rapier, which was put before the House. I am grateful to the Minister for having made an arrangement with the hon. Member for West Stirling to go into that question when they have an opportunity after Easter, but until after that meeting has taken place and the facts are disclosed in the House of Commons the public are surely entitled to have a very grave suspicion about the situation. It is all very well for some resentment to be expresed at the language of my hon. Friend the Member for North Aberdeen, but we are entitled to point out that the previous statements of Ministers have hardly indicated that they were really anxious to adopt a basis of production without profit for their programme of armaments. I remember the speech of the Chancellor of the Exchequer on 4th March, in which he said:When it is suggested that we ought to take all profit out of the supply of materials, I wonder how hon. Members think they are going to have any armaments made at all, because unless we are going completely to alter our social and industrial system and conscript everyone in industry we cannot turn 3001 out armaments."—[OFFICIAL REPORT, 4th March, 1937; col. 677, Vol. 321.]That is, perhaps, the best measure of the patriotism of those who are potential producers of armaments that we have ever had given to the House. Nothing could be said by any hon. Member on our side of the House which would be more damning of those who, we say, are guilty of making undue profits out of armaments than the Chancellor's own statement that unless there is a profit in the business we cannot get armaments. If that is the Chancellor's view, and if he is telling the House that the Government cannot possibly consider the adoption of a basis under which all profits can be taken out of production, I think my hon. Friends are entitled to say to those who are responsible for the Ransornes and Rapier incident that we suspect them. Instead of taking the offer for what it was worth and trying it out to see what could be done, it was ruled out at once. It was as though the Government said, "If we once have it proved that it can be done without a profit we shall be doing a serious injury to all the other firms with whom we have made contracts and with whom we are likely to make contracts." Therefore, until my right hon. Friend the Member for West Stirling has reported to the House further, after he has had his conference with the Minister for the Co-ordination of Defence, we shall continue in our suspicions that all is not well in this connection.
The hon. Baronet the Member for Harrow (Sir I. Salmon) addressed the House earlier in the day as chairman of the Estimates Committee, I gather, and referred to the report of that Committee and suggested that members of the Labour party who were members of the Committee had acquiesced in the general proposition that the steps at present being taken by the various Service Departments for checking costs are adequate and likely to be effective, subject to further considerations. To start with, as I understand it the matters brought before the Estimates Committee are concerned as a rule with past expenditure—it may have been recent expenditure but it is past expenditure—and I suppose that very secret documents may be laid before the Committee, but we have no indication yet of the actual system which is adopted under the check referred to by the Estimates Committee.
3002 What interested me most of all was the manner in which the case was submitted by the hon. Baronet. He endeavoured to show that there was nothing inconsistent in the capitalist retaining his profit-making system and having a public and patriotic interest in his country. Yesterday I sat with the hon. Baronet in a Government Committee upstairs. It is a Committee of which I have been a member for 13 years and it is our duty to check, as far as we can, in the public interest, the prices of building materials. Yesterday the hon. Baronet, in his capacity as Chairman of that Committee, and I and other members, signed a draft of a report which was entirely contrary in principle to the arguments he used this afternoon, and I could not understand why he should have put up his defence of the capitalist, his patriotism and lack of desire to exploit the public, after his experiences with me upon that Committee yesterday.
It is a great pity that in Debates of this character Members so often leave after addressing the House and do not come back, because it means that one has to make charges or answer charges in the absence of a Member whom one would have liked to be present. I should like to say a word about the illustrations which the hon. Baronet put forward and which brought my right hon. Friend the Member for West Stirling to his feet. It was a reference to the adequacy or otherwise of the check which the late John Wheatley tried to put upon building prices in 1924. In view of the hon. Baronet's statement it is just as well that the facts should be recorded. I was deputy-chairman of a committee set up in 1923 and went on until early in 1924, which submitted a report to the House of Commons, under my signature, to say that there was in existence such price rings, trusts, combines and trade associations as made all effective check inadequate.
We recommended legislation, but at that time the Labour Government was supported by only 191 Members out of 617, so there was little chance of getting legislation on the subject. However, the Minister of Health and the Secretary of State for Scotland at that time, in their endeavour to prevent undue profiteering, got an agreement from the employers and the operatives in the building trade to the effect that however much the volume of 3003 house building expanded the ruling prices should be taken at least as a guide—not necessarily to be a permanent fixture but to be a guide, something upon which comparisons could be based in the future. In the later months of 1924 the late John Wheatley introduced a Bill which was designed, deliberately designed, to take over whenever it was necessary—in the interests of the people at large and of the housing amenities in particular—the brick-fields and other branches of production in the building industry, in order that we should not be unduly exploited at any time by the agreement he had entered into. Therefore it seems to me that the argument put up by the hon. Baronet was entirely beside the mark.
There is another point. We are not at all satisfied with the explanation given to us about rising prices. It was said that wherever possible competitive tenders were obtained. I have in my office a whole volume of the reports which were issued as a result of the inquiries conducted under the Profiteering Acts in the years 1918 to 1921. Even as far back as 1921 the existence of price-fixing associations and close combines in the industries now engaged upon the armaments programme was proved. For example, there was a combine dealing with brass wire, brass 10ds, rolling mills, white lead, tin and iron and steel. Of course, some of these combines have been very much tightened up and developed since those days. As I go down this list of 60-odd combines existing in 1921 I find that there is not a single section of the armaments industry, from zinc to spelter, from iron and steel to chemicals, from textiles to tinfoil, which is not the subject of the most complete trade-association control, with the elimination as far as possible of any really competitive tenders.
I should like next to refer to iron and steel. In the business with which I am familiar we have over and over again in the last two years had experience of asking for tenders for iron and steel—steel of the kind used for the erection of buildings—and when we have asked for nine tenders we have got nine exactly identical results, even down to the last penny a ton. Therefore, to say that you can in these matters get any effective check by competitive tender is just nonsense. Nor am I satisfied that it is sufficient to leave it entirely to the basis on 3004 which the Costings Department works. I recognise exactly what the Minister for the Co-ordination of Defence meant when he referred to the high standard of the Civil Service. Those who work with the members of the Civil Service from time to time know how high their ideals are and how conscientiously they do their work, but it does not always mean that that is the last word on the matter. I have a memory of some occasions when I was at the Admiralty when my hon. Friend the Member for North Camberwell (Mr. Ammon) was able to suggest new and direct methods of approach other than the usual costings for the negotiation of a settlement of a price or a final account. I think we ought to be satisfied that we are not merely sticking to the old and set methods of costings accountancy in order to settle what should be the ultimate price. On that I think we ought to have a very direct answer from the Government.
We are very much concerned about the general increase in the prices of basic metals, due to the speculation which has followed the announcement of the armaments programme, because of its serious effect on other industries. The Government have said all through, "We could never get what we want on the basis of private profit, and we should interfere as little as possible with other commercial industries." The hon. Member for Kingswinford (Mr. A. Henderson) the other day put a question to a Member of the Government with regard to the price of copper and similar basic metals. He is, of course, very much concerned about the serious effect upon employment in the Midlands caused by the grave shortage and high prices of the metals which are now to be used in carrying out the armaments programme. I think that if the Parliamentary Secretary to the Board of Trade is going to reply, we ought to get at least some information to explain how these extraordinary increases in the price of the base metals is to be accounted for. I do not need to go back a long distance, but take copper, which was quoted on 20th February, 1936, at £35 17s. 6d., but which had risen by firth February, 1937, to £56, and by 18th March, 1937, to 174 10s. That is an extraordinary price. Take tin, which my right hon. Friend has already referred to; it has risen from £209 in 3005 February, 1936, to £300 10s. on 18th March, 1937. Spelter has increased from £15 13s. last year to £34 to-day, and touched as high a figure as £37 on 11th March. Take lead. You get the same phenomenal increase there, and this is so serious for industry as a whole, quite apart from the question whether we are not paying far too much on our armaments programme, that I cannot understand the general complacency of the Government about it. When I think of the way metals are going up and of the cost of a battleship, of a destroyer or of a cruiser, I can see that instead of a naval programme which in ordinary times would cost us £50,000,000, you may easily have in 12 months an increase of 15 or 20 per cent., because of these movements in prices.
But it is not only that, it is also the general effect upon all the other people who are in business dealing with these metals. I have been making some inquiries to-day as to the prospects in various industries. It is true—and I think it is always a mistake to put a case too high—that up to the present there has not been any very substantial increase outside the armament industries, but there is every indication now, from inquiries I have made on the market to-day, that there are going to be general increases all round as a result of the Government's policy—partly owing to their manner of dealing with it, and partly from the higher level of prices created by speculation.
I was looking at a number of examples to-day. Compared with 12 months ago there has been a rise in tea of 2d. a pound. An hon. Member who spoke just now would, I think, have been able to deal more authoritatively with the subject of tea than with almost any other subject. It is a pity he did not speak upon it, but I do not think he will deny that tea is up at present 2d. a pound on last year's price. The price of coal for the domestic consumer, as compared with last year, is up 2s. a ton. There is a 17½ per cent. increase in the price of blankets, and a 10½ per cent. increase in the price of flannels. There is a rise varying between 5 and 10 per cent. in the price of hardware, 7½ per cent. in that of linoleum, and from 5 to 10 per cent. in that of electrical appliances. With regard to the furniture trade, that has had a very good run for 3006 the last few years and, owing to very large demands in connection with the housing programme, was able to reduce the relative cost of production to a considerable extent, but now there is an increase of anything between 5 and 6½ per cent. in prices in the last few months. Then you find a great increase in the cost of food. We have seen a considerable rise in the last 12 months in the price of flour though that, of course, has not been entirely due to this cause. Thirteen shillings a sack is the amount in the last 12 months. Cheese is up about 15s. a cwt., lard 7s. a cwt., New Zealand butter £1 a cwt., oats have risen from 13s. 9d. to 18s. and oatmeal from 12s. 2d. to 16s. 9d. Bran and middlings are up about 25 per cent. on the price of last year.
Apparently the whole policy of the Government in relation to the finance of the armaments programme, owing to the lack of control over the rise in prices in the armaments sphere, is leading to a general advance of prices all round which is going to be a very serious thing indeed for the working people of this country. I know that the Parliamentary Secretary will say, in reply to that, that the world has been looking for an increase in prices as its hope of salvation, but an increase in prices which is induced, if not wholly, at least to a large extent, by heavy borrowing, will not help in that direction. We are stimulating that rise in prices by borrowing on the public credit to the extent of £400,000,000, and when we on this side of the House challenge the Government's methods we get the answer from the right hon. Gentleman the Member for Hillhead (Sir R. Home)—who has been in the House again to-day because there was something on in which he was interested —"We can take the £400,000,000 in our stride." But when we ask for a comparatively small sum to help in the relief of unemployment in the Special Areas or for the revival of industry in those areas it is difficult to get £2,000,000. Yet we are embarking now on a policy of raising prices all round, which means in effect a wage cut in the case of all our wage earners until such time as they can, with great labour and the full use of their trade union machinery, get an increase of wages to overtake the increase of prices. But there will be no such relief for the unemployed man, for the pensioner, or for those who have fixed standards which 3007 leave them hardly a subsistence level, if that.
Therefore, we say that the whole policy of the Government on these matters ought to be revised. If you cannot effectively check profiteering in these huge developments of production in the sphere of armaments, believe me profiteering will spread to all the other parts of industry in this country, in which it is already bad enough, and with dire effects on the population as a whole. I hope that before the evening is out we shall have some better idea from the Government, first as to what is going to be done to prevent undue profit-making by capitalists engaged in the manufacture of armaments, and secondly, as to steps which it proposes to take to prevent the exploitation of the consumer in general.
§ 8.13 p.m.
Mr. David Adams
The speech to which we have just listened has brought the House back to the fact that we are living in a capitalist age and that this is the doyen, among capitalist Governments, and I think that the evidence which has been submitted from this side of the House, and not effectively challenged from the other side, indicates that in the plans of the Government there is no such thing as an intention to restrict speculation and profit-making. The fact is that a study of the Government's legislation during its effective reign has indicated that its first, second, and third consideration is the careful preservation of the existing capitalist system and, wherever possible, the expansion of the same. The Government have gone out of their way to secure this end. We saw that tendency in the Special Areas Reconstruction Association, when £1,000,000 required for the Special Areas was not handled as it ought to have been by the Treasury. A private profit-making concern was deliberately set up by the Treasury and richly endowed. For a period of 10 years it is to receive not less than £250,000 for administering £1,000,000, in addition to a guarantee that 25 per cent. of any losses would be borne by the Government. That is an admirable illustration of the determination of the Government to extend and recreate Capitalism wherever possible.
We saw the same principle at work when subsidies were granted. This party 3008 will not oppose subsidies as such but subsidies should be granted as loans and not as unrestricted gifts. Friends of mine have been good enough to advise me that the action of the Government in making grants to certain industries in which they were engaged had preserved and protected them against financial misfortune in a normal way. There was thus the creation of another oasis of Capitalism. The same thing is seen in the new site-finding company set up under the new Special Areas Bill which is to come before the House. One would imagine that to find sites would be the duty of local authorities, or of the industrial boards set up by them for the purpose of dealing with unemployment due to the slowing up and diminution of industry in various parts of the country, but the Government do not use that method. They strike the original idea that the persons to find the factory site shall be bodies specially set up by the Government, and to be financed by the Government either by loan of by a gift of 25 per cent. of their capital. I have never heard anything more original than that notion of sweeping aside the local authorities and the industrial boards and creating a new type of company which, although it may be restricted as to dividends, is nevertheless a profit-making concern.
The same attitude is adopted largely and consistently in the armaments boom which is in full swing. The whole policy of the Government, from the first intention of rearming the nation, has been to permit the maximum of profit. The Government gave an invitation to speculators to prepare for the golden age. They did not anticipate in any way or attempt to restrict the possibilities of wild speculation and of great profit-making in rearmament. As the previous speaker has pointed out, that policy is having a most serious effect in forcing up prices. I see that the Parliamentary Secretary shakes his head.
§ Dr. Burgin
The hon. Member is always most observant. I was shaking my head at the suggestion that the previous speaker had pointed out the connection between the armaments programme and the rise in prices, whereas he quoted a number of rises in prices and talked at length about the armaments programme, but showed no connection between the one and the other.
I cannot understand that statement. Loud speakers throughout the country indicated to all and sundry that an opportunity for unrestricted speculation was at hand, but no action has been taken by the Government to protect the interests of the tax-payer. In 1922 I was in New York, where I was introduced to the deputy-chief of police. There had been a raid for the purpose of discovering intoxicants, as it was during the period of Prohibition, but remarkably little was discovered by the police—I think only a bottle of champagne, and one or two persons indulging. I was astounded, I said to the official, at the paucity of the haul, but he replied: "Mr. Adams, in this country we do things differently from the way you do them. When we are about to make a raid we let them know beforehand." That is the attitude which the Government take consistently. The taxpayer in due course will have to pay.
The Government's lack of control is affecting the normal industry of the country. Last week the chairman of the directors of Messrs. Swan, Hunter and Wigham Richardson quoted, at the annual meeting, the Minister for Coordination of Defence, who, at Newcastle a day or two previously, at a meeting of the North-East Coast Institute of Shipbuilders and Engineers had given injunction to shipbuilders. "Go abroad for Orders." Mr. Christie said that that was all very well, but how were they to execute those orders under present conditions? He said, also, that the steel makers were putting up their prices and that higher prices were to come. I had been unable to ascertain what the subsequent figures are to be. The orders, Mr. Christie said, which they booked 12 months ago showed a dead loss, and it might be that orders booked in recent months would also show no profit. While record steel profits have been made, as declared by the English Steel Corporation on 27th February far in excess of last year's profits, at the same time they are permitted to exploit the general body of consumers—I hope I use the correct term inoffensively—they are permitted to extort the maximum figure. Exactly the same difficulty in regard to the conduct of normal business is being evinced in the export trades throughout the country, namely, that their contracts have been drawn up, where contractors could draw them up, on the 3010 basis of higher figures, in almost every direction.
The Press has been warning the country of the situation, and one or two extracts are certainly entertaining. They are dated the 18th instant. One paper stating that tin last week jumped in one day £17 10s. a ton—a ten years' record —to £300. Lead and zinc soared. Copper, which cost £25 to £30 per ton, is now between £75 and £80 per ton. It was also stated that, because of the boom in armaments, metals are yielding fortunes to the bigger dealers, and the commodity markets have shown the fiercest scramble since hectic 1914. Another paper of that date observed that the scramble for metals and commodities was one of the greatest ramps ever staged. I am not prepared to use the term "ramp," because it is part and parcel of the capitalist system, which says that, if you take the maximum profit that you can while the going is good, you are acting in strict harmony with the admirable system under which we live at the present time.
I need scarcely quote more figures to show that the country is labouring, both in regard to armaments and in regard to private production, under neglect by the Government, as a result of which the rearmament programme will probably cost the country from 20 to 25 per cent. more than it should have done. Moreover, the local authorities throughout the country are going to be burdened with dearer house-building and dearer building of every description for their normal expansion. This week I put a question to the Minister for the Co-ordination of Defence, because I felt that even at this late hour some of our misfortunes might possibly be retrieved. I asked him whether, in view of the fact that the Government are probably the largest single purchaser in the country, employing trained personnel to do their buying without the intervention of intermediaries, he would extend this practice to the purchase and distribution of all raw materials required for the rearmament programme. My complaint is not as to the prices which are being charged at the present moment; my complaint is that the raw materials have not been purchased in advance, as they could have been, and, indeed, as they were during the last six months of the War.
3011 As we know, there was State control then. Purchasers imported raw material in bulk from producing countries—I am quoting from the official records—at the lowest prices obtainable, where possible by contract for the requisite number of years ahead. Large quantities of metals, non-ferrous metals particularly, were purchased by the Government at an early date in the War, and control was deliberately set up. The goods were bought at the source; profits were limited at intermediate stages, up to the finished article in many cases; manufacturers received for their whole output their conversion costs and a moderate profit, while distributing merchants were remunerated as Government agents at reasonable rates of commission. By this means prices were restricted in those times to a reasonable maximum figure, largely based upon costs. That is perhaps too fanciful an idea for the Government in a period when we are rearming, but this is in effect an expenditure equal to that of a small war. 1,500,000,000 is to be spent on rearmament, and many more millions on the normal expansion and industrial development of the country, and therefore I contend that the Government's action has been most inadequate in regard to preserving and protecting the interests of the country, even under the capitalist system itself. They could have permitted our manufacturers and others to obtain what they were entitled to obtain, namely, proper margins of profit, and by handing out raw materials on proper terms and making the requisite contracts, as was done during the War, many millions of pounds could have been saved to the State.
We recollect that the Australian wool clip was purchased in 1916 under a five years' contract. There was no difficulty in doing that. Australian meat was bought by the Board of Trade in 1914 at 4½d. a pound, and that price continued, up to the end of the War. There were purchases from the Dominions, from Crown Colonies and from foreign countries under conditions which protected the general interests of the State. From the speech of the Minister this afternoon I felt somehow that in the future the Government might step in and protect in some measure the consumers and taxpayers of this country, and my plea is that they should now, without 3012 further delay, extend the practice which is followed by the War Office, the Admiralty, the India Office, the Crown Agents for the Colonies, the Office of Works and other Departments, which are staffed by trained personnel. I appeal to the Government to use that personnel, to extend that practice, to go straight to the source, to buy direct without intermediaries and eliminate useless middlemen who at the present moment are exploiting the country. If this were done, we should call a halt to the inflation which is going on. I think the Parliamentary Secretary will not deny that inflation is in active process at the present moment. It could be avoided, or reduced to much smaller proportions, if we had State control, coupled, of course, with proper measures of taxation.
May I say a word with regard to the great controversy of the firm of Messrs. Ransomes and Rapier? I have been making what inquiries I could, and the information that I have obtained—I hope it does not slander anyone—leads me to a different conclusion from any that I have heard. I am advised that the principals of this concern were affected by the patriotic blizzard which carried some off their feet when the Defence programme was initiated. They were very anxious to share in the production of materials for patriotic reasons, but they had the Quakers' repugnance on religious grounds to any such course. A happy way out was thought of, namely, that they should manufacture without profit, and that would be a salve to their injured conscience. If that is true—and I have it on what appears to be good authority—I am sorry for the conscience, and I am sorry for the cheap salve. If that is the position, it is, in my judgment, a case of rank religious dishonesty and I hope that the statement that was given to me is incorrect, and that these people had really no conscientious objection at any time to the production of arms. But if the Government had an opportunity to obtain armaments at a saving of some £20,000 or £30,000, it was manifestly their duty to take advantage of this offer. We are living in a capitalist age and a manufacturer ought to have a profit. If he is going to maintain his factory, pay for his renewals and extend the advantages of his workpeople, profit making must be carried on, yet any Government 3013 which has the interests of the State at heart is bound to take advantage of an opportunity such as this appeared to offer.
It is not, however, very clear whether an offer was made which would have saved such a substantial sum of money. One Minister declined to state either the price or the freight obtained for scrap. I see no reason for any such reticence. I am certain that I could go to the Baltic Exchange to-morrow and obtain the exact amount of freight that was paid, with the names of the vessels. There should be no mystery in the matter. The complaint is that foreigners, French and Dutch, are employed. That is due to the neglect of British shipowners in not building the most modern type of vessels with very low draught. In the matter of coastal tonnage we are well behind the Dutch and the French in this particular. The sooner the Government look into that side of the question, which is an important one, the better. I asked a question this week with regard to examining the potentialities of our lesser ports, is a cognate question. We have not the requisite coastal tonnage to enable us to compete with other nations in handling goods which should be exclusively handled in British bottoms. Without control, rising prices, rampant speculation and huge fortunes reaped at the public expense must continue. Through inflation the cost of living will rise still further, and the burden of debt laid on the backs of the British people for 30 years to come will be altogether higher than rearmament with national control could possibly have cost. We ask for the elimination as far as possible of private speculation in the production of arms.
§ 8.42 p.m.
§ Mr. Tinker
This is a very important question and one is sorry that it has not been brought forward at a more opportune time when one is not thinking about holidays and the Chamber is not practically empty. Most of us recognise that armaments are necessary, and we are prepared to do what we can to get them supplied, but the trouble in the mind of the people is that they think that huge fortunes will be made out of the distress of the country. That is what is upsetting our side and the great majority of the people outside, and they ask whether there are no means by which this can be prevented. It is in times like this that 3014 unscrupulous people take advantage of the position and are allowed to get away with it. Without any question at all that happened during the last War, and it was galling to many of us who felt the call of the country to sacrifice our all by giving the best that could be given—our lives—to think that many of those who remained behind did very well out of the country's troubles. Figures are being quoted proving conclusively what happened in that period, and figures have been given by a right hon. Gentleman in front of me showing where it will lead now unless it is checked. I hope that even under what is called private enterprise—unrestricted competition and Devil take the hindmost—the Government will recognise that that cannot be allowed to go on unchecked.
It appears to me that there are two ways in which it hits the community hard. In the first place, increase of prices will put up expenditure if further armaments are required. Prices will have soared, and any future estimate in respect of further requirements will be based upon those higher prices. The type of battleship which now costs £8,000,000, may, if prices are allowed to soar, in the future cost £10,000,000. That will be the meaning of high prices. The extra £2,000,000 will have to be found by the taxpayers. Unchecked prices—though the Government may say that the contracts are there and will not cost any more—will have a serious bearing upon commodities if they follow the trend of increased armaments to which everything seems to point in the state of the world to-day. The Government ought to watch very carefully and try to check prices from soaring. These high prices, even though they may not affect the expenditure of the Government at the moment, are bound to bear heavily upon various sections of the community.
One or two speakers have said that wages may catch up with the higher prices, but there is always a lag. between the two. I will assume that it does so and that the wage earner is able to share in the boom and to get his share of what is going. But there are members of the community who are on a fixed rate of living. I refer to two particular classes. There are the unemployed who have a fixed rate of income which is not likely to he altered for some time. That fixed rate was based upon a level which 3015 obtained before high prices came in. As prices soar so their power of spending in the market is reduced. As coal and everything which is required to produce armaments go up in price, the cost of every article in the market increases. Their standard of living will be indirectly reduced. There are the old age pensioners whose income is on a fixed basis. Probably they have been able to arrange their pittance according to the present market prices, but as profiteering goes on and huge fortunes are made, they will be called upon to pay increased prices. These people will hardly be able to comprehend what is causing their lower standard of living. They will wonder what is happening when they are called upon to pay a few coppers more for certain articles which are so important to them. They look to us to check that kind of thing.
I do not know whether we shall be able to do so or not, but certainly we ought to take every opportunity of making our position public, so that unscrupulous profiteers may consider whither they are being led, and realise that there may be a reaction against them, and that what they are doing so well out of now may be snatched away altogether by the country determining to take the opportunity to profiteer out of their hands. I ask them to be satisfied with a fair deal and a fair rate of profit, and not to take advantage of the plight of the country. I urge upon the Government to take whatever powers they possess to check this kind of thing, and if we on this side of the House can do anything to assist in that direction, we shall be ready to do so. If the Govern-find out that this matter is getting beyond their control and that they require an Act of Parliament to help them to check excessive profiteering, I hope that they will believe me when I say that all the help that can be given from these benches will be given to them.
§ 8.51 p.m.
§ Mr. Kelly
Like my hon. Friend the Member for Leigh (Mr. Tinker), I urge the necessity for dealing with this matter. Those of us who had experience of the position between 1914 and 1919 realise the difficulty in endeavouring to deal with people who set themselves out to profiteer. Some of us had to appear and give 3016 evidence before those committees which were referred to by my right hon. Friend the Member for Hillsborough (Mr. Alexander) when he spoke this afternoon. It was astonishing that, despite all the efforts that were made by the Ministry of Munitions, by those in charge of shipping and other Departments of State, huge profits were made. Profiteering went on, and there was a great deal that was not to the credit of this country and to the administration of its affairs, certainly in regard to the conduct of industry. We had profiteering rampant throughout the length and breadth of the land. I do not know how the Government are to control these profits unless they fix the prices. An endeavour was made in the early days of 1915 to do this, but the great combines made huge profits even when their books were examined and when very close inspection was made of all their transactions. One must feel very unhappy indeed that, after all the explanations from t he Front Bench opposite by the Minister for the Coordination of Defence, and by those representing the Departments, they seem, up to the moment, not to be able to deal with this matter so as to prevent profiteering.
We listened to the hon. Gentleman the Member for Harrow (Sir I. Salmon), who is chairman of one of the committees dealing with the matter of estimated prices in order to prevent profiteering. It seemed as though he was rather endeavouring to justify the huge profits which have been referred to by my right hon. Friend the Member for West Stirling (Mr. Johnston). We have been told of the profits made by companies like the Bristol Aeroplane Company, and a few others which were named, and we have been told by the opposite side of the House that we ought to have been able to discriminate between the various manufactures of these companies in order to see how much of the excessive profits was made out of other sides of the industry than that which was supplying Government Departments. I believe the hon. Member for Harrow forgot that there are many Members on this side of the House who know what is taking place inside these factories, and know what a small amount of work is being performed by these people other than that carried out to the order of the Government. These profits are being made out of the Government 3017 orders, and it is no excuse or defence at all to say that a portion of these profits may be coming from the work other than Government orders, upon which these firms are engaged. I hope that the representative of the Government will answer some of the questions which have been put to the Government this evening: for instance, that he will deal with the question of the coastal trade.
§ Dr. Burgin
I hope the hon. Member will put his question, because for some time this afternoon I had to be in another place. If he will put his question about the coastal trade I shall be happy to deal with it. I am most anxious to be of service to the House.
§ Dr. Burgin
Perhaps the hon. Member was not here at Question Time to-day. No boats were loaded at Bo'ness. Boats discharged there. That is a very material difference.
§ Mr. Johnston
I hope the Parliamentary Secretary does not pretend that there is not regular loading of boats at Bo'ness, Grangemouth, Leith and Scottish ports on the east coast, with scrap and other metals.
§ Dr. Burgin
What I am dealing with is the suggestion that a number of vessels, mostly Dutch, have been loaded at Bo'ness in recent times. There is no foundation for that statement.
§ Mr. Kelly
The Parliamentary Secretary may take it that our statement relates to the question of loading or unloading. It is a fact that instead of British vessels being used for that coastal service in dealing with the transport of scrap, vessels sailing under other flags have been utilised. One would like to know whether the Government are cognisant of this thing and whether they have taken any steps to see that our own boats are used for this purpose. If not, why not? Is it because of the lower freight charged? We cannot say, because this afternoon when we pressed for the figures we were told that they could not be given. I 3018 hope the Government will not defend themselves behind what the War Office told us this afternoon, that it is a tradition that they must not give figures across the Floor of the House in regard to the price of contracts or estimated prices. We have had an experience within the last few weeks of a refusal by one Department to tell us what they paid for Lansdowne House, and immediately a pressman went to Lansdowne House and published the whole story in the newspaper on the following morning.
§ Mr. Kelly
The one amazing thing is that such a huge price was paid by the Department for the purpose of using luxury flats for storage purposes. I have had a look at the place recently and have been amazed to find how much is being used in that way. This afternoon the subject was raised about the offer of Messrs. Ransomes and Rapier. I have known that firm for nearly 40 years, both as regards its manufactures and its dealings with the men, and also those who are concerned with the ownership of the place. Are we to understand that the refusal to allow Messrs. Ransomes and Rapier to make shells without any profit or loss to themselves is to be the policy of the Government? It surprises me, in view of my experience with engineering and shipbuilding, to find any firm coming along and making such an offer to the Government. If other firms are prepared to manufacture for the country on this basis of no profit, do the Government intend to refuse to allow them to engage in work required for the nation?
I should like to know what steps are the Government taking to prevent profiteering in regard to machine tools? There are hon. Members on this side of the House who are greatly concerned at the method which is being adopted. We have heard of certain machine-tool makers who have been given almost carte blanche with regard to installing machine tools into some new factories. These firms not themselves being able in their own shops to manufacture certain machine tools, are going abroad and purchasing them from Germany and the 3019 United States. Some of those machine tools, if not all of them might well have been manufactured in this country.
§ Mr. Kelly
The hon. Member shakes his head, indicating that he is not prepared to accept that statement. It is time that some investigation took place. Having been concerned with that particular side of industry and being in close touch with many machine-tool makers, I am surprised to find that some of them might be engaged upon a greater amount of work than they have in hand for the Government. It is surprising to find that while some machine tool makers are not engaged to full capacity others are going abroad and bringing in machine tools from those countries. It may be that the class of machine tools that are being brought in are of a different type. I know that those machine tools can be manufactured here, having spent some years in the manufacture of them myself, but we have not had any explanation. It appears to us a new idea that manufacturers should be allowed to instal not only their own manufactures in a factory but also the productions of other people, foreigners in this case, in the same factory. I hope there will be some investigation and that we shall have the matter cleared up, so that we may feel sure that there is not cultivation of the manufactures of other countries to the detriment of the work people of this country.
Arising out of our experience in 1914–19 regarding to the factories engaged upon munitions of war I should like to know whether the whole cost of the new factories, which are to be handed over to other people to manage, is to be borne by the Government? A short time ago, when we were dealing with another side of the problem, I put that question, and the answer I received then did not satisfy me that every precaution was being taken to prevent those factories from passing into the hands of other people who had not paid a penny towards the cost of their erection. There was a great deal that went astray during the years 1914–1919. I remember on one occasion hearing a telephone conversation in which two people were priding themselves upon the wonderful present they had received from the Government without the Govern- 3020 ment knowing the many thousands of pounds they had handed to those people in machinery and buildings at that time. I hope that will not be repeated on this occasion. I hope that on the question of these factory buildings and machine tools we are to have a reply that will be more satisfactory than anything we have heard up to the present time.
When one considers the price of tin and other metals, it is astonishing that there is not a greater development of parts of the tin mines of Cornwall. Time and again in recent years we have raised that question in the House. Although the county has been worked for tin for 2,000 years, I am told that it has never been developed, and it is well known by the captains—that, I believe, is the title of the engineers there—that there is still an abundance of wealth in tin and other metals in that county. It has not been developed, because those who are in the tin-mining world have found it easier to secure their profits by their investments in Malaya and other parts of the world. They are prepared to neglect their own country when they can get easy money from the tin that is being raised in other parts of the world. That is most unfair to their own country and its people. I hope those who are in charge on this occasion will engage in that investigation now. In 1917, three years after the War began, they were compelled to engage in the development of the tin mines of Cornwall, and the result of their efforts was not unprofitable. I suggest to the Government that it would be profitable if they would engage in it at this particular time.
I wish to join with the hon. Member for Leigh (Mr. Tinker) in his demand that regard should be had by the Government to those people to whom increased prices will mean an approach to, if not the reaching of, semi-starvation—those who are on widows' pensions and old age pensions, and who, during this Coronation period, are not even being considered for the increased allowance that is being given to some sections. In the matter of school grants, for instance, I am amazed that the President of the Board of Education is not considering the question more closely, for the children to whom grants are given will find that these grants are reduced in amount by reason of their reduced purchasing power. I hope the 3021 case of these people with a fixed income of a few shillings will be considered by the Government, even to the point of increasing the benefits. I hope the Government will not wait, as they did during the War, until the burden is too heavy for those people to bear. I hope they will increase the income of these people so that they may be better able to face the increase in prices that is taking place.
I am sorry at this hour to put so many points to the hon. Gentleman, but I feel that, being concerned with many of these factories and with many thousands of men and women engaged in dockyards, arsenals and engineering and other establishments throughout the country, it is my bounden duty to put these matters to the Government in the hope that they will deal with them effectively and for the benefit of the people of this country.
§ 9.12 p.m.
§ Mr. Mathers
There is another angle of this question which has not been mentioned in the Debate to-day. Naturally the discussion that has taken place has been on exploitation and profiteering at the expense of the Government. We have been reminded of the huge profits that were made during the War by exploitation of the people of this country through the War contractors not being properly controlled. There have been various estimates of the profits made by a comparatively few individuals at that time, and we have seen figures going from £3,000,000,000 upwards. That, of course, represents only a small portion of the profits that were made, since the 3,000,000,000 were left in the hands of a comparatively few individuals after an excess profits tax of 80 per cent had been collected.
I want to look at the discussion from the point of view of the worker, not merely as a consumer, but as a producer, and I wish to ask the Parliamentary Secretary whether he can give us some indication as to how the Fair Wages Clause is administered. The object of that Clause is to see that workers who are engaged on Government contracts enjoy reasonable conditions. When we put the question, "Do wages ever catch up with increased costs?" I think we are faced with the sort of consideration that often occurs to me when I am travelling about the country and come from a subsidiary road on to the main road, always finding 3022 there the sign "Major road ahead." That gallant gentleman always keeps ahead in the same way that prices keep ahead of the workers' wages.
I have in mind an instance of the failure of Government Departments to ascertain clearly whether the Fair Wages Clause was being carried out properly. When I represented West Edinburgh, between 1929 and 1931, I had occasion to deal with a complaint from certain trade unionists working for a very large firm. They complained that although they were working on Government contracts for the War Office, the Post Office and the Admiralty, they were not receiving wages that could be considered as anything like reasonable wages for the work they were doing. It was my duty to take up the matter with those Departments and after some correspondence and investigation, the three Departments, jointly, told the firm concerned that the wages which were being paid were not proper wages under the fair wages clause. The firm was peremptorily ordered to increase the remuneration of those workers to the proper level, and my recollection is that that involved the payment by the firm, to some hundreds of workers, of an increase of 4s. 4d. per week. That happened very shortly before the General Election of 1931, but the fact that I had had some hand in securing that increase of wages did not save me from a very heavy adverse vote in that Election. That is why I was out of the House between 1931 and 1935. [An HON. MEMBER: "Base ingratitude!"] I am afraid that is a quality with which we often meet in political life, but we must be prepared to do what we believe to be right and take the consequences whatever they may be.
In the instance which I have just cited, the excuse made by the Government Departments for not having insisted earlier on the payment of better wages to these people was that the firm concerned was the largest of its kind in the district, employing thousands of workpeople, and that the wages paid by that firm were, therefore, looked upon as the standard wages prevailing in that area. That, in my judgment, is not the proper way in which to judge of whether the wages paid in a particular case are fair or not There should be much closer scrutiny by Government Departments of the wages paid for Government work, and if the Parlia- 3023 mentary Secretary to the Board of Trade can give us some indication to-night that machinery is available and is made use of to see that the fair wages clause is properly observed, it will be a great relief to many of us on this side of the House. We have in mind that in some cases the workers are not well-organised, or, even if they are organised, are not too keen to press for increases of wages because of the fear that they may be victimised, and may do themselves harm in one way or another. In those circumstances the workers may continue to endure conditions which ought not to prevail, and yet all the time this House is under the impression that the fair wages clause is being strictly applied in connection with all Government contracts, and that the workers engaged on work for the Government are receiving the appropriate remuneration. I hope the Parliamentary Secretary will be able to give us some reassurance on the lines I have indicated as to the administration of the fair wages clause in connection with these contracts.
§ 9.19 p.m.
§ Dr. Burgin
Hon. Members know that the Debate on the Third Reading of the Consolidated Fund Bill can roam over a very wide area, and many of us who have had experience of such Debates in previous years, realise that you may have in them a number of completely unrelated subjects and sometimes unrelated arguments as well, and that it would require an encyclopaedic knowledge to deal with all the questions raised on these occasions. The House, of course, understands that the Board of Trade is not an operating Department. It has no part in rearmament, and my right hon. Friend the President of the Board of Trade cannot, in that capacity, accept any responsibility for the causes of any rises in prices which may occur in the carrying out of that programme. It may be that once prices show a tendency to rise, it will be necessary that steps should be taken, and it is to that side of the matter that I shall address some observations to-night.
Before I deal with the general subject, I shall reply specifically to some questions raised by the last three or four speakers. Let me say at once that in all contracts placed by Service Departments the fair wages clause finds its place, and I know 3024 of no criticism at the moment remaining unanswered with regard to the working of that clause. If criticism were brought forward from any quarter I can give an unqualified assurance that it would at once be investigated. There is no difference of opinion between the two sides of the House with regard to the desirability of seeing that, when the fair wages clause is incorporated in contracts placed by Service Departments, it is properly fulfilled, and carried out in the spirit as well as the letter. I hope the hon. Member for Linlithgow (Mr. Mathers) will feel that that is an assurance on the lines which he would desire.
The hon. Member for Rochdale (Mr. Kelly) raised a number of questions. He asked me about the coastal trade, a subject mentioned earlier by the right hon. Gentleman the Member for West Stirling (Mr. Johnston). We are all anxious that as far as possible goods, particularly in coastwise traffic, should be carried by British vessels. We are anxious that our ports should be capable of handling the traffic which is available, and I think it will be agreed that instead of having tremendous schemes of dredging to make what are essentially shallow-water ports available for deep-draught vessels, it should be our policy to build more shallow-draught vessels for shallow-water ports. An hon. Member expressed the view that in some cases British shipbuilders or shipowners had been caught napping in not having built the type of vessel suitable for some of the shallow estuaries and shallow-water ports round our coasts. The fact is, I think, familiar to the House that the coastal trade of a number of countries is open to vessels flying the Red Ensign, and it would be a mistaken policy on the part of His Majesty's Government to shut out from participation in our coastwise traffic vessels bearing the flags of the countries which permit our vessels to take part in their coastwise trade. Where it is possible to use persuasion that merchants and shipowners engaging in their own traffic should specify British vessels, that persuasion is given. I have not ceased on shipping occasions to preach the doctrine of utilising, where possible, British tonnage, and I regret that there does seem to be in this movement of scrap from some of the Scottish ports to which the right hon. Member for West Stirling referred quite a considerable 3025 amount of traffic in vessels flying foreign flags.
I would be most grateful to the hon. Gentleman, in view of the fact that this question is very material to my own constituency, if he would tell me the countries where British vessels are allowed to embark on coastwise trade?
§ Dr. Burgin
The answer was given in response to a Parliamentary question quite recently. I would not like to charge my memory with a complete list. Holland is certainly one, and the vessels to which our attention has been called are vessels flying the Dutch flag. I will give the hon. Member a list, but there are many countries where our vessels have free access to the coastal trade. The Government are not in any way concerned in these shipments of scrap. They are private orders given by private firms who arrange their own shipping under the terms they make with their vendors. I hope that the hon. Member for Rochdale was not suggesting that the Government were concerned.
§ Dr. Burgin
I am much obliged. I felt that the hon. Member would be much too well informed to put the other suggestion forward. Let us encourage the use of British vessels, and if British vessels of this shallow depth do not exist, let us encourage their construction.
§ Mr. Johnston
Is there not another consideration which enters into the mind of the Government, namely, that in the carrying of scrap, pig iron and fire bricks the vessels flying the Dutch flag escape paying Income Tax, they travel with a third fewer engineers and seamen, and in the event of an ultimate war we might be placed in a very serious position if we did not have coastal vessels of our own?
§ Dr. Burgin
I think that all those points were covered by the answer I made. In many cases the particular type of tonnage required does not exist, and I have been doing what I can to encourage its construction.
3026 The hon. Member for Rochdale then passed to the question of the machine-tool trade. I think the machine-tool trade has played very fairly, and is cooperating in accordance with our wishes. I have no wish to make any complaint about the services which are rendered by the machine-tool makers of the United Kingdom. There are gaps, very naturally, in the manufacture of machine tools. There are a number, particularly of the automatic machines, in which we have not specialised, and the construction here would be extremely expensive, the time delay would be long, and the number of machines ordered in consequence, once the particular type had been put into manufacture, would not make it an economic factor to produce them. In cases of that kind I should have no hesitation in recommending a manufacturer who was about to switch over to a new type of trade to procure his machine tools as quickly as possible.
The hon. Member for Rochdale knows that if he went to Coventry now he would be quoted 48, 50 or 52 weeks' delay, and it may not be long before greater delays are quoted not only by the manufacturers here but in the United States and on the Continent. Side by side with the return to prosperity in America the demand for machine tools increases enormously. It is certainly a word of advice to give to anybody who is equipping a factory that he should get his machine tools quickly, because world demand is increasing. But the hon. Member for Rochdale is entitled to an assurance that this whole question is constantly under supervision. It is a matter which is referred to regularly at the Board of Trade in reports received from industry. I can give the House encouraging reports on this question.
The hon. Member asked about buildings for the use of armament manufacturers, with which I am not competent to deal. I hope he will allow that question to be conveyed to the Defence Minister responsible. It does not fall within the realm with which I have been asked to deal to-night, and I can only pass it on to one or other of my right hon. Friends. When he comes to metal I can deal with that, and I will do so generally later on. The hon. Member for Leigh (Mr. Tinker) made a most interesting, helpful and reasonable speech. I find myself in entire agreement with every word of it. I take note of his assurance that were we in 3027 any doubt as to our powers to deal with excess prices we could come to the House and count on the assistance of him and his friends to pass the necessary legislation. The Debate to-night has ranged over this whole question as to whether prices are being allowed to be uncontrolled, whether the Government have been responsible by their armament programme for some of the rises to which attention has been called, and whether that rise in prices has been materially contributed to by the action of speculators.
I want, quite shortly, to give some information to the House from rather a different aspect. The thesis which I want to put to the House is not that rearmament has caused this bounding in prices, not that there is intensive profiteering on the part of armament manufacturers and Government contractors, not that speculators have played a large part, but that these influences are relatively slight and that if we want to find what has happened in the world we must look further afield. Commodity prices have risen generally with few exceptions. The movement began in 1936 concurrently with the commencement of industrial recovery in our own country, and was stimulated very much by the return of industrial activity in the United States of America. The rise in prices has increased with greater velocity owing to various features which have arisen since. Between 1931 and 1936 there was a greatly reduced demand for primary products. An accumulation of stocks in nearly all the more important primary products resulted, and the primary producers, in order to protect themselves, with these large stocks on hand, resorted to systems of reducing production—rationalisation, cartel schemes, all kinds of schemes were resorted to, because in each trade market for a primary product a large accumulation of stocks was hanging over the market depressing the prices.
Now these measures—international schemes, most of them—had the result of reducing those world stocks, so that when the demand revived the position with regard to commodities was fairly strong. There was an upward tendency in price levels, because, stocks having been consumed, immediately there was industrial activity demand outran supply. That is precisely a set of circumstances 3028 known to all economists in which a rise in prices must inevitably follow. That was a very desirable movement within limits, very desirable indeed. Within limits, every individual in the world desires that those who produce primary products, whether metals won from the ground or crops raised from the soil, should gain a bigger livelihood, should have some surplus at the end of the year, and should be able to be the greatest possible consumers of the industrial goods made by their fellow workers in the towns and cities.
The Government rearmament proposals were announced on 16th February of this year, and half the case made by hon. Members opposite, with the suggestion that the rearmament programme has been responsible for this, that, and the other, tumbles to the ground at once if you show that the rise had occurred before the announcement was made. I have shown the rise in prices as beginning early in 1936 and continuing with increased velocity right through, and the announcement was made by the Chancellor of the Exchequer in this House on 16th February, 1937. Immediately the world became seized of the fact that there was to be an extensive rearmament programme, you had two factors at work. You had a tendency for consuming industries to cover their anticipated requirements, and, as is so often the case when there is a bit of a flurry introduced into the market, you had industries going to more than one supplier for what was eventually intended to be only one order, and you had inquiries made in five, six, or seven directions when in reality the consumer only intended to make a contract in one of them. The tendency was to force up prices, and the consuming industries covering for what they thought would be a shortage in their own materials, accounts for far the greater part of the rises to which we are referring and is not debitable to the Government in the least degree in the world, but is the natural play of the forces of supply and demand.
§ Dr. Burgin
The hon. Member cannot interrupt and say that. I have shown by a logical sequence that this has arisen, by far the greater part of it, out of con- 3029 sunning industries placing orders with producers for what they anticipated would be their requirements. I believe that the intervention of speculators has played a very much smaller role than hon. Members opposite appear to believe. The information at my disposal is that speculation, by way of a purchase with intention to re-sell at a higher price, has been extremely limited, and I think the looseness with which hon. Members talk of exploitation and of profiteering is rather deplorable. I invite hon. Members who are going to make allegations of speculation to look into the facts and to find an instance. None have been quoted to-day. Probably the absorption of primary products by the United Kingdom defence programme has had little, if anything, to do with the increases in price. I wanted to make that point clear. The announcement of the Chancellor of the Exchequer was on 16th February, and I have had careful preparations made of the Board of Trade weekly index returns for the weeks that have followed that announcement. I do not want to give details, but I have certain conclusions. Prices were showing a firm upward tendency from June, 1936, to the middle of February, 1937. The advances in respect of certain primary commodities helped to raise the index, but there is no evidence that prices of those primary commodities, except perhaps the non-ferrous metals, have continued to rise at any accelerated rate during the weeks since the Chancellor's announcement with regard to rearmament.
§ Dr. Burgin
I said, except in regard to non-ferrous metals. It is difficult to determine how far price increases which may enter into rearmament schemes have been due to shortness of supply, to speculative influence, or to a combination of both, or are debitable, as I believe, to the desire of manufacturers to secure supplies at best prices, but close scrutiny must, of course, be paid at all times, particularly by the Board of Trade, as the consumers' Ministry, to see that those prices do not get out of hand.
Attention was called to metals, and I want to say a word or two with regard to them. I would ask the House to remember that in so far as there was a restriction—and in tin there was a restric- 3030 tion scheme—it was an international scheme. I want the House not to have the impression that the tin scheme was one which it was within the power of this Government to deal with alone. This Government is not satisfied that to deal with it at all would be wise, and even if it were, it would not be able to do so without the co-operation of a number of other Governments. I think a very good case could be made out for the maintenance and continuation of the tin scheme. I have gone into it in a good deal of detail for the purposes of this Debate, and I am satisfied that the suspension of the tin scheme would not materially increase production and would create great difficulties, whereas I believe the activities of the tin market to be of temporary duration.
How does that really work out? The hon. Gentleman says he does not think the suspension of the tin scheme would improve production, and yet we are faced, on the one hand, with the statement that we are short of metals and on the other, with figures showing that within a few weeks the price of tin rose from £230 to £300. What does the hon. Gentleman mean?
§ Dr. Burgin
I mean exactly what I said. I mean that the tin scheme, which was initiated because the production was proceeding at a greater pace than the consumption, because stocks were piling up, and because prices had fallen to a hopeless level, was advantageous, that it kept the price manageable, that it kept production and consumption within measurable distance of each other, and that it kept a steady market. Of course, a buying by consumers to accumulate stocks, simultaneously bidding against each other, will put a price up temporarily to absurd levels. Even so, this rise in tin is not very different from that of other metals. Tin, copper, lead and spelter are not rising to abnormally different levels the one compared with the other, and I am satisfied, from information that I have in my possession as to the consumption and production for 1937, that the right steps are being taken. I say again that the suspension of the scheme would not appreciably increase production, but it would create great difficulties in the tin market as soon as conditions, which I believe are temporary, have ironed themselves out.
Will the Parliamentary Secretary tell us what percentage of restriction there is in the tin industry?
§ Dr. Burgin
It is not done by percentage. The visible supply of carry-over at the end of the year and the probable consumption are calculated, and the rates of quota are arrived at. The rate of quota for January, 1937, was 100 per cent. The figures are all worked out on a table from 1908 onwards. They show that the scheme is operating successfully, and that the Committee in charge of the scheme are doing everything they can to meet the situation of an increased demand for tin. I say that, in so far as that increased demand is not a real demand, but represents a number of consumers bidding against one another and putting their own prices up, this is a temporary situation which will work itself out. Let the House realise that just in the proportion in which you increase the price of an article, so you put a premium on producing more of it, which in its turn tends to lower the price. When, as the result of these Debates and other matters, the necessity of not buying against one another becomes more and more apparent, the demand to bid against each other will cease and the price will fall, and the particular price of £300 for tin will become temporary.
I have the details of all the non-ferrous metal prices. but the answer to the House is the same in all. The primary cause is the increase in world demand owing to industrial activity, not merely here, but in the United States of America. It is sometimes suggested that the Government should control prices. In nearly all these metals we rely on imported supplies. Consequently to talk of a control of prices by our Government is not possible. These are world prices, and isolated action on our part would merely result in our not procuring the metals at all. In the War of 1914–18 things were different. The Government acted as the buyer not only for ourselves, but for our allies. They were in control of a very large part of the demand, but that did not prevent large increases in prices. The prices of non-ferrous metals have been steadier during the last week, and the first wave of excited buying has exhausted itself. The increased prices now obtainable will mean that more supplies of these metals will come on to the 3032 market and prices will tend to fall. It is the fluctuation of prices within wide limits which is the annoyance, and not the particular level at which a commodity will be pushed as the result of increased world demand.
The Parliamentary Secretary says that there cannot be any effective Government control because practically all the metals come from overseas. Is it not true that the majority of these base metals come from British territory—Malay, Nigeria and Africa? I am speaking of copper, tin, spelter and, in some degree, of lead. We have some information that there has been heavy speculation in London by people buying commodities without ever intending to hold them. I say that the Government could control that, and unless they can give us an assurance that it is not affecting the armament programme costs, they ought to give the House an assurance that they will take steps to deal with it.
§ Dr. Burgin
The House will understand that I am not dealing with armament profits, but with the rise in price of raw materials. I am dealing with that which falls within the cognisance of my Department. I made that clear at the start of my observations. The distribution of these metals is well known. It is a delusion to think that the greater part of them come from British territories or the British Empire. Copper comes largely from Belgian Congo, Chile and the United States of America. Of course, there are supplies within the Empire.
§ Dr. Burgin
Certainly, but that does not meet the argument. If you are dependent on imported supplies, they are subject to the world price. It is idle to talk of the British Government controlling or fixing prices. It is a complete intellectual delusion. It is a very attractive platform method of trying to rouse the enthusiasm of an audience, but it is fallacious in the extreme. It will not bear examination. These metals which are essential to the various programmes which the Government have on hand, and also essential for ordinary industrial purposes, command the world price, and anything short of that price will result in the purchaser not securing supplies.
§ 9.52 p.m.
§ Major Procter
I should like to congratulate the Board of Trade on the excellent work they have done during the past year. I believe that at long last the Board is Lancashire-conscious, and it is in order that they should not forget one or two things that I rise, because, as the old saying has it:A thousand good things done, but one forgotWipes out the others with a blot.Before I mention those things, I would like to ask a question with regard to profiteering. I believe that the method which was in operation during the War is not now being followed in fixing the profits of manufacturers. During the War disaster was caused by a system of basing profits on a percentage of the cost of materials and wages. The desire to prevent profiteering in armaments is very laudable but unless we discourage any- thing remotely related to the old system, which increased profiteering all along the line, it will be disastrous to our export and other trades. If the old system is permitted then if the costs of materials and wages rise the profits of the manufacturer will be greater. I am concerned lest our export trades which, after all, have to pay for the new Defence armaments, will be adversely affected. Already I understand that there are being drawn off from the export trades engineers and other workers who are attracted by the high wages in the armament factories. There is a disparity between the wages of those employed in the export trades and of those engaged on armaments. This may cause a great deal of discontent and 1937 may be a year of industrial unrest, which we wish to avoid if possible. I believe in high wages all along the line. Our factory operatives in the cotton and engineering trades should have the highest wages consistent with the prosperity of industry, but I do not want the employers in armament firms to be able to attract workers from other industries, because they have a monopoly and knowing that the higher the wages they pay and the more they pay for their materials the greater will be their profits.
In the second place I should like to ask whether the Board of Trade mean to do more to prevent Japanese textiles coming into this country and being printed here and then shipped to our Colonies as British goods. I understand that some- 3034 thing was to be done to prevent cotton goods being designated British unless they had been "spun, woven and printed" in this country. Is it possible for the Board of Trade to insist that Japanese textiles exported to our Colonies shall have an indelible mark in the selvedge, or somewhere else, so that buyers may know that they are Japanese goods, no matter how they are printed or otherwise disguised?
I should also like to bring to the attention of the Board of Trade the great desire of the development associations in Lancashire to co-operate with the Board of Trade in helping industries in this country. Why should foreign manufacturers who wish to open factories in this country have to rely upon the London Chamber of Commerce to guide them? When foreigners feel compelled to open factories in this country in order to secure a market which otherwise they would lose through our tariff policy, they write to the London Chamber of Commerce, who naturally desire as many factories as possible to be established in London. We in Lancashire have in past years had the residue after London has been served. If the Board of Trade cannot exercise control in this matter we should like them at any rate to guide these foreign manufacturers to areas where there are still large pools of unemployed labour. In Lancashire we have the best and the most willing workers and we will give foreign manufacturers greater advantages than they can get anywhere, even in London. Within 'co miles of Manchester there is a larger population than there is around London. Therefore, I hope that, if possible, the Board of Trade will not continue to allow this important national work to be done by the London Chamber of Commerce but try to take a hand in it themselves.
Whilst speaking on the work of development associations, I would point out that owing to the peculiar working of the law a town council, with the object of attracting industries to the borough, can use its money to recondition factories, but an urban district council cannot do so. Accrington, through its wide-awake development association, took over an empty derelict cotton mill, reconditioned it and made it into a modern trading estate. It was taken over by a French firm, and it will give employment to Accrington people. But there are three 3035 urban districts in my division, Claytonle-Moors, Oswaldtwistle and Rishton, where there are a large number of unemployed. They have progressive councils, desirous of reconditioning their derelict mills and making them attractive to industry. We believe, indeed we know, that if this can be done it will ease the position as regards unemployment, but, unfortunately, the urban district councils have not the requisite power.
I wonder whether the energetic Parliamentary Secretary of the Board of Trade could look into this matter and suggest some way of enabling these urban district councils to help him to assist trade and reduce unemployment even more effectively, and with far less worry so far as my division is concerned. Taking things all round, I have nothing but congratulations to offer to the Board of Trade for the splendid work they have done for Lancashire during this year, and I hope they will carry on with that good work during the years to come.
§ 10.4 p.m.
Mr. Owen Evans
I rise to make one or two observations on the very important subject of the fluctuating prices of non-ferrous metals. I was very much impressed, as I always am, with the lucid, clear and effective explanation of the situation given by the Parliamentary Secretary, and in the main I must agree with him, though on some points, perhaps, I differ. I am sure that the whole House will sympathise with the anxiety of hon. Members about this question, because it is very important that the House should be satisfied that these rapidly rising prices are not due to any deliberate profiteering on the part of any individual firm or company.
There is one misconception which I hope my hon. Friends above the Gangway will permit me to clear up. In view of the Government's rearmament programme, involving an enormous expenditure of public money, it is, I think, important for the House to appreciate in what way that money is being spent—how it is being spent, and upon which it is being spent. I am sure it will then be realised that the proportion of the expenditure on raw materials is remarkably small compared with the total expenditure upon the finished products. Had I 3036 realised that this Debate was going to take place to-night, I could from my own personal experience have produced to the House real figures to show, for example, what prooprtion of the money is spent upon non-ferrous metals—on copper and nickel and tin and aluminium—as compared with the cost of the finished article, like a battleship or a cruiser. Quite apart from any party question, it is very important that this distinction should be realised. If you had the figures concerning all the operations involved in producing the finished product in the rolling mills, the casting and the smelting and so on, you would find when you analysed the cost that the cost of the raw materials is a very small proportion of the total.
I am not dealing with the world impression. In analysing these matters we must, in this House at any rate, deal with facts, and not with wrong impressions in the world. I am quite willing to concede to my hon. Friend above the Gangway that to a large extent the increase in the price of copper, for example, is due to a wrong impression of the quantity of copper that will be required by the Government programme. But I want my hon. Friends above the Gangway to realise that one of the main items of the finished cost in any rearmament will be labour—the cost of direct wages spent on the actual product, as well as the cost of indirect wages on fuel and matters of that kind. That has a very important bearing on the question of the prices of metal. I am not going into the tin scheme, because frankly I do not know sufficient about it.
I am sorry my right hon. Friend the Member for Hillsborough (Mr. Alexander) is not present. I know he brings to bear upon these things a real analytical mind, and he is quite fair in discussing them. But I do say this, that the prices of materials, such as copper, are not due to any large degree to speculative influences in London. I am saying this after having made some personal investigations. It is a matter which deeply concerns many of us. I happen to be associated with a 3037 company which is, I think, the largest producer of copper in the world to-day. The result of the investigations I have made, and which have been made by my friends who have very thorough knowledge of these matters, is that the increase in the price of copper—which frankly I and those with whom I am associated deprecate—is not due to speculative in fluences, except to a limited degree. I am told that it is a figure of £3, £4 or £5 per ton. The real cause has been that the world was caught napping, and no person could have foreshadowed the immensely increased demand for copper after the serious depression through which the world has passed—both the United States and England. Because the demand for copper has not been due to the rearmament programme at all, but has been due to the general increase in prosperity of this country, of America, and of other countries of Europe. But the world was caught napping, and immediately it was found that there was a fear of shortage the British Empire producers increased their production.
I think that all the producers deprecate this wide fluctuation in the prices of materials. We know that it upsets everybody. Those who convert the copper into the finished product desire a stabilised price for copper, and in some instances there are metals, which are very important in rearmament, the prices of which are stabilised, and which can be stabilised by the action of the producers themselves. I cannot see how any government—say a government which would represent the views of my hon. Friends above the Gangway if they were in power to-day—could stabilise the price of metals which are produced in various countries of the world, and which are imported from those countries to this country, to Germany, France, other continental countries and the United States. It would certainly be an unwise policy to say that this country would not permit any copper to come in, at a higher price than x pounds per ton, because the result would be that that copper would be diverted to other markets, to the best markets it could find. And indeed it would be unfair.
I emphasise again that the influence of the price of these non-ferrous metals upon the total cost of the Government's armament programme is greatly exaggerated, 3038 because much the greater portion of the cost is due, not to the cost of the raw materials, but to the cost of the finished products, measured by the wages paid,. both directly and indirectly, by the manufacturer. All those who are producing, these metals would, I believe, without exception, if it could be done by international arrangement, like to have the-price, say of copper, stabilised, but my hon. Friends below the Gangway will realise how difficult it is to bring about such an arrangement. I know from my personal experience that what the consumers, for example, in the Birmingham area, as well as in other areas, need today is a reasonable price which they know will last for a period of time and will enable them to contract for their products, for, say, 12 months.
Has the House realised what a small part of the cost of the rearmament programme is due to the non-ferrous metals? Take copper. I am not in the secrets of the composition of the alloys which are being used in engineering, for tanks and ships required by the Admiralty, the War Office and the Air Ministry, but every technical-minded man who is used to these things will have some close approximate idea of what the percentage is likely to be. I should think I am not far wrong in suggesting that the total amount of copper in a battleship is not 2 per cent. of its total weight.
The hon. Gentleman says that it is not as much. I do not know whether any hon. Member can tell me the average weight of a tank. I will put it at 10 tons, although I should think that the average weight would be higher. I say, again, that the weight of copper in the tank will not exceed 2 per cent. of the total weight. If a government builds' 5,000 tanks, with a total weight of 50,000 tons, the total weight of copper will not be more than 1,000 tons. The same is true of other non-ferrous metals. The nickel producers have succeeded in stabilising their prices. They have even brought down the price by about £20 per ton, although they could have advanced it by £70 per ton. That is the result of the co-operation and co-ordination of nickel producers. The producers of other non-ferrous metals could have had the same advantage as 3039 they have had. I have made these observations because I was greatly interested in the speech of the Parliamentary Secretary and I thought they would throw some light upon the importance of this subject and of the measure of its importance in the rearmament programme.
§ 10.20 p.m.
§ Mr. Gallacher
I notice that when there is any question of profits, hon. Gentlemen below the Gangway fall in loyally behind the main army. That is something which we shall always be very attentive to notice. From the story that has been told, it appears that during all these many years we have been under a strange delusion—that there was profiteering during the War. It is said that the bulk of the money goes in wages—
§ Mr. Gallacher
The hon. Member has just been showing us, in what he considers to be a very careful statement, that very little of the money spent on munitions is spent on anything but labour.
I never said that there was no profiteering now. I only said that the main cost of the finished articles in the rearmament programme is labour, both direct and indirect. There may be profiteering about that; I do not say that there is not; and I quite sympathise with the anxiety of the House to prevent it.
§ Mr. Gallacher
I would advise the Parliamentary Secretary, of whom the hon. Member seems to have a very high opinion, that when he comes to give a lecture on production and prices, he should at least know a little about his subject. What are world prices? Is there a Committee somewhere deciding world prices, and are those the prices at which raw materials come into this country and go to the manufacturers? World prices are decided by all kinds of rotten speculation, all kinds of fraud. They are decided on the Stock Exchange—
§ Mr. Gallacher
In this country, in America, and in other countries the speculation goes on. We have been told 3040 that, in the case of copper for instance, prices started to rise before this programme, but those who were speculating knew long ago, or at any rate a considerable time ago, that this programme was going to be projected. We have the peculiar story that the increase in the price of copper is determined by demand in America, and not by demand here—that the enormous expenditure to be incurred in this country is not a cause of the great acceleration of the increase in prices. But if you have, added to the demand from America and Germany, an enormous demand from this country, immediately speculators will get busy and prices will rise. If you are going to stop profiteering, you have to stop the speculator. The hon. Member said there was a big jump in the price of copper because of a wrong impression about the amount needed.
Mr. O. Evans
The consumption of copper last year reached a high peak, and that was before the armaments programme was announced at all. It is not increasing this year. The rate of consumption now is practically no higher than it was last year.
§ Mr. Gallacher
You created the impression that the tendency was for a greater amount of copper to be produced than was actually likely to be in demand. Then, although there is no likelihood of a very considerable increase in the consumption of copper, you say it is not possible to regulate the price by laying it down that they will only accept copper at a given rate. Surely, if there is not going to be an increased consumption, there is sufficient copper within the Empire to allow of the Government establishing control of that kind. There is sufficient to meet the needs of the moment unless there is going to be a very great increase in the armament programme, and that is what they are trading on and what is sending up prices.
Then we come to the statement made in connection with the offer of Ransomes and Rapier. The Secretary of State tells us that it was of such an astounding character that it is inconceivable that anyone should have made it. They have all become so wedded to the idea of profit that it is inconceivable that anyone could make such an offer. He told them it was too cheap, so that we can declare to the country from Land's End to John 3041 o'Groat's, or from Cairngorm to Ipswich, that the diligent watch dogs at the War Office have saved the country from the awful calamity of getting its raw materials too cheap. Other hon. Members have told us that the employers were so patriotic that they would never dream of profiteering for the sake of profiteering. They were prepared even to make sacrifices in order to help the nation to get its armaments—the employers who for profit have destroyed four great areas! They do not know the meaning of the word patriotism." Go and tell the people in South Wales that the patriotic employers who for the sake of profit have destroyed their areas will make sacrifices to help the Empire.
§ Mr. Magnay
Does the hon. Member suggest that employers in the North-East district destroyed the area in which they make their living?
§ Mr. Gallacher
I say that the employing class have destroyed four areas. Who destroyed them? Was it the workers?
§ Mr. Gallacher
Is Builders Securities Limited for building up or destroying areas? There is the Lancashire Cotton Corporation. Is that for building up industries for employment? I had experience of dealing with patriotic employers during the War. I was a trade union official. I remember that at one meeting, when we were discussing wages, it was stated that the bulk of the money went in wages. I was a skilled man, and I did not get high wages. They used to talk about engineers getting fancy wages. I was working at some of the most intricate and delicate work in connection with submarines and airships, and I was getting £2 18s. a week. [An HON. MEMBER: "Quite enough."] If that was quite enough for one who was working, what about those who were dodging? I remember that on the Clyde, when we were meeting the employers round the table, one employer gave us a nice lecture on patriotism, and how necessary it was to carry on the good work. That very employer—and I could give his name and particulars—after heavy howitzer guns had been lying at the goods station for three weeks because he had refused to 3042 take them from the goods station to the engineering shop to finish them, told the Government to raise the price 30 per cent. This was the fellow who had lectured us. We had experience all through the War of enormous fortunes being made while workers were sweating at miserable wages. No increases of wages were allowed at all. Bonuses were given now and again, but wages were kept rigidly to a level while most outrageous fortunes were being built up.
§ Mr. Gallacher
The Government had to pay the contract prices. I knew many contractors who, when they got into the swim, were great and wonderful men, and piled up millions. When they got their millions they handed out a few thousands to the political funds, and then a title followed the millions. I want to make a suggestion in connection with profiteering. Every hon. Member who has spoken in this House says he is against profiteering and does not want to see it indulged in. We made a proposition during the War to the then Minister of Munitions, and I will make the proposition again, if the Government are in earnest in stopping profiteering. I suggest that in connection with all contracts and with the running of industries—enormous profiteering goes on in connection with industries, apart from the cost of raw materials—the books of the companies should be open to the representatives of the trade unions in the factories, that those trade union representatives should have the most open and complete accession to the books. They should be entitled to make reports on the character of the work that is being done, on the amount of profits being made, and on the wages that are being paid, and also to make recommendations through their trade unions to stop all kinds of profiteering, and to ensure an adequate wage to those who are employed.
We are going to be faced not only with a shortage of copper and various other raw materials but also with a shortage of labour, and the question of dilution will come up. During the War, dilution was used for the purpose of bringing down and keeping down wages. It will be used 3043 for the same purpose again. The Parliamentary Secretary has evaded the question of profiteering. He told us that everybody was pleased that prices went up for primary products, and that everybody wanted to see the primary producer getting a better price. Where is the primary producer getting the benefit either in connection with metals or the production of food? As far as food is concerned, for instance, can the Parliamentary Secretary tell me that the primary producer is getting a better standard? Are the primary producers in Canada any better off? The primary producers in Alberta and Saskatchewan are bankrupt. The profiteer and the speculators are getting all the benefit. So it will be in the factories.
If there is a shortage of primary products, the speculator takes advantage of it, and farmers in many cases are ruined. If there is a shortage of labour in the country the profiteers take advantage of it, and they will do it again unless we are able to get in the factories the necessary control through the trade unions and the workshop organisations which the trade unions are capable of setting into being. Therefore, if the House really wishes to protest against profiteering and to assist in putting a stop to it, it will see to it that every assistance is given to the trade unions throughout the country to set up in all the factories where Government work is in hand factory committees, representing the trade unions and the workers in the factories, with full power of investigating into everything that is going on in the factories, including the profits of the firm, and to ensure that in any labour shortage no diluted labour comes in except under conditions that will not, and cannot, in any circumstances militate against the wages and the conditions of those who are already employed in the factories.
§ 10.39 p.m.
§ Mr. Magnay
I wish to intervene only for a few minutes, but there have been some remarks made to which I take exception. At the beginning of the Debate I made a remark in connection with the speech of the right hon. Member for West Stirling (Mr. Johnston). I said that we might have expected that there would be some measure of profiteering, just as there was when the Labour party brought in their big housing scheme when John 3044 Wheatley was at the Ministry of Health. The country was told that L000,000 houses were to be built, and at once the prices of all materials connected with the building trade went up amazingly. For example, the price of bricks went up to 75s. a thousand. The result is that to-day we are paying in rents twice as much as we should have been paying if there had not been profiteering in that respect.
§ Mr. Johnston
Surely the hon. Member was not in the House when a very detailed reply on that point was given by my right hon. Friend the Member for Hillsborough (Mr. Alexander). Hon. Members who were in the House at the time will remember that John Wheatley and the Government introduced a Measure to suppress profiteering, but that that Measure was strangled by the hon. Members friends.
§ Mr. Magnay
That does not affect the force of my argument. Whatever party was in power, as a consequence of that profiteering we paid, instead of an average of £500 a house, a sum well over four figures. This generation and the next generation will have to pay increased rents because of the profiteering in building that went on at that time. I agree heartily and sincerely, as does every hon. Member on this side of the House, that every measure should be taken to prevent profiteering, as every measure was taken during the Great War. I regret that I am not as regular in my attendance in the Estimates Committee as I should be if I lived nearer London, but I have been there often enough to hear the heads of the spending Departments explain that every measure that the wit of man can devise—measures inspired by the bitter experience through which we went during the last War—and every device that can be thought of by expert accountants and trained Government servants has been applied in order to keep down profiteering as much as possible. The right hon. Gentleman also mentioned that a company was being floated in Glasgow, and he asked the Government to do something about it, as it was, in his opinion, something in the way of profiteering. He said there were to be 400,000 shares at a premium of is each. I happened to know something at first hand about that project about three months ago.
§ Mr. Johnston
It was not a question of 400,000 shares. The hon. Member does not know that much about it.
§ Mr. Magnay
Four hundred thousand 4s. shares at a premium of is.—I saw the prospectus in draft, and that is my recollection of it. Reference was made to a "rake-off" of £20,000, but that does not affect the matter at all. If I had the money to spare and took a taxi to my hotel to-night, the fare would not be altered by the fact that there had been a change in the ownership of the taxicab. If a man had bought that taxicab for £50 more than the original price the legal fare would not be altered, and the cost of the product of a factory is not altered by the fact that the shares are sold at a premium. When it is said that there is a £20,000 "rake-off," it sounds like a lot of money, but stamp duty, counsels' 3046 and solicitors' fees, advertising and so on have to be paid, and there is not a great deal left over after the company has been formed and the working expenses have been met. I conclude by saying that Members on this side of the House are just as keen as hon. Members opposite to see that there is no profiteering.
§ Question, "That the Bill be now read the Third time," put, and agreed to.
§ Bill read the Third time, and passed.
§ The remaining Orders were read, and postponed.