TREASURY AND SUBORDINATE DEPARTMENTS.

HC Deb 26 May 1937 vol 324 cc281-400

Motion made, and Question proposed, That a sum, not exceeding £244,016, be granted to His Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1938, for the Salaries and other Expenses in the Department of is Majesty's Treasury and Subordinate Departments, and the Salary of the Minister for Co-ordination of Defence."—[Note—£1,30,000 has been voted on account.]

3.37 p.m.

The Deputy-Chairman

I think that, before I call upon the junior Member for Derby (Mr. Noel-Baker) to open this Debate, it will be for the convenience of the Committee if I indicate some of the limitations under which we shall be working. The Committee, of course, realises that we are in Committee of Supply, and it is an old-standing rule that matters which involve legislation may not be raised in Committee of Supply. At the same time, I have looked carefully through the report of the Royal Commission, and it appears to me that it would be impossible to debate the recommendations unless we debate them as a whole; but hon. Members must not go into details on any proposal which would involve legislation, and any question like that of the setting up of a Ministry of Munitions would clearly be out of order. Within these limits, I propose to give the Debate as much latitude as I can.

3.38 p.m.

Mr. Noel-Baker

I beg to move, to reduce the Vote by £100.

I move this reduction in order to call attention, as you, Sir, have already indicated, to the report of the Royal Commission on the Private Manufacture of and Trading in Arms, which was presented to the Government in September last; to the statement of His Majesty's Government on that report, which was presented to Parliament on the eve of the Coronation—perhaps, some of us think, in the hope that it might pass unnoticed; and, in the third place, to the lamentable results on the national interest of the failure of the Government to carry out long ago the proposals which the Royal Commission have made. For my sins I have had exceptional opportunities of studying the policy of His Majesty's Government in this regard over a period of years. I was, for the better part of two years, with the President of the Disarmament Conference at Geneva, and had the bitter experience, which I hope I may never have to endure again, of seeing His Majesty's Government—the same Government, with minor changes, that is now in charge—obstructing on many of the constructive proposals which were there put forward; and I venture to say that on no proposals were the Government so obstructive as on those with regard to the abolition of the private manufacture of arms.

In the proceedings before the Royal Commission Sir Maurice Hankey described himself as counsel for the defence of private firms—a strange position for a Government servant. At the Geneva Disarmament Conference the Government fulfilled that role with regard to private manufacture. When France, with the support of many other countries, proposed, first, abolition and then stringent control, our Government, mostly with the support of Mussolini's Italy and Herr Hitler's Germany and of militarist Japan, opposed every new measure which was not a sham. In so doing they said, first, that they had no facts to go upon. They knew nothing about the private trade. Whereupon a member of the Committee proposed that an inquiry should be held and a questionnaire circulated to the Governments. Our delegates replied that it was quite unnecessary, and they voted against the proposal. They were beaten. When the inquiry was thus agreed to, they immediately proposed that the Committee should suspend its work indefinitely, or at least for three months, until the answers to the questionnaire were received. When the answers came in, the French replied that they had something like 80 firms which supplied arms; the Americans said they had more even than that; and our Government made this classic reply: There are no private undertakings in the United Kingdom which can be described as engaged chiefly or largely in private manufacture. I remember a Frenchman coming to me when that reply was received, and saying, "I always thought Vickers-Armstrongs were the largest armament firm in the world." On his suggestion I took the trouble to look up the terms of agreement upon which Vickers and Armstrong had amalgamated in 1927, and I found that they were empowered to carry on the business of armament manufacture in all its branches and, in particular, to manufacture, sell, maintain, repair and deal in warships, guns, gun carriages, rifles, small arms, weapons and munitions, explosives and munitions of war, all component parts and accessories, and to carry on business as manufacturers of aeroplanes, hydroplanes and all kinds of aircraft. That seems fairly comprehensive. But we must be fair. There is a civil side to Vickers-Armstrong's business. They are also empowered by their deed to purchase, acquire, rent, build, construct, equip, execute, carry out, improve, work, develop, etc., railways, tramways, stations, aerodromes, telegraphs, hotels,… newspapers and other publications, breweries, churches and public and private buildings. We have now the advantage of knowing from Vickers-Armstrong themselves, in evidence given to the Royal Commission, what was the percentage of their business in armament work in the year before the Government return was made. Here are four Vickers companies and their percentages: Vickers-Armstrong, 68.9; Vickers Aviation, 98.09; Super Marine Aviation, 92.36; and Whitehead Torpedo Company, 100 per cent. For the Government to send in an answer of that description shows the spirit in which they approach this question of private manufacture. Their attitude is really that of one unhappy private manufacturer who, when he had been in the box three or four days, said at least in despair to Senator Nye: "Well, Senator, you know our business is not any different from any other business." The Government believe that the profit motive applied to the manufacture of arms will promote the general interest. The essence of their policy, therefore, is to leave private enterprise alone, to allow it freely to work for the common good.

We differ fundamentally in our attitude. We believe that this industry is different in every way from any other industry of any kind. We believe, firstly, in the words of the report of the Royal Commission, that it is virtually a "public ser- vice," since only Governments purchase arms; that it is "virtually of a monopolistic character" because competition, broadly speaking, has disappeared; that ordinary trade methods applied to armament manufacture and sale are open to the greatest objection; and that in practice private manufacture as a system has led to serious evils of many kinds. I want it to be understood that I am making no attack on any individual engaged in this private trade. I never have done so, and I hope I never shall. The system is wrong. It is the system, and not the individuals, that we attack, and it is upon the Government that responsibility for the system must lie. In this view we are, broadly speaking, fortified by the report of the Royal Commission. I know that the right hon. Gentleman who is to follow me will quote large sections of this report saying that the evils of private manufacture have not been proved. In the case that the Royal Commission makes for this view there are two parts. The first part is technical and the second political. On the technical side I think the Commission did admirable work and heard a great deal of admirable evidence, both from Government servants, with one notable exception, and from the private manufacturers themselves. I do not believe that better work has ever been done on that side of the case. I think they interpreted some parts of this technical evidence wrongly; and I am fortified in that belief by the fact that both the Ministers of Munitions in the late War—after all, the greatest living authorities on the subject—were very strongly on our side. I respect the Royal Commission's technical case, though I think it wrong, though I believe our case still stands.

But the political case which the Commission make is in a very different category. With all respect to the Commission, I submit that that part of their report ought never to have been written, and I submit that on grounds which they themselves put forward. They say that, owing to the terms of reference which they were given, they do not propose themselves to undertake a detailed investigation into the existence of alleged evils either in this country or abroad. It is evident to anyone who has ever considered the subject that the evidence about the evils lies principally in the files and records of the armament firms themselves, and Senator Nye proved that that is true. If the Commission were to report on this part of the subject at all they ought to have made an inquiry; they ought to have had power to seize without warning the files and records of the armament firms, they ought to have skilled experts to go through them and public money to finance them, and they ought to have had power to subpoena witnesses and to take evidence on oath. [Interruption.] The right hon. Gentleman says they had that power. They did not exercise it. My present argument is not against the Government but against the Commission, for making a report on a subject which they had not investigated. In their proceedings they made one exception. In cross-examining one firm, they did ask if two members of the Commission might look at the files, and Vickers-Armstrong said, Yes. The two members involved—I am sure they will forgive me—were, in fact, the least well-qualified members of the Commission to go through the files of a big business firm. They devoted only a very few hours to the job. They went through only a few odd files, taken almost at random. It is extraordinarily difficult, I believe, to work on files the system of which is not familiar to you. They investigated only this one single firm. No other firm was asked to open a single file. And what happened? They unearthed a first-class scandal—a bribe of £50,000, which was to be offered to the head of a foreign State in order to increase its armament orders. The Commission say that, although the bribe was not actually paid, although the thing failed, there is no doubt in the minds of the members of the Commission that both the firm concerned and the firm representing its interests in the foreign country connived at a bribe being offered by their joint agent, until such time as doubts arose as to the ultimate destination of the bribe. We consider the action of both firms in this matter is deserving of censure. There are many countries in the world where £50,000 is a figure "beyond the dreams of avarice," and where it might have started an arms race that would end in war. The League of Nations Commission have told us that the Chaco war could not have gone on without the arms supplied by foreign armament firms. That bribe might well have been the decisive factor in starting a long and bloody struggle like the Chaco war. If it were alone it would be a serious fact, but we know—I do not propose to deal with it— that there is a long list of proved cases in which armament firms have acted against the public interest, and in which the system has proved itself a serious menace to the peace of the world. I venture to say at this Box, and on the basis of my personal experience, that the vested armament interests during the Disarmament Conference worked to the fullest possible degree of their power to defeat the purpose of that conference, and that their work was not without a profound influence upon what actually occurred. I will not go further into that matter, because I hope that my right hon. Friend who is to wind up this Debate will deal with it further. I only say that, both on the technical and the political case put forward by the Royal Commission, we stand unmoved in our conviction that private manufacture ought to be abolished. We propose, I hope at an early date, to abolish it, as the French Government is now abolishing it, and as Senator Nye has asked the Government of the United States to bring it to an end. It is true, as the right hon. Gentleman will tell us, that the Royal Commission reject that solution. But they do not really reject the case in its favour. Their verdict, as someone has said, is really "Not guilty but do not do it again." Their report is not that all is perfect in the present system; it is not that we should carry on with the present arrangements which we have. It is the exact opposite. They urge drastic changes, and propose a very elaborate system which we, while we regard it as more complicated and less satisfactory than total abolition, should nevertheless consider to be a very great improvement upon what now exists. I will read to the Committee the governing passages upon which their proposals are based. They say in paragraph III: For the removal of the objections to which the private trade is open"— they do not deny that the objections exist— we are satisfied that no specific remedies, directed to particular evils, will avail. That is to say, a mere licensing system; a prohibition of holding newspaper and armament shares together; a special measure against bribery—no such proposed special or limited measure will avail. We must go to the root of the evil. They say— The means to their prevention are to he found, in our opinion, in the limitation of armaments by international agreement, and in measures recommended elsewhere in this report for the control by government"— control of the whole industry in various ways, with which I will now deal.

What are the proposals of the Royal Commission, and what is the attitude of the Government towards them? I ask the Committee to remember that this is the Government's own Royal Commission appointed after very long consideration. They took months to make up their minds about who should sit upon it. The Report was unanimously adopted by all the members of the Commission; they say that it was intended for application to the present situation, and they put it forward, hoping that, in this present situation, where armaments are expanding, we should be able by the means which they suggest to avoid the profiteering, the waste, the inefficiency, the abuses and the evils of the past. The Royal Commission proposed 10 measures, or, more accurately, one general principle and nine measures founded upon it—a complete system. I will take the different parts, as rapidly as I can, in turn.

The governing principle, upon which the rest is founded is this—the full responsibility of the Government for the production of and trade in arms. In every part of this report I have searched in vain to find if the Government are prepared to go one step further than they have gone already towards making this principle effective, towards making Armament manufacture a matter of "public service." Apparently they reject it entirely, because they accept nothing that will carry it out. [Interruption.] I was speaking of the general principle that the Government should be responsible for the whole of the manufacture of and trade in arms. The first of their concrete proposals—I am not taking them in the exact order of the report but in the order which seems to me the most convenient—is the suggestion of the Royal Commission that retired officers and Civil Servants should only pass to private firms with the consent of their Minister. Everybody in this House knows that the passage, the transfer of officers and Civil Servants to private firms in a potential evil. I do not need to quote, I hope, at much length from a paper read by Mr. Philip Snowden, in this House in 1914. In a speech which was pregnant with prophecy of evil, Mr. Philip Snowden quoted this from an armament trade paper—"Arms and Explosives." The article he quoted is explaining why private firms like to have officers and why they are useful in business— The retired officer who keeps touch with his old comrades is able to lessen some of these inconveniences, either by gaining early information of coming events, or by securing the ear of one who will not accord like favours to a civilian. The paper goes on: Kissing undoubtedly goes by favour, and some of the things that happen might be characterised as corruption. That is not out of date. I have here an extract from the "Army, Navy and Air Force Gazette," which is surely entitled to speak for serving officers if any paper is, in which they say, last October, speaking of a book which they are reviewing, that The author is on sound ground when he refers to the undesirability of the transfer of officers and civil servants. They say that it ought to be prevented, that it would be quite easy to do it and that any officer or civil servant, before being allowed to undertake an appointment in which he could influence contracts, could be forced to give an undertaking not to serve on the board of any Government contractor. The Royal Commission do not go nearly as far as that. They only propose that the officer should ask permission of his Minister. What do the Government say in reply? They take a whole page to explain the difficulties, and they say that they will continue to study the problem. In effect they reject it in toto. I pass on to the second and even a more serious matter—the export of surplus arms. Surplus arms are superseded models, but they have been very often in the past, and are always now, modern weapons of a most efficient kind. Everybody remembers the evidence given to the Royal Commission by Captain Ball of the Soley Armament Company, in which he said that he controlled so much armament that if he sold it in bulk abroad he could, in some parts of the world, change the complete political position; that he could deal in machine guns by the thousand and in ammunition by the hundreds of millions of rounds; in which he said that he was able to evade the embargo put on against Italy in the thick of the Abyssinian War, in which he said that he could evade an embargo in South America. We know the recent case of Colonel Christie, charged with selling arms in Spain. We know that the Chinese Civil War, which was so disastrous to British interests, was fought with surplus arms sold by private agents and private firms, and smuggled through the international embargo in China, sometimes a trade of more than £1,000,000 a year. We know that in 1926 there were 140,000 modern rifles on the North-West Frontier; we know that thousands of British soldiers have lost their lives there; we know that long ago, in the Nineties—the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) will remember it very well—when the Birmingham gun trade was supplying the North-West Frontier, the thing became a public scandal, and the Government took some action to stop it. The armament manufacturers—I believe Mr. Arthur Chamberlain, of Kynoch's, was one of them—protested against that action; and here is the attitude which they then took up. I am quoting again from "Arms and Explosives," of May, 1895: A great outcry was raised recently when it became known that a firm of Bombay merchants had written to a hostile tribe on the border of India offering to supply them with war material. And the paper goes on: It seems to be considered a heinous crime to have business dealings with a hostile nation. We cannot look on trade in munitions of war as being specially reserved from the general conditions of ordinary trading. Prohibitions are usually a farce. Our view is that it is better to wink at an evil than to make futile and impossible attempts at its remedy. Forty years have passed. The Government will say: "We do not let arms go direct to the North-West Frontier." That is true, but once surplus arms are out of the country you cannot control where they are going, and you know you cannot. They reach the North-West Frontier, and there is a war going on there which is being fought to-day with surplus arms, some of them sent perhaps by Mussolini, but most of them sent by the private traders of the world. The Government prefer to wink at the evil; they reject the proposals of the Royal Commission.

I pass on to the export trade in general. Here there are three measures which the Royal Commission propose. The first is that we should accept an international draft Treaty proposed by the United States in 1934 for the better control of the international trade. The Government say that they still stand on the Amendments which they put forward to that Treaty in 1934. Lord Stanhope went there, as he said, to simplify the Treaty. I was in Geneva at the time of an incident which as Mrs. Corbett Ashby, the Government's own delegate to the Conference, described in the following way: When in May, Mr. Roosevelt in his delegate's speech, announced a drastic policy of limitations and reductions, we opposed his suggestions so contemptuously that I saw the United States delegation go white with rage in face of the insult. When Lord Stanhope proposed his simplifying Amendments, which in fact destroyed the whole Treaty which the United States put forward, and which would have meant virtually no improvement in the situation, the United States were not less angry than they were on that earlier occasion. But the Government stand by their Amendments. They equally reject the Royal Commission's proposals for dealing with our licensing system and for strengthening it in various ways. The Royal Commission say in the plainest language, that the present system of licensing is not enough. They say: From the point of view of those who seek the prevention of abuses, They do seek that— the licensing system might well not exist, since under it the industry knows it can adopt all the ordinary trade methods for increasing sales, to which so much objection is taken. The question of the £50,000 bribe proves that, for our licensing system was in force when that bribe was offered. The Royal Commission ask for a new spirit in our export licence system, by which I think they mean that we should not export arms to nations which are proved aggressors under the Covenant of the League. They ask for other measures to strengthen the system. The Government are content to argue that everything is perfect as it stands; they reject the proposals as a whole.

Then the Royal Commission proposed, as a final measure for the export trade, the abolition of what is called the open general licence, that is to say the export of arms without control of any kind. Here the Government—I congratulate them warmly upon it—make their solitary acceptance. The open general licence applies to five different categories of arms. The Government agree to withdraw the open general licence in regard to half of one of the five different categories; they are going to withdraw it with regard to military aircraft.

I pass on to the four measures of control of the Home trade, by which the Royal Commission hoped to prevent abuses and to get rid of waste and profiteering. They hope also by these measures, and it is a very important point, to promote the efficiency of National Defence. The first measure is the expansion of national Government arsenals, factories and dockyards to manufacture every kind of armament required. Everyone knows that it has been the accepted doctrine of all Governments—I say doctrine rather than practice—that national establishments are essential as a check upon the private manufacturers of arms. I have extracts here from the reports of the Murray Committee of 1907, from the McKinnon Wood Committee of 1919, and from the right hon. Gentleman the Home Secretary in 1934, showing that over a period of 30 years the Government attitude has always been the same. Here is what the present Home Secretary said: A nucleus of State factories is useful not only for the weapons that they themselves produce, but as a check on the prices and qualities of those produced by private companies. The Royal Commission show that at present the Government manufacture no heavy naval guns, no heavy gun mountings, no armour plate, no tanks or virtually none, no aircraft, and at present they are giving the Dockyards, I understand, no orders for capital ships. In other words, what the Murray Committee called "the most costly" and important armaments, have no check upon their manufacture at all. The Royal Commission say that the expansion of our national establishments is essential also to facilitate and improve industrial mobilisation in time of war. What do the Government reply? They say that they are not opposed in principle; but they take two pages to tell us exactly why nothing need be done. In other words, they leave the field free for the private monopoly of the armaments firms in this immense range of products of which I have spoken.

I pass on to the conscription of armament manufacture in time of war. The Royal Commission propose, and insist on as urgent, the total abolition of all profit in time of war and the full nationalisation of armament production Some of the private manufacturers themselves told the Commission that they were in favour of it—Sir Herbert Lawrence said so. The Government devote seven lines to this subject. They admit that there is a wider control needed in time of war than in time of peace and that plans ought to be prepared. I asked a question a little while ago about these plans and was told that the Principal Supply Officers Organisation has the duty of studying the turnover of industry to war manufactures. Such an answer is totally inadequate in every way. And it is not only inadequate—it evades the main point of the Royal Commission's proposal, which is a demand that profit shall be completely abolished and that there shall be a perfectly plain understanding that no one should be allowed to make a profit out of war, and that a war in which this country is involved calls for an all-round sacrifice and not for an opportunity for profit making. In the last War we know that the profit motive was a poison in the machinery of armament production. I ask the Minister for the Co-ordination of Defence to tell us, with great particularity, do the Government agree to the policy of the abolition of profit in time of war or do they not?

There are two final proposals, and the most important of all, the very basis and framework of the whole system of the Royal Commission—a Ministry of Munitions and the control of profits. It bas been ruled that we must not discuss the creation of a Ministry of Munitions, but perhaps I may be allowed to say that it is our profound conviction that at this moment, for the lack of such a Ministry, we are going into the same chaos that we were in in 1915, and that if the present armament expansion continues for another two years, with our present arrangements, we shall have the same disorganisation of the labour market, of the raw material market, and of the machine-tool market, which very nearly brought the Empire to its knees in 1915.

Now I pass to the final proposal—the control of profiteering. Everyone agrees in theory that there ought not to be profiteering in arms. The Royal Commission say that there is a necessity for new proposals; they say it is not enough that the Defence Departments shall be satisfied with regard to each particular contract. Then they say: Nor do we believe that a measure of taxation, such as the Excess Profits Duty, which was enforced during and after the last War, will prove satisfactory to meet the essential object in view. And what do the Government do about this matter? The two exact things which the Royal Commission condemned, control by the Departments through a costing system, and an Excess Profits Duty incomparably less effective than that which was in operation during the last War. Their only real control of any kind is costing. I want to refer to some of the very judicious and well-informed remarks made by my hon. Friend the Member for North Aberdeen (Mr. Garro Jones) in a recent Debate, in a speech which called down on his head, if I may say so without offence, the rather unkind and unmerited comments of the Minister for the Co-ordination of Defence. My hon. Friend showed, in spite of what the Minister said, that the present costing system is not working, that it has not stopped profiteering and that it cannot do so. He showed that the present system of "instructions to proceed," and fixing the price later, was an invitation to the manufacturer to profiteer. Everyone knows that by costing alone, without Government manufacture to give you a costing check, you get very poor results. There is a world of difference between the two. Even with the very large scale Government manufacture in the last War the costing system did not work 100 per cent.

We are convinced that there is profiteering at the present time. I quote a statement from one of the ablest members of the Royal Commission, Sir Thomas Allen: Some of us were very much afraid that the decision to rearm might be accompanied by undue profit-making, and our recommendation on this point was very clear. Since then those fears have been justified. I am not going to quote many figures, but I would recall some that were mentioned by the right hon. Gentleman, of certain aircraft dividends which have been issued in recent times. There was the Handley Page, Limited, who in 1935 earned a dividend of 424 per cent. and paid 265 per cent. That is a small family company, and perhaps it is a special case. But there is the Hawker Aircraft Company which earned 40 per cent. and paid 20 per cent.; the Hawker Siddeley Aircraft Company, which earned 44.5 per cent., and, with a capital bonus, paid 40 per cent.; the Bristol Aeroplane Company, which earned 45.6 per cent., and paid 22.5 per cent.; and the Short Brothers, Limited, who earned 51.7 per cent., and paid 30 per cent. Is that what the Government regard as adequate profit on the present contracts which they are making? Let the Committee take note that the aircraft companies are not taking any special risk in regard to expansion at the present time as the armament firms did in the early part of the last War, because the risk is covered by the Government, who guarantee that there shall be no loss on the extra plant required.

Hon. Members with a mathematical brain will observe that the Government have accepted out of the 10 proposals of the Royal Commission one half of one-fifth of one. There has been 99 per cent. of rejection and 1 per cent. of acceptance of the unanimous recommendations in the report of their own Royal Commission. I wonder what explanation the right hon. Gentleman is going to give. Perhaps the secret was given away by a member of the Contract Costs Department of the Ministry of Munitions, who wrote a letter to the "Times" a little while ago in which he said, speaking of the work of his Department: The Costings Department was highly unpopular with the manufacturers, some of whom took the trouble to complain to the Minister about me. At every time and in every country the control of this industry has been unpopular with armament firms. The Government believe in private enterprise. They think that the profit motive is going to work for the national interest. So they reject all the Royal Commissioner's proposals, with the exception of one. They reject the proposed measures to deal with retired officers, with export licences, with the internal trade, with the situation at home. While they are rejecting these proposals, the country and the world are drifting into the situation that we were in a quarter of a century ago. We see the same profiteering, the same purchased propaganda, the same fanning of the flames of suspicion and distrust by vested interests, and we see the Government making the same mistakes that were made a quarter of a century ago. We see the Government, still, as I believe they are, perhaps with the best intentions—I do not dispute it—a prey to the vested interests, who desire a larger profit.

If they continue in this policy they will dig their own grave for there are two things that our people will not endure again. The first is, that there shall be profit from war, and the second, that vested interests, in however slight a measure, shall influence the policy which is pursued. The misery of this quarter of a century seems to have taught the Government nothing. But the people remember the tragedies and the paradoxes of the last War. They remember how at the Battle of Verdun, the last German assault which might have carried them through was broken on German barbed wire which had come through to France while the War was going on. They remember that British soldiers in Gallipoli were killed by British guns. The Government are content that Sir Maurice Hankey should go to the Royal Commission and explain that it was to the advantage of British soldiers to be blown to pieces by British guns. We are not content, and we renew our pledge to the British people that at no distant date we shall sweep this hellish paradox away.

4.20 p.m.

Mr. Kingsley Griffith

I am very glad to have the opportunity on behalf of my hon. Friends to associate myself with the reduction which has been moved. On 10th November of last year I had the honour of moving an Amendment to the Address on behalf of my hon. Friends, dealing with this subject. The situation was not quite the same then. We had at that time the report of the Royal Commission, but we had not the Government statement in our possession. Therefore, at that time our complaint was that the Gracious Speech contained no reference to the report. The matter has moved a great deal further since then. We have the Government's answer. We know now what their attitude is, and that knowledge leads us to support this reduction. I approach this matter from one point of view with some trepidation, because the "Times" in a leading article on the 7th of this month said: The Government's decisions on the recommendations of the Royal Commission on the Private Manufacture of Armaments will command the general approval of all men of common sense and moderation. It is rather a terrible thing to be convicted by the "Thunderer" of being entirely destitute of common sense and moderation, but we shall have to make the best of that condemnation. We must risk it. On the last occasion I ventured to analyse the effect of the report of the Royal Commission in a way which I think is worth repeating, because it lends point to what I have to say about the Government's answer. It seemed to me that what the report said was this: "We quite realise the intense popular resentment and suspicion against the very idea of profits being made out of war. We realise that the demand for State monopoly and the abolition of private enterprise in armaments arises out of that resentment and that suspicion. We, for ourselves, find that State monopoly either as a general system or for this country alone is not consistent with efficiency, but we have found ways of our own which we intend to put before the Government in positive proposals whereby the objection to the private manufacture of armaments can be removed without the sacrifice of efficiency which we think State monopoly would entail." That, as far as I can see, analyses what the Royal Commission tried to say.

I would point out to the Government that they cannot take this report in pieces, They cannot take the negative side and adopt it and then take the positive side and sweep it away, because what the Royal Commission W3E saving was: "We reject State monopoly because we have an alternative." Therefore, if the Government reject the alternative, then what they have done by their own action is to put the programme of State monopoly back again upon the political map. Otherwise, if they had accepted the whole report people might have said: "Here is a unanimous report; we do not like all of it but here are positive steps proposed. It may be that the other proposals went too far, but here is something that we can do." But on the Government statement there is nothing that we can do. The alternative is rejected. If the supporters of State monopoly wish to argue that there is no alternative but theirs, then the right hon. Gentleman has only himself and his colleagues to blame.

There are 10 recommendations in all, and it is somewhat amusing to see the way in which the Government deal with them. Three easy recommendations come first, three general statements with which the Government can agree without committing themselves to anything whatever. The first statement of the report is that: The most effective available means of removing or minimising the objections to the private manufacture of and trade in arms would be the limitation of arms by international agreement. The Government are prepared to agree with that, but only in the sense of its being a pious platitude, because on page 9 they say: It must unfortunately be recognised that at the present moment international political conditions are such that hopes of making progress towards international limitation or reduction of armaments are not likely to be immediately realised. Therefore, they rule that out and say, in effect: "It is very nice, as it does not fall upon us to do anything in the present international situation." Then the Royal Commission condemn a universal system of State monopoly of the manufacture of arms. That is a good solid negative so, naturally, the Government accept that recommendation. The third recommendation says: The abolition of the private industry in the United Kingdom and the substitution for it of a system of State monopoly may be practicable; but it is undesirable. In regard to that recommendation the Government say: "Splendid. Very well put. We could not put it better ourselves." This rather reminds me of the definition of philosophy that I once heard from an Oxford don, when he said: It is a system of finding out bad reasons for what we believe upon instinct. That is the way that the Government treat the report of the Royal Commission. They would have rejected the proposals altogether, but they are very delighted to find that the Royal Commission give them reasons for rejecting them. Up to this point the Royal Commission has been circumspect, conservative, so very much like every Royal Commission ought to be, and it then forgets itself very badly, because it makes seven positive proposals one after another, and those proposals have to be dealt with. There ought to be a law against Royal Commissions making positive proposals. Of course, the Government would not be so impolite as to say that the Royal Commission did not know what it was talking about. If they had said that, it would have invalidated their acceptance of the first three proposals. They deal with the other proposals in a different way. For example, there is this kind of thing on page 9, referring to the promotion and encouragement of measures for the international regulation of the manufacture of and trade in arms: In the pursuit of this policy certain difficulties must not be overlooked. Again, on page 8, the Government say: His Majesty's Government take note of this suggestion but when it is analysed"— Then comes their objection. In regard to another proposal they say: They feel, therefore, that if it is examined a little more closely— Again, that proposal is turned down. These are the little pins with which the modest balloon sent up by the Royal Commission is successfully pricked.

The real essence of the report, the important part of it, if it had been carried out, lies in recommendations 6, 7 and 8, which embody the Royal Commission's alternative to a State monopoly of arms. I do not need to go into them in detail, because the matter has been admirably dealt with in the speech of the hon. Member for Derby (Mr. Noel-Baker), but they include general responsibility in peace time, a Minister of Supply for all services, the production of all types of armaments in their own factories, a restriction of profits, not only in fact, but in such a way that the public will realise they are restricted, and the conscription of industry in war time, which, as the Commission says, is something which cannot be improvised, but which must be thought out beforehand. The Government reject the whole of these recommendations.

The Minister for the Co-ordination of Defence (Sir Thomas Inskip)

indicated dissent.

Mr. Griffith

I have in a few sentences sifted out what can be said to have been saved from the wreck, and perhaps the right hon. Gentleman will tell me if I have done the Government an injustice.

Sir T. lnskip

The hon. Member said so categorically that the Government have rejected the whole of these recommendations that I thought it was time to intervene.

Mr. Griffith

The recommendations I have read out the Government have rejected practically in toto, but I am quite prepared to give credit to the Government for what has been done. They have made some marvellous suggestions and I should be sorry to deprive them of any of the credit. The "Daily Telegraph," the most faithful supporter of the Government I know, does not appear to be satisfied with this total rejection, for in their leading article the day after the Report of the Commission was published, while expressing satisfaction with a great deal of the report, dealt with the question of a Minister of Supply in this way: There will be no disposition to quarrel with the statement that in the event of a major war a much wider measure of control of industry and its profits would be necessary than needs to be exerted in time of peace. So grave an emergency would call for the immediate appointment of a Minister whose whole time would be devoted to problems of supply. The view may still be held that a Minister of Munitions should have been appointed at the outset of the rearmament campaign"—

The Deputy-Chairman

I think this is verging on a subject which I ruled could not be raised on this Vote.

Mr. Griffith

I am only making a reference to something contained in the report of the Commission and in the Government's answer.

The Deputy-Chairman

That may be the case, but it does not necessarily follow that it is in order in Committee of Supply.

Mr. Griffith

If it necessitates legislation, of course, I cannot pursue the matter further, but I have had the satisfaction of having read the major part of the quotation. I am quite prepared to give credit to the Government for anything they have suggested they would do. On page 10 of their answer they express a good deal of scepticism as to the progress which can be made with regard to general disarmament proposals, and they say that as regards a Draft Convention on the publicity of national defence expenditure, they would be prepared to accept that if it were accepted by other principal Powers. I accept that statement as far as it goes, but it does not go very far. They are only saying that if any other Powers adopt it, they will not be behind. So far from expressing any enthusiasm they say, on page 9, that they are not convinced of the desirability of pressing forward with any piecemeal general disarmament. If they are not going to do it in pieces, I cannot see much prospect of their doing it altogether; and that amounts almost to a plain negative.

When we come to export licences, I notice that the Government say they are prepared to adopt the Royal Commission's recommendation so far as military aircraft are concerned. I accept that for what it is worth. I realise that there are difficulties in present circumstances of applying it to civil aircraft. Obviously, the real way of dealing with the problem is by an international convention, which could deal with civil aircraft together with military aircraft, but at the same time I am quite willing to accept the concession. On the question of open general export licences, although the Government do not accept wholly the proposal of the Commission, they say that they will withdraw the open general export licences in respect of bayonets, swords and lances. I am not sure that this list is not defective. What about battle axes, bows and arrows and boomerangs? These weapons have just as much relation to the realities of modern war as swords and lances. These are, as far as I can gather the positive acceptances by the Government out of the many recommendations in the report of the Royal Commission.

I ask the Government: Do they really think that the Royal Commission's report, followed by, arid largely negatived by, their statement, is going to fulfil the object for which the Royal Commission was set up? I take it the object was largely to allay the immense popular anxiety and resentment at the idea of profits being made out of war. On the former occasion I called attention to the paramount importance of the psychological side. However much your munitions and machinery are improved, there must be the man behind them and the mind behind the man. And the men must believe that they are not being sacrificed in a sordid cause. I went back to some of the War poetry of 1914—Rupert Brooke: God be thanked who matched us with his hour. And Grenfell: He is dead who will not fight And who dies fighting has increase. You will not easily recapture that mood as long as the slime of private property lies thickly over your preparation for national defence. The most essential of all objects is to restore that confidence. I do not wish that idealism to be destroyed, and I cannot forget that after the War it was said that this House was filled with hard-faced men who had done well out of the War. You have to deal with the terrible contrast of the suffering of the soldier and the millions of the manufacturer. Until you can recapture that spirit the best contrived machinery you can produce will not work. The Royal Commission at least addressed itself to that problem. I am not pretending that in every respect their findings satisfy me, but they did address themselves to the problem of finding ways in which suspicion might be swept away and efficiency at the same time maintained. The Government have reduced us to a position in which the old machine is to go on working. One might practically say that the Royal Commission might just as well have never sat for all the result that is likely to come of it. That is the position in which we are left by the Government, and for that reason I think they are to be condemned.

4.40 p.m.

Sir T. Inskip

The intimation that hon. Members opposite desired to raise this matter only reached me on Monday afternoon and with many other occupations at this particular moment I cannot pretend to be so fully informed as the hon. Member opposite who has made a study of this question for many years and has kept himself familiar with it in all its various aspects. It is not only a big question in itself, but it raises questions which go very deeply into human nature. I rather think that if the hon. Member for Derby (Mr. Noel-Baker) and the hon. Member for Middlesbrough, East (Mr. K. Griffith) and I sat round the table we should find ourselves agreeing on a great many propositions and also as to what was desirable as the goal at which we should aim. I share to the full many of the sentiments which have been expressed and I am sure that hon. Members on this side of the Committee share them also.

The question of the control of armaments cannot be wholly divorced from a consideration of the facts of human nature, of the kind of passions which are excited, which compel a man to use the arms he has and to make the weaker man arm himself with more efficient arms in the hope of defending himself. We go on from stage to stage, and we pass in 100 or in 50 years through far-reaching developments in armaments. The fact is that men have become more and more impressed with, I will go so far as to say, the diabolical character of the machines which are invented now in order to enable modern wars to be waged. But it is not quite such an easy question to settle as the two hon. Members have indicated to the Committee. We are in a very different position to-day from that when the matter was discussed in an earlier Parliament, the Parliament before the present one. On 8th November, 1934, a Motion was put down by the Leader of the Opposition in which an opinion was expressed in favour of the abolition of the manufacture of munitions of war by private enterprise and it was partly as a result of that Debate, and partly as a result of the Debate on the Address, that a decision was arrived at by the Government to set up a Royal Commission whose report we are now considering.

The hon. Member for Derby made many statements which I do not challenge as inaccurate. I have no opportunity of knowing, but he made some ex parte statements about scandals of which he has information. I am not going to be so foolish as to say that there have not been scandals connected with the arms industry. There have been scandals in connection with the ordinary industry of the country. When I was Attorney-General, from time to time I had to approve of prosecutions for bribery and corruption in the most unsuspected places. I had to investigate scandals and sometimes to prosecute in cases of scandals in connection with the ordinary carrying on of industry; but it would be absurd to suggest—and nobody would suggest—that because somebody engaging in commerce was guilty of corruption or of malpractice, that particular branch of industry should be closed down and handed over to the Government. So it is in the case of the arms industry. It is rather noticeable that even in the case of the £50,000 bribe that was never paid, to which the hon. Gentleman referred, and which I believe was a pre-War case—

Mr. Noel-Baker

It happened in quite recent times.

Sir T. Inskip

Whether the transaction was a pre-War transaction or not—

Mr. Noel-Baker

It was in 1930 or 1931.

Sir T. Inskip

The hon. Gentleman has knowledge of incidents of that sort.

Miss Wilkinson

It is your job to know.

Mr. T. Johnston

The case is referred to on page 36 of the Royal Commission's Report.

Sir T. Inskip

I am much obliged to the right hon. Gentleman; I was not sure whether it was referred to in the report or set out in an appendix. I was saying that one will find scandals from time to time in every walk of life, and I was going to follow up that observation by saying that when the Royal Commission came to consider statements placed before them about these matters, there was full facility for the hon. Gentleman the Member for Derby or for anybody else to go before the Commission and state what they knew, produce papers, and state the facts; and indeed the Royal Commission were given certain powers to subpoena witnesses. If hon. Members-will turn to page 36, they will find that the Royal Commission take a list of the alleged evils in order, and we see a series of negative conclusions which certainly do not justify the reiteration of these charges in the bald way in which the hon. Gentleman has repeated them to-day. The report states: We are not persuaded on the evidence given before us that British armament firms are guilty of having been active in fomenting war scares or of persuading this country to adopt warlike policies and to increase its armaments. We do not believe the armament firms attempt the bribery of Government officials in this country. The Mulliner incident is the only evidence that has been put before us to substantiate the charge that armament firms disseminate false reports concerning the military and naval programmes of other countries. That incident is referred to in an appendix to the report. The report goes on: No evidence has been laid before us which we regard as supporting the charges that armament firms in this country have sought to influence public opinion through the control of the Press. So far as the charges of nefarious and underground activities on the part of manufacturers in the United Kingdom, in connection with price raising and other rings, are concerned, we do not consider that such charges have been established upon the evidence before us. The report states that there is no evidence that armament makers have been in a position to dictate prices to governments, and the Commission states that: We have no reason to believe that another practice referred to has been or is likely to be the occasion of any weakening of Departmental independence.

Mr. Noel-Baker

The right hon. Gentleman has perhaps overlooked a passage which I read to the Committee. On page 14, paragraph 20, the report reads: Having regard to the terms of reference we have not ourselves undertaken a detailed investigation into the existence of alleged evils either in this country or abroad. The Commission made no investigations and excluded all foreign evidence. How could a private witness such as I was when I gave evidence put to the Commission the whole case which I had at my disposal? It would have taken a month. If the right hon. Gentleman will do me the kindness of reading a book of 650 pages which I have published since then, I think he will see that there is a great deal of evidence which deserves considering.

Sir T. Inskip

That volume reposes on my shelves and I have read, or rather skimmed through, a good deal of it. I found a great deal of assertion on the part of the hon. Gentleman, but perhaps my excessively legal mind did not find an equivalent amount of proof for some of the statements. The hon. Gentleman is entitled to say that the Royal Commission took the view that they were not charged with the duty of inquiring more than the distance which they went into these scandals, but even so, one cannot get away from the fact that in paragraph after paragraph the Commission said, "We do not believe" and "We do not find" that these charges have been proved. I appreciate that the hon. Gentleman, although he was hold enough to say that he was fortified by the report, does not like the way in which the Royal Commission discharged its duties. Let us consider what he said about the Commission. He made no attack on any individuals. I recognise that. None of us, either the critics of the Government or the Government, is attacking any individuals. But the hon. Gentleman said that on the technical side the Royal Commission interpreted the evidence wrongly. I have heard it said in a court of law and in the court of appeal that the jury and the judge did not understand the evidence.

When he came to the political part, the hon. Gentleman was a little more condemnatory, and said that part ought never to have been written. I understand the hon. Gentleman's view, and I merely want the Committee to realise the point of view from which he approaches the report. He thinks that one part is based upon a misunderstanding of the evidence and that the other part ought never to have been written, because he says it was not within the Royal Commission's terms of reference. There is not much left of the report if one part is wrong and the other part improper. The hon. Gentleman did not content himself with criticising the report as a whole, but with reference to the two members of the Commission who went with a roving commission to look through the papers of a well-known armament firm, he said that those two members of the Commission—I do not know who they were, and perhaps they deserve to be nameless in view of his criticism—were the least well qualified of the members to go through the files of the company. I suppose they were charged by their colleagues to go through the files of the company, and there must have been some incompetence, the hon. Gentleman will agree, on the part of the Chairman and the other members of the Commission if they chose those two unqualified persons to perform that duty on their behalf.

It is important that we should know how the hon. Gentleman regards the Royal Commission, because nobody can believe that he attaches very much value to the recommendations of a Commission which was partly so incompetent and partly so slow of understanding as he represented them to be. The hon. Gentleman cannot blow hot and cold at the same time. If he had said that it was an admirable Commission, that he did not agree with everything in the report, but that the Commission had performed its task with complete confidence and honesty of judgment and had thoroughly understood the evidence, and that he commended what it had said to the Committee, that would have been an intelligible position; but inasmuch as he occupied the first few minutes of his speech in running down the Commission for the way in which it had undertaken its duties, I was a little surprised afterwards to hear him attach so much importance to its recommendations.

I take another point of view. On the last occasion when we were discussing this question, I said that I had great respect for the findings of the Royal Commission because Sir John Bankes, who was the Chairman of it, was my master in the law for many years, and I knew perfectly well that no person in the realm was as capable of understanding evidence as Sir John Bankes. He did not misunderstand the evidence. If he did not get the evidence, it was because there was no evidence to get.

Mr. Garro Jones

The hon. Member for Derby (Mr. Noel Baker) clearly stated that the report says that the Royal Commission did not investigate the evidence of these grievances.

Sir T. Inskip

If the hon. Member will read the report, he will see that it does not quite say that. In the Appendix to the Report there is set out in great detail the facts of the two cases which the Commission investigated. I respect this Commission. I cannot say that, when the Royal Commission was appointed, I ever thought it was likely that it would satisfy hon. Gentlemen opposite, but it performed its duties, and, as indeed the hon. Member for Derby frankly said in an earlier sentence in his speech, it had got over the technical part of the evidence before it and there had been no better piece of work done than that part of its work. I accept with great respect the findings of the Commission. I want the Committee to appreciate that we have not treated this report with quite the indifference or want of respect which the two hon. Gentlemen have suggested.

The hon. Gentleman the Member for West Middlesbrough said that the Government in their White Paper had got somebody to bowl three easy balls to have them knocked to the boundary for four; but those three easy balls happen to be the three main topics which the Commission was charged to investigate, and it is natural that they should come first both in the Government's White Paper and in the Royal Commission's report. The hon. and learned Gentleman then attacked the remainder of the recommendations most of which, as he said, the Government cannot accept; and he said that the Government had in fact accepted only 1 per cent., or less than 1 per cent., of the whole. But he has left out the three easy balls. Why should not the Government accept that with which they happen to agree?

Mr. K. Griffith

They accepted all the negative ones.

Sir T. Inskip

The latter part of the report happens to be subsidiary to the main question which the Commission was charged to investigate.

Mr. Griffith

No, it is quite vital.

Sir T. Inskip

I did not say it was not vital, but it is subsidiary to the main question. Let the Committee understand what was the main question which the Royal Commission was asked to investigate. On page 9 of the report, it is stated that the Royal Commission was appointed: To consider and report upon the practicability and desirability (both from the national and international point of view) of the adoption (a) by the United Kingdom alone, (b) by the United Kingdom in conjunction with the other countries of the world, of a prohibition of private manufacture of and trade in arms and munitions of war, and the institution of a State monopoly of such manufacture and trade. Everybody knows that that was the prime question into which the Commission was to inquire.

Mr. Griffith

Surely the right hon. Gentleman will not stop there. If he will read further—

Sir T. Inskip

I cannot deal with more than one thing at a time. The hon. Gentleman knows that that was the prime question. It was the question raised in the Debates to which I have referred, in which the Leader of the Opposition took the leading part, and in which hon. Members opposite wanted the abolition of the private manufacture of arms. That has always been the spearpoint of their attack upon the arms industry. Their two propositions have been to get rid of the private arms industry and to have a State monopoly, and those were the two propositions which the Commission was charged to investigate. The hon. Gentleman opposite speaks in rather slighting terms of these three easy balls but they do not seem to have been such easy balls after all, when the hon. Gentleman opposite proposed to establish a Commission to investigate those questions. They were the great issues of controversy.

Mr. Griffith

When I said that these were three easy balls, I made clear what I meant. These were the three findings of the Commission which did not require the Government to do anything whatever, whereas the remaining seven required action.

Sir T. Inskip

It does not always follow that it is wise to do a thing, merely for the sake of doing something. The hon. Gentleman seems to think that there is some virtue in merely doing something—[HON. MEMBERS: "Hear, hear"]—whatever it is. There is no virtue in merely doing a thing. The virtue is in doing something which is worth while, and hon. Gentlemen opposite have perhaps on that point exposed the fallacy and the faults which lie at the basis of so much of their own policy. They understand perfectly well what I mean. The mere fact that the Government's policy agrees with the first three recommendations of the report is no reason why the Government should not get the credit of being able to say that they have accepted the report of the Royal Commission on these three points and they are the three main points of its investigation. [HON. MEMBERS: "No."] I say that they are. That is point No. 1. Now I come to point No. 2, to which the hon. Member opposite has referred. The Commission was to consider and report whether there were any steps which could usefully be taken to remove or minimise the kinds of objections to which private manufacture is stated in Article 8 (5) of the Covenant to be open. These are what I have called subsidiary questions. The Royal Commission, having been asked to deal with the big main questions of private manufacture and State monopoly, is then asked to deal with suggestions for removing particular evils on the assumption that the existing system continues.

Sir Archibald Sinclair

That is the main thing.

Sir T. Inskip

I do not think it is, even from the right hon. Gentleman's point of view. I happen to have here a speech which he made on 8th November, 1934, dealing with the question of the withdrawal of Great Britain from the traffic. He points out in that speech that such withdrawal would certainly not kill the evils attendant upon the arms industry and that the real way of killing them would be to have an international agreement for regulating arms. What I was dealing with, however, was what I called subsidiary points, namely, methods of dealing with the evils alleged to exist on the assumption that the existing system of private manufacture continues. Lastly, the Commission were to examine the present arrangements in force in the United Kingdom relative to the control of the export trade in arms and munitions of war and to report whether these arrangements require revision, and, if so, in what directions. I think I am justified in saying that the first three questions were the fundamental questions into which the Commission had to inquire, and on the assumption that the answer to those questions was "Let things stand," they were then asked to make recommendations for dealing with the evils alleged to exist under the present system. May I amplify those words "alleged to exist"?

Mr. Noel-Baker

May I point out that the actual words are "objections to which private manufacture is stated to be open," and not "alleged to exist"?

Sir T. Inskip

I do not see the distinction between "stated" and "alleged" at the moment. The hon. Gentleman's point does not seem to be a substantial one. It will be familiar to the hon. Gentleman, who knows all these documents, that the alleged or stated evils have been set out in the report of the Temporary Mixed Commission on Armaments which reported in 1922. That Commission set out the objections in a series of statements which I need not read, because I think they are familiar to hon. Members. They deal with such things as the suggestion that armament firms are active in fomenting war scares. Even that Commission likely as it was, being associated with the League of Nations, to start with certain views in favour of finding the existence of these evils to be proved and recommending an alteration of the system, went on to say or indeed wound up this part of its report by saying: It (a sub-committee) cannot at the present stage of its deliberations either recommend the abolition of private manufacture or advise upon particular steps to be taken to control it, should it be decided that on balance of advantage private manufacture must be allowed to continue. I find it difficult to believe that if a Mixed Commission of the League of Nations, pursuing the topic already mentioned in Article 8, had found these evils to be true, or had thought that there was a strong case for recommending the abolition of private manufacture, they would have retained that paragraph. The fact was that after even their investigation the matter was left as it was. They did not go so far as to say that they were satisfied finally and beyond any question that these evils did not exist. What they said in effect was, "We are not prepared to recommend the abolition of the private manufacture of arms." From that time forward this has been a controversial question, and the hon. Gentleman opposite has pledged his Government of the future to abolish private manufacture. But let it be discussed upon arguments that are relevant to the topic, and if he wants to know the arguments against the proposal he has only to turn to page 12 of the Report of the Mixed Commission and he will find a series of paragraphs there setting out a number of weighty objections to the abolition of private manufacture which the Commission obviously thought worthy of attention. They did not express any final opinion upon them, but there they are.

I want the Committee to understand, what is set out very fully in the White Paper on this part of the case, that these alleged evils or stated evils—if the hon. Gentleman prefers that word—have no doubt been seen to exist in a number of cases or scandals, as they might be called, that have existed from time to time. But to say that they extend through the whole industry or that they vitiate the private manufacture of arms, is to be guilty of a grave over-statement. Such a suggestion, in my submission, is wholly unjustified and has never been supported by any of the bodies that have been charged to inquire into these allegations.

Mr. Johnston

What about Senator Nye's inquiry?

Sir T. Inskip: Senator Nye's inquiry is beyond my purview. There are many things which go on in the United States and which are of interest to the people of the United States, but I have quite sufficient to deal with in the discharge of my own duty here. [An HON. MEMBER: "Very wise of you to ignore it."] Hon. Gentlemen opposite may indulge in cheap gibes at me for my statement, but it is precisely the statement which they would make themselves if they were in my position. Let us deal with this matter on its merits. The hon. Gentleman opposite made the criticism that the case against the abolition of the private manufacture of arms had been stated by Sir Maurice Hankey. I think on consideration he will probably regret—as he should regret if he realises the facts—having made that observation, imputing some sort of blame in this matter to a great public servant. I hope the hon. Gentleman did not mean it in that way, but he quoted a phrase or purported to quote a phrase in which he said Sir Maurice Hankey had described himself as "counsel for the defence."

What happened was this: Sir Maurice Hankey has unrivalled experience, having been Secretary of the Committee of Imperial Defence for something like 29 years. He knows these matters inside out—far more intimately than any other living person. He was asked to give evidence because the Commission, as stated in paragraph 7, recognised that it would be necessary to get the fullest information and advice from the Government Departments concerned. Sir Maurice Hankey gathered up the views of the Government Departments, having fortified himself by means of a committee, and he represented those views to the Commission at the request of the Commission. He stated arguments against many of the arguments which the hon. Gentleman opposite, for instance, put forward to the Commission. Sir Maurice Hankey in the course of further evidence said that no one had stated the case on the side of private manufacture and added: I thought it would be just as well to put together the whole case in opposition to the evidence which has been given against the side I am advocating. Then there was the following passage: CHAIRMAN: It is really the speech of the Counsel in reply? Sir MAURICE HANKEY: That is right. CHAIRMAN: That is a fair summary, is it not? Sir MAURICE HANKEY: I am afraid I am a very poor counsel, but that does define what I have taken on. On 21st May Sir Maurice Hankey said to the Commission: If I may say so, I do not like this attribution to me of the position of a counsel or advocate. I have no brief for the armament industry. I have never had the slightest contact with it of any sort, kind or description right through this business. My position is this: At the outset I explained that I thought the prohibition of private manufacture would be disastrous to Imperial Defence. As the evidence developed, I saw my claims being endangered by the powerful case that had been made against it not only from the moral point of view but also from the point of view of inefficiency and so forth. On examining that case I found there were a great many points which were contrary to what I believed to be the facts within my own knowledge and experience. … It seemed -to me that it was my duty to lay those considerations before the Royal Commission. Would anybody disagree with Sir Maurice Hankey in saying that it was his duty to lay those considerations before the Commission? I am sure the hon. Gentleman opposite would not have liked his valuable and experienced observations to have gone by default, without anything being said by those who had looked into the matter with even greater experience than he has had. I am quite willing to believe that if the hon. Gentleman opposite appeared to make any criticism of Sir Maurice Hankey he did not desire to do so, and that his statement was not intended to be any reflection upon Sir Maurice Hankey himself or upon the Government for allowing Sir Maurice Hankey to give evidence.

Mr. Noel-Baker

Of course I did not desire to make any reflection on Sir Maurice Hankey, but I thought that the words which I used were a precise quotation from Sir Maurice Hankey's statement about himself.

Sir T. Inskip

Not quite.

Mr. Noel-Baker

Then I accept the correction of the right hon. Gentleman and I will put it right in the OFFICIAL REPORT. But I do want to say that I think it very unfortunate that the Government did not appoint a Minister to put forward this evidence.

Sir T. Inskip

I hope the hon. Gentleman will not correct it in the OFFICIAL REPORT because I have drawn attention to the matter. His record must stand, I am afraid. He has said that it is a great pity that the Government did not appoint a Minister. Who was to be the Minister? Was it to be the Prime Minister? I do not suppose anybody would suggest that the Prime Minister, with his many occupations, should give evidence to the Commission. Would it be the Secretary of State for one of the War Departments? The Minister for the Coordination of Defence had, happily, not at that time been invented, and Sir Maurice Hankey was the person who naturally would gather up the whole of the knowledge available on this question. This, however, is not the main point, though I thought it necessary to deal in passing with the criticism that was made of Sir Maurice Hankey's evidence.

Now let me deal with the recommendations of the Royal Commission, because I should like the Committee to understand that the Government have not been quite so cavalier with them as has been suggested by the hon. Gentleman opposite. We have accepted, as I pointed out—I do not think there is any vice in it, even though it does happen to agree with the views of the industry—the report, and we ask the Committee to accept the report, of the Royal Commission on the three main points. I need not argue them any further. When you come to what I call the subsidiary points, though I quite agree that they are important, there is one recommendation which hon. Members opposite have overlooked in so far as the Government's attitude to it is concerned. They attach great importance to it, and that is the recommendation that problems involved in formulating plans for the conscription of industry in war time should be faced without delay. Hon. Members opposite have mentioned that more than once, but they have not mentioned the fact that the Government, in this White Paper, have deliberately stated that that question is being undertaken.

It is not a question of considering something about which it is impossible to announce a decision to-day. Very often we are considering things, and hon. Members ask questions, and the Government spokesmen have the formula that the matter is under active consideration when it is a matter which requires, not active consideration, but immediate decision. This is not such a matter as that. This is a matter of planning, and difficult planning, for war, and I may tell the hon. Gentleman and the Committee from my own knowledge that, as the White Paper shows, that planning is being undertaken, and it is resumed from time to time as we get more and more information dealing with the points that arise. It is not a very easy question to ask any Minister or sub-committee to consider, and finally decide upon, how we are going to turn over industry in peace time to war conditions, but the Government have stated their views about this recommendation in the White Paper, where, on page 16, they state: His Majesty's Government recognise that, if ever this country should again become involved in a major war, a much wider measure of control over industry would be needed than in time of peace. Indeed, this conclusion is plainly indicated from the experience of the Great War, and provisional plans for this purpose, ready in case of need to be presented for parliamentary approval, have necessarily to be prepared beforehand. Was it quite the whole truth to say that the Government rejected that recommendation in toto? I do not think so, and I should like the Committee to understand that the Government have not rejected that important recommendation in toto.

Mr. Noel-Baker

I am sorry to interrupt, but this is very important. Of course, industrial mobilisation was being prepared before the Royal Commission were ever appointed. We know that, but what is new in the Royal Commission's proposal is that in time of war there should be, first, complete nationalisation and, secondly, no profits at all, and what we want to know is whether the Government accept those two points.

Sir T. Inskip

The hon. Gentleman, I suppose, means his question to be qualified to mean complete nationalisation of the armaments industry.

Mr. Noel-Baker

Yes.

Sir T. Inskip

And that there should be no profits out of the arms industry.

Mr. Noel-Baker

Yes.

Sir T. Inskip

I am not in a position to give the hon. Gentleman a categorical answer to that question. All that I say is that the Government, especially reinforced by the views of the Royal Commission, are, as they have been for some time past, fully aware of the necessity for planning for any war that may come, and especially in the light of the experience of the war of 20 years ago, of the difficulties and evils of which in connection with armaments the Government are as fully seized as are hon. Members opposite.

When we come to the rest of the report, to these so-called subsidiary matters, I need not weary the Committee with a detailed examination of them. Broadly speaking, the proposals are that, although the private industry is to go on, the Government shall in some way seek to regulate and control it by systems of licences. The right hon. Gentleman the Member for Caithness (Sir A. Sinclair), in the speech to which I referred, recognised that this country exercises a better and more rigid control over the export of armaments than any other country in the world. That was his argument in controverting the Labour view that it was quite sufficient to nationalise the arms manufacture, his view being that you must internationalise the control of arms, that you must exercise international control or internationalise the trade in arms. The fact is that this Government, independently of the party complexion of the Government, exercises more control, by a system of licensing, over the export of arms than any other country in the world, and that has been shown, I think, by the action that has been taken in connection with the Spanish conflict. Hon. Members opposite do not agree with the Government, but it is a curious paradox that the Government have in this case put into practical operation an embargo upon the export of arms so far as Spain is concerned. Hon. Members opposite have pressed us to remove that embargo, and it was the hon. Gentleman opposite himself who, on 1st December, 1936, said categorically: We ought to have furnished the Spanish Government with arms. … and called on other Powers to do the same."—[OFFICIAL REPORT, 1st December, 1936; col. 1067; Vol. 318.] We all know that circumstances alter cases, but it is a little strange that the hon. Gentleman should on one occasion be so anxious to pour out arms in order that a conflict may be waged in another country, in Spain, and on this occasion be so anxious to reduce, diminish, or control the export of arms. No doubt he has arguments that are satisfactory to himself, but I am bound to say that they are not arguments that carry much conviction with me. What, of course, he wants to raise is the point that he touched upon earlier in his speech—the Socialist argument—and this is not the occasion upon which to debate it. Hon. Members opposite start off with that position, to consider and decide every argument from the point of view of the case for Socialism. That is another case altogether. It may be considered on its merits, and it applies not only to arms but to a great many other parts of industry.

So far as the licensing of the export of arms is concerned, I ask the Committee to accept the view that it is much better that, if there is to be, as there must be—and nobody can fail to be aware of it—a certain amount of export of arms from countries which make them, surely it is better that it should be controlled by the Government that exercises the best system instead of being in the hands of some countries that have no control, and no restrictions, and no ideas as to whether arms should be allowed to go out freely or not. I venture to think that the Government of this country, whatever its complexion, had better be left with this duty to discharge.

Sir A. Sinclair

As the right hon. Gentleman referred to me, may I say that it is true that I agree that we have the best system in this country, but I think it is imperfect, and I certainly think it would be better if the Royal Commission's proposals for improving it were adopted. I would ask whether the Government propose to give effect to those proposals for improving the system.

Sir T. Inskip

The Government's attitude is stated in the White Paper, but the point that I was on was whether we should so manage our affairs by prohibiting the export of arms, which we are asked to do, as to drive the trade to other countries which exercise a much less rigid control than we do over exports. I think it is much better that, if there are to be arms—it is a big "if," I know, but it is a hypothesis that everyone must accept—it is better that this country should exercise control over their export than other countries, where there is no such control.

I should weary the Committee if I attempted to go into the various recommendations of the Royal Commission, but there are some matters to which I will refer in a sentence or two. There is the question of the retired officer taking up a position in an armaments factory. The hon. Gentleman skated lightly over the objections raised in the White Paper, but they are very real objections. Supposing somebody who has retired from the Government without a pension, it may be a temporary public servant, takes employment with an armaments firm, what is the sanction by which you can compel him? Are you to legislate to make it illegal? That is not the recommendation of the Royal Commission. Their recommendation is that he shall not be able to do it without the consent of the permanent head, I think it is, of his Department, or of the Minister, but what is to happen supposing a man goes into, shall I say, an armament firm which carries on a large civil industry—Vickers, of course, do that, and their name has been mentioned, and so do Cammell Laird—and then he is promoted from the non-armaments part to the armaments part? What is the proposition to which hon. Members opposite stand? Is it that he should be prohibited from having his promotion?

Here again just consider how difficult it is to say what is the armaments part of the firm. A little while ago, as the right hon. Member for West Stirling (Mr. Johnston) knows, there was a controversy in this House about a firm that wanted to make armaments without profits. This firm, as appeared in the statement issued, made catapults for launching aeroplanes. Aeroplanes are murderous things under certain circumstances, and this firm made catapults for launching these murderous weapons. The contention was that that was not an armament. It is a moot point. If you look at a battleship, you will find that it has as an important part of its equipment to-day, a catapult for launching aeroplanes. I ask the hon. Gentleman: Is that an armament, or is it not? How are you going to decide this question as to whether people have broken the rule? It is not quite so easy. I may say that the Government recognise, not only in connection with armaments, but in connection with other industries, that there are solid objections to civil servants transferring at a certain stage in their career to outside employment where possibly there may be some conflict between their interest and their duty. There is a full examination being made, and although it is not solely in relation to armaments it will include the armaments position.

The only other point I need mention is the question of the profits that are said to be made by armament firms. The hon. Gentleman quoted some figures that had previously been given as to the enormous profits made by certain firms. He seemed to me to confuse the profits in the shape of a percentage of the capital of the company with the profits that were made upon a particular armaments order. He spoke of 45 per cent. profit—

Mr. Noel-Baker

Dividends.

Sir T. Inskip

At any rate, the hon. Gentleman spoke of it as a big profit, and asked whether it is not an excessive profit. What he meant was an excessive dividend. The dividend of a company has relation to the capital that it uses, and it may be a small dividend owing to a conservative financial policy, or it may be large, but it is a different proposition to say that there is a large profit on a particular job. Quite a different set of facts is involved. As a particular example of the profits which the armaments policy of the Government is allowing firms to make, the hon. Gentleman's case broke down because these were the dividends earned in 1935. The White Paper which stated the Government's armament programme was issued in March, 1936, and I go so far as to say that even the balance sheets for 1936 of any of these armament firms will not reflect truly the position consequent upon the Government's orders. Here I am on very safe ground indeed, because it so happens that the Select Committee on Estimates, which is composed of Members of all parties, made a unanimous report. They expressed the view, which conflicts with the view expressed by the hon. Gentleman opposite, that the methods followed are soundly conceived and are fair both to the taxpayer and the contractor, and they are of opinion, so far as an estimate can be formed, that they have been effective up to date in preventing profiteering at the taxpayer's expense. What is the good of expressing the unsupported opinion that excessive profiteering is going on when an impartial Committee, which included representatives from the other side, unanimously came to a contrary conclusion? There must be some finality in these statements. Let the party opposite wait, if they think they can, for next year, and see what the Public Accounts Committee say upon this matter with another year's experience. It is no good hon. Members opposite making these statements when their own party contributed to the examination of the facts with a different result from that which the hon. Gentleman expressed.

Mr. Johnston

Would the right hon. Gentleman kindly make some reference to the most important recommendation of the Commission about the foreign trade in surplus and second-hand armaments?

Sir T. Inskip

I have dealt with the export trade. The right hon. Gentleman says that this is the most important recommendation in the report. I do not regard it as such. This question admits of much the same arguments as I used in connection with the export of arms. The trade in surplus arms is controlled by a system of licences just as much as the trade in new arms. The right hon. Gentleman will find in the White Paper a full statement of the recommendations of the Government. They are on page 20: It must, however, be borne in mind that all transactions in connection with the sale of second-hand arms and munitions of war are subject to licence as in the case of export of other arms. In these circumstances His Majesty's Government are not convinced that there is sufficient reason for abandoning altogether the sale of surplus and second-hand arms and munitions of war to foreign Governments by private agency under proper safeguards. It is a matter of opinion. The Government have examined this question and, notwithstanding the view of the Royal Commission, they are satisfied that it is not in the interests of the nations—it is not so much the interests of this country of which we are thinking here—that this trade in surplus arms should be prohibited. Bear in mind what I said before, that you cannot deal with this question as if it affected this country alone. It concerns other nations. It concerns people who are determined to have arms. Are they to get them from nations where there is not the same control as is exercised here? This sale of surplus arms is one which may be carried on perfectly legitimately. The hon. Gentleman opposite cannot deny that after his statement about Spain; indeed, he said in an earlier speech that the very existence of Article XVI implies that people who are to punish the aggressor must be adequately armed. Some nations do not have any armaments-manufacturing capacity. Are they, therefore, to be prohibited arms for the purpose of carrying out their duties under Article XVI, or of defending themselves? Of course not. Somebody has to supply them. Where are they to get arms? Are they to get them from other countries or from this country? If they cannot afford to pay the price of new armaments, are they to buy the surplus arms of other nations or our surplus arms?

I do not know what answers the hon. Gentleman gives to these questions, but once you assume, as I do, and as the hon. Gentleman opposite assumes, that all nations are entitled to arms to defend themselves, we must admit that there is reason in our Government allowing the sale of surplus arms under strict control to those nations. I agree that if we were setting up an emporium for the sale of surplus arms without control or licence, and without regard to any of the evils attendant on a particular transaction, we should be worthy of condemnation, but that is not the intention of the Government. I said at the beginning that this is a problem that cannot be dealt with apart from the recognition of certain basic facts in the relations of nations, and I venture to think that the decisions of the Government are such as, in the words quoted by the hon. and learned Gentleman below the Gangway from the "Times" newspaper, "must commend themselves to all sensible people."

5.39 p.m.

Mr. James Griffiths

The right hon. Gentleman in opening his speech said that this question was one that went very deeply into human nature. I am sure that Members on all sides agree with that statement, for public feeling and sentiment in this country is deeply stirred about this problem. The right hon. Gentleman's speech will be read to-morrow with a great deal of disquiet and dismay, for he and the Government underestimate the feeling in the country upon this matter. I would like to quote one or two observations from the report of the Royal Commission. In paragraph 131, they say: In a general sense there is unquestionably something revolting to the conscience of all ordinary men and women in the thought that killing, and the supply of killing power, is profitable to particular groups of people, and the conception that war and preparation for war ought not to be the occasion of private gain is, we believe, the fundamental conception from which the moral objection to the private industry springs. In paragraph 134 they say: We are confident that the public feeling on this matter, which we believe to be widespread, intense and genuine, ought not to be disregarded. I want to urge these observations upon the right hon. Gentleman, because I think they express a feeling which he has completely missed in his speech, which in many ways was a clever Parliamentary performance. He argued about technical details, but what the Government have to do is to satisfy the deeply stirred conscience of the country which believes that there are men and companies who are making profits out of war and the preparations for war. The speech of the right hon. Gentleman and the statements in the White Paper will not, I am sure, allay this disquiet. We all approach this problem of the preparation for war with the hope that the armaments may not be used. We approach it also with an experience, and my reason for intervening is not to add to what has been so eloquently and lucidly said by the hon. Member for Derby (Mr. Noel-Baker), supplemented by the right hon. Gentleman below the Gangway, about the detailed recommendations of the Commission, but to point out that embodied in all this and affected by every one of the recommendations, are the life and the interest of the industrial workers. I have recently been re-reading parts of the Memoirs of my distinguished fellow countryman, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), who has probably an unrivalled experience of this problem among living statesmen. He went through the War and dealt with the problems we are now discussing, and I want to quote a statement which forms the background of it all. It is a part of the problem which the Government have completely neglected, and they will neglect it at their peril. The right hon. Gentleman is talking of the unrest that existed during the War and he wrote on page 1985: Since Britain is the most highly industrialised State in the world, the contentment and co-operation of the wage-earners was our vital concern, and industrial unrest spelt a graver menace to our endurance and ultimate victory than even the military strength of Germany. I suggest to the Government that what they have to dispel, if they are to escape that peril of industrial unrest, is the belief among the workers of the country that they are being conscripted, not to defend the nation, but to make wealth and profits for a few individuals. That is in the background of the minds of the workers—

Mr. Crossley

Would the hon. Member maintain that the costing system exercised by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was one-tenth as effective and efficient in preventing profiteering as the system now put into operation by the Government?

Mr. Griffiths

I will come to that in a moment. I am now dealing with the experience of the right hon. Gentleman the Member for Carnarvon Boroughs. He went on to explain why we had this industrial unrest, and what was at the root of it. What he found to be at the root of it is at the root of the problem we are facing to-day. He contrasted the solider in the trenches with the worker at home who was striking. He commented upon the newspaper propaganda that poured ridicule on and roused a storm of protest against the worker and compared him with the soldier in the trenches; and he used these striking words: The soldier, however small his pay, had no sense of being exploited to provide wealth for a profiteer. The worker in industry even though his wage was much larger felt himself a unit in a system which made profits for employers and dividends for shareholders, and he suspected that if he helped his, country to put forth an extra effort some capitalists would skim the cream and recompense himself from the increased effort which he put forth. That is one of the problems which the Government are completely ignoring. If this country should ever again be faced with a major war, and the workers be called upon to put forth increased efforts, one of the difficulties which will have to be taken into account will be the fact that it is not easy to define precisely the limits of the armament industry. In a major war all industry is called upon to make its contribution. The right hon. Gentleman has indicated this afternoon that the Government are preparing plans for the conversion of all industry into war-time industry.

Sir T. Inskip

indicated dissent.

Mr. Griffiths

The right hon. Gentleman talked about planning so as to be able to convert the industrial life of the country to war purposes. In doing that you not merely convert a pit or a factory but you change the relationship of the men who are employed in that pit or factory, and their psychology in the matter and their reactions to the change are an important point to be considered. The hon. Member opposite referred to the costings system. The plain fact is that money is made out of war. Fabulous fortunes were made out of the last War. I remember that in 1916, when I was in my trade union, the right hon. Gentleman who is now the President of the Board of Trade was sent down to Cardiff by the Government to appeal to the miners in South Wales, who had gone on strike, to get back to work. His plea was, "Your country is in peril. The nation is in danger. The coal which you ought to be producing is essential to the successful waging of this War. Go back and do your duty, and we will see to it that you are not prejudiced and that nobody skims the cream." But we know that fabulous fortunes were made by coal-owners, by shipowners and by many others out of the national necessity. How could the rapid rise in prices be explained, except by the fact that advantage was being taken of the national necessity? At present colliery owners, owners of steel making concerns and others are making great profits. Everybody, directly and indirectly, is feeling the effect of the sudden demands which have been created by the Government's rearmament policy. Why are industrial shares rising? Because investors know that prices are rising as a result of the increased demands consequent on our armaments policy. Profits are rising, but not wages—wages are lagging far behind, as they did in the War. I believe the people agree with the Royal Commission that there is something revolting in making money out of war. In spite of all technical arguments, they believe that it is the duty of the Government to convert industry into national industry, and that is our view on this side.

Let me say this finally: The Government may go on with all their plans for transferring industry and for conscripting labour, but the workers are rapidly reaching a stage at which they will not put their best into industry if it is run for private profit. The motive which we have hitherto relied upon, the motive of private profit, is breaking down. That motive effects but a very few people in present-day industry. Industry to-day is not run by those who make profits out of it, but it is run by those who perform the manual labour and those who give of their skill, the technicians and others, and they are men dependent upon wages and salaries. The profit motive is failing. I warn the Government that they will not get the response from the workers which they want if they do not cut out from industry the profit motive. Only the motive of service to the nation will sustain people in a crisis such as a war produces, and that motive of service can only be secured to the extent that industry is made the property of the nation and that whatever gain is made out of it becomes the gain of the nation.

It is a consideration which appeals to human nature. What were the thoughts of the men who, from 1914 to 1918, were in France and who came back to this country maimed and wounded, who have never been the same men since, who have never been able to rebuild their family life or to get back to where they had been, when they found that somebody who stayed at home had made a fabulous fortune out of shipping or coal mining? That psychology is spreading among the workers, and if the Government want the country to survive a crisis in the future they will only succeed by satisfying the workers that the motive of profit has been cut out of industry; but I feel strongly that neither the speeches we have listened to, nor the White Paper published by the Government, will reassure the people that the profit motive has been taken out of the arms industry.

5.52 p.m.

Mr. Crossley

Until I heard the speech of the hon. Member for Llanelly (Mr. J. Griffiths) I had not intended to speak this afternoon. His speeches always Impress me very profoundly with their sincerity and their vigour, and I think he touched the roots of the question when, towards the end, he suggested that if we were going to nationalise the arms industry it would mean, in fact, rationalising the whole of industry. We nave either to abolish the private system altogether and go in for industry as a State service, as a nationalised service, with service to the State as the motive to impel the workers, or else we have to take the system as it is and adapt it as best we can to the particular needs of the day. At this moment we are faced with the need for an expansion of armaments, and it is idle to pretend that at such a moment we can set about nationalising our industry and afterwards turn to the provision of increased armaments. The Royal Commission decided emphatically, and I thought gave admirable reasons for the decision, that it would be far better to take the private system as it is, and to impose certain safeguards in time of war and in the preparatory period.

I entirely agree with the hon. Member that there should be an elimination of profiteering. There is one thing about profiteering which I should like to say. I believe that the costings system which the Government have adopted is far more effective than any costings system carried out in the last War. I am not sure that, in spite of his great success as Minister of Munitions in supplying munitions, the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) was not as responsible as any other individual for some of the abuses which undoubtedly took place then. I agree with the hon. Member that it is the determination of the country that such abuses shall not occur again, but I do not think that any of the figures which the hon. Member for Derby (Mr. Noel-Baker) gave prove, in fact, that they have arisen, because those figures represented not more than 5 or 6 or 7 per cent. yield. But whereas costings are easy enough in the case of a firm which gets a contract direct from the Government, they become difficult when it comes to sub-contractors. I am not sure that there are not, in fact, abuses creeping in among those who are supplying Government requirements under subcontracts and sub-sub-contracts. The man, for example, who makes an aeroplane, does not get a disproportionate profit, but the man who gets a contract twice removed to supply nuts and bolts for that aeroplane, in the middle, it may be, of making a big provision of nuts and bolts for private industry, may be making a disproportionate profit out of the Government. I do not know how my right hon. Friend will eventually deal with that difficulty, but it is a question which has been very much in my mind lately.

I ought to tell the Committee that in some ways, and indirectly, I am concerned with armaments firms—indirectly, because I am not a member of any firm which is undertaking Government contracts—and I am pretty sure from my knowledge of the shadow scheme and so on that under the present Government costings scheme it is not the contractors who are going to derive disproportionate profits. I do not think that my hon. Friend opposite would agree that a profit of 5 per cent. would be unreasonable or undesirable, because, when all is said and done, industry is putting itself out of the way to supply a public service at the present moment, often—and this is the dangerous thing—at the ultimate expense of its export trade, and that is a pity. But how are we to make sure that subcontractors do not secure too great a margin of profit, because it is extremely difficult to apply the costings system right throughout the production of all the components of any item of armaments? I know of one armament firm which recently made an almost direct request to the Government to be a party to the purchase of their raw materials, because they had not the least idea what their raw materials would cost, and could not quote a price to the Government which would not be either too high or too low unless they knew what they would have to pay for raw materials. They asked the Government to be a party to the purchase of their raw material so that they might feel quite sure that they did not ask a price which was either too high or too low.

Those are the only observations which I feel disposed to make after the speech of the hon. Member for Llanelly. I agree with him entirely that we cannot give a greater fillip to recruiting or a greater fillip to the self-respect of the country than to make it perfectly clear that no arms manufacturer will make an excessive profit out of the country's necessity, and indeed I think there are extremely few arms manufacturers who have the slightest desire to do so.

6.0 p.m.

Mr. Gallacher

I had no intention of speaking in this Debate until I heard the speech of the Minister for the Co-ordination of Defence. The other night I saw a cartoon by Low, in which he had endeavoured to fit the clothes of the Prime Minister on to the Chancellor of the Exchequer; I got the impression that the Minister for the Co-ordination of Defence was endeavouring to steal that cast-off clothing for himself. A couple of points which must be dealt with were raised by the Minister, and they show either enormous and unbelievable inability to understand a simple issue, or a deliberate attempt to confuse it. The Minister said that there may be scandals in the armament industry; he was dealing with the similar statement made by the hon. Member for Derby (Mr. Noel-Baker). There were scandals in all industries, he said, and that he had had to consider those scandals as part of his legal business. There had been prosecutions in connection with them, that is, in ordinary industry. He did not tell us of any prosecution in connection with scandals in the war industry. They seem to be exempt from prosecution.

The Minister went on to ask whether, because there were particular scandals in ordinary industry, that meant that the State should take over all industry. That was a very clever question from a right hon. and learned Gentleman who seems totally incapable of understanding the question at issue, or who is deliberately attempting to confuse it. I agree that there is no industry, run for private profit, that is without corruption, some of it so glaring as to call for prosecution; but then it is a question of one robber fleecing another robber. There is a prosecution when a robber is robbed. If there is corruption in the armaments industry, and scandal, such as was presented by the hon. Member for Derby, thousands of people, it may be millions, outside the range of that industry, may have to pay the price in death and destruction. Is the Minister conscious of that vital difference between corrupton in the armaments industry and in other industries? That is the issue that he avoids and tries to obscure. When we come to the question of Spain he says that the Members on this side are against the export of arms in general; of course we are against it, but nobody ever said that the Government, at no time and in no circumstances, should ever export arms. Whoever suggested anything of that sort? Can he give any evidence of anybody ever presenting that unheard-of proposition? Obviously, the most vigorous opponent of the export of arms for profit, and supporter of State ownership of the armaments industry, would always hold with the right of the Government to use their power on behalf of particular interests, in common with the interests of our own country.

So, we come to Spain. Those of us who opposed the export of arms, and those who were in favour of the export of arms, as against ourselves, have suddenly changed right around. These people have become the non-exporters. How is it that the Minister and hon. Members on the other side have suddenly become the opponents of the export of arms? The Minister asked why we are now in favour of the export of arms. We are for the export of arms to Spain because a democratic Government are fighting for their existence against a horde of evil enemies drawn from all the Fascist Powers in Europe. The democratic members of a democratic institution such as this House of Commons ought to support the democratic Government of Spain.

The Temporary Chairman (Sir Robert Young)

The hon. Member must not discuss Spain in that way in connection with this Vote.

Mr. Gallacher

I quite understand that I am away from the Commission's report, but it was the right hon. and learned Gentleman, in his desire to confuse the whole issue, who introduced this topic, and I considered that I had the right to answer him. On both the issues he is either giving an exhibition of colossal, gigantic ignorance, or else is using all his developed legal faculties for the purpose of trying to confuse the issue, which is clear and straight. This industry is different from all other industries—although we are in favour of owning all of them. The appointment of the Commission and the discussions of the Commission arose from the fact that this Industry differs entirely from ordinary industry, in so far that the wrong control of it, and the corrupt methods associated with it, can lead to the death and destruction of millions of people. No Member with any sense of decency or of genuine representation of the people of this country can consider for a moment leaving the masses of the people at the mercy of the private profiteers in this industry.

I had some experience during the War and so did my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood). There was a discussion in the Cabinet (luring the War about the treatment of him and me, charging us with high treason and considering putting us in the Tower, or something of that kind. One genius in the War Cabinet suggested that it would be a great idea to withdraw our exemptions, which we had as engineers, so that then we should go into the Army. It was a great idea, until they came to think of it. We had some experience of what was going on during the War. I was an official of a trade union. A body of officials of the allied trades in Glasgow met the employers. There they sat, discussing an increase in wages. Prices were going up and so were rents, and profits were going up. We asked for an increase of 2d. but they offered us ½d. An employer made a patriotic appeal to us. You would almost have thought that he was the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). The boys out at the Front, they were waiting for our munitions, and we should not make a strike, and so on and so forth. I had never listened to such unspeakable hypocrisy, because the firm that the employer represented had two guns lying up at the goods station; those guns had been lying there for three weeks and the firm refused to take them from the goods station to the plant until they had received a 50 per cent. increase in price from the Government. The same thing was going on in other parts of the Clyde—the most atrocious profiteering. In one of the big industries, the firm was being paid, not on the work done, but according to the number of men employed. Every man brought in meant more money for the firm. In the end, they did not care whether they worked or not; all they were concerned about was getting the money. We saw hundreds of things like that.

Just now there is the question of apprentices in the Clyde area. War work is being carried on and big profits are being made; statement after statement has been made about how shares are soaring up in different industries; but at the same time there is this spectacle. Let hon. Members contemplate it. Apprentices of from 14 years of age to 18 years of age, young boys, with no organisation, no trade union—there are no agitators—are forced, because of the conditions under which they work, to come out on strike; all the boys on the Clyde. That is their first experience in life. Hon. Members on the other side have no understanding what it means for those boys to be exploited. They are not being taught any trade and they are paid scarcely any wages. Hon. Members may have sons and daughters—and what care and attention they give them—but here are boys of 15 or 16 years of age, going into engineering shops to work from early morning to late at night. There is no question that big profits are being made, fortunes; and these boys are asking for a standard rate of wages and for increases of wages each year. They want, in their first year, 15s. a week; that is all, while any amount of profit is being made. In their second year they want 17s. 6d.; third year, 20s.; fourth year, 25s.; fifth year, 30s., when they are 20 or 21 years of age. That is what they are fighting for, these lads who ought to be given the greatest possible consideration. They are forced to come out on strike and march up and down the streets.

I met them. I was with them on a demonstration one day. I was proud of those lads, although I regretted that they should have to take such action and that our adult organisation had not been strong enough to protect and care for them. It was fine to think that the boys of the Clyde, faced with those conditions, exploited in order to pile up profits, had the courage to come out and take a stand. Then they ask for a reasonable ratio of apprentices to engineers, for proper training, and no sacking at 21. These boys are taken in and are not given any effective training, but are used for all kinds of purposes—working on semi-automatic machines and so on—and when they reach the age of 21, instead of getting a chance of earning a skilled man's wage, they are thrown out and other boys are taken on in their place. Take what is happening at Parkhead. Enormous profits are being made at Parkhead, but the engineers there, on the question of a small increase of wages, have been forced to come out on strike, and have been out for nine or ten weeks. No one who has not experienced it can understand what a strike means to the worker and his family, but they are forced to take this action at the present time. As the situation develops, the fight for profits will become keener, and those profits will be realised at the expense of the workers in the various industries.

The war materials industry is entirely different from ordinary industry, and it is necessary that a democratic government should have the fullest measure of control over its armaments and the power and will to use these for democratic purposes as against support for Fascist systems, and to ensure that the workers will get better wages and working conditions and that the apprentices will get an opportunity for learning a trade. I had a question down to-day with regard to the Admiralty contract workers at Crombie, and was told that, while the Admiralty men got a full day's pay for Coronation day, the men who were doing Admiralty work on contract only got half a day's pay for that day. The employers, seeing that they were working for the Government, were forced to make some concession, but had it not been for the fact that the Government men were receiving a full day's pay for that day these men would not have got a penny from the contractors.

I remember the right hon. Gentleman the Member for Carnarvon Boroughs coming to Glasgow and having a talk with us on dilution and other matters in connection with the engineering industry, for the purposes of winning the War. It was an engineers' war, he said. But when the question was put to him of taking the industry out of the hands of the private manufacturers, his knees gave way. He would fight Hindenburg, he would hang the Kaiser, but, when it came to facing the employers of this country, he said that it could not be done, that it would mean a revolution, and you could not carry through a revolution in the midst of a war. But if you cannot carry through a revolution during a war, if it is impossible during a war to control profiteers who are prepared to sacrifice the country and lose the war in order to keep their profits—because that is what the right hon. Gentleman meant—if you cannot handle these people during a war, please handle them now.

There is no reason why this industry should not be taken over. The speech of the hon. Member for Derby was an unanswerable speech. He put an unanswerable case for taking over the industry. The Minister did not make the slightest attempt to answer that speech; its main arguments he entirely evaded, and the parts that he did not evade he tried to confuse. I ask this Committee to consider very seriously their responsibilities to the men, women and children of this country, to weigh carefully the speech of the hon. Member for Derby, to consider the proposal that that speech so forcibly supported, and to carry something that will be of the greatest value to the country as a whole—namely, nationalisation, the national control of armaments—to take armaments away from the arena of profits arid to prevent any further exploitation of the masses by those who are engaged in the production of weapons of destruction. Weapons of destruction in the hands of profiteers are a menace, not only to this country, but to every country in Europe, and I therefore commend the proposal of the hon. Member for Derby.

6.21 p.m.

Mr. Louis Smith

Members of the House of Commons are frequently privileged to listen to the eloquence of the hon. Member for West Fife (Mr. Gallacher), but it is not always that they are privileged, not only to listen to that eloquence, but also to have it supplemented at the same time by the brains of another Member. I am sure we are much indebted to the hon. Member for West Fife for the points that he put forward, although sonic of us must say that we totally disagree with them. I could not fail to note that in the early part of the speech his enthusiasm carried him so far that he said that not only was there corruption in every armament concern, but also that no trade or industry carried on in this country for private profit was free from corruption. I am wondering whether every trader in the hon. Member's constituency, whether he runs a small shop, a small manufacturing business, or a larger manufacturing business, will welcome a statement in the House of Commons that in his particular business there is corruption.

Mr. Gallacher

The Minister for the Coordination of Defence said, that there was not only corruption in the armaments industry, but there was corruption in ordinary industry, and I said that I believed that the Minister was correct.

Sir T. Inskip

What I said was that there were cases of corruption, cases of scandal. That is a very different thing from saying that corruption pervades industry.

Mr. Smith

Seeing that the point has been so ably answered, I will make no further reference to it. I should like to say how much I welcome this very able report on the private manufacture of and trade in arms, and how pleased those of us who have all along felt that it was most undesirable to take the manufacture of armaments out of the hands of private firms were to know that it is a unanimous report. When one realises that all shades of thought were represented on the Commission, I think the general public will feel confident that the Report is one of which the Government can take very careful note. I would like to thank the Minister for having so clearly put before the House and before the country the views of the Government on this important matter. Representing, as I do, one of the principal districts in this country where armaments are being turned out by private firms, I feel that the House should realise how indebted the country is to those concerns, large as well as small, in the city of Sheffield, for having in their factories and works prepared plant in readiness for any demand which the Government might make upon them. Several large concerns in Sheffield spent a great deal of money, running into hundreds of thousands of pounds, in providing modern equipment at a time when work among machine-tool builders was badly needed, and when practically all firms in the engineering trade in this country were needing work, thus providing work for people in this country at a time when the demand had not arisen. I think the country is in- debted to those firms for having so fully prepared themselves to meet the demands which the Government are making upon them. I have always felt that the main reason why public opinion in this country was doubtful as to the wisdom of allowing armaments to be made by private concerns was due to what is written on page 15 of this Report: The desire to abolish the private trade is no doubt in part an expression of the general desire to abolish war. I think the reason why those of us who' felt that it was desirable that armaments should be made partly in private works and partly in Government factories have met with so much opposition and criticism has been that people imagined that by abolishing the manufacture of arms in private factories they would help to abolish war. One can quite well realise, however, that no such effect would follow, and that, if private firms throughout the world were unable to manufacture arms, those firms would be replaced by State arsenals, which would no doubt help to create wars, especially in the smaller countries, which to-day have to buy their arms from other countries.

We have heard a great deal about the tremendous fortunes that are being made by armament firms, and particular reference has been made to the Clyde. My information with regard to one firm, that of Beardmore's, where there has been labour trouble for some few weeks, is that that firm has been extremely weak financially for some years, and is not now, as far as I am aware, making a great fortune.

There is a very great deal of loose talk about fortunes being made by armaments concerns, many of which have for many years shown a deficit on their balance sheets and have made no profit at all, and there is a great deal of leeway to make up before they can be said to be making profits. I do not know to-day of any firm in the country which has been showing huge profits. During 1936 only about 15 per cent. of the total production in the factories of Sheffield was armament work and 85 per cent. was the ordinary commercial work which, thanks to the policy of the Government, has increased very rapidly during the last year or two. It is absolute folly to talk about huge fortunes being made when we have not really reached the time when we can judge. As the Minister himself said, it will be high time in 12 months to judge whether the restrictions on profits put on by Government Departments have been effective or otherwise. Certainly it is not the time to judge to-day. I know of several firms in the Midlands which, during the last two years have taken a certain amount of Government work and, in conversation with the manager of one of those concerns a short time ago, I was told that, although he was wishful to continue taking these contracts—in one case it was for boilers—in order to keep up the class of work in his shops, owing to the keen competition and the methods adopted by the Admiralty he was unable to make more than half the profit on the Admiralty work that he was making on ordinary commercial work. The demand for very high-class workmanship by Government Departments, the keen inspection and the very close watching of contract prices in London have certainly prevented firms making huge profits during the last 12 months.

It is said by some hon. Members opposite that it would be much more desirable to do away with the private manufacture of armaments altogether. I take it that in that they include gas. If we had to produce gas for defence or attack in a future war, I take it that those who are demanding the abolition of private armament manufacture would say that we must put up State factories. It would be most undesirable to put up State factories to produce gas. If we need gas at any time in an emergency we can, of course, fall back on our chemical factories. We must always have a nucleus of private firms who can not only supply guns, armour-plate, aeroplanes and accessories, but we must also make sure that, if there are any chemical appliances used in war, we do not need State factories for their production. I was astonished to hear an hon. Member opposite say that in his opinion the workers would refuse to produce armaments. I am sure that is not the general opinion in the armament works of the country. I know a good deal of the feeling that is common in various works in the Midlands and in the North, and the defence of our homes is just as much thought about by the workers in the factories as by Members in this House.

Mr. Noel-Baker

I think my hon. Friend said that the workers would feel difficulty about producing armaments for profit. It is a matter of history that in the last War it was the fact of excessive profits which caused a good deal of the labour trouble that there was.

Mr. Smith

The hon. Gentleman has made the point very much clearer to me than his colleague behind him, but one not infrequently hears the statement made without the qualification that the hon. Gentleman has added. I am certainly most definitely opposed to the nationalisation of any industry. I can well understand the hon. Member who spoke last advocating the nationalisation of the armaments industry, because he is wishful of nationalising every industry. The same reaons for which I oppose the nationalisation of any industry are applicable to the nationalisation of the armaments industry. You will never get efficiency, you will never obtain the best personnel to run the business at an economical rate, and you will not keep up to date with appliances of war. You will have other nations outstripping you. It is essential to keep the private firms in order to obtain the best aeroplanes, the best guns, the best armour-plate and the best alloy steel, which is so essential in the manufacture of a great deal of our armaments. The hon. Gentleman, perhaps, does not realise the advance that has been made in the last 10 years in Sheffield in high speed and alloy steel. A great deal of the armaments that the Government are purchasing could not have been obtained if it had not been for the research work that has taken place during that period. The aeroplane industry is greatly dependent on this high-grade steel and the alloys which have been worked out in another area of the country, and it is up to the country to appreciate the work that has been done by pioneers in private industry in finding out lighter metals and higher-class materials which enable the Government Departments to obtain armaments not only equal but superior to those of other countries.

I sincerely welcome this report and appreciate very much the attitude of the Government towards it. I shall wholeheartedly support the retention of private armaments manufacture, because I feel sure that it is in the interests of peace and not of war, and I believe it would be a great disadvantage to the world as a whole if by doing away with private firms we created State arsenals in every country.

6.42 p.m.

Mr. Arthur Henderson

The hon. Member who has just spoken chided the hon. Member for West Fife (Mr. Gallacher) because he is in favour of nationalisation, and presumably that is the reason why he supports the proposal to nationalise the armament industry. One might reply that it is quite clear from what the hon. Member opposite has just said that he is opposed in every case to nationalisation of industry and that is why he opposes any suggestion that we should take over the arms industry. Apart altogether from the merits, he has made up his mind in advance, and therefore will have nothing to do with it. He made one or two statements which I should like to controvert. He argued that private enterprise was responsible for the manufacture of gas. I understand that any gas that may be manufactured in this country and the research work that is being carried out in connection with the potentialities of gas warfare, are being done under the aegis of the Government.

Mr. L. Smith

What I said was that should the demand for gas arise we should have to depend on private firms because it would be undesirable for the Government to create factories on a large scale for the purpose. I did not say anything about the experimental work that is going on.

Mr. Henderson

The point that I seek to make is not affected by the fact that the hon. Member was not arguing that the research work was being carried on by private enterprise, but I should have thought that our experience in the future would not be affected by the suggestion that at present any responsibility for the manufacture of war instruments should be the responsibility of the State. The hon. Member also made a rather pathetic defence of the private entrepreneur in the armament industry and said they had not been making the large profits that have been suggested. As far as Vickers are concerned, I believe that in 1935 they issued a 50 per cent. share bonus, and last year they paid a 10 per cent. dividend on the entire capital, which works out at 15 per cent. on the original capital. I should have thought that 15 per cent. was a very reasonable profit, and that the hon. Gentleman need not be so diffident about the financial prosperity of those who are engaged in the iron and steel trades.

Sir Walter Smiles

Did not Vickers reduce their £1 shares to 6s. 8d. some time about 1922?

Mr. Henderson

If the hon. Gentleman wishes to rely upon history, he may go back to the years 1914 to 1918. I think he would be well satisfied if his business were to make the profits that Vickers and other armament firms were making during those years. I was making a point in reply to the hon. Gentleman, who had argued that apparently the armament makers of this country were very near the poverty line. I confess that many of us are disappointed with the attitude which His Majesty's Government have adopted towards this report. They appointed a Commission at the latter end of 1934, composed of men of great experience who sat for many months, and I believe that the evidence to which they listened comprises more than 20 volumes. They were in a unique position to assess the pros and cons of this vexed question. I assume that they were appointed by the Cabinet in order that this investigation might be made, and to advise the Cabinet after they had completed their investigations. The members of the Cabinet themselves have not had anything like the same opportunity as the Commission had for making the necessary investigations, and yet, for some reason or another, after having asked these gentlemen to spend 12 or 18 months in making these very careful inquiries, they more or less reject the report which has been presented. I should imagine that the members of the Commission have a real sense of grievance in the way in which their recommendations have been accepted or not accepted by the Government.

Those of us who are supporting the Amendment before the Committee tonight do so because, rightly or wrongly, we have a fundamental objection to any person making profit out of instruments of death. During the Great War millions of young men in this and other countries went into the Services and served in France and Belgium and other parts of the world. I do not believe that anyone would suggest that the question of profit entered into their minds when they took the oath to serve in His Majesty's Forces. It is no use hon. Members on the opposite side of the House taking the view that the element of profit is of no consequence in the making of wars, either so far as past wars are concerned or as regards the future. The Minister for the Co-ordination of Defence interrupted one of the previous speakers, and made it clear that, as far as this country was concerned, there had been only exceptional cases of corruption. That is not the position in other countries, nor does it end the question as far as we are concerned. We know full well that it is not so much the desire on the part of a particular individual to make a large profit, but a desire on his part to make a profit, and that has led to the ramifications of the international armament industry, which we know has its influence in every part of the world. The Nye Report, which was the product of the Commission set up by President Roosevelt to inquire into the armament industry, makes this statement: The Committee finds…that almost without exception, the American munition companies investigated have at times resorted to such unusual approaches, questionable favours and commission, and methods of 'doing the needful' as to constitute, in effect, a form of bribery of foreign government officials or of their close friends in order to secure business. The Committee realises that these were field practices by the agents of the companies, and were apparently in many cases part of a level of competition set by foreign companies. The report goes on to state: The Committee accepts the evidence that the whole process of selling arms abroad thus, in the words of a Colt agent, has 'brought into play the most despicable side of human nature; lies, deceit, hyprocrisy, greed and graft occupying a most prominent part in the transactions.' The Committee finds, further, that not only are such transactions highly unethical, but that they carry within themselves the seeds of disturbance to the peace and stability of those nations in which they take place. That was the report not of Socialists, but of a Commission of men who believe in the capitalist system of industry. At any rate, as far as the armament industry is concerned, this is the view that they take with regard to its method of working. There are many cases on record showing how this particular industry works, and of supplies being given to both sides in a particular conflict. Two or three years ago there was a war between Bolivia and Paraguay, and I should like to ask the spokesman of the Government whether it is true that, while the dispute between Bolivia and Paraguay was brewing, the agent of a most important British armament firm secured an order for £1,500,000 worth of arms and at the same time another agent of the same firm was working with equal success in Paraguay? That statement has been publicly made and never contradicted, and It would be interesting to know whether, in the view of the Government, it is true. It also appears that after the fighting had begun, and while the delegates of the British Government were seeking, with their colleagues at the Council of the League of Nations, to stop the war, British firms were still supplying both belligerents with great quantities of arms. In the House of Commons in 1933 the President of the Board of Trade admitted that five tanks had been exported from Great Britain to Bolivia during the previous year. I believe that it has also been stated and not contradicted that in the 12 months prior to 1934 British armament firms sold guns to both belligerents to the value of more than £250,000. We all know of the classic instance of the British guns that were used by the Turks in Gallipoli to kill British soldiers.

There are many people who cannot in any circumstances be described as Socialists who take the view that this question must be tackled at the earliest opportunity. I understand that one of the favourite defences put forward by those who support the present system—and I believe the Minister for the Coordination of Defence took the same view to-night—is that there would be a difficulty in the disposal of surplus arms in the event of the armament industry being nationalised. [Interruption.] I understand the right hon. Gentleman had made a reference to the position of non-producing States. The argument that is generally put forward with regard to non-producing States is that those nations without armament factories would be placed in a difficulty, and that, therefore, it is an argument for not making it impossible for them to obtain their arms from other countries. I will quote from a memorandum which was submitted, I believe, to the Disarmament Conference by the Government of Denmark on this particular point: The non-producing States derive no benefit from the system of private manufacture. The abolition of this system, would not, therefore, modify the situation of non-producing States in any way. The memorandum then proceeds to explain why this is true: Even in the present state of affairs arms are only sent by a private factory with the assent of the government on whose territory chat factory is situated. I, therefore, suggest that it is no argument to concern oneself with the possible situation of non-producing countries in the event of this reform being carried through. In conclusion, I would make an appeal to the Government from an entirely different point of view. Millions of ex-service men in this and other countries, rightly or wrongly, are opposed to the manufacture of arms being left in private hands. Two or three years ago during the sittings of the Disarmament Conference a special delegation was sent to Geneva composed of 700 ex-service men from various European countries. They put forward resolutions to this effect: The ex-service men and war victims grouped in the C.I.A.M.A.C. and the 35.I.D.A.C., assembled for the first time in a common effort, evoking the memory of the millions of war dead and speaking in the name of the above two organisations which comprise 8,000,000 members…have adopted the following resolution:— 'Material disarmament…should include the suppression of private manufacture of, and private traffic in, arms, together with effective mutual international control.' Those are the views of 8,000,000 ex-service men. Hon. Members on the Front Bench opposite may think that this is a humorous matter, but to me it is one of great seriousness. Those of us who served in the last War have had enough of war. We are anxious to launch these reforms because we want to prevent wars in the future. We put forward these proposals sincerely because we believe they will prove to be one of the methods by which the possibility or probability of war in the future will be lessened. I hope at any rate that the Government will take the matter seriously and accept our bona fides in putting forward our proposals in this connection. That was the point of view put forward by the representatives of millions of ex-service men.

I know perfectly well that the Government have consistently opposed any nationalisation of the arms industry, just as they have consistently opposed even the control of the armament industry. During the years of the Disarmament Conference, when a small group of nations, composed of France, Belgium, Poland and one or two other nations, were advocating the control of the armaments industry as one of the main proposals to be embodied in a disarmament convention, the Government consistently opposed that proposal. They are opposing it to-day. This Commission has, quite frankly, rejected the proposal that the armaments industry shall be nationalised, but has taken its stand in favour of control. The Government will have neither nationalisation nor control. It may be that nothing we can say or do will alter their policy. It does not alter the fact necessarily that our policy may be right. We believe it to be right. We believe it to be one of the means by which we are going to be able to eradicate the causes of war in the future. To further that belief I hope that we shall carry out views into the Lobby to-night and register our adherence to the policy which has been adumbrated in the speech of the hon. Gentleman who opened the Debate.

7.2 p.m.

Mr. Higgs

If I thought that by voting for the Amendment I could assist in reducing the risk of war, I would certainly do so for the reason that I consider the question of peace is a question above party. There is a profit in armaments undoubtedly, but that profit is confined to no one section of the community. The costing systems have been credited for the making of this profit. Those gentlemen who suggest that the costing systems are at fault forget that competition comes into play in the manufacture of armaments, that the same factors have to be taken into consideration by those firms which are manufacturing armaments as by the ordinary individual when he is purchasing an ordinary commodity. If I go into a shop and want a pair of shoes I find out the price, and if I go into another shop and find the same pair of shoes being sold at a cheaper price I buy them. The same mentality exists among the powers-that-be who are placing orders for armaments. Competition comes into play, and the most efficient firm gets the order, and if they make a profit, after taking that competition into account, it is due to their efficiency. We are told that they pay low wages.

Mr. Paling

And they do.

Mr. Higgs

We have heard of 15s. a week being paid to apprentices. I am not going to say whether that is a high or a low figure. When I served my time as an apprentice I was paid 5s. a week, and I do not believe that I was worth that. Since then the cost of living has not gone up three times and, therefore, the apprentice to-day is in a far better position than the apprentice was when I served my time. The employer is in a better position, but my point is that all ranks of society have benefited. If we take the manufacture of armaments or of any other commodity out of the hands of individuals, we are losing that individual effort which is so necessary to efficient production. How can one tell whether he is employed by a railway or a post office? One is nationalised and the other is not, and I do not think that the concern of a given size is any more efficient if it is nationalised than it is if run by a private individual.

What are armaments? Where do they begin and where do they finish? Can you tell whether drawn brass is to be made for use on motor cars or for use in cartridges? Can you tell whether the finer instruments used in battleships are going to be used in a power station or in a battleship? To define armaments is exceedingly difficult, and that is one of the problems with which we should have to contend. Improved trade has, to a great extent, been credited to the armaments programme. The excess expenditure on defence last year over the previous year was something under.£50,000,000. The total income of this country is somewhere in the neighbourhood of £5,000,000,000. Our national defence costs 1 per cent. more of our total income. How is it possible that that has improved our trade in the manner in which many people are in the habit of suggesting that it has done? It is confidence which has improved British industry. It is not the rearmament programme; it is confidence in the Government and what they have given us, stability, so that the manufacturer is prepared to go ahead and look ahead. If I could for one moment think that by putting all armaments into Government control I would be helping peace as a new Member I would vote with the Opposition, but I do not believe it would have that effect.

7.9 P.m.

Mr. David Adams

Permit me to have the pleasure of offering my congratulations to the hon. Member on the delivery of what, I understand, is a maiden speech. He has given us a lucid explanation of his views and brought to bear on the subject of the Debate that form of information to which the House will always listen, and to which it will give its approbation. In the name of this party I tender to him our congratulations on his maiden effort, and express the hope that he will take part with frequency in the Debates to the general advantage. I am not one of those individuals who look upon the findings of the Royal Commission as some new revelation to be treated as though it were Holy Writ. I find that the individuals composing the Commission were human beings and, examining the social position which I think, without variation, each occupies, I should have been greatly astonished if any other reports had been forthcoming than the findings at which they arrived.

If a pronounced Socialist had formed one of that happy and unanimous group there would have been a minority report which would have been more in harmony with the view which the Opposition hold upon this subject. So that hope that in the ensuing Royal Commission which we are promised by the Government—there is to be one art the location of industry—the Government will see that, in order to have a dispassionate review of the subject, one or two good Socialists will be placed upon it.

Lieut.-Colonel Sir Thomas Moore

Are there any good ones?

Mr. Adams

The Commission properly said that the first and main question they were asked to consider and report upon was the practicability and desirability of the adoption of the prohibition of private manufacture of and trading in arms and munitions of war, and the institution of a State monopoly of such manufacture and trade. All other subjects which have been raised in this Debate are not, strictly speaking, relevant to the Debate. The Commission go on to state—and I do not consider that they were strictly dispassionate, but were partial— In a sense it would, no doubt, be practicable if all the States of the world agreed to adopt it in principle and were willing and competent to enforce it within their own borders. So that we in Britain have to wait until we get unanimity among the whole of the States of the world before we pursue any particular action. It is rather remarkable that, having had these views endorsed by the Government, we should have had such a thing as a Defence programme. Why did we not summon the States of the world and inquire whether we could not have their unanimous decision as to the wisdom of Britain entering into a Defence programme or not? The Commission go on: We do not think that the establishment of such a system would entirely remove the objection which is entertained to making a profit out of the trade. If you limit the private production of arms, you will go a considerable way to eliminate profits out of the trade. The Commission say: It is, we think, difficult to assume that producing governments would be prepared to supply arms to non-producing governments at cost price. That is a puerile observation to make. Surely it is an entirely different thing and in no sense analogous to compare the private profit-making of private shareholders and individuals with that of States which must be reimbursed by a reasonable profit on any transaction they undertake. The Commission say: It is conceded that the non-producing countries are entitled to a supply of arms and munitions of war for the perfectly legitimate purposes of self-defence, the maintenance of order, and the fulfilment of international obligations. Obviously, we all agree with that proposition; it scarcely needs to be defined. The Commission say that if all sources of private supply are cut off, a non-producing country must either start its own manufactories or purchase from some producing country. Why should we, if we are manufacturing arms, object to supplying, with the general agreement of other great Powers, those small States which are non-producing? One would almost assume from this statement I have read that the lesser States of the world would be in jeopardy if the greater States proceeded to manufacture armaments. Nothing could be more remote from the facts of the case. It is in the interests of common humanity for the greater States of the world to see that the lesser States receive the protection which they are able to give either through treaties or the supply of necessary arms and other forms of protection. The further statement is made: The conclusion at which we have arrived on this point is that in the present state of international affairs the setting up of a universal system of State monopoly is unlikely either to reduce the available supply of arms and munitions of war, or to increase the prospect of a general peace. There, again, I entirely dissent from the statement made. No one who knows the history of past wars will deny that the private manufacture of arms has substantially contributed to the private production of wars. All classes of the community agree that the callous and international character of the arms producers working as they do by subterranean methods in many cases, have been the deliberate cause of international ill-will, leading either to the brink of war or to wars. The greater the international strain and the demand for armaments the greater the profit which goes to those who are producing arms. They thrive on the use of armaments and munitions or the preparations for war. It is that of which we make a complaint.

The Minister for the Co-ordination of Defence informed us that there was no particular form of general corruption observable, or very little of it, among those who are producing arms. Perhaps we can subscribe to that proposition. Gifts of £20,000 which are discovered are uncommon. They do not occur with frequency, but does not everyone know that there are other methods of corruption which can be discovered, such as powerful financial influences and social and political pressure? The history of the arms trade has proved to the world that those methods are used in addition to methods of corruption by means of gifts of money. As long as this trade continues in private hands it is admittedly a form of private capitalism. Hon. Members opposite have stated that in no circumstances would they be parties to nationalising the armaments industry. Seeing that about one-third of the total capital employed in this country is nationalised or municipalised capital, would right hon. and hon. Members opposite, to be logical, put into private hands, the Navy, the Army, the Post Office, the roads and the great municipalised industries of the country, for private exploitation? It is not a very far cry to our roadways being in private hands. Until recently in the city from which I come we had a toll bridge and people had to pay for bringing in or taking out a vehicle from Newcastle. Only a week ago, with the assistance of the Minister of Transport, we were able to free our bridges and to get rid of the last toll which prevented people from coming in or going out of Newcastle except on payment of toll.

If the Royal Commission had declared that it believed in the abolition of the private manufacture of arms the Government would not have accepted that finding. The Government have laid it down definitely in some cases, and in other cases indefinitely, that the prime object of the Government in power is the preservation of the present capitalist system and the extension of the same whenever opportunity comes. It is for that reason that the Government will take no steps, no matter how powerful the argument may be in favour of it, for the nationalisation of the arms industry.

The Minister for the Co-ordination of Defence said that the Opposition viewed this question from the Socialist standpoint. That is true. We believe that only by viewing all subjects, particularly those in regard to trade and industry, from the Socialist standpoint, can we secure the greatest good of the greatest number. We believe that the evils of the time in which we live are due to modern capitalism, however much they may be modified from time to time by legislation and administration. As the Minister said at the outset of his remarks, these questions involve matters of great human import. Perhaps I have paraphrased his observation. There is a great underlying truth there. Nothing can be of greater importance to the age in which we live than the question of peace and war. We learn in Holy Writ that the last great enemy is death, but we have discovered something infinitely worse than death itself, and that is the terrors of a great war, the years of anxiety which arise from war, and the destruction of the wealth accumulated by mankind. These things are infinitely worse than death itself. Death often comes to the human family as a happy release, but the great terrors of war, with the uncertainties, the anxieties, the waste, the folly, the impeding of the ordered progress of the human race, are infinitely worse than what the Holy Book tells us is the last great enemy of man.

We on this side are correct in our diagnosis of the present position as far as the manufacture of arms is concerned. If the profit making element were taken away from this trade the human family would breathe easier and would have a sense of greater security. It is for that reason that we advocate the elimination of private profit making and the handing over of the manufacture of these deadly instruments of destruction to those who would not abuse them but would use them with discretion, judgment and common sense, which would be so much better for all the nations upon earth.

7.28 p.m.

Sir W. Smiles

We are discussing this question in May, 1937, and it is only fair to think of the conditions as they exist to-day. In 1919 at the end of the War everybody was sick and tired of armaments. They felt that the nations of the world had been wasting their time in a futile affair. After the War, in the years 1919, 1920, 1921, 1922 and for the next to years people would hardly look at a soldier or show proper respect to the Army, the Navy or the Air Force. What was the result? The taxpayer would hardly pay £1 to keep up the national defences. We were hoping that the League of Nations would succeed. When I came into Parliament in 1931 we were talking about the League of Nations. Germany was still a member of the League and I think Japan was a member. We were all hoping that war was over for good and that nations would not need navies, armies or air forces, that we should be able to get rid of implements of destruction and sit down to reduce the Income Tax, to improve social conditions and to allow children to remain at school till they were 15 or 16 years of age.

We had a rude awakening. It is no good mentioning the countries which woke us up, but we found ourselves in a state of absolute disarmament when other countries were being armed to the teeth. No one can contend that our own arsenals or dockyards were capable of meeting the emergency. We had to look around for people who could, and we had to rely on the foundries and engineers of the country, who had been running their businesses as private enterprises all this time. The Government are controlling profits in every possible way, but there is no doubt that without these private firms we could never get warships or aeroplanes or the Army equipped in time. The Government had to go to the private manufacturers. But were private manufacturers always ready to take up these contracts? [HON. MEMBERS: "Yes."] Not always. I was discussing this matter with the managing director and chairman of a big engineering works when I was ordering some machinery from him, and said that he probably would not be able to deliver the machinery to me because of Government contracts. He told me that a Government official was at the works only the week before, but that he did not want to be left in the same position as he was in 1919 after the War. He said that they put in a lot of machinery which was left on their hands after the War, and that he preferred his own private work to taking on any Government contract. I do not think that this particular firm has taken on a single Government contract yet.

Mr. Messer

Then we cannot depend on private enterprise?

Sir W. Smiles

I have said that the Government have not got the arsenals or dockyards to deal with the problem, and it is no good discussing what the position may be in 1946. We have to consider the position as it is to-day; we are in a very perilous state. We have done nothing in the past 10 years for the Army, Navy or the Air Force, and it is about time we woke up and did something. The Secretary of State for War will probably be able to say that the division which went to Palestine was equipped by having to rob every other division in the Army. I am told that they had almost to take the trousers from other regiments because there was not sufficient equipment for the division. This is due to the fact that Parliament and the country have been so stingy in refusing to put up any money for national Defence. We have to pay for it now. If the Government were not able to depend on private enterprise they would not get Army supplies at all. The hon. Member for Kingswinford (Mr. A. Henderson) made a very good, eloquent and moderate speech. He was talking about the firm of Vickers. I think it is true that Vickers at the end of the War had actually to write down their capital from £1 per share to 6s. 8d. and turn all their energies to private enterprise. They used their capital to advance money to the P. & O. Navigation Company to build their ships. They were left with a tremendous lot of plant on their hands which is only useful in wartime and in preparing for war.

It is no use pretending that war contracts have been a continual and an entirely unmixed blessing to the engineering industry of the country. One has only to go to Belfast and see the grass growing under the slipways of Harland and Wolff's or to the Clyde to see the distress which was brought about by the swing-back after the War. I should not be speaking now but for some statements made by the hon. Member for West Fife (Mr. Gallacher) about engineers. I have no interest in any armament firm or engineering works, but it has been my duty during the past 15 years to engage a number of engineers to send out East, and I have engaged them from Belfast, Manchester, Ipswich and from the Clyde—and they are by no means the worst from the Clyde. The hon. Member for West Fife said that the apprentices on the Clyde were not trained. My experience of engineering employers is that they take a lot of interest in their apprentices and insist upon their attending technical schools and passing a certain standard. In the Committee on the Factories Bill I was told by the hon. Member for Gorbals (Mr. Buchanan) that on the Clyde they never took engineering apprentices under the age of 16, and I am very doubtful, although the hon. Member for West Fife ought to know better than I do, whether they take apprentices of 14 into their business.

Mr. Ellis Smith

They do all over the country.

Sir W. Smiles

Are they supposed to serve five or seven years?

Mr. Smith

Seven years.

Sir W. Smiles

I know that they come in at the age of 16 and are turned out at 21 as journeymen, and I am glad to engage them. Personally, I do not think it is much use starting a boy under 15 years of age in an engineering works. I am doubtful whether he would learn his business quickly. At any rate, I am saying that the employers take a real interest in their employés. The hon. Member for West Fife attributed all sorts of corruption to private enterprise in this country. If he reads his papers as I do mine he must know that in other countries people who engineer railway accidents are, under the regime there, liable to be shot. At any rate, that sort of thing does not exist in this country. It is only the niggardliness and lack of interest on the part of the people of the country and Parliament which has allowed our defences to get into the state they are, and there is no doubt that many employers and owners of big engineering works are very reluctant now to take up these Government contracts.

There were a good many bankruptcies between 1919 and 1924 after the War contracts were over. The alternative is to set to work and build Government arsenals and huge Government dockyards all over the country. I do not think that would be in the interests of the taxpayer. You would have a lot of men and plant standing idle for long periods, which would not be an economy. At the present moment private enterprise, which has put down the machinery, will save the country. When you talk about the control of armaments it is difficult to say what are armaments and what are not. During the trouble between Italy and Abyssinia this country stopped the export of arms to Italy. I was rung up by a man who said that they were building lathes and were sending them out to Italy, and he asked whether they would be allowed to export them or not. He was not a member of my constituency and I referred him to the Government Department. He told me afterwards that they were allowed to export lathes to Italy because they were not looked upon as being munitions of war. But there are certain lathes which are only useful for the rifling of big naval guns. Would they in that case have been allowed to export them? It is difficult even for a skilled engineer like the hon. Member for West Fife to decide immediately and definitely whether some machine tools are munitions of war or not. In the present condition of the world it is far better for this country to carry on with private enterprise now because without it we should not get munitions at all. If in the future Germany and Japan should return to the League of Nations and we have real disarmament instead of lip-service, I shall be prepared then to see the Government take over the whole of this industry.

7.41 p.m.

Mr. Holdsworth

We have had a most remarkable speech from the hon. Member for Blackburn (Sir W. Smiles). He paid a tribute to private enterprise and then illustrated his tribute by citing the case of a man who refused to take a Government contract. It was a striking demonstration of mixed things. He said that we have a very inefficient Army and directed his attention to hon. Members above the Gangway. Any criticism on that point should be directed to the Government Bench. The Government have been responsible for the Army, inefficient or efficient, since 1931. They have been responsible for the policy of this country, and no supporter of the Government should turn round and try to fasten the responsibility for inefficiency upon the Opposition. I suggest that the hon. Member should direct his criticism, if it is true, to the Government Front Bench. But is it true? I do not believe for one moment that they have had to take trousers from the stock of other battalions in order to equip the division which went to Palestine. If it is true, I would suggest that the constituency which I represent provides sufficient material to equip the British Army, and can fulfil any contracts of this kind which may be handed to them.

The hon. Member for the Hallam division (Mr. L. Smith) said that he had no intention of speaking. I certainly had no intention of speaking until I heard tht hon. Member speak. He welcomed the report and the unanimity of the report, but qualified that statement somewhat. He said that he was no believer in nationalisation. I am termed an individualist in this House, and I do not apologise. If anybody believes in nationalisation less than I do I should like to meet him, but I am surprised that any hon. Member opposite should not believe in nationalisation because we have taken more steps towards nationalisation in the last five years than in any previous period of our history. While hon. Members opposite are keen against the principle of nationalisation they will troop into the Lobby with complete unanimity to support any proposal to subsidise a vital interest. It has been my continual grouse during the time that I have been a Member of Parliament that those who profess to believe in private enterprise, the very essence of whch is competition and the elimination of the inefficient, have always been ready to trot into the Division Lobby and vote for subsidies and all kinds of grants, which have sometimes benefited themselves. I have protested against that time after time, and I shall continue to do so. I can find no excuse for anybody who derives his authority from votes going to Parliament and, through the execution of the power given to him by votes, voting money for private individuals to make profits through a legislative privilege. That can never be private enterprise, and can never be defended on those grounds.

Mr. L. Smith

Are we to understand that when an industry is suffering from depression through no fault of its own, but owing to special circumstances, the hon. Member would allow that industry to die, even if the Government could for a period of years subsidise it in some way? Do I understand that the hon. Member would advise the Government to do nothing to help it?

Mr. Holdsworth

That is a very subtle question. I speak for myself, because there are few people in this House who really believe in capitalism to-day. The proposition is not whether an industry should die, but whether certain units within it should die. I do not accept for one moment the proposition that if one does not subsidise an industry, it will go out of existence, but a person who, within a system of capitalism, finds himself inefficient in carrying on his business, ought to go out of industry. I have no hesitation in making that point.

Mr. L. Smith

If the hon. Member will think for a moment, he will realise that during the last few years, even though the Government have helped some industries, firms within those industries have gone out of existence if they were inefficient. But in some cases the whole industry would die if the Government did not come to its aid.

Mr. Holdsworth

I do not accept that proposition. I know of no case in which it can be proved that if an industry did not get a subsidy it would die—

The Temporary Chairman

Both the hon. Member for South Bradford (Mr. Holdsworth) and the hon. Member for Hallam (Mr. L. Smith) are out of order. The question before the Committee is not subsidies, but the report of the Royal Commission.

Mr. Holdsworth

I shall have no difficulty in keeping to your Ruling. The hon. Member for Hallam said that the private manufacture of armaments had no effect on the demand for arms. The report does not state that, because on page 26 it reads: It is undoubtedly a fact that armament firms and the numerous industries on which they relied for their material profited by these activities "— That shows the influence of private industry upon recent wars— and that they were zealous in soliciting orders. I do not criticise them for soliciting orders, for that is their business, and they would be absolutely incompetent if they did not do so; but it is not true to say that that has no bearing on the question. As the hon. Member for Blackburn (Sir W. Smiles) and the hon. Member for Hallam said, it is very often true that firms are prepared to develop skeleton organisations, but it is also true in many cases that the armament firms rely almost completely on the business of armaments. Those firms, if they are to provide work for their employés, are bound to solicit orders, and I do not for one moment say that they are wrong in doing so. Nevertheless, it is not open to the hon. Member for Hallam to make the point that this has no effect upon armaments.

The hon. Member said that he welcomed the report. He does not. What he welcomes is the particular part of the report which denounces what he has already denounced. He picks out a certain part of the report and says, "It is perfectly unanimous; it is a splendid thing, and I welcome it." But he welcomes only that part which the Government have decided to accept because, as the hon. Member for West Middlesbrough (Mr. K. Griffith) said, it means doing nothing. The hon. Member welcomed that part of the report which confirms what he has said before, but he failed to argue about the report. That indeed is one of my complaints about this Debate. We ought not to be discussing in this Debate the nationalisation of the armaments industry, but the report of the Royal Commission.

With regard to the Government's attitude on this matter, it is a remarkable thing how the people of this country will respond to the demands of any Government if they really believe it is necessary to provide something to ensure either the economic or any other kind of welfare. I do not believe we need ever be afraid of making an appeal to the pepole if we can really tell them what is necessary for the country. There is no lack of response. The people are prepared to give to the Government the armaments which they believe to be necessary for the defence of the country, but what they are not prepared to stand is that in dire necessity any individual or set of individuals should derive exorbitant profits out of this particular industry. I think they are right in that attitude. I did not serve for very long during the last war, but I served for some time at 1s. 6d. a day, and I remember one day going up for pay when there was none. Thousands of young fellows in my constituency and dozens of my friends were taken from their homes and sent to different theatres of war, prepared to lay down their lives for 1s. 6d. a day.

Sir T. Moore

They were not laying down their lives for 1s. 6d. a day.

Mr. Holdsworth

That may not be true, and I will not put it in that way. We all know that they were serving their country. But what they objected to was that when they came back they saw the man who had stayed at home, the man who had taken every opportunity of getting an exemption from service, and who had not been able to run a perambulator before, running a Rolls Royce. The people say that if the Government ask them to contribute through taxation towards the provision of adequate defence for this country, they must be satisfied that there is some method of seeing that they are not paying that taxation in order that certain individuals may make exorbitant profits. I am not making charges against any particular industry.

Where the Government are making a mistake is in saying that they have a costings system. I have some knowledge of the costing system of the last War, and undoubtedly it was a complete failure. I have been told by one man that he was ashamed of the profits that he made. There was supposed to be a costing system, but different methods of manufacture were developed as time went on, so that the armaments could be produced at a quicker and cheaper rate; and it cannot be denied that exorbitant profits were made. I do not believe there is any Government Department which is competent to check under the present costings system, the profits that are now being made. The Royal Commission made a recommendation with which the Government deal on page 10 of the White Paper. I ask the hon. Member for Hallam whether he accepts this part of the report, which was just as unanimous as the part which he accepts. It reads: We recommend that the Government should assume complete responsibility for the arms industry in the United Kingdom and should organise and regulate the necessary collaboration between the Government and private industry; that this responsibility should be exercised through a controlling body, presided over by a Minister responsible to Parliament, having executive powers in peace-time and in war-time over all matters relating to the supply and manufacture of arms and munitions, costing and the authorisation of orders from abroad.

Mr. L. Smith

I would ask the hen. Member to consider for a moment what is being done at present. Though it may not be done in that particular way, the Government are very considerably, if not altogether, controlling the armament industry of this country, and it is quite impossible for any armaments to be exported without a licence. To-day the Government, by costings and in many ways, control the armament industry.

Mr. Holdsworth

The hon. Member, in his speech, said that he welcomed this report, but he does not welcome it. When the Commission was inquiring into these matters it was as well aware as is the hon. Member of the contentions which he is now putting forward, but the Commission said that these things are not enough. The report is based upon the knowledge of all the contentions which the hon. Member is now putting forward. The Royal Commission said that these things are not effective and will not satisfy the people of this country. It said that the public feeling on this matter of profits being made out of armaments, which it believed to be widespread, intense and genuine, ought not to be disregarded Does the hon. Member accept that particular paragraph in the report which says: We recommend that measures be taken to restrict the profits of armament firms in peacetime to a reasonable scale of remuneration "? The Royal Commission then goes on to suggest that a specific body should deal with this matter, and that shows that it was not satisfied with the method which the Government are following. The hon. Member is satisfied with that part of the report which confirms what he has been saying for years, but unfortunately he cannot accept the positive recommendations of the Commission. That is exactly what the Government have done and I think it is fair to say, as my hon. Friend said, that the Government have accepted all the negative things in the report, but, with the possible exception of one small item, are not prepared to accept the positive suggestions of the Commission.

Mr. Radford

The hon. Member has been very indefinite. He said that he was a strong individualist, but he seems to be criticising the Government for not adopting these proposals. Is he then in favour of this interference with private enterprises, including that of the manufacture of woollen cloth to be made into uniforms?

Mr. Holdsworth

I think the intervention is irrelevant. We are not discussing whether that should be regulated or not.

Mr. Radford

Is it not connected with equipment?

Mr. Holdsworth

The hon. Gentleman has put me a question, and perhaps he will allow me to answer it before he puts another. I am speaking on this report. I am prepared to accept the recommendations of the Commission unequivocally. The report does not recommend the nationalisation of the armaments industry, but it makes specific proposals for satisfying the public that exorbitant profits are not being made and that steps are being taken to control the export of arms. I believe that the Government, from their own point of view, would be wise to accept the recommendations. I, for one, am disappointed that they have accepted merely the negative proposals, while firmly declining to act on the positive proposals of the Commission.

8.3 p.m.

Mr. Walker

This Debate has proceeded largely on the lines which one expected it to take. We did not expect the Government to do anything of a drastic nature to interfere with private profit-making in any form. This question of the private manufacture of arms for profit, is one in which not only this nation, but other nations are keenly interested, as we have seen from recent events in France. We have been forced to take an interest in it, because experience, particularly during war time, has shown that the country can be exploited even by the most patriotic of its citizens. I cannot understand how, after the experience of the last War, when huge fortunes were made by the armament firms, Members can make speeches such as we have heard to-day. Great profits were made then in spite of regulations, in spite of the control exercised by the Ministry of Munitions and in spite of the fact that by the establishment of national shell-factories throughout the country, prices were brought down. In spite of all these things huge profits were made out of the agony of the nation.

The hon. Member for Blackburn (Sir W. Smiles) said that our arsenals could not build up the Navy, the Army and the Air Force which we require. He is merely begging the question, because those establishments which are owned by the Government, are producing exactly the same commodities as great factories like Beardmore's of Parkhead, Armstrong's of Newcastle and Vickers of Sheffield. We suggest that if those establishments are necessary for the defence of the country, they ought to be in the hands of the country and not in the hands of private enterprise for profit-making purposes. During the last War it was never suggested that we should hand over the defence of the country to private enterprise. We did not advertise in the "Daily Mail" or the "Daily Telegraph" so many hundred miles of trench lines to be defended in Northern France at so much a yard. We left that entirely in the hands of the country. The organisation and equipment of the Army, Navy and Air Force were completely under Government control. Any man would have been considered a lunatic who suggested going back to the time when nations were defended by private enterprise —going back to the time of Drake or further back still to the time when Scotsmen used to go to France and other parts of Europe in order to sell their services as soldiers. All that has been done away with now, because nations realise that national defence is the nation's business and that to be organised properly it must be under national control.

It is no good arguing that there is no such thing as corruption in this country and that it exists only in America. I am willing to admit that they are more frank about it in America. Business is business there all the time and the remark is often made: "What is the Constitution between friends?" But that takes place in this country, too. You will find on the boards of armament firms retired admirals who never saw a steelworks or an engineering factory in their lives except from the outside. Why are they there? Because, owing to their long experience in the Admiralty, they have a pull at Whitehall and can direct the channels into which orders flow. I know of one admiral who became a director of a big steel firm. About a week after he arrived in the board room he was walking through the works and went into the foundry. Looking round he saw piles of dirty sand. He called the foreman and ordered him to have it cleaned up. He had been used to a quarter-deck where everything was spick-and-span. He did not know that what he was asking the foreman to have cleared away was part of the tools of the trade; that castings could not be made without sand and that the sand had to be where the castings were being made.

The same thing will happen in connection with the Air Service. People who retire from the Royal Air Force will get billets with aircraft manufacturers, not because of any special knowledge which they possess of the making of aircraft, but for other reasons. Their knowledge is mainly concerned with the flying of aircraft —just as an individual may be an expert motor-driver and have some knowledge of the mechanism of the car but no knowledge whatever of motor-car manufacture. But those people will get the jobs, and that is the kind of influence which is used all the time. Once a firm has been established and private capital has been subscribed and plant laid down, it is no use saying that they will not work as hard as they can to get orders. No one can blame them for doing so. You can only blame the community or the Government representing the community which allows that kind of thing. Surely we have arrived at a stage in the history of this nation when we ought to be prepared to take over the armament-making industry.

The Deputy-Chairman

That would require legislation.

Mr. Walker

I understand that the question of nationalising the armaments industry has been one of the main themes of this Debate.

The Deputy-Chairman

I gave a clear Ruling at the beginning of the Debate, that Members must not raise questions dealing with legislation. Nationalisation would involve legislation and must not be discussed in detail on this Vote.

Mr. Walker

I must, then, confine myself to dealing with the matter in the abstract. The community ought to own the things which it is going to use and the methods whereby those things are made, in order to prevent exploitation by people who are prepared to take advantage of the community's needs. War is inevitable under the system under which we are living to-day, because nations do not realise that their best interest lies in co-operation with each other. They are living under the false idea and illusion that they can prosper individually as nations by destroying other nations, and that they can build up wealth and prosperity in one part of the globe by destroying wealth and prosperity in another part of the globe. It is because they believe in this kind of ideas that we have had wars in the past and shall continue to have wars in the future, and it is because of that kind of ideas that we have allowed to grow up a vested interest in the continuance of those wars, or of threats of war, which amount to the same thing, because they all bring grist to the mill.

Then we, as a nation are doing a wrong thing, and we ought at this time of day—particularly when the Government are doing so much in the way of legislation to reorganise and subsidise industry, not so much for the benefit of the community as for the benefit of the shareholders who are interested in the particular concerns—to see to it that the organising and regulating ability that the Government are using to-day is used in the direction of getting these industries away from their present position, where they are instruments of private exploitation and where we have in our annual Budget to devise ways and means which are extremely difficult in order to get some of that profit back from them. Whenever these new methods are suggested, all that type of vested interest is immediately up in arms, deputations are sent to the Chancellor to try to prove that it would be wrong to tax me because he is letting some other body off, and to prove to him that his methods are absolutely futile and that the best thing to do is to let everybody get their hands as deeply into the pockets of the taxpayer as they can, and hope for the best in the very near future. All that sort of thing comes about because of the great expenditure that is necessitated by the situation to-day. National expenditure gives the opportunity for private interests to exploit the community, and we on these benches believe that the time has arrived when all that ought to be abolished, by the Government taking over the armament firms of this country, using them for the national needs, and not allowing them to be used for the national exploitation.

8.18 p.m.

Mr. Johnston

I am sure that, whatever we may disagree about in this Committee, there will be a consensus of opinion that the opening speech to-day of my hon. Friend the Member for Derby (Mr. Noel-Baker) was one of the most powerful, comprehensive, well-informed, and documented speeches ever delivered at this box. I do not propose to weaken the effect of that speech by any attempt to traverse the same ground that he did, nor do I propose to occupy the time of the Committee by repeating statements that I myself have made in previous debates in recent years relating to the armament industry. What I should like the Government to consider, before it is too late, before financial and economic disaster, unparalleled in our history, comes to us all, is not only the experience of this country in the last War, but what is happening now in America, in France, in Russia, in the affairs of the Allies, semi-Allies, and potential Allies of this country.

Will the right hon. Gentleman recollect what happened at the outbreak of the last War? It is folly simply to discuss barren epithets about Socialism and private enter- prise. If we have a war, any Government of any kind whatever, will be compelled to lake not only the steps which the Government took in 1914, but more drastic steps in the direction of collectivised organisation as well. What was the first thing that the Government did on the day that war broke out? They were compelled to guarantee the solvency of the banks and the discount houses, in order to prevent a general collapse of private enterprise. Secondly, they had to take over the railways on a pre-war dividend guaranteed basis, and they had to monopolise the purchase of the import of essential foodstuffs like sugar.

I understand that the Secretary of State for War is going to reply later. It was the War Office that proposed the nationalisation of the armaments industry in this country, and it was the private war profiteers of this country that beat the War Office. In June, 1915, when nationalisation as a proposal had failed, the Ministry of Munitions had to be set up in an attempt to control the private plunder that threatened to wreck the nation altogether. It was discovered that there was confusion, dislocation, speculation, competitive buying between local commands and Allied delegates, uncertain supplies of raw materials. Everything was in chaos and ruin, and the nation collectively was compelled to take control. Then the War Office had to take over the purchase, importation, and shipment of all the flax supplies. On 16th August, 1916, they had to jump in and nationalise the importation of all the jute supplies. They had to take over the domestic wool clip, they had to ration supplies, they had to ration the wool industry of this country, and at the end of it their administration expenses were only I per cent. of the turnover, or less than private enterprise had been charging, and they had made a profit of nearly £7,000,000 for the Treasury, besides keeping prices from soaring sky high.

What is happening now? The Government issue a White Paper saying that the nation will be compelled to spend a sum of £1,500,000,000 on munitions of war, spread over about five years. In the first year it is estimated that they will spend about £400,000,000. Almost in a night everybody who has anything to sell to the nation for war purposes, or raw materials for the preparation of armaments, starts to jump his price. Speculation proceeds rapidly. I am informed from what I believe to be an absolutely reliable source that the cost of building a battleship, if entered into this week, would be 40 per cent. more than it was on 1st January this year. If that be so, or if it be anywhere near, it is obvious that the £1,500,000,000 projected armaments programme will not meet the national requirements. The amount will be nearer £3,000,000,000 before you have finished, or, alternatively, you will get only half the munitions you want for the £500,000,000. I do not want to give many figures or quotations, but I would like to take a quotation from the "Glasgow Herald" of Monday of this week telling us what has happened in the Clyde in regard to shipbuilding costs from the day the Government armaments programme began. They say: Here are some of the results of the sudden demands of the Admiralty's building programme. They go on to give some figures. Of vessels of the "Standard B." type, that is, cargo vessels of 8,000 tons deadweight, they say: In 1932 vessels of this type were changing hands for £6,500. In September last they were fetching about £24,000. Now they are worth £55,000. The owner of a fleet of tugs recently made an offer to purchase a second-hand tug built 12 years ago. The existing owner of the vessel would not accept a figure much under double the contract price of the tug as it was built 12 years ago. Another case is quoted of a £60,000 profit refused, and a case where the profit is in the region of £25,000 and £30,000. The newspaper gives details of how the cost per ton has moved. In June, 1936, you could purchase a large cargo steamer at a cost per ton deadweight of £9 15s. In May, 1937, it was up to £13 10s. per ton, proving the general assertion I made a moment ago that the contract price of a battleship now would be 40 per cent. higher than it was only a few months ago.

There is a curious parallel to all this that must be within the cognisance of the right hon. Gentleman. This is not something new, something that has come suddenly out of the air, a new problem that is worrying the Government, and that requires six to eight months to digest before they can submit a recommendation. Here are the memoirs of one big munition manufacturer, Mr. Crittall. In his book "Fifty years of work and play," on page 98, he says: After the most thorough investigation of all costs, I discovered that it would be possible to deliver 18-pounder H.E. shell for almost half the price charged by the Ring. The cost of materials, labour varnishing, carriage, and overhead charges. I estimated at exactly ten shillings per shell. I then added eighteenpence, being profit at 15 per cent., and an extra shilling as a contingency charge—a total of 12S. 6d. per shell. In short, I found that the millions of shells for which the country had been paying between twenty and twenty-six shillings for the eighteen months of war could have been produced at a comfortable profit of 15 per cent. for the manufacturers for as little as 12s. 6d. And he proceeded to do it. He got other manufacturers to join with him, and he turned out millions of shells at tinder 12s. 6d. each. They reduced the price to 10s. 11d. per shell, while the ring for a year and a-half was soaking the country at 26s. per shell. It is idle for the Minister for the Co-ordination of Defence to come to the Committee this afternoon and, quoting something from the Estimates Committee, say that there is no evidence yet of any substantial plunder, and that if the Opposition will oblige by waiting for another 12 months it will be time enough to talk about it then. He said that it was too early for the Opposition to raise the question of prices and plunder on the armaments supply, but this is just the time to raise it. We must face it now, not when it is too late. I appeal to the Secretary of State for War, politics apart, to take a much more enlarged view of the national economic necessities of this matter than was taken by his colleague this afternoon.

There is one distinction between the armaments industry and every other industry. If an armaments firm gets a contract, it does not thereby ruin its competitors. When one armaments firm gets a contract, inevitably other armament firms in stimulation get other contracts to meet it. Prosperity begets prosperity in this industry. Fear creates fear. An order for guns in one country means a similar order for guns in a neighbouring country. Similarly with tanks, shells and every kind of munitions of war. This is the peculiarity of the armaments industry, that the prosperity of a private armaments firm in one country immediately stimulates an equal prosperity for other armament firms in that country and in other countries as well. This afternoon the Minister for the Co-ordination of Defence said that abuse and corruption by the armament industry had never been proved. I wish that he or, in his absence, the Secretary of State for War, would read this week-end the full report, not the summaries of it which have been printed in British newspapers, of the Nye Committee in the United States of America. It is a report which reflects upon British firms, and quotes British documents, and I am absolutely certain that if the right hon. Gentleman will give some attention to the appalling state of affairs disclosed about British firms with whom a British Government in the past, if not the British Government in the present, have been associated, he will inevitably take steps, such steps as my hon. Friend the Member for Derby asked for this afternoon, at least to deal with the gang who make fortunes by the exportation of alleged surplus stocks.

I will give one quotation from the Nye Committee's Report, on page 91. They are referring there to the Soley Armament Corporation, used by the British Government for the disposal of its surplus war materials, a semi-official agency of the British Government they call it: because they will only sell with the consent of the British Government. The quotation I wish to give says: On 24th March, 1934, during the war between Bolivia and Paraguay the Soley Company wrote to American Armament that they had been approached by certain people interested in 3-inch anti-aircraft guns for Bolivia. The spokesman, who appeared to be connected with the Bolivian diplomatic service, informed Soley that he wanted 12½per cent. on anything he bought for the Bolivian Government. Soley stated that they informed him that although they had a number of anti-aircraft guns in stock"— This is British stuff— they doubted whether these could he sold to Bolivia, since these guns were the property of the British War Office and a sale of material emanating from a British official department to a Latin-America country then at war might lead to some diplomatic shindy, This is the Soley Company's letter: for it might be said that Britain was supporting Bolivia against Paraguay. However, we have, of course, heard from several sources that Bolivia wants A.-A. guns quickly. We do not think for a moment that a shipment or sale to Bolivia could be made direct while that country is at war. If, however, an American armament firm of some standing bought the guns for eventual re-sale things might be easier—or if the Colombian Govern- ment, who are not at war, bought the guns, they could no doubt have them. What is the use of telling us that munitions can only be exported under licence? It is true that no British Government would give a licence for a sale of munitions to Bolivia or Paraguay when they were at war, but if they license the export of this murder machinery through a neutral country they are in effect contributing to intensifying and developing the war and making a profit out of it. Seeing that the Royal Commission—which this Government set up—emphatically condemned the trade in surplus and second-hand arms, surely we might have had from the Government a declaration to-day that on no account would any private individual be allowed to export arms anywhere without the most rigid inquiry by the British Government and, if necessary, publicity. Instead of that the hon. Member for Derby got nothing but metaphysics in reply. The trade is to go on and the trade is going on.

In the current issue of the Engineering Supplement of the London "Times," dated 27th May—I am not going back to the Bolivia-Paraguay case—they tell us that there were record exports of aircraft last year—and this at a time when our own country is in desperate need of aircraft, when shadow factories are going up, when the country is in danger and when fear and terror are being spread throughout the land. At such a time we are busily engaged in selling aircraft abroad, and the London "Times" say that the ultimate prospect is good. They say, With regard to military aeroplanes the position is less favourable but the ultimate prospect—dealing with export—is remarkably good…Application has been made to the Air Ministry for permission to buy them by a large number of countries. The needs of the Royal Air Force are necessarily the first consideration, but with the rapid increase in production the time will come when manufacturers will be in a position to consider the demand from abroad, and some of these machines will find a ready market in countries where the authorities consider it will help the maintenance of world peace to export them. It goes on to say that the year started promisingly, with exports in January at the same figure as in December, and that there was an increase of £50,000 on the exports for the corresponding month of last year. The Royal Commission unani- mously plead with the Government to stop this traffic. The British nation does not know that it is going on. We have all this aircraft shelter work, all the gas mask work, all the mass hysteria and terrorism being spread about the land at a time when private enterprise is busily selling bombing aircraft abroad and yielding the fabulous profits which my hon. Friend quoted.

The Minister for the Co-ordination of Defence said that abuses had never been proved. I am sorry to say that he derided Senator Nye's Committee. That was a senseless sort of thing to say. It has made an exposure of the profits which are being made. I have not time to quote it fully, but I will give one example: The Carnegie Steel Company made profits, according to its own figures, of 57 per cent., 43 per cent., and 42 per cent., on three typical Navy contracts…yet on the contract on which 57 per cent. profit is made Bethlehem Steel Company had bid 130 dollars a ton above Carnegie and Midvale had bid 110 dollars a ton above Carnegie. Plunder extraordinary! The majority of this Commission recommend the American Government to nationalise the industry at once. And even the minority recommend that some parts of the industry should be nationalised.

If the Secretary of State for War agrees with the Minister for the Co-ordination of Defence, he will probably be able to tell us how he explains the extraordinary situation in Japan in times past, when British armament firms were convicted in court for bribing Japanese admirals. Will he tell us who it was fortified the Dardenelles before the War, and cost thousands of British lives? Will he tell us who created the torpedo factory at Fiume in Austria and built the torpedoes that sank British ships in the Mediterranean during the War? Will he tell us what is the answer to Professor Delaisi's exposure of how it was and who it was, even during the agonies of the last War, when German headquarters were in need of aluminium for the bodies of their Zeppelins, and carburet and cyanamide for their explosives, and when the French discovered that Allied factories could not manufacture magnetos comparable to those of the Germans, that arranged a joint swopping shop in Switzerland, whereby the French got what they wanted, and the Germans got what they wanted; and how, as my hon. Friend the Member for Derby said this afternoon, and proved, when the Germans at Verdun made their last effort, their bodies were hung up on their own wire, which had been sold to France during the War and put up by French engineers?

Will the Secretary of State for War tell us a little more about the projected bribe of £50,000 by Messrs. Vickers referred to in this report, and discovered by accident, when two members of the Commission, not looking for it and not expecting to get it, went to Messrs. Vickers and by chance saw a file? They discovered an arrangement made for a bribe of £50,000 to a foreign officer to get a contract. That bribe was never paid, but the attempt to arrange it is emphatically and unanimously condemned by the Commission. What is the sense of telling us that there is no corruption in the industry? The Commission never tried to get at the corruption. The Commission specifically said that they were not going to look for it and that they were not going to examine documents and papers or take evidence to look for it. You will never get evidence if you do not ask for it, but there is sufficient evidence in the world, and in the files of other nations of the world. There is evidence at Geneva, in the Nye files, in France, in Russia, and all over the world, that British firms manufacturing armaments, like other nation's firms manufacturing armaments, have sought to increase their orders by corrupt and dishonest means and by means which endangered the safety of this country.

In the Nye Report there is one interesting quotation on page 176, to which I would refer the right hon. Gentleman, and, particularly, the Secretary of State for Foreign Affairs. Here is Commander Craven, of Vickers, writing of a place called Geneva, or any other troublesome organisation. It is not Moscow which is the enemy of these people, but Geneva; it is Geneva they are out to break. When Commander Craven puts his name to statements like that, his firm ought to be scored off the list of firms with which the British Government have any transactions or dealings. If our policy is adherence to the League, and collective security, we have no right to be hand in glove with private manufacturing firms who are busily engaged in attempting to upset and defeat the British Government's policy. For its own safety, France has started nationalising its armaments. I have here a list of 17 aircraft factories in France, nationalised by the French Government, who have discovered that it not only pays them financially to do so, but pays them in national safety. France is not the only country. Somebody said that national factories would not be so efficient. I happened to see in to-night's evening papers that three aeroplanes have reached the North Pole and landed. They are most efficient planes. One of them was carrying 24 tons. They are Russian nationalised aircraft; not aircraft run for private profit, but run for national purposes, and created in national factories. They are run by a nation which is in close association with us now, politically, in European affairs, just as France is.

I would cheerfully vote for the complete abolition of the whole business. My hon. Friend the Member for Derby has written a very remarkable book on this subject. I think it is a book which will live. It is carefully documented. Any hon. Gentleman opposite who wants to see how Germany was rearmed after the Versailles Peace Treaty, and to know the names of the firms who rearmed Germany surreptitiously, will get it here—British, American, French, all kinds of firms. The simple issue to-night is not the abolition of arms, because we cannot get that, but whether that this death-dealing machinery is to be produced with or without the private profit stimulus. If it were produced without profit, we claim that there would be a vast financial saving to the State, greater safety, and no sale, surreptitious or otherwise, of designs, materials, and surplus stocks.

All sections of this nation have decided that the Navy cannot be run by private enterprise, or owned by private enterprise. We dare not allow the Navy to be run by a private corporation for a dividend. The Navy, the sure shield as it is called, must be nationally owned; all parties are agreed about that. The Army and the Royal Air Force cannot be left o private profit speculators. Therefore, as the Navy, the Army and the Air Force are, and must remain, public organisations for the public weal, we ask the Government to-night to take steps—let them begin with aircraft if they choose— steadily but surely, in the national interest and for the national safety, to take our defences out of the hands of gangs who have lived by robbing and plundering the nation for generations past, in whom we have no faith, in whom we have no trust, and who, at every inquiry held in recent years, have been proved guilty of corruption, of non-national and anti-national practices. Nothing will give my hon. Friends and myself greater pleasure than to go into the Lobby tonight to register our conviction that the national safety and the national security depend upon national ownership and national control of the necessary defences of the nation.

8.58 p.m.

The Secretary of State for War (Mr. Duff Cooper)

Before I take part in this Debate, I should like to say how sorry I was not to be able to have the privilege of hearing the hon. Member for Derby (Mr. Noel-Baker), who opened the Debate. I very much regret that I was unable to be present to hear either his speech or that of my right hon. Friend in reply to it. I have not read the hon. Member's latest work, to which the right hon. Gentleman opposite has just referred, but I know the deep interest that he has always taken in this subject, and the great authority that he is upon it. Some 12 years ago I read an earlier work of his on armaments, which very deeply impressed me at the time, and which I have often quoted in the years that followed when speaking from platforms of the League of Nations Union in various parts of the country in advocacy of what he has advocated, namely, the cause of disarmament. Our efforts, however, have failed, and I sometimes think that the hon. Member is unwilling to face the melancholy fact that those efforts have failed, and to re-orientate his mind to a new and more dangerous—almost, I might say, more hopeless—world than that which we were contemplating in 1934. Whether that view is right or not will be for historians to say, but I am afraid that the hon. Member, and other hon. Members opposite, are always inclined to think that a very great part of the blame, if not the major part, has rested during these years with His Majesty's Government. We have been taught that it is difficult to feel much confidence in the historians of the future, having read some of the historians of the past, but I think that, when the records of the various Governments that have held office in this country since 1918 come to be inquired into closely in a clear light, those Governments will be found to have been more guiltless than the Governments of any country in the world of the present state into which we have unfortunately fallen.

I do not propose to defend at length the existing method of private manufacture of arms in this country. It is a big subject. It would not have been in order for hon. Members opposite to advocate the nationalisation of armaments, because that would necessitate legislation, and, therefore, I propose rather to deal with some of the points that have been raised in the Debate, and to deal with what I believe to be the principle which has actuated hon. Members opposite in initiating the Debate. I think that the main motive of all hon. Members is the disgust which we all remember feeling at the vast profiteering that took place in the late War. Of all the disgusting features of war, there is, perhaps, none that is so loathsome to decent-minded people as the making of vast profits out of the sufferings of its victims. The hon. Member for South Bradford (Mr. Holdsworth), who spoke very feelingly on this subject, was rather, I gathered, in favour of the abolition of a system which hon. Members opposite think is a horrible one, but I think that he and others found themselves in a somewhat difficult position in discussing the report of the Royal Commission. Indeed, it seemed to me that some hon. Members opposite were almost inclined to pass a vote of censure on those responsible for the report, and they were, I am sure, disappointed at some of its main conclusions. The Government themselves, although they agree with the main lines of the report, are still unprepared to accept some of its conclusions. But the hon. Member for South Bradford found himself in the distinguished position, I think, of being the only Member of the House who was in complete agreement with the whole report. Perhaps because that places him in disagreement with every other Member of the House, he seems to have retired from the Debate.

Mr. K. Griffith

I expressed the same view.

Mr. Cooper

I am sorry that I did not have the privilege of hearing the hon. Member's speech either. The justifiable feeling of horror at the vast profits made out of the last War has produced, not only this Debate, but a complete literature since the War, and it has produced the efforts—and they are genuine efforts—which His Majesty's Government are making at the present time to ensure that similar profiteering scandals shall not take place on a future occasion, if the future occasion should arise. I myself and my right hon. Friend, who is more closely in touch with the matter than I am, have explained on more than one occasion all the steps that are being taken to ensure that profits are kept within bounds. Hon. Members have expressed their doubts as to the efficacy of those steps, but we can only tell the House what we are doing, and, if hon. Members will suggest any way in which we could improve our methods, or any other steps that we could take in order to prevent this profiteering, we shall be anxious and willing to consider any such suggestions. We feel, however, that it is, by the building Up in peace-time of this potential war capacity, and by that only, that the worst scandals in war may be avoided.

The right hon. Gentleman the Member for West Stirling (Mr. Johnston) has already referred to the profits which were made as a result of a sudden and vast rise in prices, but I think it could have been claimed that people obtained the prices which were justified by the fact that at that time our market was so limited, and we could not go to the markets of the world. That position no longer exists, and the rise in prices is the inevitable result of an enormous and sudden increase of demand. I know of no means by which, if a sudden demand arises, it is within the power of human intervention to prevent a sudden and great rise in the price of commodities.

There is another consideration which is also probably present in the minds of hon. Members, and that is that, from their hatred of war, and their confusion of armaments with war, they are led into the belief that the manufacture of armaments in itself is a wicked thing. I have heard them say that it is dreadful that a man should make money out of his countries needs, but out of what else can a producer make money except what other people need? The only alternative is something that they do not need. It is not wicked to make for the country arms which may protect it in the hour of danger and which may preserve its liberty and to make money out of providing them. We have been told a terrible story of the things that go on in South America. I am prepared to accept such evidence as the hon. Member produced—I am not acquainted with all the details—of these various nefarious transactions, and of a British firm offering bribes. We live in a wicked world. We all know of Governments which are extremely corrupt. There was a time when Governments in this country were extremely corrupt, and when a War Minister could not hold office for a few years without making a substantial fortune and not being ashamed of it. I am glad that we have got rid of that in this country, but it exists in other countries, and when a British firm goes to the War Minister of, we will say, Ruritania, under some southern sky, with a perfectly good object to sell which that country really needs, the British firm may find it quite impossible to get the contract unless it is prepared to give a substantial commission to the statesman. The commission is given to the corrupt statesman, the foreign country has the goods that it requires and people in England are employed to make them. These things happened in Europe 100 years ago and no one was ashamed. The world is improving in some directions but the improvement is slow, and we cannot expect an entirely new morality to exist throughout the governments of other countries in the world.

Mr. Shinwell

Is not the right hon. Gentleman evading the main point, which is that the bribe was offered by a British agent who was selling goods which were surplus stocks of the British War Office?

Mr. Cooper

I was not dealing with that, I was dealing with another case. It is true that the Royal Commission advised that the sale of our surplus armaments should be abolished altogether, and the Government have not turned down that suggestion. In the final paragraph of the White Paper it is pointed out that, His Majesty's Government are not convinced that there is sufficient reason for abandoning altogether the sale of surplus and second-hand arms and munitions of war to foreign Governments by private agency under proper safeguards. His Majesty's Government do not propose to make a regular practice of licensing the sale of surplus and second- hand arms and munitions of war to foreign Governments by private agency but they do not consider that it is necessary to insist upon the complete cessation of this trade. One of the many results of invention is that armaments rapidly become obsolete. What was the latest and best ten years a go becomes useless to great Powers which are contemplating war. But those armaments still have a value. I do not see that any one's mind need be made up. The Government have taken no irrevocable decision. While I fully agree that we should be most careful as to the destination which such weapons eventually reach, I cannot see that the case against disposal, where they are wanted, has been overwhelmingly made out. We have been told about a British firm which made torpedoes that were used against us and of the fortifications of the Dardanelles being built with British assistance. I cannot see that the nationalisation of armaments in this country would have prevented a British firm setting up a factory at Fiume. On the contrary, it would encourage them to do so, as they would be unable to set up a factory in this country. So far as the sardonic and ugly fact exists that in the last War men were killed by bullets made in our own country, it is part of the cruel irony of war, but it made very little difference to those who were killed whether the bullets were made at home or abroad. The more these hideous facts are advertised the better. I do not mind full publicity being given 10 anything which will impress on the mind of the world the stupidity as well as the wickedness of war. I have never been advised that it would have been a very great advantage to this country if the whole of the fortifications of the Dardanelles had been built by German rather than by British engineers, nor can I see that it would have been a very great advantage to the dead Germans to be killed by the guns of France rather than by our own.

There is also the idea that armaments do in themselves lead to war. I have combated that idea for many years even when I was an ardent advocate for disarmament on behalf of the League of Nations Union. It is a complete example of the failure of arguing post hoc propter hoc. Some people say these armaments are too often followed by vast wars. They say that armaments lead to war. You might just as well say when one morning you look out of the window and see someone carrying an umbrella, and later in the day it rains, that umbrellas always lead to rain. The analogy is perfectly clear. It is the state of mind of people who say that nations buy armaments because they are frightened there is going to be a war, and they go out with umbrellas because they are afraid it will rain, and too often their fears are justified.

Do armaments cause war? This, on the face of it, is incapable of proof. It has never been so. Somebody the other day argued that this or that could not have happened unless the nations concerned had the armaments with which to do it. But the greatest wars of the world in the dark ages were before there were any armaments at all. Equally is it untrue to suggest that, if you deprive two nations of armaments, provided they are equally deprived, you thereby prevent them from fighting. Men have never yet been prevented from fighting when they have no armaments with which to do it. Take away their armaments, and they fight with their hands. You may persuade them not to fight, but it is no good snatching their armaments out of their hands and in that way try to stop them fighting. The idea is widely held that there are these mysterious individuals going about the world stirring up and starting wars solely in order that they may sell their armaments to one side or the other. [An HON. MEMBER: "Hear, hear.] The hon. Member, no doubt, has a wide knowledge of history, but I confess that it does not include the case of a single war started by an armaments race, and, what is more, it does not include one in which he could even allege that an armament manufacturer started war. These mysterious figures belong to the romances of E. Philips Oppenheim.

Mr. David Grenfell

Has the right hon. Gentleman forgotten that ample evidence exists that armament makers in France and Germany were inciting the one against the other, and that both Cannot and Krupps were financing newspapers?

Mr. Cooper

If there is evidence in support of that and the hon. Member really thinks that that contributed to the War, that the Government of Berlin were influenced by Krupps in their decision to go to war, and that the Government of France were mainly influenced by Cannot in order to defend their country, then his reading of history is very different from mine.

Mr. Grenfell

The armament firms owned newspapers and carried on a campaign inciting hostility.

Mr. Cooper

It is quite possible that many people, not only armament firms, but many misguided people, spend their lives trying to create not only between different nations, but between different classes inside. I have always considered that these sorts of agitation and agitators can be treated with the contempt they deserve. I do not believe that a revolution was ever caused by propaganda, and that a war was ever caused or started or influenced by newspapers. If the hon. Gentleman opposite thinks differently, I am afraid I shall never be able to convince him. The right hon. Gentleman the Member for West Stirling described at length the conditions that existed at the beginning of the War and the scandals that arose. I am not going to controvert anything that he said upon that subject, but I do not think that that is an argument for resorting in times of peace to the steps which are taken in times of war. Many of his friends would like the complete nationalisation of industry, and that is a matter which he would not expect me to argue this evening. The nationalisation of one form of industry, while leaving the others free, must obviously lead to vast complications and great injustices, unless you take the view, which it is suggested that some hon. Members take, that one form of industry is wicked and another form is good. But if you admit that it is a perfectly legitimate way of earning money and fulfilling the vast needs of the modern world, you must give to the people engaged in that industry the same rights and liberties as are enjoyed by others.

If the time comes again, as it did in the last War, when we were driven by necessity to take away the most elementary rights of the citizen and to institute a system almost as opposed to our idea of liberty as that which exists in so many countries to-day, we shall once more be obliged to resort to the nationalisation not of armament firms only, but of many other things as well. But until that time comes, I submit that no case has been made out for a sudden and violent revolution in our industrial world, and I hope that that dreadful eventuality will never arise, and that meanwhile we shall never be driven to go away from our present system of freedom and private enterprise.

9.23 p.m.

Mr. Kelly

I expected that a Minister of the Crown would at least defend his own Department, and those who are in the employ of the War Department, of the Admiraly and the Air Force, against the attacks which have been made upon them during this Debate from hon. Members on his own side of the House. We were told by the hon. Member for Hallam (Mr. L. Smith) that, so far as these Departments were concerned, we never get either efficiency or the best persons, and we do not get the results in production. It is amazing that a Minister representing the Government in replying to this Debate does not defend his Department against attacks such as that. The work of the War Department, as far as the Arsenal and the various departments throughout the country are concerned, is of the very highest, and those of us who are associated with those men in their work know that to the full. It looks as if the Government are quite prepared, in order that profit may be made by private individuals out of the necessity of the country, to allow these attacks not only to be made, but to stand on the records of this House, without any defence being put up on behalf of these people.

We were told by the hon. Member for Blackburn (Sir W. Smiles) something of the same conditions, and at least one did expect that the Secretary of State for War would have defended himself against the attacks that were made, that the men who were sent out to Palestine went out with equipment which had been robbed—I use the words which were used by the hon. Member—from various other divisions. As one who knows a little about the Stores Department of the War Office, I say that that statement is untrue, and in the interests of the country it was the duty of the Secretary of State for War to have told the hon. Member for Blackburn that his statement was untrue. I challenge the Secretary of State for War to say whether the statement is correct, that the men who were sent out to Palestine recently were so badly equipped both in clothing and in arms in the way that was mentioned by supporters of the Government.

Any statement appears to be good enough in order to justify certain individuals in this country being able, to use the words of the Secretary of State himself, to make a profit out of the country's needs. If that is a correct statement, surely he will carry it to its logical conclusion, which means that the greater the country's needs, the worse the position it finds itself in, the greater the virtue of these people in making a greater profit out of them. It is an amazing doctrine, but I can understand it quite well, because those who know what happened during the years 1914–1918 know not only the enormous profits that were made but the deceits which were practised by many of those who were engaged on munitions, and they realise that much the same thing is being engaged in at the present time. These people do not think in terms of supplying the country with what it needs but much more in terms of what they can make out of the country.

I cannot understand anyone who claims to have regard for his country, who claims to be a citizen of this country, with respect for it, yet thinks in terms of how much profit he can make out of it because the Government happen to say that our needs are so great that we require a greater production in the matter of armaments. The hon. Member for Hallam made a speech which did surprise me. I fully expected it from him. Whenever there is a question of companies making profits as against the conditions which operate for the workpeople, I know where one will find him both in speech and in vote. He told us that there was little profit being made, and he instanced certain companies. I am not going to deal with individual companies, although I know something of them, having had some associations for more than 30 years with many of them. But has he not heard of the enormous profits already made by those engaged on that side of munitions known as aeroplanes? If he still holds to the statement which he made during the early part of this Debate, one can only think of him as endeavouring to deceive himself by the suggestion that these huge profits are not being made.

I was interested in his defence of the chemical firms of the country. I hope that he is not associated with them, but when he suggests that we should leave the entire chemical production to the private chemical manufacturers of this country—there are not many of them now; most of them are included in the combines or the combine—let me recall what happened in 1914, when some of us had to deal with the problem with which this country was faced at that time. The great combines of this country let this country down, even though it meant disaster and death to many of those young fellows who were our friends and associates and relatives; the big combines let them down because these firms were concerned with what they could make out of the country rather than with what they could make for the country to help it at that particular time. We were told by the hon. Member for Blackburn that he visited an engineering firm within the last week or two and, on putting a question to the head of this great concern, he was told that they were not going to undertake any Government contracts, they were not intending to help the country at this particular time. Yet the hon. Member for Hallam tells us that all these people are sacrificing themselves, when we were told by one of his own party that they are refusing to use their skill, machinery and organisation to help the country.

Mr. L. Smith

Assuming that there should be a need for poison gas at any time in the future, would the hon. Member wish to build at the present time a number of State factories to produce such poison gas as might be required, or would he prefer to obtain it from existing plant, which might be turned off from peace production and used for poison gas?

Mr. Kelly

I am quite willing to reply. Already the Government are engaged in certain factories—I will not name them because I do not want to alarm those living in the neighbourhood—but they are engaged on it now. If you ask me what I would prefer I would prefer to have agreed with other countries, when the opportunity presented itself, that there should be no use of poison gas. That would be the sensible thing to do. [HON. MEMBERS: It has been done:") I know that they signed a Convention in regard to it, but I would never leave myself nor the country at the mercy of any private individuals who are organised for the purpose of making profit out of everything they engaged upon, whether in engineering, shipbuilding, chemicals, textiles, as we realised to the full from from 1914 to 1918. We are bound to consider the interests of the country as against the profits of individuals and private companies. The Government are not considering the interests of the country at the present time. They have been starving the dockyards by refusal to engage upon the laying down—I do not know whether this is a subject of amusement to the hon. Member for Elland (Mr. Levy). The question of the country's needs is something more than a laughing matter.

Mr. Levy

I do not know why the hon. Member refers to me. I was not laughing with him or at him.

Mr. Kelly

I am quite sure of that. The hon. Member may have been laughing at the subject with which we have been dealing. There is that interpretation which can be put upon it. Even now the Minister for the Co-ordination of Defence and the three Departments dealing with the Defence Services are not making full use of the factories, dockyards, and workshops that they have under their control. The Air Ministry is using its institutions at Farnborough for research experiments. It is time they engaged upon their own manufacture,.rather than have their whole efforts engaged upon research.

The Deputy-Chairman

The hon. Member is now dealing with a subject which ought to come on the Air Ministry Vote. It is in order to refer to it as an illustration on this Vote, but not in any detail.

Mr. Kelly

I do not want to deal with the matter extensively, but I am making a case against the private manufacture of arms and the making of profit by private individuals out of the manufacture of arms, and I am suggesting that we ought to make greater use of the facilities that we possess. That has a bearing upon some of the suggestions that are made in the report which we are discussing. I was using an illustration in support of my argument that we could make greater use of our dockyards, our arsenals, and our various Service Departments, including the Departments of the Air Ministry. Demand is being made upon us to expend huge sums of money upon armaments, and we say that these individuals HOUSE OF and private firms are making huge profits out of the country. We should not give them an opportunity of continuing that, but we should take steps to check them. Costing did not prevent them profiteering during the War period. Those of us who saw the Ministry of Munitions from day to day during that time know what a failure business men were at the Ministry of Munitions. We say that Government Departments should engage more and more upon this work, which is the only check they have upon these people. Indeed, we say that the Government ought to engage upon the whole of the work and not give it out to these private individuals.

9.40 p.m.

Mr. Garro Jones

If the electors of the country could have been present at our Debate to-day it would have meant an end of the present Government. I cannot remember a Debate in which there has been such a shattering and unanswerable case put forward which has been so weakly and unconvincingly answered from the Government side. I hope that much of the silence which has characterised hon. Members opposite has been due to their realisation of the facts of the situation. Some of the statements which were made this evening by the Secretary of State for War are among the most astonishing that I have ever heard from a responsible speaker in this House. He sought, for example, to defend the sale of secondhand armaments on the ground that it would be waste for them to be destroyed. Which is the greater waste—for these armaments to be destroyed, or for them to be used in the destruction of life? That is the only purpose to which they could be used. Surely, the greater waste is the human waste, which is the object to which these armaments would be put.

The right hon. Gentleman also told us that it was open to question whether a bribe given by a British armament firm's agent to a civil servant of a foreign country was an immoral act. That is an astonishing view to be expressed by a member of a British Cabinet in a democratic country. Would the right hon. Gentleman like to address a public meeting in any one of these foreign countries and tell the public of that country that he is prepared to connive at the bribery of their civil servants? There was a further question. The right hon. Gentle- man appeared not to be in the least concerned that there had been an interchange of armaments commerce between contending nations during the last War. "What difference does it make to a British soldier, "he asked, "whether he is killed by a British bullet or a German bullet? "It makes all the moral difference in the world, and the Secretary of State for War should never have given utterance to such a statement as that.

The answer to the powerful case made out by the hon. Member for Derby (Mr. Noel-Baker) and the right hon. Member for Stirling (Mr. Johnston), by speakers from the other side, has consisted of a succession of quibbles and evasions. The first one was an attempt to impale us upon an inconsistency in regard to our reprobation of some recommendations in the report and our approbation of other recommendations. The facts are simple. We have a clear and specific policy which, we contend, will alone solve this question. So far as the Commission have gone along the road to accept that policy, we approve of their recommendations, but where they shirk the logical conclusions of the case we do not accept their recommendations. One has only to examine the names of the members of the Royal Commission to get some very interesting light upon the situation. If I make a few observations with regard to these gentlemen it will perhaps show the Committee why they did not recommend the nationalisation of the trade in armaments. Take "Our Right Trusty and Well Beloved Counsellor," Sir John Eldon Bankes. He is a learned and distinguished lawyer. His age is 83. He was educated on the playing fields of Eton, where no doubt the Battle of Waterloo was won, but where the battle of the nationalisation of the armaments industry will certainly not be won. When the Government chose Sir John Eldon Bankes to be in the chair there was one gentleman who could be relied upon to say that nationalisation of the armaments industry was an impossible and impracticable proposal. Then we come to Sir Philip Hamilton Gibbs, Knight Commander of our Most Excellent Order of the British Empire. I do not wish to say anything too critical about him. He is a distinguished journalist, a member of the profession to which I have belonged, but, nevertheless, he was honoured by the Government, I believe in 1919, and therefore has no partiality to- wards the policy of the nationalisation of the armament industry.

Major Braithwaite

You have no right to say that.

Mr. Garro Jones

If you have a gentleman with a knighthood, although some of them I recognise are enlightened, the odds are 10 to one that you will get a vote against the nationalisation of the armaments industry.

Sir John Haslam

What about your own Front Bench?

Mr. Garro Jones

Then there is Mr. John Alfred Spender, a man of considerable experience, but, after all, he is 75 years old, an age at which any physiologist will tell you the human mind is not receptive.

Mr. Magnay

On a point of Order. Is it fair or in consonance with the Rules of the House for the names of members of a commission appointed by this House to be called into question when they are unable to answer for themselves? Is it in the interests of this House for such a thing to be done? Is it likely that public men in future will allow their names to go forward for a Royal Commission if they are to be brought into contempt in this way?

The Deputy-Chairman

As far as I am aware the Rules of the House do not prevent the hon. Member making his speech. It is not for me to judge on matters of taste.

Mr. Garro Jones

Nor do I need any instruction from the Chair on matters of taste. Let me proceed to draw the attention of the Committee to yet another name—Sir Kenneth Lee, Knight, Doctor of Laws. This gentleman had already been chosen by the Government to sit on a Royal Commission where the precise issue of nationalisation was in question. He was on the Coal Commission in 1925, and he recommended against the nationalisation of the coal industry in face of all the volume of facts. That is yet one more name which the Government could guarantee as being safe to recommend against the nationalisation of the armaments industry.

Mr. Holdsworth

You were against it yourself in 1925.

Mr. Garro Jones

I propose to answer briefly one question put by the Secretary of State for War. He said: How can you prevent a rise in price in the case of a sudden demand? That has been part of the defence of the Government in the matter of profiteering for the last three months. They say that it is due to a world demand, and entirely overlook the fact that it takes two factors to make a price, demand and supply. The supply of raw materials has been restricted; therefore, the first thing 10 do to prevent an increase of price is to remove the restrictions on the supply of raw material. That applies in the case of tin and steel, two of the most important of the raw materials involved in armaments. The second method by which we can prevent these excessive profits being made is by common prudence and common sense. The Government announce that it is going to spend £1,500,000,000 without taking one step to cover their essential requirements in advance, a step which any small business man would say to be absolutely necessary. The Government were committed to this expenditure, and the people knew that they could get what price they liked.

The third and last method, which will never be adopted by the present Government when you are being exploited by private interests is to produce the things yourself. That is the most simple and efficacious way. Our case has been put very ably by the hon. Member for Llanelly (Mr. J. Griffiths). The greatest of all soldiers once said that moral is to the physical as three is to one. In the question we are debating I say that the moral issue should be the dominant issue. Among the people of this country, the workmen who produce these armaments and who will have to man the defences of the State, there is intense resentment that profits should be made out of the manufacture of private armaments, and I want to know what weight has been given to that powerful factor. In the long run this policy will prevail. I predict that before many years have passed the industry will be under national and public control, and if the present Government have not: done it by the time the electors next have an opportunity of expressing their opinion, it will cost them a tremendous number of seats at the next election.

9.53 p.m.

Mr. Ede

There was one remark of the Secretary of State for War which surprised me coming from a man who served in the last War. He said that it did not matter very much to a British soldier whether he was killed by a British or German bullet. I want to put it to him as one ex-service man to another, would he have cared three minutes before zero hour to have said to the troops under his command, "Well boys, the enemy have got British bullets but that does not matter. If they have got your number on, they will kill you whether they are British or German bullets." The troops would have thought such humour rather misplaced. It was never advertised to the British troops that the weapons they were going to meet were the best in the world because they were made by British hands. That was never said by any officer to the troops he was leading. For the moment the right hon. Gentleman is at the head of the British Army as far as representation in this House is concerned. I do not know how much longer he is going to be there, but, after his effort of to-night, I say as an ex-soldier that the shorter the time he is there the better for the Army. He knows from his own personal experience that these things are of enormous moment at critical instances in the lifetime of armies, when men have to be convinced that the sacrifices they are being asked to make are being shared, as far as they can be, by every person of their race.

One of the difficulties which confronts the right hon. Gentleman in the problem of recruiting, on which I sympathise with him, is the knowledge which people have that while the young men of the richer classes did their part in the War as well as the young men of the poorer classes—I have never tried to make any distinction on that point, for they all did their part—there were during the War people in all sections of society who used the opportunities they had to enrich themselves, and who were a great deal better off financially at the end of the War than they had been at the beginning. To-day we have asked the Government to remove that difficulty which stands in the way of getting a really united nation on the question of national defence. I believe that until this question is tackled, the right hon. Gentleman and those associated with him will have the same difficulty with regard to the recruitment of personnel for his particular Service which has confronted him during the last few months.

I am not one of those who think that in the future the Army will be of no account. The right hon. Gentleman will recollect that during the Debate on the Army Estimates, I said that I believed the role of the British Army in any conflict of the future had been seriously under-estimated by the people who envisage that war. It is because I hold that view that I regretted very much to hear the statement which the right hon. Gentleman made to-night. Admittedly, when a man is dead it does not matter whether it was a British bullet or German bullet that killed him, but when you are asking a man to go "over the top," when he has had his iron rations and when somebody not going with him wishes him the best of luck, you do not want to have in his mind doubt as to whether the weapon he is going to meet may have been forged in his own country by people safe at home enjoying luxury out of the profits on the weapon that may possibly end his life.

In the Estimates Committee we had before us witnesses from the three Service Departments. They proved to hon. Members from all sides that the three Service Departments were taking all the steps that they could reasonably take to deal with their direct contractors, and we unanimously passed a report which said so. As far as I am concerned, I still stand by the report on the evidence, but I am bound to say that I have been rather shaken by some of the things that have emanated from the Treasury Bench since that report was signed. There is one point with which I wish the Government would deal. We found that they insist on an inspection of the books of the companies with whom they have direct contracts and an inspection of the books of sub-contractors when those sub-contractors are subsidiary companies of the contractors who have direct contracts with the Government, but that when the subcontractors are not in that relationship with the main contractors, they do not insist on the production of books. It seems to me that there is a very great chance of profit being made there which the Government ought to endeavour to check.

Moreover, many Members of the Committee reached the conclusion that the Government ought to have some hand in purchasing the raw material and in arranging for its rationing between the various firms engaged in the industry. It appears to me to be the height of folly for two firms, each engaged on a contract for the Government, to compete with one another for the supply of raw material and to put up the price, not merely against one another, but against the Government. Some of us feel very strongly that the Government should take some step, even if they will not go to the length we desire and nationalise this particular industry, to see that the raw material is handled nationally and is shared out among the various firms.

I agree entirely with the remarks of my hon. Friend the Member for North Aberdeen (Mr. Garro Jones) regarding the way in which the reply from the Government Bench has been made today. Earlier in the Debate I heard a most impressive speech, following that of my hon. Friend the Member for Llanelly (Mr. J. Griffiths), by the hon. Member for Stretford (Mr. Crossley), in which it seemed to me that he recognised, as a young man, most of the points that I have been putting to the Committee. I am sure that outside the House the conscience of many patriotic men of all parties is profoundly disturbed by the fear that in this emergency—for the Government tell us it is an emergency—there are influences at work which will make national unity exceedingly difficult if the moment of crisis should unfortunately arise. For the moment the Government are charged with the responsibility not merely of preparing the material for a war, if war is to come or is inevitable, but with the still more responsible duty of preserving the unity and morale of the nation and of enabling the nation, if possible, to go into any conflict in which it may be involved with the certainty that there will be no one who, at the end of the war, will be living in luxury because he has been supplying the material in the handling of which men will have lost their lives.

10.3 p.m.

Mr. Sexton

I have listened to most of this Debate with great concern. It seems to me that there are two aspects of this question, one of them sentimental and the other commercial. The sentimental point of view has been very ably put by many of my hon. Friends on this side of the Committee. There are some people who scorn sentiment, but when the drums of war are beating it is sentiment that rouses the nation, because it is the very fibre of the nation. Therefore, to deride sentimentality, or sob-stuff as it is called, is really to defeat your own purpose if you wish to rouse the people in war time. The report of the Royal Commission mentions the sentimental views of a great part of the population of this country. All kinds of societies and organisations gave evidence before the Commission, and not one of those societies and organisations belonged to a political party. They were non-party, representing the religious views of the country, the women's views and the views of those people who believe in the League of Nations and collective security. I could, from the report, give the Committee the numbers of people represented by those organisations, the names that were attached to certain petitions, and the names of certain witnesses who gave evidence before the Commission, names that are household words in religious and philanthropic organisations in this country. The sentimentality which prevails consists of a repugnance to the idea of profits being made out of armaments. The Commission say that no one should be allowed to make profit out of war and they suggest that in war-time there should be conscription of industry. The following passage occurs on page 46 of the report: We recognise that great difficulties are likely to be met in any attempt to formulate plans for the conscription of industry in time of war, but we are impelled to the belief that these difficulties will have to be faced. We say that no one should be allowed to make profit out of the manufacture of war material, not only in time of war but in time of peace. If arms are to be nationalised in war-time they ought to be nationalised in peace-time. There is a popular song which is called "Sing as you go," and.we believe that if it were a case of "Pay as you go" in this matter, there would be little chance of another war. We believe that not only industry but wealth should be conscripted, just as the life of the nation is conscripted in the time of the nation's emergency. But the patriotism of the arms factors does not extend further than profit. Finance knows no frontier. In the creation of the sentiment which has been referred to to-night, what happened at the Dardanelles has played a large part. There is, in the Market Square in Bedford, a gun which was captured by the Bedfordshire Regiment during the War and which was made in this country. According to this report, in answer to a question about arms made in this country and supplied to foreign firms, the reply was given that there were only 13 of these Dardanelles guns. Only 13, but how many British lives were taken by those 13 guns. From those 13 guns, manufactured by Vickers, came dividends to the arms manufacturers. What came to the British soldiers and sailors who faced them? Not dividends but death—death in defending the dividends of the arms factors of this country.

So much for the sentimental point of view. From the business point of view we believe that the manufacture of arms should be in the hands of the nation. Reference has been made already to our war experience. The private manufacture of arms broke down during the War. The private firms could not deliver the goods. From the Floor of this House a cry went up to Heaven for arms and some of the arms factors were almost designated traitors to the country because of late deliveries. National factories had to be established, not because the Government had any love for nationalisation but because of stark necessity and the national factories, it was found, gave certain delivery of arms which were of greater effectiveness and of considerably lower cost than those previously supplied. It has been said that no armament firm ever made war. We recognise that Governments make war, but if Governments make war then only Governments ought to make the implements of war. To exercise proper control we must own the factories which make these implements of war. We are of opinion that all private profit ought to be taken out of the manufacture of arms. More than once in the Debate it has been said that if we had national factories they would not be occupied all the time in making arms, and what, it was asked, would we do with them then? What a pity that would be. If we had only to use these factories for three days a week it would be a great blessing. If I could foresee a time when one day a week would provide all the arms we needed I would be a happier man, and if we had to close them altogether, as far as the manufacture of arms was concerned, I would be the happiest man in the land.

10.13 p.m.

Sir J. Haslam

I should not have intervened had it not been for the speech of the hon. Member for North Aberdeen (Mr. Garro Jones) in which he attacked, among others, a gentleman who comes from the town which I have the honour to represent and who is respected throughout the whole North of England. I refer to Sir Kenneth Lee. I have not the pleasure of his acquaintance but I know that his firm are model employers and that it is the ambition of most parents there to secure employment for their children in that firm. The hon. Member's grievance against most of the members of the Commission seems to be that they had grown old and attained high positions in the service of the country. They had reached ages like 70 or 80, and according to the hon. Member they had no right, with their ripe experience, to act on a Commision of this kind. I always thought that age brought wisdom and that a person was none the worse for having behind him years of honoured service in the cause of his country.

I am not, however, dealing with any members of the Commission except the gentleman whose name I have mentioned. You, Mr. Deputy-Chairman, told the hon. Member that raising this question was a matter of taste. The hon. Member apparently refused to accept an admonition on the matter of taste from you, but perhaps he will accept from me, as not being of the same authority as yourself. He raised an objection to Sir Kenneth Lee on the ground that that gentleman was against the nationalisation of mines, I think, in 1925. I believe the hon. Member for North Aberdeen was also against the nationalisation of mines at that date, but he has changed his mind since then, and whether Sir Kenneth Lee has changed his mind I do not know.

Mr. Garro Jones

The hon. Member is in error when he states that I was against the nationalisation of mines at that time.

Sir J. Haslam

I am open to correction, but I believe the hon. Member for North Aberdeen was at that time a Liberal candidate, and I fully thought that Liberal candidates were, speaking as a body, against the nationalisation of mines.

Mr. Ede

They never have spoken as a body.

Sir J. Haslam

One must be able to draw conclusions, and I always thought the Liberal party, as a party and as individuals, were against nationalisation. If the hon. Member says that at that time he was in favour of nationalisation, all that I can say is that at that time he did not tell the electors when he appealed to them that he was+ in favour of nationalisation. But his principal grievance against Sir Kenneth Lee is that he is consistent, whereas the hon. Member for North Aberdeen is consistent in his inconsistency and chooses to cross over the floor of the House and then attack a gentleman—I do not want to be rude, but from experience of him I would say—whose shoes he is unfit to loose, from what I know of Sir Kenneth Lee. I have already said that I have not this gentle- man's acquaintance. He has been a political opponent of mine all his life, but he is an honoured citizen of the town that I represent in this House, and therefore I feel it incumbent upon me, as no Member from his own side of the House has spoken for him, to say what I know about him and his reputation and I say that his reputation will stand examination from any gentleman who cares to leave his own party and go over to another party and then try to traduce members of the party that he has left. I will leave it at that.

10.17 p.m.

Mr. E. Smith

I came straight from the workshop into this House and have been brought up in a school of thought and action which has taught me that when one of my colleagues is attacked it is my duty to defend that colleague. I listened to the speech of my hon. Friend the Member for North Aberdeen (Mr. Garro Jones) and am of the opinion that no one could take objection to it on a personal basis. He did not indulge in any personal criticism of the individual, but his speech was based upon a criticism of the Government for having biased the Commission before it met by selecting the individual that he named. Then he went on to draw attention to the fact that the Commission was biased with the people who had been selected to serve upon it. For example, it was my generation that went through the last War. It was the generation of men and women who are now between 40 and 55 years of age, generally speaking, and yet not one member of that generation was included in this Commission. From the point of view of our own people, the man who represented this movement on that Commission is, in my view, as good a Tory as any sitting in this House, and these are the people, the safe people, not the people that would come down on the side of the people of this country, but the people who would come down on the side of the vested interests, who the Government knew would prepare a report of this description.

I want to join with my colleagues in the criticism that has been made of the Government's attitude in this matter. One of the most devastating attacks that I have heard made in this House has been made from the Liberal benches and from our own benches, supported in one or two instances from that side to-day. I sat here and listened to the speech of the hon. Member for the Hallam Division of Sheffield (Mr. L. Smith), who is noted for being a 100 per cent. supporter in this House of private enterprise, and he tried to score off our colleagues by saying that if the armaments industry was nationalised, it would not he run as efficiently as it is at the present time. If the armaments industry of this country were nationalised on a scientific basis it would eliminate the overlapping and the profit-making that takes place, and it would be run far more efficiently than it is being run at the present time. I will take one or two illustrations. Is there any industry in this country run more efficiently than the Post Office?

Viscountess Astor

That is a question!

Mr. Smith

Is there any section of industry run more efficiently than the fire brigade?

Viscountess Astor

There is no competition. We do not know.

Mr. Smith

The Noble Lady says she does not know. She is a supporter of private enterprise and should know.

Viscountess Astor

There is no private enterprise in the fire brigade.

Major Procter

Does the hon. Member seriously consider that there is any parallel between the sale of postage stamps and the high technical skill required in the manufacture of arms?

Mr. Magnay

Before the hon. Member replies to the question about the Post Office, which is a monopoly with no competition, will he kindly refresh the memory of the Committee by referring to the persecution of the chief of the fire brigade?

Mr. Kelly

On a point of Order. Mention has been made of the fire brigade—

Mr. Magnay

I apologise. I put cold water at once on what I said. It was the salvage corps.

Mr. Smith

I know nothing about the persecution of the person to whom the hon. Member draws attention. We do not stand for the persecution of any individual, and if it is correct that an individual has been persecuted, we do not desire to be associated with it. Hon. Members on the other side, and particularly the hon. and gallant Member for Accrington (Major Procter), asked me if there were any parallel between the nationalisation of the armaments industry and the nationalisation of the Post Office services?

Major Procter

No, I did not. I tried to point out to the hon. Gentleman that the sale of postage stamps is a different operation from manufacturing armaments. There is very little difference between one postage stamp and another.

Mr. Smith

Some of us have had the benefit of the experience of being engaged in industry. Having been engaged in large-scale industry, some of us have seen the responsibility which large industrialists have to shoulder. The difference between hon. Members on this side who have that experience and hon. Members on the other side is that they have been engaged in finance companies and do not realise the serious responsibility of industrialists. They, therefore, cannot approach this question in the way that practical men have to approach it. I am not saying that that observation applies to every hon. Member opposite, but if we had time to make an analysis of Members opposite, we should find that a very big proportion of them have had no practical experience in the industrial life of this country. The question put by the hon. and gallant Member for Accrington indicated that he has no knowledge of the great services which are rendered to the community by the Post Office.

Major Procter

rose—

The Deputy-Chairman

We had better not pursue this discussion on the functions of the Post Office.

Mr. Smith

I was answering the speech made by an hon. Member for one of the Sheffield Divisions, in which he stated that it would not be possible to run industry on a national basis as efficiently as it is run at the present time. In the earlier part of the War, and before we went to play our part elsewhere, some of us served in industry which was State-controlled at that time. I would draw the attention of hon. Members to a book written by Dr. Addison, in which he shows clearly that before the factories were State-controlled shells and other munitions were costing hundreds of pounds more than when the State took over control. We remember that just before the end of the War, when Gretna Green, Altrincham and other national factories were running, the cost of munitions had been brought down enormously. The whole country was surprised at the reductions in the cost of munitions as a result of State control of the armament factories.

During this Debate we have lost sight of the fact that there is no comparison between the situation in 1937 and the situation in 1914. In 1914 the whole of the world was a capitalist world, but in 1937 we have a different set of circumstances, and if hon. Members are to be worthy representatives of the people of this country they must be prepared to consider the world as it is divided at the present time. If the people in this country—and the same thing would apply to other countries where there is still relative democracy—believe that the Government were at any time going to take part in a war in order to support the Covenant of the League of Nations and to maintain the principle of collective security, they would rally round that Government providing they could be convinced that armament firms and other vested interests were not going to exploit the people as they did during 1914–18. En another part of the world, in countries like Italy and Germany—

Viscountess Astor

And Russia.

Mr. Smith

If the hon. Lady will not be too ready to mention that country which she visited not long ago she will find I am quite prepared to deal also with the state of affairs there. I was saying that in countries like Germany and Italy there are millions of people of our kind who have been subdued for the time being. They have been batoned and thrust into concentration camps. When a similar situation is brought about to that which prevailed from 1914 to 1918, do the people of the world think that the populations of those countries who have been dealt with in that way during the last few years can be depended upon? In Russia there are millions of men and women enthusiastically supporting the Government that is in existence.

Viscountess Astor

How do you know?

Mr. Smith

The Noble Lady puts a reasonable question. We know because hundreds of people, just like herself, have visited that country, have written books, pamphlets and papers—

Viscountess Astor

I have been to Russia, but I never cared to write a pamphlet or talk about it because I did not speak the language and I saw only what they wanted to show me, and I was not expected to believe everything.

Mr. Smith

When the Noble Lady returned everybody said: "What is coming over Lady Astor?" If I remember rightly, although unfortunately I have not the cuttings with me, she came back and praised the régime there, because of the way in which they were taking care of the children.

The Deputy-Chairman

What the hon. Member says may be true and very interesting, but I do not quite see the connection it has with this Vote.

Mr. Smith

In Germany, Italy and other places they think they can depend upon people, but the reason that they cannot depend upon them—

The Deputy-Chairman

All that argument would be more appropriate on the Foreign Office Vote and not on this Vote.

Mr. Smith

That may be your interpretation. I am proceeding to relate the analysis which I am making—

The Deputy-Chairman

The analysis is not relevant to this discussion, and if the hon. Member cannot keep to the subject he must resume his seat.

Mr. Smith

I shall not put myself in that position because I have been brought up to be respectful to the Chair. We have been trained to respect democratic institutions and to respect Standing Orders. It seems to me to be a question of the interpretation of the material which I want to try to analyse. The position I want to reach is that we on these benches have a great deal to be thankful for to the people who gave us the opportunity of coming here to speak. We have not had the opportunity by the good nature and good will of hon. Members opposite, but because of the hard struggles and sacrifices that our forefathers made. They built up this movement, which represents the aspirations of the common people of this country. I am attempting to show that the Government are no longer patriotic and that they do not represent the people, but represent the vested interests of the country. I remember standing in the General Election of 1931 and going from district to district to speak. On all platforms speeches were made like those made by the hon. Member for Bolton (Sir J. Haslam). That is the kind of speech they made—"Buy British."

The Deputy-Chairman

I cannot see the connection between the hon. Member's speech and the subject which is now before the Committee. I trust that he will get back to it,

Mr. Smith

The connection is that in 1931 this Government was elected on a basis of misrepresentation and deceiving the people of this country. They misrepresented the position, and asked the people to support a policy of "Buy British "and" Put Britain First"; and yet the Secretary of State for War stands at that Box to-night and says, "What does it matter whether mankind are killed by German or by British shells? They are killed in just the same way in either case." The Government have come out in their true colours to-night. They are representing vested interests—the vested interests represented in the cartels and monopolies, who do not care where they get their profits from. Therefore, we say that the time has arrived when the arma- ments industry in this country should be nationalised, in order to prevent international cartels from making profits out of the lives of men and women throughout the world.

Question put, "That a sum, not exceeding £243,916, be granted for the said Service."

The Committee divided: Ayes, 119; Noes, 181.

Division No. 191.]	AYES.	[10.37 p.m.
Acland, Rt. Hon. Sir F. Dyke	Grenfell, D. R.	Owen, Major G.
Acland, R. T. D. (Barnstaple)	Griffith, F. Kingsley (M'ddl'sbro, W.)	Paling, W.
Adams, D. (Consett)	Griffiths, G. A. (Hemsworth)	Parker, J.
Adams, D. M. (Poplar, S.)	Griffiths, J. (Llanelly)	Parkinson, J. A.
Adamson, W. M.	Groves, T. E.	Pethick-Lawrence, Rt. Hon. F. W.
Alexander, Rt. Hon. A. V. (H'lsbr.)	Hall, G. H. (Aberdare)	Potts, J.
Ammon, C. G.	Hall, J. H. (Whitechapel)	Pritt, D. N.
Anderson, F. (Whitehaven)	Harris, Sir P. A.	Quibell, D. J. K.
Attlee, Rt. Hon. C. R.	Harvey, T. E. (Eng. Univ's.)	Riley, B.
Banfield, J. W.	Hayday, A.	Ritson, J.
Barnes, A. J.	Henderson, A. (Kingswinford)	Roberts, Rt. Hon. F. O. (W. Brom.)
Barr, J.	Henderson, J. (Ardwick)	Rowson, G.
Batey, J.	Henderson, T. (Tradeston)	Salter, Dr. A. (Bermondsey)
Broad, F. A.	Holdsworth, H.	Salter, Sir J. Arthur (Oxford U.)
Bromfield, W.	Hopkin, D.	Sexton, T. M.
Brown, C. (Mansfield)	Jenkins, A. (Pontypool)	Shinwell, E.
Burke, W. A.	Jenkins, Sir W. (Neath)	Silkin, L.
Cape, T.	Johnston, Rt. Hon. T.	Smith, Ben (Rotherhithe)
Cassells, T.	Jones, A. C. (Shipley)	Smith, E. (Stoke)
Chater, D.	Jones, Sir H. Haydn (Merioneth)	Smith, T. (Normanton)
Cluse, W. S.	Jones, Morgan (Caerphilly)	Sorensen, R. W.
Cocks, F. S.	Kelly, W. T.	Stephen, C.
Cove, W. G.	Kennedy, Rt. Hon. T.	Stewart, W. J. (H'ght'n-le-Sp'ng)
Daggar, G.	Kirkwood, D.	Taylor, R. J. (Morpoth)
Dalton, H.	Lawson, J. J.	Thurtle, E.
Davies, R. J. (Westhoughton)	Lee, F.	Tinker, J. J.
Davies. S. O. (Merthyr)	Logan, D. G.	Viant, S. P.
Day, H.	McEntee, V. La T.	Walker, J.
Dobbie, W.	McGhee, H. G.	Watson, W. McL.
Dunn, E. (Rother Valley)	MacLaron, A.	Welsh, J. C.
Ede, J. C.	Maclean, N.	Westwood, J.
Edwards, A. (Middlesbrough E.)	Mainwaring, W. H.	Williams, D. (Swansea, E.)
Edwards, Sir C. (Bedwellty)	Marshall, F.	Williams, E. J. (Ogmore)
Evans, D. O. (Cardigan)	Maxton, J.	Williams, T. (Don Valley)
Gallacher, W.	Messer, F.	Windsor, W. (Hull, C.)
Gardner, B. W.	Montague, F.	Woods, G. S. (Finsbury)
Garro Jones, G. M.	Muff, G.	Young, Sir R. (Newton)
Gibson, R. (Greenock)	Nathan, Colonel H. L.
Graham, D. M. (Hamilton)	Naylor, T. E.	TELLERS FOR THE AYES.—
Green, W. H. (Deptford)	Noel-Baker, P. J.	Mr. Whiteley and Mr. Mathers.
Greenwood, Rt. Hon. A.	Oliver, G. H.
NOES.
Acland-Troyte, Lt.-Col. G. J.	Clarke, Lt.-Col. R. S. (E. Grinstead)	Everard, W. L.
Albery, Sir Irving	Clarry, Sir Reginald	Fleming, E. L.
Allen, Col. J. Sandeman (B'knhead)	Colfox, Major W. P.	Fox, Sir G. W. G.
Allen, Lt.-Col. Sir W. J. (Armagh)	Colman, N. C. D.	Furness, S. N.
Amery, Rt. Hon. L. C. M. S.	Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)	Fyfe, D. P. M.
Anstruther-Gray, W. J.	Croft, Brig.-Gen. Sir H. Page	Gluckstein, L. H.
Aske, Sir R. W.	Crossley, A. C.	Glyn, Major Sir R. G. C.
Assheton, R.	Crowder, J. F. E.	Goldie, N. B.
Astor, viscountess (Plymouth, Sutton)	Cruddas, Col. B.	Gower, Sir R. V.
Atholl, Duchess of	Culverwell, C. T.	Graham, Captain A. C. (Wirral)
Baldwin, Rt. Hon. Stanley	Davidson, Rt. Hon. Sir J. C. C.	Granville, E. L.
Baldwin-Webb, Col. J.	De Chair, S. S.	Grattan-Doyle, Sir N.
Balfour, Capt. H. H. (Isle of Thanet)	Denman, Hon. R. D.	Gretton, Col. Rt. Hon. J.
Beamish, Rear-Admiral T. P. H.	Denville, Alfred	Gridley, Sir A. B.
Beaumont, Hon. R. E. B. (Portsm'h)	Dorman-Smith, Major Sir R. H.	Guinness, T. L. E. B.
Bennett, Sir E. N.	Dower, Capt. A. V. G.	Guy, J. C. M.
Bird, Sir R. B.	Drewe, C.	Hamilton, Sir G. C.
Blair, Sir R.	Duckworth, Arthur (Shrewsbury)	Hanbury, Sir C.
Blaker, Sir R.	Duckworth, W. R. (Moss Side)	Harbord, A.
Boulton, W. W.	Duggan, H. J.	Haslam, Sir J. (Bolton)
Boyce, H. Leslie	Duncan, J. A. L.	Heilgers, Captain F. F. A.
Bracken, B.	Eastwood, J. F.	Heneage, Lieut.-Colonel A. P.
Braithwaite, Major A. N.	Eckersley, P. T.	Hepburn, P. G. T. Buchan-
Brocklebank, Sir Edmund	Ellis, Sir G.	Hepworth, J.
Brown, Col. D. C. (Hexham)	Emery, J. F.	Herbert, Major J. A. (Monmouth)
Campbell, Sir E. T.	Emmott, C. E. G. C.	Higgs, W. F.
Carver, Major W. H.	Emrys-Evans, P. V.	Horsbrugh, Florence
Cayzer, Sir C. W. (City of Chester)	Errington, E.	Howitt, Dr. A. B.
Chamberlain, Rt. Hn. N. (Edgb't'n)	Erskine-Hill, A. G.	Hudson, Capt. A. U. M. (Hack., N.)
Chorlton, A. E. L.	Evans, Capt. A. (Cardiff, S.)	Hume, Sir G. H.
Hunter, T.	Nicolson, Hon. H. G.	Smith, L. W. (Hallam)
James, Wing-Commander A. W. H.	O'Neill, Rt. Hon. Sir Hugh	Somervell, Sir D. B. (Crewe)
Joel, D. J. B.	Ormsby-Gore, Rt. Hon. W. G. A.	Somerville, A. A. (Windscr)
Jones, Sir G. W. H. (S'k N'w'gt'n)	Orr-Ewing, I. L.	Spens. W. P.
Keeling, E. H.	Palmer, G. E. H.	Strauss, E. A. (Southwark, N.)
Kerr, J. Graham (Soottish Univs.)	Patrick, C. M.	Strickland, Captain W. F.
Kimball, L.	Peake, O.	Sueter, Rear-Admiral Sir M. F.
Lamb, Sir J. Q.	Perkins, W. R. D.	Sutcliffe, H.
Law, Sir A. J. (High Peak)	Peters, Dr. S. J.	Tasker, Sir R. I.
Leckie, J. A.	Petherick, M.	Taylor, C. S. (Eastbourne)
Leighton, Major B. E. P.	Pickthorn, K. W. M.	Touche, G. C.
Levy, T.	Procter, Major H. A.	Tufnell, Lieut.-Commander R. L.
Little, Sir E. Graham-	Radford, E. A.	Turton, R. H.
Mabane, W. (Huddersfield)	Ramsay, Captain A. H. M.	Wakefield, W. W.
MacAndrew, Colonel Sir C. G.	Rankin, Sir R.	Walker-Smith, Sir J.
MacDonald, Rt. Hon. M. (Ross)	Reed, A. C. (Exeter)	Waterhouse, Captain C.
Macdonald, Capt. P. (Isle of Wight)	Reid, W. Allan (Derby)	Wayland, Sir W. A
McKie, J. H.	Rickards, G. W. (Skipton)	Wells, S. R.
Magnay, T.	Ross, Major Sir R. D. (Londonderry)	Wickham, Lt.-Col. E. T. R.
Makins, Brig.-Gen. E.	Ross Taylor, W. (Woodbridge)	Williams, C. (Torquay)
Manningham-Buller, Sir M.	Rowlands, G.	Williams, H. G. (Croydon, S.)
Mason, Lt.-Col. Hon. G. K. M.	Russell, Sir Alexander	Willoughby de Eresby, Lord
Maxwell, Hon. S. A.	Russell, S. H. M. (Darwen)	Windsor-Clive, Lieut.-Colonel G.
Mayhew, Lt.-Col. J.	Salmon, Sir I.	Winterton, Rt. Hon. Earl
Meller, Sir R. J. (Mitcham)	Samuel, M. R. A.	Womersley, Sir W. J.
Mellor, Sir J. S. P. (Tamworth)	Savery, Sir Servington	Wright, Squadron-Leader J. A. C.
Moore, Lieut.-Col. Sir T. C. R.	Shaw, Major P. S. (Wavertree)	Young, A. S. L. (Partick)
Moore-Brabazon, Lt.-Col. J. T. C.	Shaw, Captain W. T. (Forfar)
Morgan, R. H.	Simmonds, O. E.	TELLERS FOR THE NOES.—
Munro, P.	Simon, Rt. Hon. Sir J. A.	Mr. James Stewart and Lieut.—
Nail, Sir J.	Sinclair, Col. T. (Queen's U. B'lf'st)	Colonel Llewellin.
Nicholson, G. (Farnham)	Smiles, Lieut.-Colonel Sir W. D.

Original Question again proposed.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Lieut.-Colonel Llewellin.]

Committee report Progress; to sit again To-morrow.

The remaining Orders were read, and postponed.