Commons Sitting of 4 July 1938

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Shropshire Worcestershire and Staffordshire Electric Power (Consolidation) Bill [Lords] (King's Consent signified), Bill read the Third time, and passed, with Amendments.

Stanmore Unused Burial Ground Bill [Lords],

Read a Second time, and committed.

West Yorkshire Gas Distribution Bill [Lords],

To be read a Second time To-morrow.

ORAL ANSWERS TO QUESTIONS.

  INDIA (FEDERATION, SIND).
  Mr. Sorensenasked the Under-Secretary of State for India whether his attention has been drawn to the resolution of the Sind Legislative Assembly expressing strong opposition to the scheme of federal government and urging the British Government not to impose the scheme on the Province; and whether he has any statement to make respecting this further repudiation of the scheme of federation?
  The Under-Secretary of State for India (Lieut.-Colonel Muirhead): My Noble Friend has not yet been made aware of a resolution in this sense by the Sind Legislative Assembly, and I have no statement to make.

  BOMBING OF BRITISH SHIPS.
  Mr. Henderson Stewartasked the Prime Minister whether he has any report to make upon the representations recently made by Sir Robert Hodgson to the Burgos government with regard to the bombing of British ships?
  Mr. G. Straussasked the Prime Minister whether he can make any statement concerning the report which Sir R. Hodgson has made to His Majesty's Government on the bombing of British ships?
  Mr. Caryasked the Prime Minister whether he has any information to give the House in regard to assurances received by His Majesty's Government respecting the cessation of the bombing of British ships trading in Spanish waters?
  Mr. Vyvyan Adamsasked the Prime Minister what reply has been brought by Sir Robert Hodgson from the Burgos authorities to the protest against the deliberate outrages upon British shipping by insurgent aircraft?
  The Chancellor of the Exchequer (Sir John Simon): Sir Robert Hodgson arrived in London on Thursday afternoon and has since then been engaged in consultation with my Noble Friend and his advisers. These consultations are still in

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  progress and the House will not expect me to do more at the moment than give a summary of the reply which Sir Robert Hodgson has brought with him from the Burgos authorities.
  The reply maintains that ports are legitimate military objectives, but strongly disclaims any intention to single out British ships as objectives for attack. The reply goes on to make certain proposals for according immunity from attack to a port to be agreed upon, and the suggestion is made that this port might be Almeria. The Burgos authorities ask for suitable guarantees concerning the nature of the merchandise to be admitted through that port. They conclude by emphasising their readiness to put forward proposals which may be helpful in establishing new laws of war for the future. I would only add that the shipping interests concerned have been informed of the proposals contained in this note, and His Majesty's Government will naturally take their views into account.
  Mr. Henderson Stewart: Will my right hon. Friend bear in mind, in considering this matter, the serious anxiety felt by citizens of this country regarding the continual bombing of British ships?
  Sir J. Simon: I think that as the Prime Minister is not able to be here to-day it would be better if I did not deal with supplementary questions. If there are questions arising from the statement which I have made they had better be put down.
  Mr. Wedgwood Benn: Does not the right hon. Gentleman recollect that these protests were sent on account of the machine-gunning of seamen and the bombing at close quarters of British ships, and do I understand that Sir Robert Hodgson has replied that they were not deliberate? As the right hon. Gentleman does not reply, may I ask what the position is, because questions were put on the Paper addressed to the Prime Minister? The Prime Minister, we understand, cannot be here, and can we have some understanding as to when the matter can be inquired into?
  Mr. V. Adams: May I press my right hon. Friend to say whether His Majesty's Government accept the denial of the Burgos authorities about the deliberate character of these attacks?
  Sir J. Simon: I do not think that I can in the circumstances do more than give the House the information I have given. That does not debar further questions being put on a subsequent occasion.
  Mr. Attlee: Does the right hon. Gentleman think that the Prime Minister will be able to make a fuller statement tomorrow if I put down a private notice question?
  Sir J. Simon: The Prime Minister will, I am sure, be ready to answer questions on this subject as soon as he is in a position to do so.
  Mr. Leach: If that port is selected, is there any guarantee that it will not be bombarded by the Germans?
  Mr. Cocksasked the Prime Minister whether he can give any information regarding the attack on the steamship "Stanwold" by an armed insurgent trawler in the Straits of Gibraltar; and whether he will take steps to see that British ships shall pass through the Straits without molestation?
  The Under-Secretary of State for Foreign Affairs (Mr. Butler): My Noble Friend has seen an account in the Press of the incident in question, and a full report is now being obtained. As regards the second part of the question, measures are already in force to provide for the safe passage of British merchants ships through the Straits of Gibraltar.
  Mr. Arthur Hendersonasked the Prime Minister whether, in view of the fact that the bombing of British ships in Spanish ports is carried on by Italian aircraft, supplied by the Italian Government to General Franco and based on Majorca, His Maejsty's Government will represent to the Italian Government the desirability of their immediately withdrawing such aircraft from Spain in the interests of good relations between the two countries?
  Mr. Butler: His Majesty's Government must hold the Burgos authorities responsible for any action taken by aircraft stationed on the Island of Majorca. They are not, therefore, prepared to adopt the hon. Member's suggestion.
  Mr. Henderson: Will it now be possible for the Italian Government to withdraw these aeroplanes if they so desire?
  Mr. Butler: I have said on previous occasions that we must hold the Burgos

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  authorities responsible for the operations of these aircraft.
  Mr. A. V. Alexander: Do I take it that the Government have made no representations in the last week through the British Ambassador at Rome to Count Ciano with regard to this bombing of ships?
  Mr. Butler: There is a further question on the Order Paper on that subject.
  Mr. Cocks: Is the hon. Gentleman aware that these aircraft belong to the Royal Italian Air Force, and, therefore, must belong to the Italian Government; and will he make representations to the Italian Government?
  Mr. Butler: We must hold the Burgos authorities responsible for the operations of the aircraft.
  Miss Wilkinson: If the Government must hold the Burgos authorities responsible, why do they receive information on matters of high policy from Count Ciano and not from the Burgos government?
  Mr. Butler: We have communications with both governments?
  Mr. Noel-Baker: Why do the Government hold the Burgos authorities responsible when we know from the Italian Government-controlled Press that their orders are coming from Rome?
  Mr. ButlerThe hon. Gentleman has his sources of information and we have ours, and according to our sources of information the Burgos authorities must be held responsible for the operations of these aircraft.
  Mr. A. Hendersonasked the Prime Minister what representations have been made by the British Ambassador in Rome to the Italian Government with regard to the sinking of British ships in Spanish Government ports, and what reply has been received?
  Mr. Butler: This and other aspects of the Spanish problem have been discussed between His Majesty's Ambassador in Rome and the Italian Government, but I am not in a position to make any statement.
  Mr. Attlee: May I ask why it was that the Prime Minister could not give me that information when I asked him?
  Mr. Butler: I have given the right hon. Gentleman the latest and most up-to-date information on this point.
  Mr. Benn: Why was it that when this same question was put to the Prime Minister he asked for notice of it, whereas within two hours full information was given to the Press by the Foreign Office?
  Mr. Butler: It is a question of the hour and the date. I am answering the question at a later time than it was addressed to the Prime Minister.
  Miss Wilkinson: Why did these conversations take place at all, in view of the fact that in answer to a previous question the Government have stated that they recognise the Burgos government as being the only authority in Nationalist Spain?

  SPAIN.
  Mr. Henderson Stewartasked the Prime Minister whether representations have been made to the Burgos government with the object of preventing the bombing of open cities in terms as stern as those employed in the recent protest to the republican government of Spain on the same subject; and what were the terms of those representations?
  Mr. Cocksasked the Prime Minister whether the Government have made representations to the Spanish Government to dissuade them from bombing, by way of reprisal, the Italian air base at Majorca or Italian ships unloading munitions in Spanish insurgent ports?
  Lieut.-Commander Fletcherasked the Prime Minister in what terms he replied to the communication as to the Spanish Government adopting a policy of reprisals in regard to air attacks upon the civilian population and non-military objectives?
  Mr. Butler: His Majesty's Government have made no formal representations to the Spanish Government on the subject of reprisals for air attacks, but they have represented to the Burgos authorities the horror with which they view the loss of civilian lives resulting from the bombardment of towns in Spanish Government territory, and they have in the past appealed to both sides to abstain from the destruction of objectives of a non-military character.
  Brigadier-General Sir Henry Croft: Is it not a fact that there have been several reprisal raids against Majorca, and that a great number of civilian casualties have been suffered?
  Mr. Butler: I have not that information.
  Sir Archibald Sinclair: Will His Majesty's Government's objection apply to reprisals against military aerodromes in Majorca?
  Mr. Butler: I must refer the right hon. Gentleman to my original reply. I cannot accept the premises on which he bases his supplementary question.
  Mr. Cocks: Do I understand that the Government made no representations to the Spanish Government to refrain from bombing Italian aerodromes in Majorca?
  Mr. Butler: The Government have made no formal representations. They have made their view perfectly clear on this subject to both sides.
  Mr. J. J. Davidsonasked the Prime Minister whether the steamer "Baron Forbes," sent from Glasgow on 25th June by the "Friends of National Spain," containing goods for General Franco, had a non-intervention observer on board; and can he indicate of what the cargo consisted?
  Mr. Butler: This vessel duly took a non-intervention observer on board at Lisbon on 3rd July. I understand that the cargo consists of medical stores.
  Mr. Davidson: In view of the fact that certain statements and allegations have been made in reliable quarters that this vessel also had a cargo of iron plates, will the hon. Gentleman make further investigations?
  Mr. Butler: I can do no more than say that the vessel had a non-intervention observer on board, thus safeguarding the point which the hon. Gentleman has in mind.
  Miss Rathboneasked the Prime Minister whether he can assure the House that His Majesty's Government have exerted their influence with the Portuguese Government to prevent the passage to Spain of munitions and combatants over the Portuguese frontier; and whether he is satisfied that the Portuguese Government are, in fact, maintaining an effective control?
  Mr. Butler: During the period when the British observers in Portugal were stationed on the Spanish frontier, they received every assistance from the Portuguese officials in carrying out their duties, and the reports received from the administrator of the observers showed that effective control of the frontier was being maintained by the Portuguese authorities. The observers were withdrawn from the frontier on 25th June, 1937, in consequence of the decision of the French Government to withdraw facilities from the international observers on the Franco-Spanish frontier. Since that date His Majesty's Government have received no evidence to show that effective control is not being maintained, and they have not felt called upon to make any communication on the subject to the Portuguese Government.
  Miss Rathbone: May I know why it has been thought necessary to make strong representations to the French Government to keep the frontier closed and to make no corresponding representations to the Portuguese Government?
  Mr. Butler: As I have told the hon. Lady before, I cannot accept her statement as a true picture of the position.
  Mr. Lloyd George: This is really rather important. There is no doubt at all, I understand—and I ask the hon. Gentleman—that representations were made by the British Government to the French Government as to the desirability of closing the French frontier. Have the same representations been made to the Portuguese Government with regard to their frontier?
  Mr. Butler: We must take it, and we have reason to believe that the Portuguese exercise effective control on their land frontier. With regard to our relations with the French Government, no formal representation or request was made by His Majesty's Government.
  Mr. Lloyd George: May I ask the hon. Gentleman whether he has any definite impartial information that the Portuguese are not allowing munitions to pass their frontier? His Majesty's Government have evidently had some information about the French frontier. What steps have they taken to ascertain that no munitions are passing across the Portuguese frontier? Have they taken any steps to make inquiries?
  Mr. Butler: I have given that information already to the House; it is that we have no evidence that there is not effective control, and that the Portuguese are not carrying out their duties in this respect.
  Sir A. Sinclair: On what is that opinion based? Have the Government made inquiries?
  Mr. Butler: That opinion is based on the information in our possession.
  Sir Nairne Stewart Sandeman: Has not Franco any number of ports without going through Portugal?
  Mr. Noel-Baker: Has the hon. Gentleman had reports from Portugal that nothing is passing the frontier?
  Mr. Butler: I have already told the House that I can only give the information at our disposal. I have given the information, which is that there is no evidence to show that effective control is not being maintained.
  Mr. Attlee: Why is it necessary always to have affirmative evidence with regard to a frontier which is on the side of the Spanish Government, while a mere negative reply is always enough for Franco's frontier?
  Mr. Butler: The right hon. Gentleman need not try to attribute any partiality to our side. We have adopted the policy of non-intervention, and, in spite of all the difficulties. we have adhered to it.
  Mr. Attlee: Why should the hon. Gentleman assume that this is a matter of partiality unless there is another explanation?
  Mr. Benn: Are we to gather from the Under-Secretary's answer that no representations were made to the French, or is he slipping out on the word "Formal"?
  Hon. Members: Answer.
  Miss Wilkinson: On a point of Order. May I put it to you, Sir, that on a matter of this importance, when a Minister has given an answer which is obviously intended to be misleading——
  Mr. Speaker: The hon. Lady must not impute motives.
  Miss Wilkinson: May I re-phrase my question? [HON. MEMBERS: "No! and" "Withdraw!"] I have no desire
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  to impute motives. I wish only to ask you whether, an answer having been given which, unfortunately, may be read in two ways, when a Front Bench Member asks for a clarification, so that we might know what the Minister did mean, it is really fair for the Minister to make no answer whatever?
  Mr. Speaker: The Minister has given about six or seven answers already.
  Miss Rathbone: In view of the unsatisfactory nature of the Minister's replies, I beg to give notice that I shall raise this matter on the Adjournment.
  Miss Rathboneasked the Prime Minister whether he has consulted authorities upon international law as to the relative position of British subjects engaged in ambulance work in Spain and of those engaged on British ships doing legitimate trade in Spanish territorial waters?
  Mr. Butler: The analogy lies rather in the nature of service rendered by these classes of persons than in their respective positions under international law.
  Mr. Gallacher: In view of the statement made by the Minister the other night, are we to understand that British ambulance men going to work in Spain can be murdered with impunity by any of the brigands on the other side?
  Miss Rathbone: Is the hon. Gentleman aware that several international experts have expressed strong disagreement with the statement of the Prime Minister that there is no difference between the two cases?
  Mr. Butler: Then perhaps they will study the reply which I have given to-day.
  Lieut.-Commander Fletcherasked the Prime Minister what reply has been returned to the note of the Spanish Government asking that an international commission should visit forthwith Spanish towns which have been subjected to aerial raids?
  Mr. Butler: The Spanish Government have been informed that His Majesty's Government are making every endeavour to arrange for the formation of a commission to proceed to France at an early date. Consultations are still being

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  carried on with a number of Governments, and I regret that I am not, therefore, in a position to make any further statement at this stage.
  Sir H. Croft: Will such a commission also visit other Spanish towns where there are allegations of massacres of civilians, and will the hon. Gentleman accept it from me——
  Mr. Speaker: The question asks only whether there has been a reply.
  Sir H. Croft: May I not ask whether the commission might not be extended?
  Mr. Speaker: Not on this question.
  Lieut.-Commander Fletcher: May we hope for the dispatch of this commission at an early date?
  Mr. Butler: That depends upon the answers of several Governments, but I sincerely hope so.
  Lieut.-Commander Fletcher: Is the matter being pressed?
  Mr. Butler: Yes, Sir.

  DISARMAMENT CONFERENCE (AERIAL WARFARE).
  Mr. A. Hendersonasked the Prime Minister whether His Majesty's Government have decided what instructions will be given to the British representatives at the September meeting of the Bureau of the Disarmament Conference; and whether efforts will be made to secure by international agreement a measure of air disarmament and the limitation of the air bombing of civilian populations?
  Mr. Butler: In reply to the first part of the question, no decision has yet been taken by His Majesty's Government. As regards the second part, I would refer the hon. Member to the Prime Minister's reply to the hon. Member for West Leyton (Mr. Sorensen) on 28th June.

  CHINA AND JAPAN.
  Mr. Dayasked the Prime Minister what reply has been made by the Japanese authorities in Tokyo to the representations made to them relative to the difficulties experienced by British ships which are unable to obtain wharfage
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  in the commercial harbour at Tsingtao; and will he give particulars of the local settlement that has been arrived at between the British naval and consular authorities with their Japanese colleagues on this question?
  Mr. Butler: The representations made to the Japanese authorities in Tokyo were informal, and did not specifically call for any reply. As regards the second part of the question, the Japanese Consul-General at Tsingtao has informed His Majesty's Consul-General that the Imperial Japanese Navy are prepared to accord facilities to British vessels on compliance with instructions given by the Japanese Naval Harbour Administration. There are, however, consequential difficulties involved by such compliance on the part of British shipping, as I have already stated in my answer to my hon. Friend the Member for West Lewisham (Sir P. Dawson) on 27th June.
  Mr. Day: Are shipowners still compelled to use sampans and junks for the transport of merchandise and passengers to this port?
  Mr. Butler: Yes, Sir.
  Sir John Wardlaw-Milneasked the Prime Minister whether he is aware of the strong opposition on the part of the European community to the proposal that there should be any evacuation of any part of the foreign areas in Hankow; and whether every effort will be made to retain His Majesty's vessels at Kiukiang to support and protect those who are there endeavouring to protect and maintain British interests?
  Mr. Chorltonasked the Prime Minister whether he will give an undertaking that the British business communities at Hankow and Kiukiang will not be evacuated except at their own request, and that His Majesty's gunboats will remain at these ports for the due protection of British interests and property?
  Mr. Butler: I am aware that there is a division of opinion amongst the British residents at Hankow regarding measures to be taken in the event of a Japenese occupation. Both at that city and at Kiukiang, the ultimate responsibility for making the best arrangements for the protection of British lives and property must rest with the authorities on the spot, in whose judgment my Noble Friend has

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  every confidence. As regards the movements of His Majesty's ships, I would refer to the answer I gave to my hon. Friend the Member for Bury (Mr. Chorlton) on 29th June last, to which I have nothing to add.
  Sir J. Wardlaw-Milne: Is my hon. Friend aware of the immense importance of British interests in this part of China, and of the necessity of doing everything possible to maintain those interests, especially seeing that if the evacuation of British residents took place it would probably have a very serious effect on our trade interests in the future—interests which, I may say, are probably much greater than those which exist in Spain?
  Mr. Butler: Yes, Sir, I am fully aware of the importance of those interests, and that is why the Government pay particular attention to this aspect of the question.
  Mr. Gallacher: Are not these interests there for the purpose of making profits.— [Interruption.]
  Sir J. Wardlaw-Milne: Is the Minister not aware that British interests in China represent a vast amount of employment?
  Mr. Gallacher: On a point of Order. I was only half through with my question. Am I not permitted to finish it? I think it is a very good question.
  Mr. Speaker: If it had been a little shorter it would have been better.
  Mr. Gallacher: As the question of profit arises in both cases, cannot the hon. Gentleman give the same protection to British interests in Spain as he is prepared to give to British interests in China?
  Mr. David Adamsasked the Prime Minister whether his attention has been drawn to the reply by the Japanese delegate at the committee on traffic in opium in its meetings at Geneva during the present month to the effect that 1,500 chests of Iranian opium, transported by a Japanese ship from the Persian Gulf to China, were imported by the Manchukuo Government for the purpose of consumption by the registered addicts of that country; and whether he will endeavour to ascertain whether the numbers of such registered addicts are increasing under Japanese guidance?
  Mr. Butler: As regards the first part of the question, this information was communicated to His Majesty's Ambassador at Tokyo by the Japanese Government, to whom an inquiry had been addressed as to the destination of the ship when it left Bushire. As regards the second part of the question, I am not in a position to make any statement, nor is it likely to be possible to obtain the information desired.
  Mr. Adamsasked the Prime Minister whether his attention has been drawn to statements by the Japanese delegate at the committee on traffic in opium that of 2,900 chests ordered by Japanese interests in the first three months of 1938, 300 chests were imported by a Japanese firm through Shanghai, these 300 chests being permitted by the North China provisional government in conformity with existing opium conventions; and whether, in view of the fact that existing conventions appear to allow an increasing import of dangerous drugs into parts of China under Japanese control, the British Government will press for the most rigid interpretation of these conventions, with a view to preventing a systematic demoralisation of a very large number of people?
  Mr. Butler: Yes, Sir; my attention was drawn to the statement made by the Japanese delegate at Geneva. As, however, he declared that the Japanese firm acted solely as shipping agents, no technical breach of the 1925 Convention has been committed by the Japanese Government. As also, the Convention of 1931, which limits the amount of manufactured drugs which may be imported by each country during the year, does not apply to raw opium, the tightening up of existing regulations would not achieve the object which the hon. Member has in mind.
  Mr. Adams: Does the Under-Secretary not agree that these Conventions appear to allow increasing imports of these dangerous drugs into China, and cannot His Majesty's Government take action in the matter?
  Mr. Butler: I fully realise the position, and I regret that the Conventions do not cover the sort of incident which the hon. Member brought to our notice.
  Lieut.-Commander Fletcher: Will the report of the proceedings at the League

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  on this subject be considered, and is there any doubt that the Japanese Government are encouraging the drug traffic in China with a view to demoralising the Chinese?
  Mr. Butler: The whole matter is under close consideration.
  Mr. A. Henderson: Will His Majesty's Government work in close co-operation with the United States Government to try to check this horrible traffic?
  Mr. Butler: Any steps we can take to check this traffic in co-operation with any Government will be necessary and important.
  Mr. Thorne: Is it not true that while we are considering these questions the Japanese are making the Chinese all drunk?
  Mr. Chorltonasked the Prime Minister whether he is aware that, since the Japanese military authorities took over the telegraph service in North China, British merchants' business cables in Tientsin are subject to serious delay in delivery and are often mutilated in respect of essential details, such as quantities and figures; and whether, failing satisfaction from the Japanese, he will endeavour to arrange for the transmission of these messages by wireless to and from Hong Kong?
  Mr. Butler: I have seen no recent official information on this subject, but my Noble Friend is now calling for a report from His Majesty's Consul-General at Tientsin.

  PEACE PROPAGANDA (BROAD CASTING).
  Mr. Marcus Samuelasked the Prime Miinster whether he will consider making representations to all foreign Governments, whether members of the League of Nations or not, as to the desirability of enlisting the service of broadcasting in the cause of peace; and whether, in any event, His Majesty's Government will take the necessary steps to initiate broadcasting of that character from this country?
  Mr. Butler: The International Convention on the Use of Broadcasting in the Cause of Peace was signed at Geneva on 23rd September, 1936, by representatives of 28 Governments, of whom eight subsequently proceeded to ratification. Three
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  other countries have acceded. An invitation to attend the conference was extended to non-members as well as members of the League and the Convention was open to accession by all countries. His Majesty's Government, having ratified the Convention, will observe its provisions.

  RUMANIA (JEWS).
  Colonel Wedgwoodasked the Prime Minister whether he has any information as to the deprivation of nationality rights of 80 per cent. of the Rumanian Jews and their consequent loss of livelihood; and whether he will make representations for the assistance of this minority in Rumania?
  Mr. Butler: I have no precise information as yet regarding the incidence of the Rumanian Law for the Revision of Civic Rights. The interest of His Majesty's Government in this matter remains as indicated to the House on previous occasions, and particularly in the reply given to the right hon. Member on 14th February by the then Foreign Secretary.
  Colonel Wedgwood: Does the hon. Gentleman deny that this law is de-franchising 80 per cent. of the Jewish population? Has he seen the telegram this morning dealing with the matter, and will he make representations on the lines of the policy laid down by the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden)?
  Mr. Butler: My right hon. Friend the late Foreign Secretary said that His Majesty's Government would continue to maintain their interest, and the right hon. and gallant Gentleman may take it that we continue to take the same interest.

  CAPITAL SHIPS (TONNAGE AND GUNS).
  Lieut.-Commander Fletcherasked the Prime Minister whether, following the recent agreement between this country, the United States of America, and France, he proposes to initiate discussions with the Japanese Government with a view to averting the necessity for resorting to battleships of 45,000 tons and gun calibres of 16 inches?
  Mr. Butler: In view of the unwillingness of the Japanese Government, both

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  before and during the escalation discussions, to furnish any information or assurances as regards their naval construction intentions, I fear that nothing would be achieved at the present stage by initiating discussions as proposed by the hon. and gallant Member. His Majesty's Government, however, are always ready to discuss this question with the Japanese Government, should the latter show any desire to do so.
  Lieut.-Commander Fletcher: In view of the Government's willingness to discuss the matter, will it be brought to the attention of the Japanese Government so that everything possible may be done to avoid the shocking waste of money represented by these increases?
  Mr. Butler: I hope that the question of the hon. and gallant Gentleman and my reply will be noticed by the Japanese Government.
  Mr. Alexander: Will the British Government initiate the conversations?
  Mr. Butler: I said in my original reply that I feared nothing could be achieved at the present stage by initiating discussions, as the right hon. Gentleman proposes.

  NAVAL AND MILITARY PENSIONS AND GRANTS.
  Mr. Dobbieasked the Minister of Pensions the number of fresh applications for disability pensions by ex-service men between 1st January, 1937, and 1st January, 1938, and the number which were established?
  The Minister of Pensions (Mr. Ramsbotham): During the year 1937, the number of fresh applications in respect of War disablement was 2,934. Of these, 17 per cent., or 492, were established.
  Mr. Holdsworth: Will the Minister consider setting up a committee of inquiry into the whole question?
  Mr. Ramsbotham: That question has been answered.
  Mr. Dobbieasked the Minister of Pensions the number of ex-service men in receipt of a disability pension on 1st January, 1937, and the number in receipt of the same in January, 1938; the number in receipt of a pension less than 100 per cent. on both dates; the number of
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  limbless men in receipt of a disability pension and the proportion of such receiving less than 100 per cent. pension; and the estimated cost to place all the men disabled through Service and in receipt of a pension on 100 per cent. allowance, and so remove them from competition for work in the industrial field?
  Mr. Ramsbotham: As the answer involves a number of figures I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.
  Following is the answer:
  Ex-service men in receipt of disability pension numbered, on 1st January, 1937, 444,000, and on 1st January, 1938, 436,000. Of these, the numbers in receipt of a pension less than the maximum were respectively about 415,000 and 409,000. The numbers of "limbless" pensioners, including in the term all classes of amputation from the loss of foot or hand to the loss of entire limbs, were, on the specified dates, respectively, 32,800 and 32,350. Of these about 10 per cent. were in receipt of maximum pension on account of the loss of two limbs, and the bulk of the remaining 90 per cent. of pensioners were drawing pensions of 50 per cent. and upwards. The cost of raising all disablement pensions to the 100 per cent. rate is estimated at an additional £31,000,000 for the first year.
  Major Milnerasked the Minister of Pensions particulars of any recent alterations which have taken place in the personnel and practice of the Special Grants Committee?
  Mr. Ramsbotham: As the hon. and gallant Member may have seen in the Press, I have appointed Mr. Charles Doughty, K.C., to be Chairman of the Special Grants Committee in place of Sir Edward Troup, K.C.B., K.C.V.O., whose health prevented him from accepting reappointment, and I have added to the committee Captain Frank Nicholl, late chairman of the Halifax, Todmorden and District War Pensions Committee. The Committee inform me that, apart from certain changes in procedure to which I referred in my replies to the questions addressed to me on 24th and 31st May, their practice in dealing with the class of case which the hon. and gallant Member no doubt has in mind, has not been affected.
  Major Milner: May we take it that Mr. Doughty will occupy the position of chairman of the sub-committee which deals with the deprivation of pensions of widows?
  Mr. Ramsbotham: Yes, Sir, that is so.
  Mr. Holdsworth: Will there be any change in the procedure of the committee?
  Mr. Ramsbotham: That is an entirely different question.
  Mr. Kelly: Is it the intention to take evidence rather than to follow the procedure of the past, when no evidence was taken?
  Mr. Ramsbotham: That, also, is a different question.
  Mr. Henderson Stewart: Will it be permissible to submit to the committee cases which have already been turned down?
  Mr. Ramsbotham: Perhaps the hon. Member will put that question down.
  Mr. George Griffiths: Will it be the same kind of evidence that the Minister spoke about at Monmouth the other day?

  AGRICULTURE.

    WHEAT SALES.
    Mr. T. Williamsasked the Minister of Agriculture what proportion of the 1,558,000 tons of wheat sold off farms in England and Wales in the year 1935–36 was of millable quality and qualified for deficiency payments, and how much of this wheat was used for flour by the millers, and similar figures for 1936–37?
    The Minister of Agriculture (Mr. W. S. Morrison): The figures of 1,558,000 tons and 1,118,000 tons which I gave in reply to my hon. and gallant Friend the Member for Newbury (Brigadier-General Brown), on 27th June, represent the total amount of millable wheat credited to growers in England and Wales under the Wheat Act, 1932, in 1935–36 and 1936–37 respectively, all of which qualified for deficiency payments. The figures also represent the bulk of the wheat sold off farms in those years. I have no information as to how much of the wheat was used by flour millers.
    Mr. Williams: Ought not the figure sought in the question be given to the
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    House so that we might know exactly to what extent we are subsidising poultry food and cattle food?
    Mr. Morrison: I should have to consider whether it is possible to get the information. The present rule is that the quality of the food is the standard by which deficiency payment is decided, and not the destination of the food.

    GOVERNMENT POLICY.
    Mr. T. Williamsasked the Minister of Agriculture what steps are taken by his Department to ascertain whether the best use is made of agricultural land; whether periodic inspections are made by inspectors or county agricultural committees; to whom their reports are submitted; and, further, to what extent he exercises power, and under what Statute, to insist that the best possible use is made of agricultural land?
    Mr. De la Bèreasked the Minister of Agriculture whether he will consider setting up a committee of inquiry and research to report on the agricultural position throughout the country?
    Mr. W. S. Morrison: Information is already available to me, both from my outdoor officers and from other sources, relating to the conditions of agriculture throughout the country, and I do not think, therefore, that any useful purpose would be served by the setting up of such a committee as is suggested by my hon. Friend. The information collected covers the use made of agricultural land, and confidential reports based on this information are submitted to me periodically. Inspections of individual estates, however, are not undertaken except in some cases for specific purposes, such as the administration of the statutory powers in relation to injurious weeds, which have been delegated to the county agricultural committees. As to the last part of the hon. Member's question, the policy of the Government is to give such assistance as it can to encourage the better use of the land, as is being done, for example, under the provisions of the Agriculture Act, 1937. It is not part of this policy, however, to use methods of compulsion.
    Mr. T. Williams: Are we to understand from the reply of the right hon. Gentleman that, in spite of the fact that he has gone over vast areas of agricultural land, he is still of the opinion that the best use is being made of the land?
    Mr. Morrison: I think that the question as to what is the best use of a particular part of agricultural land must be largely a matter of opinion and must vary with the economic conditions of the various commodities at different times. I am satisfied that the officers to whom I have referred give me sufficient information to enable me to keep in touch with the general situation.
    Mr. Williams: In view of the rather large number of subsidies given to this industry and of the further preparations the right hon. Gentleman is now making, is it not the duty of himself and the Government to insist that the best possible use be made of our agricultural land?
    Mr. Morrison: I think the only point of difference between the hon. Gentleman and myself is that we use the method of compulsion when it is necessary to get rid of injurious weeds, and that we do not use it in other cases; and that we endeavour by our policy to secure the best use of land.
    Sir Percy Hurdasked the Minister of Agriculture whether he is aware that Sir Daniel Hall, the former chief scientific adviser to the Ministry of Agriculture, has suggested that, inasmuch as a great part of the grassland which is officially designated as permanent pasture is now incapable of fertility even in time of emergency, a body on the lines of the Forestry Commission should be set up to use all available technical skill in bringing second-rate grassland into a productive state; and whether he proposes to take this or some alternative means to the same end?
    Mr. Morrison: I would remind my hon. Friend that the improvement of grassland is one of the principal aims of the Government's agricultural policy, and substantial assistance to this end in the shape of grants for the purchase of lime and basic slag is being given under the provisions of the Agriculture Act, 1937. These measures have been supplemented by increased facilities for technical advice to farmers furnished through the cooperation of the county agricultural education authorities and the agricultural colleges, and I hope to take further steps to increase these facilities in the near future. The Government do not feel that the proposal made by Sir Daniel Hall is
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    one which they could recommend to Parliament.
    Mr. De la Bèreasked the Minister of Agriculture whether he can give some figure as to the acreage of arable land which would fulfil the requirements of the Government's agricultural policy, and as to the number of agricultural workers on the land required to fulfil that policy?
    Mr. Morrison: The Government's agricultural policy is designed to encourage the production of the maximum volume of food consistent with a reasonable financial return to the producer, while at the same time maintaining the fertility of the soil. My hon. Friend will appreciate that it is impossible to associate this aim with any particular figure of acreage of arable land or of agricultural workers employed on the land.
    Mr. De la Bère: Does the Minister really mean to tell the House that the Government have no definite agricultural policy?
    Mr. Morrison: I should not at all like to be understood in that sense. What I said was that you cannot define an agricultural policy in any precise terms of acres or numbers of workers.

    POTATO MARKETING BOARD.
    Mr. Hepworthasked the Minister of Agriculture what factories are at present operated by the Potato Marketing Board; where they are situated; and what they produce?
    Mr. W. S. Morrison: I understand that the Potato Marketing Board do not operate any factories, but that during the past three seasons they have co-operated with the Farmers' Marketing and Supply Company, who have a factory at Wisbech where potatoes are dried for use as cattle feed.
    Mr. Holdsworth: Is not this another back way of using powers which the board are not entitled to use?
    Mr. Morrison: No, Sir; they are quite entitled to co-operate in this way.

    LAND DRAINAGE.
    Mr. Haslamasked the Minister of Agriculture whether, in considering the amendment of the Land Drainage Act, 1930, he will take into account the grievances of the residents of an area such

    23
    as Horncastle and district who, owing to the Act, find themselves saddled with a heavy rate burden out of all proportion to any benefits they could receive from drainage operations, either direct or indirect; and whether, in particular, he will consider more direct representation of such areas on the main spending authority or alteration of the basis of assessment of such areas so as to bring the rate into some relationship with benefits received or to make some statutory limitation of rate burden?
    Mr. W. S. Morrison: As I indicated during the Debate on the operation of the Land Drainage Act, 1930, in the House on 3rd November last, I am satisfied that a review of the provisions of the Act is necessary. In the course of that review I will consider the points referred to by my hon. Friend.
    Mr. Haslamasked the Minister of Agriculture whether, in view of the fact that the Third Witham District Internal Drainage Board have not yet considered the question of introducing differential rating into the area under their control in regard to which he reminded them of their powers a year ago, he will again communicate with them and remind them of the powers which they possess under the 1930 Act?
    Mr. Morrison: I have recently been in communication with the Drainage Board on the question of differential rating, and I understand that the matter was before the board at a meeting held on 28th June, when it was decided to levy a flat rate for the current financial year. In the circumstances, I do not think that any useful purpose would be served at the present stage by communicating again with the Drainage Board.

    CREDITS.
    Mr. De la Bèreasked the Minister of Agriculture whether he will now consider introducing a Bill to amend the Agricultural Credits Act, 1928, with a view to providing long-term credits at a low rate of interest to assist the increased production of home-grown foodstuffs?
    Mr. W. S. Morrison: I have nothing to add to the answer given to a similar question by my hon. Friend on 15th June, 1937.
    Mr. De la Bère: Are the Government unable or unwilling to grant these credit facilities?
    Mr. de Rothschild: Will the right hon. Gentleman cause a departmental inquiry to be made into this subject, in order to buttress him with arguments to substantiate his constant refusal?
    Mr. Morrison: As my hon. Friend was informed in answer to his earlier question, the matter is under consideration. In reply to the supplementary question of the hon. Member for the Isle of Ely (Mr. de Rothschild), I do not think that a departmental committee is necessary in this case.
    Mr. De la Bère: May I know whether it is the fact that the Government are not unwilling to do this?
    Mr. Morrison: If the Government were unwilling to do it, we should not be considering the matter at all.
    Mr. De la Bère: Why not do it now?
    Mr. Morrison: The matter is one of considerable difficulty and complexity, and it is not a matter that can be put into operation as easily as a question can be asked in the House of Commons.

    EXPERIMENTAL SLAUGHTER- HOUSES.
    Mr. T. Williamsasked the Minister of Agriculture how many applications were received from local authorities, persons or companies to erect experimental slaughter-houses under the terms of the Livestock Industry Act, 1937; the number of applications that have been withdrawn and the number still under active consideration; and what progress has been made in connection with the schemes?
    Mr. W. S. MorrisonI would refer the hon. Member to the reply given to the hon. Member for Barnstaple (Mr. Acland) on 14th June, indicating that the procedure adopted by the Livestock Commission has been to consult informally with local authorities and other bodies regarding the submission of proposals for slaughter-house schemes. I understand that the Commission have been in consultation with 25 local authorities and other bodies. Five local authorities have now intimated that they do not intend to proceed further with the matter, while three others have submitted definite and detailed proposals. The Commission are

    25
    not aware how many other submissions may yet be made, but I am informed that memoranda for the guidance of local authorities and other bodies will be published by the Commission in the course of this week with a view to facilitating the preparation of proposals and expediting the submission of detailed arrangements.
    Mr. Williams: Can the right hon. Gentleman give us any idea of how long it will be before the scheme for the first experimental slaughter-house is approved?
    Mr. Morrison: I am afraid I could not give any estimate of time that would be of any value. It is obviously very difficult from the point of view of the local authorities and the interests concerned in the matter.
    Mr. Williams: In view of the length of time that has elapsed already, may we take it from the Minister that, if the Livestock Commission should decide that none of these schemes can be accepted and applied, the Government themselves will undertake the job?
    Mr. Morrison: That is a hypothetical question in the present state of affairs. According to my information, there was trouble in the early days owing to the fact that some of the proposals were not sufficiently detailed to enable the Commission to form an opinion on them. They are now taking steps to issue information as to what particulars are required to be submitted with the application, and I am told that some of these proposals are sufficiently detailed for consideration to be given to them.

    WOOL CLIPS.
    Mr. Sextonasked the Minister of Agriculture what the Government are prepared to do to mitigate the hardship of sheep farmers, many of whom have now on their hands the 1937 and 1938 clips of wool which they cannot dispose of at a remunerative rate?
    Mr. W. S. Morrison: I have no information as to the proportion of the 1937 wool clip still in the hands of farmers, but I would point out that prices of wool in 1937 were well above the level of recent years, although there has been an appreciable decline this season owing to the general fall in world prices of wool, over which the Government has, of course, no control. The 1938 clip is only now being marketed. As regards the
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    question of action by the Government to mitigate the hardship of sheep farmers, I would refer the hon. Member to my replies to earlier questions on this subject.
    Mr. Sexton: Are not the Government prepared to insist that at least the clothing of British troops must be made from home-produced wool?
    Mr. Morrison: That is another question; perhaps the hon. Member will put it down.
    Mr. Holdsworth: Is the Minister aware that some home-produced wool is not suitable for that type of clothing?

    LIVESTOCK MARKET, BUNGAY.
    Mr. Loftusasked the Minister of Agriculture whether he is aware that the Livestock Commission have refused a licence for the livestock market at Bungay, which has been in existence for centuries except during a temporary abeyance in 1936; whether he has considered a petition signed by over 700 local inhabitants, the majority farmers in the neighbourhood, praying for the retention of the market; whether he is aware that recently several hundred pounds have been spent on the market to comply with the requirements of the East Suffolk County Council; and what action he proposes to take on the matter?
    Mr. W. S. Morrison: I am aware that the Livestock Commission, in exercise of their powers under the Livestock Industry Act, have refused to approve the use of certain premises at Bungay as a livestock market, and I have received the petition referred to. I am informed by the commission that no market was in operation at Bungay between 1900 and 1929, and that very few livestock sales took place during the period 1929 to 1937, there being none at all during the period referred to in Section 14 of the Act, namely, the year ended 30th November, 1936. It appears that the recent expenditure on improvements was incurred in ignorance of the position under the Act. Before arriving at their decision the commission, in accordance with the requirements of the Act, consulted interested parties and the Livestock Advisory Committee, and carefully considered all relevant factors. On the advice of the committee, however, the commission decided that the approval of the premises concerned would not be in the interests of efficiency and economy

    27
    in the marketing of livestock. The question of a refusal to approve the use of market premises in the above circumstances is one for the Livestock Commission, and I see no grounds for asking them to reconsider their decision regarding the market at Bungay.
    Mr. Loftus: Before a final decision is taken will my right hon. Friend cause a public local inquiry to be held at Bungay?
    Mr. Morrison: I can only call for such inquiries to be held when I have power to do so. Under the Livestock Industry Act, the power to refuse a licence when there has been no market in a specified time is a matter for the commission, and not for me.
    Mr. Loftus: I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.

    POULTRY INDUSTRY.
    Mr. Turtonasked the Minister of Agriculture whether he has any announcement to make on the Government's policy towards the poultry industry?
    Sir Gifford Foxasked the Minister of Agriculture whether his attention has been called to the report of the National Poultry Council stating that the total import from May, 1937, to April, 1938, of eggs in shell, liquid and frozen, is estimated at 4,082,681,180; whether his Department accepts this figure as approximately accurate; and whether, in that case, he can accelerate the announcement of his policy for the poultry industry?
    Mr. W. S. Morrison: I have seen the estimate to which my hon. Friend the Member for Henley (Sir G. Fox) refers, and have no reason to suppose that it is not approximately correct. I hope very shortly to be in a position to make a statement of the Government's policy in regard to the poultry industry.
    Mr. Turton: Is my right hon. Friend aware that the delay in announcing the Government's policy is leading a number of men to leave the poultry industry, and to a great diminution in the number of poultry kept on the holdings; and will he take steps to prevent irreparable damage being done to this important industry?
    Mr. Morrison: There has been no avoidable delay. Consultations have to take place between the industry itself and a number of associated interests. I hope that an announcement will be made very shortly, as I am anxious to deal with the matter.
    Mr. De la Bère: Is my right hon. Friend aware of the unsatisfactory state of affairs throughout the poultry industry?
    Mr. Gallacher: Is the Minister aware of the very great hardships caused to ex-servicemen and others engaged in the poultry industry in Scotland; and will he take it up with the Secretary of State for Scotland?
    Mr. Morrison: Of course, there is collaboration with my right hon. Friend the Secretary of State for Scotland in this matter.

  EDUCATION.

    MILK IN SCHOOLS.
    Mr. Dunnasked the Minister of Agriculture the parts of England and Wales where liquid milk is not being provided for school children; and what action has been taken with the Milk Marketing Board to correct this?
    The Parliamentary Secretary to the Board of Education (Mr. Kenneth Lindsay): Liquid milk is being provided for school children in all or some of the public elementary schools in all the 315 local education authority areas in England and Wales with the exception of the Scilly Isles, Morecambe and Pudsey. In Morecambe and Pudsey the absence of provision for the supply of liquid milk is not due to such milk being unavailable, but to a preference in these areas for dried milk, so that no purpose would be served by taking up the matter with the Milk Marketing Board.
    Mr. Dunn: May I take it that the complaint that was lodged some 12 months ago, that 1,009 schools in this country were not being provided with liquid milk, has now been corrected?
    Mr. Lindsay: The situation is better. I simply said that in all or some of the 315 local education authority areas milk is being provided. Actually, in schools where 93 per cent. of the children are, there is milk available.
    Mr. Dunn: May I ask, further, what is the meaning of "all or some"?
    Mr. Lindsay: Precisely what it says. In the 315 local education authority areas, either all of the schools are taking milk, or some of them are.
    Mr T. Smith: Is the Minister satisfied that, in those districts where milk is being supplied, it is supplied in sufficient quantities?
    Mr. Lindsay: Yes, Sir.
    Mr. Sexton: Is pressure being brought to bear on those authorities that are not providing milk?
    Mr. Lindsay: Representations have been made to them.
    Sir Percy Harris: Will the Board bring pressure to bear on the authorities to carry out this duty? Will the hon. Gentleman, where they are failing to carry it out, use every endeavour to persuade them to do so?
    Mr. Lindsay: I assure the hon. Member that pressure is being brought to bear, but you cannot force people to drink milk.

    RATES.
    Mr. A. Jenkinsasked the Parliamentary Secretary to the Board of Education whether, as the incidence of child population in this country varies sufficiently to cause substantial differences in the education rates levied by the education authorities, he will take steps to adjust the grant formulae so as to get a greater measure of equity in the education rates levied by the local authorities?
    Mr. Lindsay: The adjustment and equalisation of the various factors in the elementary grant formula are among the principal points now under discussion between representatives of the local education authorities and officers of the Board.
    Mr. Jenkins: When will the hon. Gentleman be in a position to make a statement with regard to the position?
    Mr. Lindsay: The matter is under consideration, and I would not like to give a specific date?

    EMPIRE SETTLEMENT.
    Sir H. Croftasked the Prime Minister whether time can be given to
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    debate the Motion dealing with migration standing in the names of the hon. and gallant Member for Bournemouth and 283 other Members?
    [That this House is of opinion that the time has now arrived for an early resumption of the movement of the population within the Empire, and urges His Majesty's Government to invite the representatives of the Dominion Governments to consider the possibility of making early preparations for settlement, and to indicate its readiness to grant facilities for approved schemes.]
    Sir J. Simon: I regret that the state of public business makes it impossible to hold out any hope of a special opportunity being given for the discussion of the Motion standing in the name of my hon. and gallant Friend.
    Sir H. Croft: In view of the fact that a large majority of the supporters of the Government support this Motion, will my right hon. Friend take every step to see that the Dominions will be consulted at an early date?
    Sir J. Simon: My hon. and gallant Friend will appreciate that it is not a matter of want of recognition of the importance of the subject. It is merely a question of time.
    Mr. T. Smith: Would not a discussion on the Motion show how fallacious it is at this time to expect large-scale migration?

    CHEMICAL RESEARCH (NEW COMPOUNDS).
    Mr. David Adamsasked the Chancellor of the Duchy of Lancaster, as representing the Lord President of the Council, whether he is aware that the firm of May and Baker, Limited, are obliged to refuse requests for supplies of newly-discovered chemical compounds, because of the dangers involved, until further research has been carried out; and what steps he is taking to expedite the necessary research in this and similar cases?
    The Chancellor of the Duchy of Lancaster (Earl Winterton): It is the ordinary and necessary practice in the case of new drugs that they should in the first place be subjected by specialists to carefully controlled trials, as regards their value and safety, in order to ascertain

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    whether the medical results warrant production on a large scale for general distribution. The hon. Member may have particularly in mind a new compound which is being tried in the treatment of pneumonia, and about which the firm named recently published a statement that the work was still in an experimental stage. The manufacturers have not so far thought it necessary to seek the aid of the Medical Research Council in this case, but it is understood that the requisite investigations are in active progress.
    Mr. Adams: Does the Minister not agree that in this very vital matter the Government ought to take a supervisory interest and, if necessary, give monetary or other assistance in the matter?
    Earl Winterton: No, Sir.

    COMPENSATION CLAIM (MR. J. R. BURCHILL).
    Mr. Parkerasked the First Commissioner of Works why Mr. J. R. Burchill was kept waiting five months before any compensation was paid him; why he has been refused compensation since April, although on 1st June he was officially pronounced still only fit for light work; and why none of his solicitor's letters have been answered in the last two months?
    The First Commissioner of Works (Sir Philip Sassoon): The claim for compensation in respect of the accident sustained by Mr. Burchill on 6th January last was not received until 20th April. Under Section 41 of the Workmen's Compensation Act, 1925, the amount was subject to a deduction in respect of relief granted to Mr. Burchill by the Essex County Council, and it was necessary to ascertain the amount payable to the council on this account before forwarding the balance to his solicitors. Payment was made on 11th May of the balance due at that date. The report of the medical examination made on 1st June indicated that Mr. Burchill was still disabled to a slight extent as a result of the accident, but, before the decision to make payment on the basis of the degree of partial incapacity disclosed could be communicated to his solicitors, notice was received from them of arbitration proceedings. With regard to the last
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    part of the question, all letters from Mr. Burchill's solicitors on the case have been duly answered.
    Mr. Parkerasked the Secretary of State for the Home Department whether, in view of the hardship inflicted in many cases, in particular in the case of Mr. J. R. Burchill, he will consider the amendment of the Employers' Liability Act so as to include servants of the Crown?
    The Secretary of State for the Home Department (Sir Samuel Hoare): As stated in my reply of 28th April, I am not aware of the cases of hardship to which the hon. Member refers. He subsequently referred me to the case of Mr. Burchill, but I understand on inquiry that liability for damages was not disclaimed on grounds of Crown exemption from actions at common law or under the Employers' Liability Act.

    PRIVATE MOTOR VEHICLES (WIRE- LESS RECEIVING LICENCES).
    Mr. Dayasked the Postmaster-General particulars of the number of licences that have been issued for the use of wireless sets on private cars; and has he any information as to the number of long-distance motor coaches that have been fitted with wireless receivers?
    The Assistant Postmaster-General (Sir Walter Womersley): Wireless receiving licences issued in respect of private motor cars and motor coaches are not segregated; and the information which the hon. Member desires could only be obtained by a special examination of the records of 8,500,000 licences. I do not think the expense of such an examination would be warranted.
    Mr. Day: Will the hon. Gentleman consider how the public can be better made acquainted with the fact that a licence is necessary for a receiving set in a motor car?
    Sir W. Womersley: The public is already acquainted with the facts. It is only necessary if the set is a fixture in the car.
    Mr. Day: Is the hon. Gentleman aware that the public cannot obtain information about these licences?

    UNEMPLOYMENT (GOVERNMENT WORK, EIRE LABOURERS).
    Major Procterasked the Minister of Labour the number of labourers from Southern Ireland who are employed on factory and other construction work for His Majesty's Government; and, with a view to reducing unemployment in Lancashire, whether he will consult with the appropriate authority with the object of employing men drawn from the Lancashire Employment Exchanges?
    The Parliamentary Secretary to the, Ministry of Labour (Mr. Lennox-Boyd): The information in the possession of the Department does not enable me to give the figure asked for in the first part of the question. As regards the second part, it is now the practice for a clause to be inserted in all important Government contracts making it obligatory upon the contractor to notify vacant situations to to the local Employment Exchange. In submitting for the contractor's consideration workpeople who appear to be suitable, the exchanges always select work-people on the local register first. Where it is necessary to bring workpeople from other districts in this country, the exchanges give first preference to those who come from areas of heavy unemployment.
    Major Procter: Can my hon. Friend give any information to the House as to why it is that some thousand of Irish labourers have been brought into Lancashire to do Government work, when we have unemployed miners and other people well able to do this work?
    Mr. Lennox-Boyd: As my hon. and gallant Friend knows, no restriction can be placed on the free movement of people of the British Empire into this country. If he has in mind in particular the works at Chorley, I can assure him that the vast majority of the people employed have been recruited in the United Kingdom.
    Mr. Rhys Davies: Is it not a fact, nevertheless, that a good number of Irish workers from Ireland have been employed there, and that labour was advertised for in Ireland?
    Mr. Lennox-Boyd: I have no information on that.
    Mr. Jenkins: Is it not possible to get the figures asked for in the first part of the question?
    Mr. Lennox-Boyd: That would lead to innumerable inquiries. It might lead to misunderstanding, and I think it is undesirable.
    Sir William Davison: Should there not be reciprocity in this matter, so that British labour in Southern Ireland is treated in the same way as Irish labour in this country?
    Mr. Benjamin Smith: Can the hon. Gentleman say whether the wages paid to Irish labourers, as against the wages paid to English labourers, is a reason for bringing them into this country?
    Mr. Lennox-Boyd: I have no information as to that.

    STRAITS SETTLEMENTS.
    Mr. Parkerasked the Secretary of State for the Colonies whether he is aware that public opinion in the Straits Settlement, both European and Asiatic, is strongly opposed to the proposed amendment (Section 157A) to the Penal Code; and whether the matter will be reconsidered?
    The Secretary of State for the Colonies (Mr. Malcolm MacDonald): As there is no Section 157A in the Bill referred to, I presume the hon. Member refers to the proposed Section 153A about which he asked me a question on 22nd June. I am able to inform him that the Section has now been deleted from the Bill. The matter is being dealt with in the new Sedition Bill, which is based upon the law in this country.

    HONG KONG (GIRLS, GUARDIANSHIP).
    Mr. Lunnasked the Secretary of State for the Colonies whether he can make any statement on the Hong Kong Government's recent decree requiring every person who has the custody of any adopted girl to register her with the Secretary for Chinese Affairs?
    Mr. M. MacDonald: The Legislature of Hong Kong has passed a new Women and Girls' Protection Ordinance which provides that the Secretary for Chinese Affairs may assume the guardianship of girls who have been transferred by their parents permanently, or for any consideration except marriage. He is empowered to make such orders as he thinks

    35
    desirable in the interests of these wards for their disposal or supervision. Registration is made compulsory in the case of girls under 21 who have been adopted into the custody of any person other than their own parents, and there is provision for inspection in the case of any of his wards or other girl whom he has reason to believe is in moral danger. The inspectorate staff is being increased for this purpose.
    Mr. Lunn: Are we to take it that mu-tsai, or child slavery, in Hong Kong will still continue in spite of the decree which has now been issued?
    Mr. MacDonald: Mu-tsai is gradually, by the process which is well understood in this House, being brought to an end in the Colonies.
    Lieut.-Colonel Sir Thomas Moore: Will my right hon. Friend see that the Hong Kong Government fully implement this decree which they have not done for some time?
    Mr. MacDonald: Certainly, that is so. The new ordinance tightens up the administration, and it is the intention of the Government to work it properly.

    PALESTINE (MOSLEM HOLY PLACES).
    Mr. Keelingasked the Secretary of State for the Colonies whether, in view of the fear expressed in certain quarters that the Jews of Palestine intend, and will be permitted, to take possession of the mosque of El-Aksa, in Jerusalem, and other Moslem holy places, he can make a statement on this subject?
    Mr. M. MacDonald: Yes, Sir. I am glad to have this opportunity of giving on unqualified denial to the suggestion which has been made, and which has, I understand, already been refuted by the President of the Jewish Agency in a telegram to the Head of the Jewish Community in Cairo. It is clear that the Jews have no designs on any of the Moslem holy places in Palestine, and in any case, as the House is aware, it is the policy of His Majesty's Government, under any scheme of partition, to retain permanently responsibility for the protection of holy places in the city of Jerusalem and
    36
    generally to secure the preservation of the rights of all religious communities throughout Palestine.

    UNITED SERVICES FUND.
    Mr. Dobbieasked the hon. Member for West Swansea, as representing the Charity Commissioners, who controls the balance of the fund known as the United Services Fund, what is the policy adopted for the purpose of allocating grants from the fund, and what is the amount now standing to the credit of the fund?
    Mr. Lewis Jones (Charity Commissioner): The balance of the fund known as the United Services Fund is under the control of the council of management of the fund; the 18th annual report of the fund shows the grants made by the council for the year ended on 30th September, 1937; and the balance-sheet at the same date shows the balance of the fund at that date as£1,421,863 16s. 11d.

    TIMBER (EXPORTS TO ITALY).
    Colonel Sandeman Allenasked the President of the Board of Trade (1) whether he is aware that a Liverpool firm supplied a sample of African timber four months ago to an Italian firm and that, whilst the Italian Government sanctioned the payment in respect of this transaction on 30th May last, no money has yet been transferred, although the buyer paid the necessary money into the Bank of Italy; and whether he can arrange for this and other similar cases to be reviewed at an early date;
    (2) whether his attention has been called to the difficulties of timber stockholders in the Liverpool district who are interested in the shipment of Candian and West African woods to Italy, arising from the unsatisfactory operation of the clearing machinery; and whether, in view of the fact that French stockholders are enabled as a result of the French-Italian agreement to get orders which formerly came to Great Britain, further representations can be made to the Italian Government to release money for goods supplied by British exporters as far back as 1935 and in respect of which money is available in the Bank of Italy and cannot be transferred to this country?
    Mr. R. S. Hudson (Secretary, Overseas Trade Department): I have no detailed information regarding the debts to which he refers, but, if he will send me full particulars, I shall be glad to look into the matter. I may add that the published text of the Franco-Italian Payments Agreement of 14th April, 1938, contains no reference to French re-exports of colonial produce.

    HACKNEY CARRIAGES AND PRIVATE HIRE VEHICLES (COMMITTEE).
    Mr. Benjamin Smithasked the Home Secretary whether he can now inform the House of the personnel of the Departmental Committee to be set up to inquire into the grievances of the London taximeter-cab drivers, the terms of reference, and the date of the first meeting?
    Sir S. Hoare: I am glad to be able to announce that Sir Clement Hindley has accepted an invitation from my right hon. Friend the Minister of Transport and myself to act as Chairman of this Committee, and the hon. Members for Sowerby (Mr. McCorquodale), Pembroke (Major Lloyd George) and Rothwell (Mr. Lunn) together with Councillor J. H. Meachin of Manchester, have accepted invitations to serve on the Committee. The terms of reference of the Committee will be as follows:
    "To review, first as regards London and secondly as regards other places in England and Wales, the legal provisions applying (a) to hackney carriages licensed to ply for hire and (b) to motor vehicles not so licensed which, not being public service vehicles, are used for carrying passengers for hire or reward (i.e., 'private hire' vehicles), to consider what services are or should be provided by each of the two classes of vehicle, and to report whether any changes in the existing law and procedure are desirable."
    As is indicated by the terms of reference, I propose to ask the Committee to deal first with the London position and to consider whether it is practicable to make any recommendation as regards London in advance of their other recommendations.
    It will be for the Committee to settle the date of their first meeting.
    Mr. Smith: While thanking the right hon. Gentleman for his reply, can he tell the House whether the Committee will report before the Adjournment for the Autumn Recess.
    Sir S. Hoare: I cannot give that undertaking before the Committee actually meet, but I know that they and I regard the question as one of considerable importance.
    Mr. Thorne: Is it intended that the Committee should issue an interim report?
    Sir S. Hoare: If the hon. Member will read the answer which I have given, he will see that that is the suggestion which I have made to the chairman of the Committee.
    Mr. Sorensen: Can the right hon. Gentleman say whether it is possible to have some kind of report regarding the position in London before the Summer Recess?
    Mr. De la Bère: Can anyone really tell me what the Government's agricultural policy is?

BUSINESS OF THE HOUSE.
Mr. Attlee: May I ask the Chancellor of the Exchequer two questions about business; first, whether he can state how far it is proposed to go to-night in the event of the Motion to suspend the 11 o'Clock Rule being carried, and, secondly, when it is intended that there shall be a Debate on the report of the Committee of Privileges?
Sir J. Simon: We propose to suspend the 11 o'Clock Rule in order to obtain the business up to and including the fifth Order on the Paper and the Committee stage of the Anglo-Turkish Agreement (Money) Resolution.
As regards the second question put by the Leader of the Opposition the report of the Committee of Privileges must, of course, be brought before the House, and time will be given to consider it. I am not, however, in a position to make arrangements to-day, and perhaps the question might be repeated later.
Motion made, and Question put,
"That the Proceedings on Government Business be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[Sir J. Simon.]
The House divided: Ayes. 216; Noes, 104.

Division No. 265.]

AYES.

[3.52 p.m.

Acland-Troyte, Lt.-Col. G. J.

Gilmour, Lt.-Col. Rt. Hon. Sir J.

Proctor, Major H. A.

Adams, S. V. T. (Leeds, W.)

Gluckstein, L. H.

Radford, E. A.

Agnew, Lieut.-Comdr. P. G.

Glyn, Major Sir R. G. C.

Ramsay, Captain A. H. M.

Allen, Col. J. Sandeman (B'knhead)

Graham, Captain A. C. (Wirral)

Ramsbotham, H.

Amery, Rt. Hon. L. C. M. S

Grimston, R. V.

Rankin, Sir R.

Anderson, Rt. Hn. Sir J. (So'h Univ's)

Guest, Hon. I. (Brecon and Radnor)

Rathbone, Eleanor (English Univ's.)

Aske, Sir R. W.

Gunston, Capt. Sir D. W.

Rathbone, J. R. (Bodmin)

Assheton, R.

Hambro, A. V.

Rawson, Sir Cooper

Astor, Hon. W. W. (Fulham, E.)

Hannah, I. C.

Rayner. Major R. H.

Baillie, Sir A. W. M.

Haslam, Henry (Horncastle)

Reed, Sir H. S. (Aylesbury)

Balfour, Capt. H. H. (Isle of Thanet)

Haslam, Sir J. (Bolton)

Reid, Captain A. Cunningham

Barclay-Harvey, Sir C. M.

Heilgers, Captain F. F. A.

Reid, Sir D. D. (Down)

Baxter, A. Beverley

Hely-Hutchinson, M. R.

Reid, J. S. C. (Hillhead)

Beauchamp, Sir B. C.

Hepworth, J.

Reid, W. Allan (Derby)

Beaumont, Hon. R. E. B. (Portsm'h)

Herbert, Major J. A. (Monmouth)

Remer, J. R.

Bennett, Sir E. N.

Hoare, Rt. Hon. Sir S.

Rickards, G. W. (Skipton)

Bernays, R. H.

Holdsworth, H.

Ropner, Colonel L.

Boothby, R. J. G.

Holmes, J. S.

Royds, Admiral Sir P. M. R.

Bossom, A. C.

Hope, Captain Hon. A. O. J.

Russell, Sir Alexander

Boulton, W. W.

Horsbrugh, Florence

Ruuell, S. H. M. (Darwen)

Bower, Comdr. R. T.

Howitt, Dr. A. B.

Salmon, Sir I.

Boyce, H. Leslie

Hudson, Capt. A. U. M. (Hack., N.)

Salter, Sir J. Arthur (Oxford U.)

Brass, Sir W.

Hudson, Rt. Hon. R. S. (Southport)

Samuel, M. R. A.

Briscoe, Capt. R. G,

Hunloke, H. P.

Candeman, Sir N. S.

Brown, Col. D. C. (Hexham)

Hunter, T.

Sassoon, Rt. Hon. Sir P.

Brown, Brig.-Gen. H. C. (Newbury)

Hurd, Sir P. A.

Scott, Lord William

Bull, B. B.

Joel, D. J. B.

Selley, H. R.

Bullock, Capt. M.

Jones, L. (Swansea W.)

Shaw, Major P. S. (Wavertree)

Burton, Col. H. W.

Keeling, E. H.

Shaw, Captain W. T. (Forfar)

Butcher, H. W.

Kerr, J. Graham (Scottish Univs.)

Simmonds, O. E.

Butler, R. A.

Keyes, Admiral of the Fleet Sir R.

Simon, Rt. Hon. Sir J. A.

Caine, G. R. Hall-

Lambert, Rt. Hon. G.

Smith, Bracewell (Dulwich)

Campbell, Sir E. T,

Leech, Sir J. W.

Smithers, Sir W.

Cary, R. A.

Leighton, Major B. E. P.

Somervell, Rt. Hon. Sir Donald

Channon, H.

Lennox-Boyd, A. T. L.

Southby, Commander Sir A. R. J.

Clarke, Lt.-Col. R. S. (E. Grinstead)

Levy, T.

Spears, Brigadier-General E. L.

Clarry, Sir Reginald

Lindsay, K. M.

Stewart, J. Henderson (Fife, E.)

Clydesdale, Marquess of

Lloyd, G. W.

Stourton, Major Hon. J. J.

Cobb, Captain E. C. (Preston)

Locker-Lampson, Comdr. O. S.

Strauss, E. A. (Southward, N.)

Cooke, J. D. (Hammersmith, S.)

Loftus, P. C.

Strauss, H. G. (Norwich)

Cox, H. B. Trevor

Mabane, W. (Huddersfield)

stuart, Hon. J. (Moray and Nairn)

Cranborne, Viscount

MacAndrew, Colonel Sir C. G.

Sueter, Rear-Admiral Sir M. F.

Croft, Brig.-Gen. Sir H. Page

M'Connell, Sir J.

Tasker, Sir R. I.

Crooke, Sir J. Smedley

MacDonald, Rt. Hon. M. (Ross)

Tate, Mavis C.

Crookshank, Capt. H. F. C.

Macdonald, Capt. P. (Isle of Wight)

Taylor, C. S. (Eastbourne)

Crossley, A. C.

MoEwen, Capt. J. H. F.

Thomas, J. P. L.

Davidson, Viscountess

McKie, J. H.

Thomson, Sir J. D. W.

Davies, Major Sir G. F. (Yeovil)

Maitland, A.

Thorneycroft, G. E. P.

Davison, Sir W. H.

Makins, Brigadier-General Sir Ernest

Titchfield, Marquess of

Dawson, Sir P.

Manningham-Buller, Sir M.

Touche, G. C.

De la Bère, R.

Margesson, Capt. Rt. Hon. H. D. R.

Tufnell, Lieut.-Commander R. L.

Denman, Hon. R. D.

Marsden, Commander A.

Turton, R. H.

Denville, Alfred

Mayhew, Lt.-Col. J.

Walker-Smith, Sir J.

Doland,G. F.

Mellor, Sir J. S. P. (Tamworth)

Wallace, Capt. Rt. Hon. Euan

Donner, P. W.

Mitchell, H. (Brentford and Chiswick)

Ward, Lieut.-Col. Sir A. L. (Hull)

Dorman-Smith, Major Sir R. H.

Moore, Lieut.-Col. Sir T. C. R.

Ward, Irene M. B. (Wallsend)

Dower, Major A. V. G.

Moreing, A. C.

Wardlaw-Milne, Sir J. S.

Duckworth, Arthur (Shrewsbury)

Morgan, R. H.

Warrender, Sir V.

Duckworth. W. R. (Moss Side)

Morris-Jones, Sir Henry

Watt, Major G. S. Harvie

Dugdale, Captain T. L.

Morrison, G. A. (Scottish Univ's.)

Wedderburn, H. J. S.

Duggan, H. J.

Morrison. Rt. Hon. W. S. (Cirencester)

Wells, Sir Sydney

Duncan, J. A. L.

Muirhead, Lt.-Col. A. J.

Whiteley, Major J. P. (Buckingham)

Dunglass, Lord

Nicholson, G. (Farnham)

Wickham, Lt.-Col. E. T. R.

Edmondson. Major Sir J.

Nicolson, Hon. H. G.

Willoughby de Eresby, Lord

Ellis, Sir G.

O'Connor, Sir Terence J.

Wilson, Lt.-Col. Sir A. T. (Hitchin)

Elliston, Capt. G. S.

O'Neill, Rt. Hon. Sir Hugh

Windsor-clive, Lieut.-Colonel G.

Elmley, Viscount;

Palmer, G. E. H.

Winterton, Rt. Hon. Earl

Emmott, C. E. G. C.

Patrick, C. M.

Withers, Sir J. J.

Emrys-Evans, P. V.

Peake, O.

Womersley, Sir W. J.

Entwistle, Sir C. F.

Petherick, M.

Wood, Hon. C. I. C.

Findlay, Sir E.

Plugge, Capt. L. F.

Fox, Sir G. W. G.

Porritt, R. W.

TELLERS FOR THE AYES.—

Fyfe, D. P. M.

Pownall, Lt.-Col. Sir Assheton

Mr. Munro and Mr. Furness.

NOES.

Acland, R. T. D. (Barnstaple)

Barnes, A. J.

Chater, D.

Adams, D. (Consett)

Barr, J.

Cluse, W. S.

Adams, D. M. (Poplar, S.)

Batey, J.

Cocks, F. S.

Adamson, W. M.

Bellenger, F. J.

Collindridge, F.

Alexander, Rt. Hon. A. V. (H'lsbr.)

Benn, Rt. Hon. W. W.

Cove, W. G.

Anderson, F. (Whitehaven)

Benson G.

Dalton, H.

Attlee, Rt. Hon. C. R.

Brown, C. (Mansfield)

Davidson, J. J. (Maryhill)

Banfield, J. W.

Charleton, H. C.

Davies, R. J. (Westhoughton)

40

41

Davies, S. O. (Merthyr)

Kennedy, Rt. Hon. T.

Sinclair, Rt. Hon. Sir A. (C'thn's)

Day, H.

Kirby, B. V.

Smith, Ben (Rotherhithe)

Dobbie, W.

Lansbury, Rt. Hon. G.

Smith, E. (Stoke)

Dunn, E. (Rother Valley)

Lathan, G.

Smith, Rt. Hon. H. B. Lees- (K'ly)

Edwards, A. (Middlesbrough E.)

Lawson, J. J.

Smith, T. (Normanton)

Edwards, Sir C. (Bedwellty)

Leach, W.

Sorensen, R. W.

Fletcher, Lt.-Comdr. R T. H.

Leslie, J. R.

Stephen, C.

Gallacher, W.

Logan, D. G.

Stewart, W. J. (H'ght'n-le-Sp'ng)

Gardner, B. W.

Lunn, w.

Strauss, G. R. (Lambeth, N.)

Garro Jones, G. M.

Macdonald, G. (Ince)

Taylor, R. J. (Morpeth)

George, Megan Lloyd (Anglesey)

McEntee, V. La T.

Thorne, W.

Green, W. H. (Deptford)

McGhee, H. G.

Thurtle, E.

Greenwood, Rt. Hon. A.

MacLaren, A.

Tinker, J. J.

Griffith, F. Kingsley (M'ddl'sbro, W.)

Maclean, N.

viant, S. P.

Griffiths, G. A. (Hemsworth)

Maxton, J.

Walkden, A. G.

Griffiths, J. (Lianelly)

Messer, F.

Walker, J.

Hall, G. H. (Aberdare)

Milner, Major J.

Watson, W. MaL.

Hardle, Agnes

Morrison, R. C. (Tottenham, N.)

Whiteley, W. (Blaydon)

Harris, Sir P. A.

Noel-Baker, P. J.

Wilkinson, Ellen

Henderson, A. (Kingswinford)

Paling, W.

Williams, E. J. (Ogmore)

Hicks, E. G.

Parker, J.

Williams, T. (Don Valley)

Hopkin, D.

Pethick-Lawrence, Rt. Hon. F. W.

Wilson, C. H. (Attercliffe)

Jagger, J.

Price, M. P.

Windsor, W. (Hull, C.)

Jenkins, A. (Pontypool)

Ridley, G.

Woods, G. S. (Finsbury)

Johnston, Rt. Hon. T.

Rothschild, J. A. de

Young, Sir R. (Newton)

Jones, A. C. (Shipley)

Sanders, W. S.

Jones, Morgan (Caorphilly)

Sexton. T. M.

TELLERS FOR THE NOES.—

Kelly, W. T.

Silverman, S. S.

Mr. Mathers and Mr. Groves.

ALIENS RESTRICTION (BLASPHEMY) (No. 2) BILL.
Mr. Thurtle: I observe that the hon. and gallant Member for Peebles (Captain Ramsay) is due to present at the Table to-day a Bill dealing with Aliens Restriction (Blasphemy), and I wish to ask you, Mr. Speaker, whether there is any limit to the number of times upon which a Member may introduce a Bill in the same Session on the same subject? I would draw your attention to the fact that last week the hon. and gallant Member for Peebles obtained the permission of the House to introduce this Bill under the Ten Minute Rule, and now, apparently, he is introducing exactly the same Measure by presenting it at the Table.
Mr. Speaker: I understand that the other Bill was withdrawn. This is not the same Bill.
Mr. Thurtle: If that be the case, may I submit to you, Sir, that this is rather a misuse of the procedure of the House?
Mr. Speaker: I understand that that was done in order to correct some mistake in the Bill.
Mr. Maxton: Do I understand, Mr. Speaker, that it is your Ruling that the Bill presented last week did not receive the First Reading in this House?
Mr. Speaker: I am afraid I do not understand the hon. Member.
Mr. Maxton: Let me put it this way. I am very anxious about this matter. Do we understand that the proceedings on the Measure last week have been completely abortive?
Mr. Speaker: What occurred last week was that the hon. and gallant Member had forgotten the names of the backers of the Bill. It is with my leave that he is able to introduce a new Bill.
Mr. Thorne: Do you think that a Member who is not in a position to name the backers of his Bill is good enough to represent people in this House?
Mr. Benjamin Smith: Are we sure that the hon. and gallant Member will not forget the substance of the Bill?
Mr. Gallacher: He not only forgot the backers of the Bill when he brought it in last time, but he forgot the subject of the Bill, and it is obvious that the hon. and gallant Member is not in a mental condition to introduce it.

BILL PRESENTED.
  ALIENS RESTRICTION (BLASPHEMY) (No. 2) BILL,
  "to prevent the participation by aliens in assemblies for the purpose of propagating blasphemous or atheistic doctrines or in other activities calculated to interfere with the established religious institutions of Great Britain, to amend the Aliens Restriction (Amendment) Act, 1919, and for other purposes connected therewith," presented by Captain Ramsay; supported by Sir William Davison, Mr. Erskine-Hill, Mr. McCorquodale, Sir Patrick Hannon, Captain McEwen, Sir John WardlawMilne, Miss Horsbrugh, Major Mills, Major Despencer-Robertson, Colonel Sandeman Allen, and Mr. Denville; to be read a Second time upon Monday next, and to be printed. [Bill 203.]

  BRISTOL CORPORATION BILL [Lords].
  Reported, with Amendments, from the Committee on Unopposed Bills (with Report on the Bill).
  Bill, as amended, and Report to lie upon the Table; Report to be printed.

  BAKING INDUSTRY (HOURS OF WORK) BILL.
  Lords Amendment to be considered upon Thursday, and to be printed. [Bill 202.]

  PUBLICATIONS AND DEBATES' REPORTS.
  First Report from the Select Committee brought up, and read;
  Report to lie upon the Table, and to be printed. [No. 148.]
  Minutes of Proceedings to be printed. [No. 148.]

ORDERS OF THE DAY.

  ANGLO-TURKISH (ARMAMENTS CREDIT) AGREEMENT BILL.
  Order for Second Reading read.
  4.0 p.m.
  The Chancellor of the Exchequer (Sir John Simon): I beg to move, "That the Bill be now read a Second time."
  The purpose of the Bill, as the House knows, is to confirm an agreement between His Majesty's Government and the Government of Turkey which is to be found in the Schedule to the Bill. The agreement is one of three agreements signed at the same time, on 27th May, 1938, and the three agreements are connected and have to be considered in relation to one another. They were all made the subject of Parliamentary publication and are to be found in three Command Papers with successive numbers—5754, 5755 and 5756. The agreement in the Schedule is the only one of the three which needs Parliamentary confirmation. Under this agreement the Government undertake to advance by way of loan to the Turkish Government such sums, not exceeding £6,000,000, as may be payable by the Turkish Government under contracts concluded by them for the purchase in the United Kingdom of material necessary for the defence of Turkey. Hon. Members will see that that is the substance of Article I of the scheduled agreement. These advances so made will bear interest at 1 per cent. above the Bank Rate, with a minimum of 3 per cent. up to 1st January, 1943, and thereafter at a rate certified by the Lords Commissioners of the Treasury to be the rate appropriate for a loan of similar term guaranteed by His Majesty's Government, with a minimum of 3 per cent. That is the substance of the first part of Article II. Those advances, together with approved interest, are to be repayable in equal half-yearly instalments over a period of 10 years, 1952 to 1962. I shall explain later why the year 1951 has been chosen. Of course the Turkish Government has the option to repay the advances at any time earlier.
  With regard to the nature of the material which the Turkish Government intend to purchase if this agreement is authorised, I should explain that they are to purchase it in the United Kingdom,
  60
  and the material is such that it may be supplied without in any way delaying or interfering with our own Defence needs, and that the Service Department concerned is fully in agreement with the arrangements contemplated. In any case, as the House will notice, if they examine the terms of the agreement, the agreement applies only to such contracts as are concluded with the prior approval of the Government of the United Kingdom. As I have said, this agreement was signed at the same time as two other agreements with the Turkish Government and has to be considered in connection with them. The surrounding circumstances which led up to the signing of these three agreements can be thus stated:
  In the first place, from the political point of view this country is glad to feel that the friendship which exists between the United Kingdom and Turkey rests on a secure and solid basis. Both countries have the same objective, the preservation of the peace of the world. Their friendship is not directed against any other country. Both the United Kingdom and Turkey desire to be strong for the purpose of improving and furthering the prosperity and standard of living of their own people. The friendship between this country and Turkey is very firmly based. The whole trend of Turkish policy in recent years justifies from the political point of view the proposals embodied in this agreement. Turning to the economic side, those who have studied the matter I am sure will confirm me when I say that the Government of the Turkish Republic during the last 16 years have made quite remarkable progress in their programme of reorganising the economic life of the country, of promoting domestic industry and of utilising the country's very considerable mineral wealth. In December last the Turkish Government adopted an economic programme, elaborate and very carefully thought out, providing for the intensive and orderly development of the mineral wealth of the country and for the promotion of the export of other Turkish goods. Minerals in the soil cannot, of course, be developed and exploited rapidly. All that needs months and years of preparation and very considerable capital expenditure. That is the circumstance which explains another of the agreements in this trinity, the one which

  61
  provides for advances through the Export Credits Department.
  Let me say a few words about the situation in Turkey as regards its internal financial administration. The Turkish Government undoubtedly have achieved very notable success in that department. They are one of the few countries, one of the very few Governments in the world which have succeeded in these difficult times in maintaining a balanced budget, and for that reason a Chancellor of the Exchequer may be allowed to look at them with some admiration. But as regards what is called technically the capacity to transfer, the Turkish position since the economic depression of 1931 has been somewhat difficult. In order to preserve the stability of the Turkish currency the Turkish Government decided that it was necessary to conduct their foreign trade with a large number of countries by means of bilateral clearing arrangements. Turkey has been completely successful in maintaining the stability of her currency, but some of the clearing arrangements, many of them indeed, have not worked with complete satisfaction. In the Anglo-Turkish clearing there are at present arrears amounting to about £1,500, 000.
  This is rather a technical matter. I think I understand it rightly when I say that Turkey has not succeeded in selling to us enough to provide the sterling which Turkey needs for its purchases from this country. Thus Turkey's capacity to transfer payments in foreign exchange at the present time is very limited, but as soon as more progress is made in carrying out the economic programme which Turkey has recently adopted, there is good and solid ground to hope that the situation in this respect will improve very greatly.
  I thought it right to give the House briefly, but I hope clearly, some account of the matter from those three points of view—political, economic and currency—because the arrangements we have made in these three agreements have to be read together, and these special circumstances afford the explanation of the three Agreements which were signed on 27th May.
  The Anglo-Turkish guarantee agreement does not require statutory authority. It is dealt with in Command Paper 5754.
  62
  That agreement relates to guarantees up to a total of £10,000,000 in connection with the exports to Turkey of United Kingdom goods which are required for development within the framework of the Turkish economic programme. Those guarantees can be given by the Export Credits Department under their existing powers and no further legislation is required to confirm that agreement.
  The second agreement of the three, Command Paper 5756, which is supplementary to the agreement of September, 1936, regarding trade and clearing, provides for improvements as regards the Anglo-Turkish clearing to which I have referred, and effect has been given to that by the Treasury Order which is dated 15th June last. That Order requires the approval of Parliament and in fact is to be found on the Order Paper to-day.
  Now we come to the remaining agreement with which this Bill is concerned. It relates only to armaments, Command Paper 5755, and is to be found in the Schedule to the Bill. But, all the same, these three arrangements all form part of a single scheme in so far as they all have as their origin and justification the economic programme of the Turkish Government, which on the one hand requires capital goods, and on the other hand should in a year or two's time afford sufficient resources for these repayments both of the amounts covered by the guarantee agreement and the further credits provided in the armaments agreement. That is all subject to the passing of this Bill.
  If the House is interested in the details, hon. Members will see in the Schedule, on page 5 of the print, in line 5, that the agreement was signed in duplicate on 27th May. Looking back to Article 4, at the bottom of page 4, hon. Members will see a provision that the agreement shall be ratified and the instruments of ratification exchanged at Angora, and that the agreement shall enter into force from the date of the exchange of ratifications. We shall be ready to exchange ratification very shortly after the authority of Parliament is obtained. I promised earlier to refer to the fact that repayments are timed to begin in 1952. The reason is this: The repayment of the credits covered by the guarantee agreement (the export credits agreement) should be completed in the year 1951. That would happen first.

  63
  That is why the armaments credit agreement provides that the repayment of the credit for defence material should be completed between the years 1952 and 1962.
  Mr. Benson: Are there any details laid down as to the repayment of the £10,000,000 credit?
  Sir J. Simon: If the hon. Member will refer to Command Paper 5754, that is the one concerning the Anglo-Turkish Guarantee Agreement, he will see the position, but if it is necessary that point can be dealt with by the Secretary to the Overseas Trade Department.
  Sir Arthur Salter: The right hon. Gentleman has referred to the Schedule which has been agreed between the Turkish Government and His Majesty's Government, but I do not see it on the Paper. I cannot find it.
  Sir J. Simon: That, no doubt, is the point put by the hon. Member for Chesterfield (Mr. Benson) which I did not at the moment apprehend. I agree that it is relevant, and perhaps the best way will be for the Secretary to the Overseas Trade Department to deal with it. I must make the observation that the transaction embodied in this Armaments Credit Agreement is admittedly an exceptional transaction, but it is justified we think, and we hope the House will also think, by the circumstances to which I have referred. The usual practice when armaments are supplied by this country to other countries is that this country expects to be paid in cash, or if they are supplied by private manufacturers here then, of course, the terms of payment are such as may be arranged between the foreign Government and the contractors. That is the usual practice and there is no reason to depart from it in the ordinary case, but, as I have said, the combination of considerations which I have summed up to the House do, we think, justify the present admittedly rather exceptional arrangement.
  I should like to add, in conclusion, that it has been a matter of special satisfaction to His Majesty's Government that it has been possible to conclude this agreement with Turkey. It does not mean, of course, that His Majesty's Government have in any way overlooked the desirability of promoting to the greatest possible extent our financial and economic
  64
  relations with other foreign countries. That, of course, is a matter outside this Debate altogether, but, nevertheless, it is a matter which is and will continue to be considered by the Government. These things cannot be dealt with on the basis of any fixed precedent, general formula or special rule. There must be in each case a consideration of the circumstances, as they particularly affect each separate country. I apprehend that it will not be in order for me to develop that aspect of the matter at greater length as it is not relevant to this Bill, but it may be sufficient for me to emphasise that it is not the desire of His Majesty's Government, and it can be safely said that it is not the desire of the Turkish Government, that the agreements successfully concluded between them should be regarded as other than that of a general policy to promote international economic relations.
  Mr. Stephen: Do I understand that this agreement means that the budget of this country is to be unbalanced to an additional amount of £6,000,000?
  Sir J. Simon: No. It will mean that these advances are made on the terms of this agreement as other advances are made, and except in that sense it will not have that effect.
  4.19 p.m.
  Mr. Dalton: This Bill suggests a number of very diverse reflections. In the first place, we are asked to assent to a new procedure in so far as the Money Resolution is to be presented after the Second Reading of the Bill. Therefore, we are not unduly limited by a tightly drawn Resolution in discussing the general principles of the Bill. That we welcome. It is due to a decision of this House that this new procedure has been adopted. It represents another example, for which we may be grateful in these times, of the successful resistance by Parliament to an attempted undue encroachment by the Executive. The second consideration the Bill raises is its financial aspect. This relates to the export credits and guarantee arrangements. This is a device introduced since the War, and it has been introduced here on a considerable scale. It illustrates the decadence of the City of London. The Chancellor of the Exchequer has told us of the strong financial and economic position of modern Turkey, and yet if trade is to be done with this prosperous and progressive

  65
  country, the ordinary agencies of private finance are inadequate or unwilling to carry the risks, and, therefore, the Government have to come in.
  I make no complaint of the Government's intervention and activities in these matters, but I would point to the corollary. To-day the spirit of the old merchant adventurers seems to be dead. In the old days persons desiring to trade with Turkey would not have come to the Government and asked for the backing of a Government guarantee. We have here to-day another illustration of the general truth that our financiers to-day prefer the palm without the dust; the rake-off without the risk. They seek safe profits, guaranteed by the Government. Under this provision you are socialising the risks, but not the profits. There will no doubt in future be many more examples of Government guarantees and guidance of trade, and I think we shall have to draw the proper conclusion, that, if we are to socialise the risks we must socialise the profits as well.
  The third consideration which this Bill suggests is that, in so far as the effect on trade is concerned, it is quite clear that, owing to a lack of enterprise which now prevails among private traders, the Government have effectively intervened to increase trade. That is to be welcomed. International trade has got into a jam, and as private agencies have not availed to lift it out, therefore the Government are effectively intervening to make a considerable amount of work in this country. We welcome that, although we regret that private traders have failed to blaze the trail. Bi-lateral arrangements of this type, with countries politically friendly to us, may be one of the best steps we can take at the present time in promoting that revival of international trade, which we all desire, and strengthening those countries which are properly minded towards the large issues of international policy.
  That brings me to the fourth consideration, the bearing of this arrangement on foreign policy. Although it is the Chancellor of the Exchequer who has introduced the Bill it is quite clear that this is an act of foreign policy. The Government have almost wrecked the League of Nations. The Chancellor of the Exchequer did not mention the League of Nations this afternoon, nor did he men-
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  tion the obvious fact, which is one of the reasons why my hon. Friends do not intend to oppose the Second Reading of this Bill—the fact that Turkey is an extremely loyal member of the League of Nations. That is a fact not worth mentioning by the Chancellor of the Exchequer. The Prime Minister made a long speech on Saturday dealing much with foreign policy, but he did not once mention the League of Nations. Lest there should be any misunderstanding this afternoon let me again say that we are profoundly disturbed by the track which British foreign policy is following. Indeed, unless such a policy as is hinted at in this Bill is pursued much more persistently and intelligently and on a larger scale, we may find ourselves in a very serious situation.
  I am anxious not to travel too far into generalities about foreign policy, but I would ask what are we doing here? We are helping Turkey to arm herself. That is the intention of these provisions. That may be wise. It probably is. This is a new precedent. Arms were deliberately excluded by Parliament from the Bill authorising export credits and, therefore, this Bill is to put this particular operation in order. You are helping Turkey to arm herself, and of that general intention we make no complaint. But are you sure that there are not other States whom you should help to arm, perhaps more urgently, than Turkey? You have not even allowed, let alone helped, Spain to arm herself, and, passing to the Far East, are you sure that a Bill which should take priority over this is not a Bill allowing China to arm herself in order to resist the aggression of Japan, which, if pursued, may well threaten the whole structure of the British Empire? Are the Government sure that their priorities are right? May we hope that if the House of Commons passes this Bill designed to help Turkey to arm herself, the Government will follow it up by another Bill designed to help China to arm herself? I believe that persons who have been giving serious attention to these matters are not irrevocably or unanimously against such a Bill being introduced.
  Turkey, I repeat, is a loyal member of that League of Nations which members of the Government no longer even mention. It has been placed on the list of things which are unmentionable. Turkey is a loyal member of an unmentionable

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  organisation, and that is a factor which has weighed heavily with my hon. Friends in deciding not to oppose the Second Reading of the Bill. Turkey was defeated in the last War, but none the less has adjusted herself to the conditions of the new chapter which opened after the War, and has shown an admirable psychological example to certain other countries. We were all glad to read lately of the settlement arrived at after some friction in respect of the Sanjak of Alexandretta, which is yet another valuable proof of the desire of the present Turkish Government for conciliation and friendly discussion with her neighbours the French and Syrian Governments. So far as the Eastern Mediterranean is concerned, Turkey is undoubtedly a force making for peace and against possible aggression. In 1935 this country had the pledged support of Turkey when it was mistakenly supposed in Turkey that the speech made by the present Home Secretary at Geneva was something more than an electioneering calculation.
  In 1935, when it was thought that this country was going to take the lead in defending the Covenant of the League against violation by the Italian Government in respect of Abyssinia, the Government of this country had Turkey wholeheartedly on their side. At that time we had with Turkey, as we had with Yugoslavia and with Greece, a tight pact of mutual guarantee against aggression, which was very valuable during those difficult months. Then, in order not to offend Signor Mussolini, the Government threw away that pact. They threw away Turkey at that time in order not to offend Italy. We would much have preferred that pact of mutual guarantee between this country and Turkey to have been developed and generalised among other States members of the League in Eastern and South-Eastern Europe. Instead of doing that the Government retreated, even from the one-half movement they had made towards the proper organisation of collective security; and since that time all that part of the world, Eastern and South-Eastern Europe, stretching down to the extreme end of the Balkan Peninsula and the territory of Turkey, partly in Europe and still more in Asia, has been in doubt and demoralisation because those countries do not know where the British Government stand. I hope that the
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  Measure now before us indicates and forecasts a rather firmer stand in those parts of the world, where we have many potential friends if only we looked as though we were desiring their friendship and were prepared to organise and build up a great system of mutual benefit through trade and mutual benefit through security against aggression from whatever bullying Power might otherwise take advantage of what seemed to be weakness.
  The new Turkey has a good record in the respects which I have mentioned in addition to its record of economic and financial reconstruction which the Chancellor mentioned. The new Turkey, moreover, was one of the first States to recognise the need for friendship with the new Russia. For a long time the relations between Angora and Moscow were more cordial than the relations between any two Powers in the Eastern part of Europe and Western Asia. Turkey gave the lead in seeking to bring the Soviet Union into effective co-operation with her neighbours, a lead which might well have been followed by others, and in that respect too, the present rulers of Turkey are realistic judges of what Powers stand for peace and what Powers stand for other things. They have in this respect given an example which is worthy of being followed.
  I should like now to say a few words about geography. Turkey is a key State in the Eastern Mediterranean geographically as well as in other respects. Let the House consider for one moment, if the Dardanelles had been in the hands of our friends in the last War, what a changed chapter of history would have been written. If the Dardanelles, from the beginning of the last War, had been in the hands of our friends, that war could barely have lasted two years; we should have saved millions of human lives, we should have saved many of the most precious of the lives that were lost, including those magnificent Australians and New Zealanders who were battered to pieces on the Dardanelles—we should have saved all that, and we should have kept contact all the time, through the Black Sea, with Russia. It is only necessary to compare the tragedy of what occurred with the possibilities of what might have been to realise the immense importance of a friendly Turkey

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  in years to come. This country's position in the Western Mediterranean is not so strong that the Government can afford, as indeed they have shown by introducing this Bill, to be indifferent to the possibilities of support in the Eastern Mediterranean. Spain, as far as the British Government can influence the issue, is being handed over as rapidly as possible to General Franco, supported by German and Italian forces. The Government are selling out in Spain. Gibraltar is commanded by enemy guns.
  Mr. Godfrey Nicholson: On a point of Order. Is there any limit to the range of subjects that can be discussed on this Bill?
  Mr. Dalton: Further to the point of Order. I submit to you, Sir, that I am speaking of the geographical conditions in the Mediterranean. I am arguing that recent events in the Western Mediterranean have rendered it especially desirable that our position in the Eastern Mediterranean should be safeguarded. That proposition I am relating to the Bill.
  Mr. Speaker: I do not think the hon. Member for Bishop Auckland (Mr. Dalton) is out of order. Of course, the Bill being one that deals with Turkey, the Debate must be confined to the question of how it affects Turkey. The hon. Member was in order in dealing with the geographical position.
  Mr. Benson: Further to the point of Order. This Bill introduces a very novel principle and I respectfully submit that hon. Members are entitled to argue for or against that principle, not only as it applies to Turkey, but as to whether it should or should not be extended to other countries.
  Mr. Speaker: No, hon. Members would not be in order if they did that. The conditions are so totally different that the same arguments as are applied to Turkey on this Bill could hardly be applied to other countries.
  Mr. Benson: Assuming that there are other countries to which the arguments that apply to Turkey would also apply, would hon. Members be within your Ruling if they referred to those other countries?
  Mr. Speaker: No, not on this Bill. In this instance, hon. Members must confine themselves to Turkey.
  Mr. Dalton: I thank you for your Ruling, Sir, and I assure the hon. Member for Farnham (Mr. Nicholson) that I was moving as rapidly as he would permit me from West to East. I reassert, under the shield of the Ruling which has just been given, that this is a geographical question within the Mediterranean, and it is idle, in considering the strength of the case for this Bill, to ignore the state of affairs not very far away at the Western end of that sea. I have briefly indicated the great concern which hon. Members on this side feel, and which I believe is felt by many hon. Members opposite, although they may not be so vocal or explicit, about the way in which in the Western Mediterranean the British Empire is rapidly being counted out. Gibraltar, I repeat, is menaced by enemy guns. Malta, in the judgment of many experts, would be utterly untenable in the event of war. Therefore, let us look at the Eastern Mediterranean, and consider what harbours of refuge for harassed British ships can be found in that part of this inland sea. Our position in the Western Mediterranean has been so seriously compromised that we must try not to lose Turkey as well. No doubt that was in the mind of the Cabinet when they authorised the presentation of this Bill. I congratulate them on having at least that minimum of sagacious appreciation of the Mediterranean position. If collective security is to be built up again, and if, to quote a phrase which I have used before and which was adopted by the Labour party at their last annual conference, we are to have that emphatic superiority of armed force on the side of States loyal to the League as against aggressors, then we shall need, among others, a well-armed and friendly Turkey, a member of the League and loyal to her obligations under the League, as indeed we shall likewise need other countries in Eastern, South Eastern and Central Europe, which, in pursuance of your Ruling, Mr. Speaker, I will not name or further discuss.
  A future Labour Government, seeking to rebuild the ruin which this Government has made, will need such a Turkey, well armed, friendly and loyal to the League, and it will desire to co-operate with such

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  a Turkey when the time comes for the right hon. Gentleman the Chancellor of the Exchequer to cross the Floor, as well as to move southwards from Spen Valley. For that reason, because in those days we shall need this aid, my hon. Friends will not oppose the Second Reading of this Bill. We hope that this Measure will be followed up. I have in my possession a remarkable book, by a most prolific writer—"Bloodless Invasion" by Paul Einzig. It was sent to me, and no doubt to many other hon. Members. It deals with the Turkish question and allied questions of German penetration, political and economic, in parts of Europe reaching towards Turkey. I hope it will be widely read, for whether or not one agrees with all of it, it is most relevant to these matters. It is a very clear statement of what is taking place, and of those practices, particularly by the present rulers of Germany, against which we hope the Government are going to guard and against which I suspect they are seeking to guard, in the particular case of Turkey, in introducing this Bill. For if the Government had remained as inactive in regard to Turkey as they have in regard to many other countries in that part of the world, Turkey would before long had been brought effectively within the German orbit.
  This Bill illustrates a new line of departure; it is an act of foreign policy, and it is an act of financial and economic policy. In itself, provided it forms part of a clearly co-ordinated plan for restoring the sovereignty of the League and the forces of collective security, it is welcomed by hon. Members on this side. We have no confidence that it will be properly used in that connection by this Government, for they have let us down too often before; but we believe that it is, in itself, apart from the intention that may be in the mind of the Government, a wise Measure and that it might be one of the foundation stones of a new building which another Government, more loyal to the League, might build hereafter. Therefore, we shall not oppose the Second Reading.
  4.42 p.m.
  Mr. Boothby: I do not know whether the hon. Member for Bishop Auckland (Mr. Dalton), in his concluding sentences, was making an appeal to the Chancellor
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  of the Exchequer to join the next Labour Government as Chancellor of the Exchequer if and when hon. Members opposite come into power, but in any case, I am sure that all hon. Members enjoyed his jovial speech, and are very glad that he has welcomed the agreement with Turkey. The hon. Member rather contradicted himself, because he started by complaining very bitterly about the lack of enterprise on the part of our traders and manufacturers in not having themselves built up, unaided, an international trade with Turkey and other countries. He said that before the War our traders would haves had enough enterprise to have concluded whatever arrangements were necessary for doing profitable trade with Turkey without appealing to the Government for help. In his concluding passage, however, the hon. Member pointed out that if the British Government did not show some form of activity in regard to trade with the countries of Central and Eastern Europe, we should very soon lose the whole of it to Germany.
  Mr. Dalton: That is another illustration from another angle of the same thing—a lack of enterprise and confidence on the part of the people now engaged in our financial arrangements.
  Mr. Boothby: I submit that under present conditions it is not possible for private manufacturers and traders in this country, without any support or assistance from the Government, to compete unaided against Field-Marshal Goering and the whole of the tremendous apparatus he has built up in Germany, with the whole resources, financial and economic, of the State marshalled behind him. I do not think it can be said that British traders are really lacking in enterprise if they cannot compete against those methods. I take Germany as one example, and it would not be in order for me to go into all the methods that are adopted there, but I endeavoured to outline them in the House in a recent Debate. I submit to the House that in present conditions, when there is so much economic control in Europe by the Governments of all countries—and I certainly do not exclude Russia—when there is also an international situation which, until quite recently, was extremely tense, and when there are still carried over from the crisis of 1931–33 a large number of commitments in respect of many European

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  countries which are still frozen, it is very difficult indeed for any private organisation, however powerful, to break its way through and restart trade.
  I, for my part, welcome the agreement warmly as I think the whole House does. At least, it reminds us that there is a good as well as a bad side to international affairs. During the last few months many of us have been inclined to think of the foreign situation solely in terms of bombs and guns and war, and other horrors of that kind. But there is a good side to international affairs. There is such a thing as international trade, upon which the industrial greatness and prosperity of this country was founded and built up, and it is a good thing that His Majesty's Government are taking this constructive step, which, I hope, may be the first of many to help us to regain our international trade.
  Many people say nowadays that we ought to cut out Europe altogether and concentrate upon trading with our own Dominions and Colonies. They say that we ought not to risk our money in countries like Turkey and the other countries of Central and Eastern Europe. But we must not forget that there is a tremendous potential purchasing power in those countries, based upon their populations, if upon nothing else; and we cannot afford to ignore them. Turkey is a thickly populated country and there are other countries with populations just as great, whose lack of purchasing power is only temporary. Those countries are at the present time suffering from dire poverty, but if given a chance they could be made great consuming markets which might, in the long run, benefit not only this country but our Dominions as well.
  I, therefore, venture to suggest that the Government will do good both to this country and to the Empire as a whole by concentrating some attention upon the great populations of Central and Eastern Europe. It is said in some journals which have been critical of this agreement that we shall only lose more of our capital by it, in the way that we have lost so much capital in the past. There are two sides to that argument. Although we have from time to time lost considerable amounts of capital by the investments which we have made abroad during the last 50 to 100 years—in South America for instance—we have reaped in profitable and thriving trade and industry far more
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  value out of those investments than we have lost. We cannot hope to exist as the centre of a great Empire, or to sustain this enormous, largely artificial, population, unless we have a great international trade. I congratulate the Government upon having taken this step—as I have said I hope it will be the first of many—to open up trade in this most valuable part of the world.
  One of the difficulties, as the hon. Member for Bishop Auckland pointed out, is that in order to "unfreeze" existing commitments, to pay interest upon such loans as they have received, and to pay for such goods, capital goods particularly, as they desire, these countries must be able to sell some of their goods in this country. It is to that problem, I think, that His Majesty's Government are now directing their attention; and it is very important, because, as long as you had the frozen commitment to which the hon. Gentleman referred in respect of Turkey, it was impossible for private manufacturers or anybody else to open up a profitable trade with Turkey. Exactly the same thing applies to-day, in the case of Poland and Rumania, where you have in rather different forms similar frozen situations which, by the judicious expenditure of not more than a few millions of pounds could be liquidated, thus opening up the way for the further extension of credits—medium-term credits from the Export Credits Guarantee Department—and for trade on a considerable scale.
  There is one final observation I would make. However much you may arrange to purchase from these countries, however much you may extend your export credit guarantees, however much their Governments may be prepared to meet you, there remains one tremendous risk which will deter private traders and manufacturers in this country to a large extent unless it can be overcome. This is a purely political risk—the risk of a European war. If a European war comes, we shall all be more or less "done in" anyhow; and I suggest that the Governnment might consider the possibility of some method of guaranteeing manufacturers and traders in this country, under this agreement and similar agreements, against that risk of war which weighs so heavily on their minds at the present time. If they try to insure against it privately they will have to pay such large premiums that Turkey will have to pay a great deal more for

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  the capital goods which she receives than would otherwise be the case.
  It seems to me that no private organisation, no private insurance company, under existing conditions, can afford to run the risk of insuring on reasonable terms against the possibility of an outbreak of war in Europe. That, at least, is a risk which I think His Majesty's Government might well take, because, after all, it is up to them to avoid a European war. They know the risks much better than anybody else, and I believe if they were prepared to insure some of our traders and manufacturers against that risk, not even the hon. Member for Bishop Auckland would say that that was undue or indefensible support of private enterprise by the Government of this country. That kind of insurance represents just the kind of Government assistance to industry which would be most valuable at the present time. I would remind hon. Members once again that we are no longer living in those palmy pre-war days, when private traders and manufacturers could compete with each other on equal terms and let the best man win. We are up against some very formidable economic organisations to-day, and unless some effective support is given to them by the Government, I do not see how we can expect British traders to compete against the forces which confront them on the Continent of Europe.
  4.53 p.m.
  Sir Percy Harris: Twenty years ago if a proposal of this character were put before the House of Commons it would have been considered impossible. But the world is changing rapidly and ideas are being adapted to new circumstances. If a Bill of this kind had been presented to the House before the War or even a few years ago, it would have been regarded as a first-class Measure. The Bill establishes a precedent and, according to conventional ideas, a rather bad precedent. Encouraging a foreign country to purchase armaments in this country shocks our ordinary susceptibilities.
  Mr. Boothby: Liberal susceptibilities.
  Sir P. Harris: The susceptibilities of most of us, though perhaps not those of the hon. Member for East Aberdeen (Mr. Boothby). But, as I say, we have to face the world as we find it and at a time when every section of the House,
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  and especially the Government, are speeding up our armaments, we have to look with favour on a country which is putting itself into a defensive state in order to co-operate with us and—if we must be realists let us put it frankly—keep up the balance of power in the Mediterranean. The hon. Member for Bishop Auckland (Mr. Dalton) was right in drawing certain lessons from the contents of the Bill, but as far as we are concerned we do not propose to place any obstacle in the way of its speedy passage through the House.
  There are just one or two remarks which I desire to make upon it. The right hon. Gentleman the Chancellor of the Exchequer referred to three most interesting White Papers and in so far as they aim at stimulating trade, naturally, hon. Members on these benches view them with favour. We agree with the hon. Member for East Aberdeen that one thing which is needed to put the world in order is to stimulate and restore trade. When our rearmament programme is completed we must inevitably be faced with unemployment and economic pressure. We on these benches have constantly argued the need for taking a long view and of taking every step to stimulate our export trade in particular and reopen the channels of world trade. I suggest that these White Papers should not be isolated but should be made part of a concerted policy which will recognise the importance to this country of trade in Central Europe. The other day some hon. Members on this side were pointing towards the Balkans as an area which presented great potentialities for that trade which our manufacturers so badly need. I am glad to-day to find the hon. Member for East Aberdeen taking a wider view than some hon. Members opposite take, of the potential markets for our manufacturers and traders.
  The idea that was being spread a year or two ago was that we should concentrate all our efforts on the Dominions and divorce ourselves from the Continent not only as regards international affairs but as regards trade. That obviously would be a thoroughly unsound and bad policy. This very remarkable document, the Anglo-Turkish Guarantee Agreement, aims at providing methods to enable Turkey to liquidate the debts which are to be incurred under this Bill. There is a very novel provision here. I think it is almost without precedent. We are

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  setting up a company with a board of directors, one director to be appointed by the Eti Bank, one director to be appointed by the Department—I assume the Overseas Trade Department—and one director or such greater number of directors as may be agreed, to be appointed by the Bank and the Department jointly. That is of some interest and is a novelty.
  A peculiar feature of the agreement is that it sets out certain commodities in which this new company is to trade. They are metals, mineral ores and concentrates, coal and—I hope the House will mark this—wheat, timber, raw cotton, fresh fruit and vegetables. That list of commodities is very significant. It suggests a departure from the narrow Ottawa policy. It is a recognition that Great Britain cannot depend solely on the Empire for the prosperity of its industries and manufactures, but has to look to new markets in order to keep up the great trade with which it has always been associated. For that reason only, the Bill has more than ordinary significance. It suggests a new alignment and a new recognition of this country's interests in Central Europe and the Continent generally not only as regards foreign policy but in relation to trade prosperity. I hope the Bill will go through all its stages without difficulty, and I think if hon. Members look behind its Clauses to the policy which it involves, they will recognise that it represents a great new departure, firstly in its acceptance of the principle of giving credits to a country for the purchase of armaments in this country, and, secondly, and more significant, in its recognition of our dependence for our prosperity on world trade.
  5.0 p.m.
  Major Sir Ralph Glyn: The Parliamentary Secretary of the Department of Overseas Trade and the Chancellor of the Exchequer must be very pleased at the reception of these proposals, and I think the House should congratulate those who have been responsible for facing realities. One is delighted to think also, after the speech of the hon. Member who spoke from the Front Bench opposite, that those in Turkey who have laboured so long for friendship with this country will feel that we are united and party differences are dropped, and that the one thing we wish
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  is to see the old-established trade and association with the Turks the settled policy of this country once again. In passing I would like to mention that the hon. Gentleman who spoke from the Front Bench opposite rather complained about the lack of enterprise on the part of British merchants in trading with Turkey. I remember I was in Stamboul not very long after the War when the edict came out that no more tarbooshes should be worn by Turkish subjects. There were three British naval officers who had given up the Navy and assumed the bowler hat and were looking round for some trade, and they telegraphed to England and had sent out tons of felt hats. These they sold at very remunerative prices, because none of the porters was allowed to appear the following day unless he had a European hat, and the shops in Constantinople were entirely unable to meet the demand. That was an example of British enterprise which I think was respected by the Turks, who much preferred to pay an ex-British naval officer a good percentage on the hats they had to buy rather than be forced to buy them from the nationals of some other country.
  There is another thing that we should never forget. What a vast difference it would have made had the Dardanelles been open to the Allies throughout the War. One of the reasons why they were not open was the short-sighted policy of the Government at that time in seizing two battleships which were building here; if they had not done that those battleships would probably have been used by the Turks as our Allies in the last War. That is a matter of speculation. But I am perfectly sure that under the new regime in Turkey we can look forward to a stable form of government in the hands of men who look to this country once again to set the example of honest dealing and honest trading, because those who have dealt commercially with Turkey have never found them, any more than they have found Chinese, dishonest in their methods. They understand us, and we understand them. And this Measure has come only just in time. It is not only Field-Marshal Goring, as the hon. Member for East Aberdeen (Mr. Boothby) mentioned, it is Dr. Schacht who has been a considerable factor in bringing trade to Germany, both in the Balkans

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  and in Turkey, and it is absolutely essential that the Government should take a hand and provide a sort of umbrella over British traders, so that they may carry out their business effectively.
  There is one other matter to which I would like to draw the attention of the Secretary of the Department of Overseas Trade. We all recognise that this scheme is bound to take a little time, and I want to refer to the system of blocked credits and the clearance scheme. As the Chancellor of the Exchequer stated just now, there is no less than £1,500,000 of blocked credits at the present time, and it would be very interesting to know whether any scheme can be devised whereby those could be liquidated. The tendency, I am afraid, will be to block those credits all the more until the periods of the contracts are fixed up. There are only two ways in which restrictions of clearances can be removed. One is by increasing the exports of Turkish produce to this country, and hence I imagine that the Committee mentioned by the hon. Baronet opposite, the Member for South-West Bethnal Green (Sir P. Harris) has been set up in order to expedite those sales. The other is by giving assistance to shippers here, British exporters, who otherwise would be shipping goods out to the importing districts of Turkey only to find that those goods would be held by the Customs indefinitely until the clearing block is raised. I think it is essential that the exporters here, before goods are shipped, should have some organisation through which they can learn what is the state of congestion in the Turkish Customs, in order that those goods shall not be shipped and suffer demurrage and loss.
  Mr. Boothby: Is it not a fact that the provisions of these three agreements in themselves will automatically remove the present clearing arrangements?
  Sir R. Glyn: That was not mentioned by the Chancellor of the Exchequer.
  Mr. R. S. Hudson (Secretary, Overseas Trade Department): That is a separate matter which comes up on the next Order—the clearing Order—and I propose then to go into the matter.
  Sir R. Glyn: That is all right so long as it is explained, because nothing does
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  the trade of the country so much harm as when Turkish firms order British goods and there is an inability to receive them. It is absolutely essential that a clear statement should be made to-day showing that there will be no further difficulty, and that this block of £1,500,000 will be liquidated.
  The last point I wish to mention is this. It may be, and perhaps it is, a good thing that all the effort of introducing a special Bill on each occasion should be continued as a normal practice, remembering that under the Export Credit Facilities Acts armaments are not allowed to come within the purview of those Acts. But I do feel that the times are now tremendously changed since the first of those Acts was passed. At that time we all hoped that disarmament would be the general practice of the world, but to-day we cannot hope that there will be any very immediate reduction of armaments. Surely it is a matter of prime importance that British manufacturers, under full Government control—I think that is essential—should have equal chances with those of other countries, notably Germany, in order that the countries of the Balkans and the Middle and Far East should at any rate be able to order their supplies from this country without any difficulty.
  Unless there is some amendment of these Acts it will always be necessary, I take it, to introduce legislation of this character, and it might be worth while to ponder on the advisability of amending the Export Credit Facilities Acts with every intention of keeping control and preventing any abuse of that power. Those who have recently visited the Danube or Turkey or the Far East report that the restrictions placed upon our great industries, both for the supply of ships and other prime articles that are useful in time of war, have placed an immense amount of trade in the hands of those who would be very glad indeed to see peaceful penetration lead to something more active. There is nothing more useful to an invading army than to enter into a country and find that all the armaments of that country are of their own manufacture and can be turned round very rapidly and used against the very people who have bought them from them. That is a matter not of party politics; it is a matter that affects foreign affairs. I am

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  quite sure that the condition of the world to-day is such that if those countries who arm, not for aggression but for the maintenance of peace, are prevented from acting as allies and friends of those who have the same objects, we are doing the cause of peace not much good, but a great deal of harm.
  5.10 p.m.
  Mr. Arthur Henderson: I hope that His Majesty's Government, if they listened to the appeal of the hon. Baronet the Member for Abingdon (Sir R. Glyn), who has just spoken, will at any rate consider very seriously before they agree to our country becoming a free supplier of armaments to the rest of the world. It may be that in special cases a country which has proved its loyalty to the League, as Turkey has, a case may be made out for entering into such an agreement as the House is discussing this afternoon. But is it not a tragic commentary on the present international situation that we should be discussing such an agreement to-day? Not so many years ago it would have been inconceivable that the British House of Commons would be called upon to sanction agreement granting a loan to another country for the purpose of purchasing armaments. But whether we like it or not, we have to face the present international situation. His Majesty's Government, I think, have to bear a large share of the responsibility for the present international situation. But that does not help. We have to realise that there are powerful countries which, in complete disregard of their treaty obligations, are carrying on policies of aggression against countries weaker than themselves. We have in fact, whether we like it or not, returned to the system of power politics, with its doctrine that might is right and that a nation which is powerful enough to enforce its will upon another nation will seek to do so, especially in some parts of the world.
  I welcome this agrement only because it seeks to help Turkey, a nation which has remained loyal to the League during recent years. After all, there is no use in deluding ourselves: Germany at the present time is seeking to carry out a policy of expansion towards the East, not only in the Danubian area but also in the Balkan area, to which Turkey itself belongs. We had an example of that following the Montreux Conference. After Turkey had decided to re-fortify the
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  Dardanelles Messrs. Krupp, the great German armament firm, tendered for the work at a very very low price, and Turkey was, I think, fully entitled to accept that extremely low tender. In fact, Turkey accepted a much higher tender put in by a British firm. I believe that the explanation is, not that Turkey was anxious to do a favour to a British firm, but because of the political repercussions of this aspect of German policy. We know that throughout the Danubian countries and the Balkan countries Germany has to-day secured between 40 and 50 per cent. of their total trade, and I suggest that such a high percentage could not be justified on any economic, commercial or financial grounds. Germany has attempted to carry out her economic policy not only with regard to Turkey, but with regard to the other Balkan States and the States of the Danubian area, by seeking to grant them long term credits. I believe that it is on record that offers have been made to all those countries, including Turkey, to grant them credit extending up to two years. Reference has also been made to the supply of armaments by Germany to these countries. The hon. Baronet the Member for Abingdon, who made the reference, did not tell the House that the armaments which have been supplied by Germany are almost entirely second-hand.
  Therefore, it seems to me that we have to make a choice. We can take the point of view of the isolationist school and say that what takes place in Turkey or anywhere else is no concern of ours, and that if Germany is allowed to extend her influence in Eastern Europe it will cause her to leave Western Europe alone. I believe that to be a dangerous and shortsighted point of view. On the other hand, we may take the line, which I think is exemplified by the agreements we are discussing, and seek to assist the Danubian and Balkan countries to maintain their economic independence. I hope, therefore, that it will be possible for His Majesty's Government to extend the policy which is exemplified by this agreement to the other countries in that part of Europe, and that it will be possible for them to grant some form of economic assistance, not only by credits, but by the direct Government purchase of their products. Hungary, for example, is well able to supply large quantities of wheat. At present 75 per cent. of her supply

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  goes to Germany, and it has become a matter of common knowledge that, in spite of her desires, she is becoming drawn within the German economic and political orbit.
  Cannot His Majesty's Government take a leaf out of the book of the Germans by sending prominent Members of the Government to visit these countries? We have the example of Dr. Schacht, who paid visits to the Danubian countries and the Balkan countries, and I am not sure whether he did not get as far as Turkey. He had his pockets full of unsigned contracts and when he returned to Berlin they had been completed. I suggest to His Majesty's Government that they might well follow the example of the Germans and make some attempt to stabilise economic conditions in that part of the world. I believe that not only is that necessary in Turkey and in the other Central European and Danubian States, but we have to give some demonstration that this country is interested in the problems of that part of Europe. The fate not only of Turkey, but of Greece, Hungary, Czechoslovakia, Rumania and Yugoslavia will depend on the degree of collaboration between those countries and the Western Powers, including our own country. It is not because we desire to isolate Germany that we seek to strengthen the economic independence of those smaller countries. It would be the finest thing that could be done by the great Powers of Europe—Germany, Italy, France, Russia and this country—if they could come together and by agreement seek to give a measure of economic assistance to those small countries by a reduction of customs duties, by the provision of alternative markets for their products, so as to enable them to maintain their economic independence, whether in respect of Germany or of any other single Power.
  I therefore, to that extent, welcome this agreement, because I believe it will strengthen the ability and power of Turkey to resist the economic penetration of any single Power. It is not that this country desires to restrict the legitimate trading activities of Germany; it is merely because we believe we are far more likely to stabilise world peace if all the nations of Europe, great and small, are able to retain their independence and
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  their national economy and not become pawns in a game of international economic policies. For these reasons we on this side of the Committee will not, I hope, vote against the agreement.
  5.21 p.m.
  Captain Alan Graham: I should like to congratulate the Government sincerely on the conclusion of this agreement. Not only does it revive and consolidate that old friendship with Turkey which somehow has always seemed spontaneously natural, but it is undoubtedly an important contribution to the stabilisation of the whole position in the Near East. It does not strike me as being essentially a new departure, least of all as a departure from the policy laid down at the Ottawa Conference, as suggested by the hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris). As one who took a very humble and minor part in that conference I should like to point out to him that the basic idea of the Ottawa Conference was not to ignore or to throw over trade with foreign nations, but simply to find one certain point of economic refuge for what trade there was still to be found in a world where world trade was foundering in an economic whirlpool. That point of refuge was provided by our Empire.
  Turning, however, to this Anglo-Turkish Agreement, the question whether or not we are to obtain the fullest possible advantage from it will depend largely on the action of the Board of Trade. The conclusion of the agreement will increase the available carrying trade between the Near East and Britain. Other nations more favoured by geography in that connection, such as Greece and Italy, have been in the past very much quicker to take economic advantage of any changes that have been created by political acts in Europe than we have. Perhaps the most glaring example was the expulsion of the Jews from Central Europe by Herr Hitler, which has benefited to an enormous extent the carrying trade of the Lloyd-Triestino Line. Anyone travelling by that route to the Near East cannot fail to notice ships filled to the utmost capacity with Jews travelling from Trieste to Palestine, and Jewish traders coming back from Palestine in them with their trade. The Lloyd-Triestino Line was very quick to take advantage of that position. Our own Board of Trade

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  needs, in view of the world position of our trade, to be equally quick to assist our shipping lines to compete with other lines more favoured both by their own Governments and by geographical contiguity to these points of trade.
  Last year the Greek Government were eager to deliver themselves from the position of economic helotry to Germany to which they found themselves bound. If we were to take the whole Greek tobacco crop, which would amount to only 2 per cent. of the consumption of tobacco in this country, we should not only deliver Greece from that condition of economic dependence, but would insure Greece taking a much larger proportion of goods from this country than is the case at present. The Board of Trade, for some reason as yet unexplained, did not bring the necessary pressure to bear or give what assistance it might, towards achieving that valuable and important end which I have good reason to know was intensely desired by the Greek Government. Therefore, I suggest that it is very much the concern of the Board of Trade that we should not lose in that way the valuable fruits to our carrying trade that should properly accrue to this country on the conclusion of this present agreement. We all know how the spread of political ideas and the ideals of our own civilisation are bound up with an increase of trade.
  The new Turkey seems to have turned its newer gaze very far away and definitely away from Asia, and while territorially consolidating itself much more in Asia than in Europe, it seems, as regards its ideas, to be turning almost entirely westward and not eastwards as before. It is far more open than ever before to permeation by the highest ideals of Western civilisation. This is a moment in which to press forward those ideals about which we care through the British Council and other vehicles for the spread of those ideals to which we attach so much importance. So that not merely on economic grounds alone, but on political grounds, and still more on grounds of strengthening those forces on which we believe the future progress of the world depends, we welcome the conclusion of this agreement.
  5.28 p.m.
  Mr. Bellenger: I hate to disturb the harmony of the proceedings which has
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  been manifest in all parts of the House, but I wish to offer a few critical observations on this Bill. I suppose that it is part of the duty of the Opposition to offer constructive criticism, even though Government Bills bear on the face of them the hall-mark of righteousness. My hon. Friend the Member for Kingswinford (Mr. A. Henderson) in lauding the travels of the Governor of the Reichsbank, made a suggestion that we should emulate that example. Perhaps he had in mind sending our own Chancellor of the Exchequer, or perhaps the Governor of the Bank of England. If the suggestion extends to the Chancellor I should find myself in considerable disagreement with my hon. Friend because I seem to recollect that the Chancellor is more happy on home ground than on foreign territory. The House ought to observe that the hon. Baronet the Member for Abingdon (Sir R. Glyn) said the initiative and the energy that have been displayed by Germany in exerting pressure by economic efforts on other countries are probably more due to the powers of Dr. Schacht than to those of Field Marshal Goering. Dr. Schacht's abilities are, if I may say so, knowing some little about them, very potent from a financial and economic point of view.
  The hon. Member for East Aberdeen (Mr. Boothby), in paying his tribute to this Bill, rather indicated that this £6,000,000 was, as it were, a traveller's sample, that it would result in opening up to this country a large amount of Turkish trade and that we should be almost inundated with repeat orders from Turkey. I have some doubt about the reliability of that forecast. In my opinion—and it is only my opinion, although one hon. Member said it was shared by certain financial organs—this £6,000,000 which will be used to finance the supply of munitions to Turkey will be largely in the nature of a subsidy to Turkey. I can quite understand the expediency of helping Turkey with her armaments, or rearmament, if that is part of the Government's settled foreign policy, but do not let us be under any illusion, because if we examine this agreement critically from a financial and economic point of view I do not think all those benefits will flow from it which have been predicted by certain hon. Members. In that respect I should have welcomed a little more enlightenment from the Chancellor.

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  The hon. Baronet the Member for Abingdon threw out a suggestion, which is a serious one, though I do not know whether it will meet with the Chancellor's approval, that the Export Credits Act should be revised and extended in order that monies advanced under that Act could be utilised for the purpose of supplying munitions to foreign Powers. The House knows very well, Germany's policy of providing armaments for certain other countries, but if we ever do extend the principle, which we are adopting this afternoon, of utilising British taxpayer's money for the financing of large shipments of arms and munitions to foreign Powers, the result will not be for the benefit of British trade in the end but will lead to the disintegration of British trade, because those armaments can be used for only one purpose eventually, and that is war, which all are agreed is the last thing we want.
  I was pleased to hear the Chancellor say that the friendship between the United Kingdom and Turkey is firmly based. I wonder on what instrument that friendship is based. Is it based upon any treaty with this country, or is it based on that wide instrument the Covenant of the League of Nations, because my hon. Friend the Member for Bishop Auckland (Mr. Dalton), in saying this afternoon that we on this side would not oppose this Bill, did it on the specific ground that Turkey was, and presumably is, a loyal member of the League of Nations, and therefore we could support this Bill because it was providing munitions to another loyal member of the League. As to the Chancellor's remarks about the internal position of Turkey and her balanced Budgets, perhaps I may be allowed to make a few observations on those points presently.
  We shall all agree to a certain extent upon the expediency of the Bill introduced this afternoon. The effect of the Bill will be that we shall enter into competition with Germany in order that we may be able to ensure that Turkey will be our ally in the Eastern Mediterranean when the next conflict comes. I think it is purely on those grounds that we are asked to support this Bill this afternoon. The remarks about £10,000,000 credit being advanced under the Export Credits Act opening up large areas of trade to this country I rather
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  doubt, and I shall have a few figures to give to show that we cannot expect to export large quantities of goods other than munitions. I was pleased to hear the Chancellor say that this export of munitions will not interfere with our own rearmament programme, and I should have liked him to indicate the type of munitions which will be exported, because hon. Members in all parts of the House have expressed some concern as to the state of our own rearmaments, and if we are to export weapons like antiaircraft guns we should feel a little more concerned about giving approval to this Bill. Obviously we do not want to know all the individual things that will be exported, but I certainly think the Government should give some indication of the type of munitions, and whether they will include aeroplanes.
  To come to the financial position of the Bill, I should like to ask whether this £6,000,000 which is to come out of the Consolidated Fund, will necessitate any new issue or how the money will be provided with which to finance these munitions, and whether it will all be expended in this financial year or over a longer period?
  Sir J. Simon: If the hon. Member looks at Clause 2 of the Bill he will see how the borrowing will be authorised.
  Mr. Bellenger: I understand that it is to be raised under an Act of 1919, but will that necessitate any loan being floated in addition to the Government's own measures of taxation introduced this year, and their Defence Loans?
  Sir J. Simon: No. Under that Act we already have authority to raise the money by loan, and the effect of Clause 2 is to say that the exercise of authority under that Act to raise money by loan shall extend to this purpose, so there will not be any special issue.
  Mr. Bellenger: So I understand that although it is not contemplated that there will be any special issue this £6,000,000 will form part of some issue or other for purposes other than this particular purpose. When I come to examine the rate of interest, which at present is 1 per cent. above bank rate, that is 3 per cent., and I understand is to last for the next five years, I am inclined to criticise the interest. It may sound something of a

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  paradox that an hon. Member on this side should criticise interest rates as being too low, but we have to deal with the facts as we find them under the capitalist system, and I suggest that 3 per cent. interest for the next five years on the money to be advanced to Turkey is rather a low rate of interest. The Government's recent £80,000,000 Defence Loan was a 3 per cent. loan, issued at 98 and repayable at par in 1958. There was one feature of that loan which is, perhaps, novel in view of the terms of this loan, and that is that interest was to be paid to the subscribers immediately and during the whole of the currency of the Defence Loan, but in this case we are asked to lend this money at 3 per cent. nominal interest and the interest is not to be collected till 14 years hence.
  I have heard that the reason why we shall not start earlier to get our interest on or to redeem this loan of £6,000,000 is that there will be a prior loan of £10,000,000 to be used for exports under the Export Credits Act. That seems to be putting the cart somewhat before the horse, because the goods which will be exported under that £10,000,000 loan will be of more substantial value than the munitions which we are to export under the loan to be raised by this Bill. The munitions which will be exported will have no value whatever, certainly not after 14 years, when Turkey starts redeeming the loan. I suggest that this loan and the £10,000,000 loan will result in the bolstering up of Turkey's exports, perhaps to the disadvantage of British exports. The Chancellor referred to the trade position of Turkey and to her budgetary position. One hon. Member asked how the £1,000,000 odd now frozen in Turkey was to be thawed. I have seen the view expressed that those frozen assets in Turkey will be thawed by those who own those assets being enabled to buy Turkish goods, to export them and to sell them abroad, and to realise the proceeds for the purpose of unblocking their own frozen assets in Turkey.
  When we come to the trade position of Turkey, hon. Members opposite, who number bankers among them, will know that bankers, even when they lend to their most favoured customers, generally want some form of security. What is the security that Turkey is offering for this £6,000,000 for armaments? It may interest the House to know that 40 per
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  cent. of Turkey's exports consist of tobacco. There has been a considerable increase in the exports of tobacco in the last year, the rise being from £T20,000,000 to £T41,000,000. The Chancellor mentioned something about the development of Turkey's mineral resources, and I wish he could have given a few figures as to how they have been developed to show what security there will be for the British taxpayer's money. Other main staples of Turkish production with two exceptions have decreased considerably during the last year, and the export surplus dropped from 15½ million Turkish pounds in the first two months of last year to nearly 2,000,000 Turkish pounds in the first two months this year. It would seem therefore, that Turkey's favourable trade balance is depreciating very considerably.
  Next I have one or two questions to ask on the Anglo-Turkish Comptoir Limited and the Anglo-Turkish Commodities Limited. We understand that these companies are to operate the export and financing of munitions under the Bill. I should like the Chancellor of the Exchequer to explain to us a little more carefully what will be the exact position of these two companies. I understand that there will be Government directors, or at any rate directors subject to Government control, on the boards of both the companies, and I should like to ask the right hon. Gentleman whether it will be in order later on to question him in the House of Commons as to the activities of the two companies.
  We appear to have reverted to a somewhat pre-war position. It is not a question of supplying our future allies with munitions for League of Nations purposes; we are now engaged in selecting certain allies, either in Central Europe or farther afield, as under the old system known as the balance of power. What we are trying to do at the present time is to encircle Germany economically by such methods as this. I am not going to say that Germany has not been responsible to a certain extent for the methods that we are adopting, but the methods are not conducive to peace, certainly not from the long point of view. So far as the old balance of power model goes they may have some deterrent effect upon Germany, and, if they do, that is all to the good, but I am not one of those who believe that the policy which we are pursuing is the right one in the long run.

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  We have to pursue an entirely different policy. Although my hon. Friend has stated that we do not intend to oppose the Government on this occasion, I do not agree that the policy which the Government are adopting in the Bill and which has been advocated this afternoon will be conducive to long-term peace.
  5.47 p.m.
  Mr. G. Nicholson: I very much regret the tone and the content of the speech to which we have just listened. I noticed the same tone, although more judiciously expressed, in the speech of the hon. Member for Kingswinford (Mr. A. Henderson). I am certain that I shall have the Government with me in saying that the purport and the purpose of the agreement are economic and not political. It seems to me that the Opposition are obsessed with politics and with the idea that the basis of the action of the British Government must always be part of an anti-Fascist and, in particular, an anti-German struggle. I cannot imagine anything more inaccurate, more injudicious and more unnecessary than to interpret every economic activity of the Government as part of an anti-German encirclement policy. Besides being far from the truth, such an interpretation must do a great amount of harm on the Continent. I am sorry to speak so strongly about the matter, but it seems to me absolutely deplorable that such speeches should be made.
  Mr. A. Henderson: Does the hon. Gentleman say that any part of my speech was directed to the point that this agreement demonstrated a desire to encircle Germany?
  Mr. Nicholson: I did not take down the hon. Gentleman's speech, but I think it is within the recollection of the House that he took that line, and I think the hon. Gentleman will find it in the OFFICIAL REPORT. I admit that I thought at the time that he was unaware of the tendency of his remarks, but I think he will see that the trend of them was that this agreement was part of an anti-German policy.
  Mr. Henderson: Will the hon. Gentleman tell me what I said?
  Mr. Nicholson: I regret that I did not take down every word of those remarks, but I am within the recollection of hon. Members of this House——
  Sir John Withers: Hear, hear——
  Mr. Nicholson: One hon. Member, at any rate, agrees with me. The hon. Member who spoke last asked whether the understanding between England and Turkey was based upon support for the League of Nations or upon any Treaty instrument; surely every form of good understanding between countries must be based upon a community of interests. It is in this case. This agreement is based upon the fulfilling of our reciprocal needs. I regard it primarily as an economic agreement, and the Turkish Government so regards it also. We have something that they want and they have orders which will go a long way in relieving unemployment in this country. I congratulate my right hon. Friend from the bottom of my heart upon the Bill. It is a good Bill. Incidentally, somebody ought to extend those congratulations to the respective Ambassadors, the Turkish Ambassador in this country, and our own Ambassador in Angora.
  However, I did not rise in order to add to the stream of benevolent platitudes that have flowed round the right hon. Gentleman this afternoon, but to express the opinion that the time is ripe for a great movement forward, so far as we are concerned, in the Balkans, and not only by this method of guaranteeing credits to the Governments of certain countries. I have reason to believe that a great volume of opinion in Balkan countries is in favour of wide, active, British participation in the industries of those countries. My hon. Friend the Member for East Aberdeen (Mr. Boothby) stressed the point that the introduction of a Bill like this was not proof that British commercial enterprise was less ambitious than in the past; that is true, but it is proof that British commercial enterprise is hampered by the political instability of the present time. If we are to reap full benefit of the pro-British feeling which is common in so many Balkan countries there will have to be active help from the Government. I hope that one of the results of the harmony displayed in today's Debate will be that the Chancellor of the Exchequer will not lose sight of this aspect of our economic policy.
  The feeling in Balkan countries is partly genuine pro-British feeling and partly fear of other countries; but most

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  of all, it is a tribute to the stable conditions which obtain in London. I think that many Balkan industries and industrialists are anxious to place some of their funds in this country and are anxious to get Britain interested in those industries, not only because they hope, I suppose, that active British participation will give them some form of protection in the event of political disturbances, but because they have been thinking that British participation will be of value to them from the point of view of the stability of their funds and of their businesses. It will be easy for the right hon. Gentleman to find out whether I am right in saying that there is a great volume of opinion of that kind in the Balkans. If he will make inquiries through diplomatic and commercial channels he will find that that is the case, and if he does so, I most earnestly beg him to look upon the Bill as only a first step in the right direction, and to remember that there are other ways in which the trade of the Balkan countries can be encouraged besides the way of direct loan to the Balkan Governments.
  5.56 p.m.
  Mr. T. Johnston: I am sure that I am expressing a feeling of regret which is experienced by many hon. Members that the hon. Member for the Oxford University (Sir A. Salter) has not seen fit to take part in this Debate. He has spent a long time at the League of Nations, and as a result of his experiences in dealing with foreign loans and lending he wrote a remarkable book. I am sure that the hon. Member who has just addressed the House has never read that book. It is a book entitled "Recovery."
  Mr. Nicholson: Of course I have read it. I remember an interesting passage was that what Europe needed most was more gentlemen like Mr. Kreuger.
  Mr. Johnston: A strong point made by the hon. Member for Oxford University in that book was that practically every penny has been lost of all foreign lending to Governments for the two years 1927–28—I speak from memory—that had not been recommended and backed by the League of Nations. He recommended, and I thought it was a very wise recommendation, that future lending of this kind should take place only if it had the backing of the League of Nations. We are now out of those conditions, and are
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  back in the era of power politics. My hon. Friend who spoke a moment or two ago was right in saying that we were lending credit to this particular country, not because it is a loyal member of the League of Nations, but because it is within our orbit at the present moment, and we hope that these munitions will be used not against us but on our side. If that prediction is to be fulfilled the results will be rather different from what happened in the last War. On 3rd December, 1913, the "Times" carried the following paragraph:
  "A contract was signed to-day with the Armstrong-Vickers group for the reorganisation of the Turkish Naval dockyards. The Government hands over to the Armstrong-Vickers group the arsenal and the docks on the Golden Horn, with all the existing machinery and buildings. It likewise provides for a naval base at Ismid. The English group finds the capital for the exploitation of the works, and supplies the technical knowledge and control essential to the success of the undertaking."
  That was in 1913. Whatever we provided then and in the early part of 1914 was, singularly enough, not used to defend us or to assist the Allied cause a few months later, but was used to blow to blazes and smithereens forces from Australia, New Zealand and this country.
  I hope that the convictions and expectations expressed this afternoon will have a more fortunate outcome so far as this country is concerned than upon the last occasion, when English financiers, moneylenders, guarantors of loans and English munitions exporters, engaged in an adventure in Turkey. When the hon. Gentleman and his Friends are speaking of matters of this kind I beg them not to be so exact in their estimates of their own invulnerability. When my hon. Friend said that this was another adventure in power politics and that we were arming the Turkish Government because we hoped that the Turks and their armaments would be on our side in the next war, he was just as historically right as the hon. Gentleman who sought to chastise him was historically wrong.
  Mr. G. Nicholson: I am sorry to interrupt the right hon. Gentleman. Of course I was not objecting to any remark like that. If we arm other people, naturally we hope that the arms will not be used against us. What I was speaking about was the tendency—I said it was almost an obsession—on the part of the Opposi-

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  tion to believe that the sole function of British policy is to play a part in the anti-Fascist struggle. In speeches from the other side the Bill has been represented as an attempt to counterbalance German activity in the Near East and in Europe. Such suggestions are injudicious and inaccurate. I do not think that is the basis of British policy. That interpretation can be placed upon it, but it is wrong to do so.
  Mr. Johnston: I must leave the facts to speak for themselves. In effect, His Majesty's Government are providing Turkey with £6,000,000 for armaments, and they are doing that because they believe it to be in the interest of this nation that those armaments should be provided for Turkey and not for Germany. We have lent money to Germany and Austria before, and one reading of the crisis of 1931 was that the lending of money to Austria aggravated and intensified the position and brought about the financial explosion. I do not wish to say any more about armaments except to point out that the hon. Member who spoke about Greece and Turkey—I am sorry he is not here at the moment—omitted to tell the interesting story of how we sought to sell dreadnoughts to Turkey and Greece, how Turkey had to raise the money for her dreadnoughts by public subscription, how they were built in this country, and how, because they were not paid for, we took them back. The same commercial traveller went to Greece and said, "You see that Turkey is buying dreadnoughts; you had better buy some too"; and Greece also bought some. The hon. Member, in giving us his impression of recent historical events in connection with Greece and Turkey, might have remembered that incident.
  We have decided that we shall not oppose this Measure in the Division Lobby. Some of us have made that decision with a very heavy heart. But the argument is that Turkey is in the League, and that, therefore, for what it is worth, this is a League act, it is a step in collective security for what it is worth. It may be. I have some reason to believe that it is not quite so true as it would have been if the loan had been made after it had been approved by a committee of the League of Nations. That is not the case. This is a direct loan from manufacturers in this country; some big firms
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  in this country have got the British Government to O.K. their loan. In my view there is very little League of Nations endorsement on this loan, and I feel that we shall be lucky if some of these munitions are not in turn used against us, as was the case with the former loan for the rearmament of Turkey.
  Mr. Harold Nicolson: The agreement in December, 1913, was not for munitions, but for a graving dock, and it is most unfair and ungenerous to say that actual munitions were ever delivered and were ever used against our people at that time. If the contract had been proceeded with, that might have been the case, but it is unfair to make the suggestion now.
  Mr. Johnston: I know that Armstrong-Vickers——
  Mr. Nicolson: They built the graving dock.
  Mr. Johnston: They were building an arsenal. I can understand hon. Members in any part of the House who say that we ought to stand by the League of Nations alone and provide no armaments for any other Powers; and I can also understand hon. Members opposite who say they do not care two hoots for the League of Nations, they are going to arm Turkey. But let there be no hypocrisy about it. An attempt has been made this afternoon to convey the impression that we are arming Turkey purely for commercial reasons, and not for any political reasons connected with the growing power of Fascism in Europe, but that is not my view.
  Mr. Boothby: It is the Opposition who have talked about the League of Nations; we have not talked about the League of Nations.
  Mr. Johnston: That is my complaint—that hon. Members opposite have not talked about the League of Nations, that the whole thing is divorced from the League of Nations.
  Mr. Boothby: Hear, hear!
  Mr. Johnston: The hon. Member now says, "Hear, hear." I beg of him to have his quarrel with the hon. Member who sits below him. I think we ought to have from the Government—we have not got it from the Council of Foreign Bondholders in this connection—a full and clear statement as to whether there are

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  any outstanding loans due by Turkey to this country. For my part, I am for spending whatever credits we have in order, first, to develop the buying power of people in this land, before they are spent on munitions of war abroad, and at any rate I think we ought to know whether there are any previous loans unmet, dishonoured, owed by Turkey to this country. I am not saying that that would necessarily be a mark against Turkey, when we remember the extraordinary methods of British railway financiers in getting the poor Turks to enter into contracts at so much per mile, and then running the railways zig-zag in order to make a big mileage.
  Mr. H. Nicolson: It was German financiers who did that.
  Mr. Johnston: I am not going to abandon that statement for one second. I can refer the hon. Member to exact proof, in the Library of this House, of my statement that British railway corporations got contracts in pre-war Turkey to build railways at so much per kilometre or mile, and, instead of running the railway direct from one point to another, ran it zig-zag in order to get a bigger payment under the contract. Those railways have never paid, and never will pay. Men like Mr. H. N. Brailsford and others have written books on the subject, and the facts have never been disputed to this moment, nor are they disputed now.
  There was lent to Germany in the years 1927 and 1928 2,000,000,000 dollars from America and this country, or £400,000,000. That was five times the total amount which they were called upon to pay as reparations, and which they did not pay. Who were the brainy people who did this kind of thing? Not the representatives of the Opposition, but the financier class who rule and dominate this country. For my part, I am not happy at all about any Measure promoted by this or any other Government which, with a minimum of explanation, hands over to foreign countries credits for the purposes of munitions of war. It may be that there is a reason for it embedded in anti-German politics; it may be that this is our only method of putting up a struggle against Fascism in Europe. But, in a land where we have not sufficient credits to build houses for our people, to drain our swamps, to cleanse our rivers,
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  to purify our atmosphere, I think that there is only one explanation for granting to a foreign country this credit for munitions of war, and that it is a political explanation which hon. Gentlemen opposite are not too happy to avow.
  6.11 p.m.
  Sir Walter Smiles: I promised to speak for five minutes only, and I hope that hon. Members opposite will not say that I have been a hypocrite for that length of time. During the week-end I have discussed this question of loans to Turkey with many people, and I have been blamed, as other Members of Parliament have been blamed, for the loan which we made to Austria, a great part of which we shall probably never see again. But, at the time when we made the loan to Austria, I took the responsibility, with other Members of the House, either of voting for or of voting against the Measure; I voted for it and have my responsibility for the result. If the Opposition Members abstained from voting to-day, they will go down to history as having been in favour of this loan to Turkey just as much as I, who have every intention, if it goes to a Division, of voting for it. Friends have pointed to me the amount of money which British financiers have lent, have wasted, have lost in every corner of the world. If it were returned, I suppose there would be no National Debt in this country, and it would probably be the greatest possible embarrassment to us—just as much an embarrassment as it would be to America if we started paying off the American War Debt now. At any rate, I feel that we are lending this money with the object of getting an ally in the Near East, and it is for that reason, not being a hypocrite, that I support this loan.
  Speeches have been made about the encirclement of Germany, but nobody talks about the encirclement of our Near East ally—the encirclement of France. I consider that at the present moment France is in far more danger of encirclement than Germany is. [Interruption.] I am giving my own opinion, and we on this side have just as much right to be nervous for our friends as anyone else in the House has. The right hon. Gentleman the Member for West Stirling (Mr. Johnston) spoke about a well-known book written by the hon. Member for Oxford

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  University (Sir A. Salter). But at times books which are worth reading have been written by people who are not Members of this House. One of them, published within the last few months, is "Insanity Fair." I suggest that, but for some of the facts mentioned in that book, this loan of £6,000,000 would not be being made to Turkey to-day, and, after all, it is only the price of one day of modern war. The right hon. Gentleman mentioned Vickers-Armstrong, and the contract they made with Turkey in December, 1913. That was only some seven months before war broke out, and Vickers-Armstrong could not have done a great deal of work under that contract. I am quite prepared to admit, however, that in the last War large quantities of munitions and many guns manufactured in this country were used against us and shot down British soldiers; and it does not make very much difference afterwards whether the projectile that killed a man was of foreign or British manufacture. It is to be hoped that our diplomacy in preventing war in the future is going to be better than our diplomacy was in 1913.
  Other books have been written pointing out, that, if we had used a little intelligence and tact, we might have had Bulgaria and Turkey on our side instead of against us.
  I think it is a very wise plan to try to make friends with Turkey at this moment. I assume that our Foreign Office know exactly what Turkey wants, because, after all, Turkey lost a great deal of territory by Bagdad and in Palestine and Syria at the end of the last War, and I am hoping that they are not going to make claims, as Germany is doing at this moment, once they get our munitions, for the return of those territories. In that case our last state would be worse than the first; but, realising all the facts and dangers of these munitions, which might be used against us, one reason why we should have Turkey as our friend is we want nothing from Turkey: we do not want one inch of her territory; and, seeing that we have this honest intention, it is a good thing to lend money to our friends, both in order that they might defend themselves and for the encouragement of trade with this country. If it comes to a Division, I shall take my full responsibility in going
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  into the Lobby in support of the Government.
  6.17 p.m.
  Miss Ward: I shall be very brief indeed, but I should be less than human if I did not seize this opportunity to intervene in the Debate. If I recollect correctly, we on the North-East Coast have been since 1933 trying, within our limited powers, to press the Government to adopt the very line they have now embodied in this new agreement. If I may, without impertinence, express this view, may I say that if we had had an agreement of this kind at the time when the North-East Coast and other parts of the country were starving for work we would not have had the differences on foreign policy which have been expressed by my hon. Friends above the Gangway? I am not going to give away any trade secrets or say on what lines we had hopes of obtaining orders from Turkey, but I wanted to take this opportunity of congratulating my right hon. Friend on the decision which has been come to at last by the Government, and to ask whether this indicates an alteration of policy.
  That is to say, when we have done with the Turkish Agreement are we likely to initiate any other schemes with other countries in Europe? It seems to me that that might be a very useful policy to pursue. That is the question I really want to ask; but, again, I should be less than human if I did not refer to the somewhat lordly attitude of the Board of Trade when people like myself ventured to suggest, as I have said, over a period of years that something might be said for entering into agreements of this kind. We were always told quite definitely that the Government had no intention of ever entering into any such agreement. I take very great comfort from the introduction of this Bill, because it is an indication to me that when back-bench Members—I am not saying this from my own point of view alone, but I include everybody concerned in this—have a good idea, with responsible knowledge gathered from industrialists, if one prods long enough and hard enough one may arrive at a successful conclusion. I hope that in future when suggestions relating to trade are put forward by responsible industrialists, people who know their own business and how important it is to get trade

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  abroad, the Government will listen and take action a little earlier than they did on this occasion.
  Mr. Benson: Will the Minister let us know the rates of repayment under the Government guarantee?
  6.21 p.m.
  Mr. R. S. Hudson: We have listened to a number of interesting speeches from all parts of the House, and I think I should be justified in claiming that the balance of opinion is in favour of the proposal contained in the Bill The front Opposition Bench were, shall I say, clever in endeavouring to get the best of both worlds, because the first speech, from the hon. Member for Bishop Auckland (Mr. Dalton), was in favour of the Bill, so that if things go all right he will be able to say that the Labour party were in favour of the proposal, while the speech of the right hon. Gentleman the Member for West Stirling (Mr. Johnston) was critical, so that if things go wrong he will be able to say that the Labour party criticised the Bill. Apart from that we may claim that there has been general approval.
  Several hon. Members have given reasons which to them appear to justify our bringing in the Bill. Some said that it was in order that we might claim Turkey as an ally; others, that it was an endeavour to secure ourselves against a potential enemy in Germany. Let me repeat what my right hon. Friend said: that the origin of this Bill lay in a desire to help the economic development of Turkey. Ever since Ataturk got control he has been pursuing a policy of economic and industrial development in that country. It is very largely as a result of his personal drive that so much progress has been made. As my right hon. Friend the Chancellor of the Exchequer pointed out, one of the difficulties that the Turkish Government are meeting with at present is the fact that they have not got sufficient exports to pay for the goods, including munitions, which they wish to import. That is the basis of the difficulty that arose over our clearing agreement. I shall have a word to say about that in moving the next Order on the Paper. It is that difficulty in finding markets, the fact that they wish to import far more than they export, especially to this country, that led them to come along last year and explore with us the possi-
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  bility of developing their industries, their raw materials, their minerals, along lines that would enable them to get the chance, the probability, of developing an export trade to this country. That really is the answer to the question that has been put to me by a number of hon. Members in all parts of the House, "Why, if this is good for Turkey, do not you extend the system to other parts of Europe, especially the Balkans and Central Europe?"
  Mr. Stephen: There is one point on which I would like information. On page 5, the agreement says:
  "The said commodities are metals, mineral ores and concentrates and coal."
  Does that mean that when the agreement comes into operation the British Government are going to assist a coal selling agency to sell Turkish coal in the British Empire?
  Mr. Hudson: That is part of the export credits arrangements. I was saying that the question of extending this arrangement to other countries had been raised. We are perfectly aware of the situation in those countries and their desire to extend their markets, and possibly their desire not to be entirely dependent on one particular country. But the difficulty they are up against—I will not deal with it except very briefly, as it would be out of order—which differentiates them from Turkey, is that already we provide very large markets in this country for their products. If you take these Central and South-East European countries together, you will find that they sell to us at present twice as much as they buy: in other words we are very materially helping them at present; whereas in Turkey it is the other way around. I am not saying that we are neglecting the problem of Central and South-Eastern Europe, but obviously the solution is not the same as in the case of Turkey.
  Some other hon. Members, particularly my hon. and gallant Friend the Member for Abingdon (Sir R. Glyn), asked why we could not extend the Export Credits Department and include munitions. Again, I think it would he out of order to go into that in too great detail. But, briefly, the reason is that the Export Credits Department was set up, as hon. Members know, and consolidated last year, in order to help British export trade on a purely economic basis; and in order

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  to ensure that the risks which are ultimately guaranteed by the Consolidated Fund of this country are of a proper nature each individual transaction is revised by an advisory committee consisting of leading business men and others. Once you begin to bring questions of the export of munitions into the picture questions of politics inevitably come in, and it is not fair to ask a committee of business men to advise on questions of politics. It is for that reason that we have decided—and, I hope the House will think, rightly decided—to limit the question of export credits entirely to ordinary commercial work. We have shown by the Bill that where we think it right we do not hesitate to come forward with specific sanction.
  The only other point I think I need dwell on is the question asked by the right hon. Gentleman opposite as to what is happening to our bondholders. I noted with pleasure the new interest on the Front Opposition Bench in the welfare of rentiers and foreign bondholders. The right hon. Gentleman will find in the papers dealing with the Clearing Amendment Order that provision is made for the chief British bonds. After a Second Reading has been given to this Bill, we have to deal with the Clearing Office Amendment Order.
  Mr. Bellenger: Can the right hon. Gentleman indicate in any way the types of munitions to be exported?
  Mr. Hudson: No, Sir, I cannot say what the types are at present, for the very good reason that I do not know the details, nor, indeed, I think do the Turkish Government know the details.
  Mr. Maxton: Do not those who are likely to supply these articles know the types of munitions?
  Mr. Hudson: I do not know.
  Mr. Maxton: Does the right hon. Gentleman mean to say that they would undertake to produce arms that they were not capable of producing.
  Mr. Hudson: We have not undertaken to produce any arms at all.
  Mr. Maxton: I mean Vickers-Maxim.
  Mr. Hudson: We are to guarantee orders placed by the Turkish Government for munitions.
  Mr. Maxton: The hon. Lady the Member for Wallsend (Miss Ward) knows that some of the fellows up there are going to make these things, and, therefore, there is somebody in this country who knows. Cannot we know, if it is not secret and we shall not get into any trouble with the law, the nature of the things which Vickers-Maxim are going to supply?
  Mr. Hudson: I do not know yet, and to the best of my advice the hon. Lady does not know what munitions or what particular arms are to be supplied, but we have the safeguard that the contracts are to be approved by this Government. Therefore the House may take it that the Service Department will not allow any contracts to be placed in respect of any arms of which they disapprove or which would have a deleterious effect on our own rearmament policy. We have to face that problem. The hon. Gentleman the Member for Chesterfield (Mr. Benson) asked me whether I could say what were the dates and amounts of repayments under the export credit guarantees. They will start in 1939, £20,000; in 1940 £280,000, rising in 1945 to £970,000, and, ultimately, in 1951, to £1,320,000.
  Mr. Stephen: Can the right hon. Gentleman say whether the £10,000,000 will operate as a charge on the Turkish coal-selling agency in the British Empire.
  Mr. Hudson: No, Sir. The proceeds of any coal sold by the Turkish Government will be paid into the sterling account in London as security for the repayment of loans.
  Mr. Bellenger: Must the financial transaction go through London?
  Mr. Hudson: The headquarters of the Anglo-Turkish Commodities Company are going to be in London and therefore the Turkish Government will do the business through the Anglo-Turkish Company. I hope that that clears up the various questions which have been put to me, and I venture to think that the ultimate sanction of this agreement will be that this country and Turkey have come to an agreement to their future economic interests.
  Question, "That the Bill be now read a Second time," put, and agreed to.
  Bill read a Second time.
  Bill committed to a Committee of the Whole House for To-morrow.—[Major Herbert.]

  DEBTS CLEARING OFFICES AND IMPORT RESTRICTIONS ACT, 1934.
  6.35 p.m.
  Mr. R. S. Hudson: I beg to move,
  "That the Clearing Office (Turkey) Amendment Order, 1938, dated the fifteenth day of June, nineteen hundred and thirty-eight, made by the Treasury under the Debts Clearing Offices and Import Restrictions Act, 1934, a copy of which was presented to this House on the sixteenth day of June, nineteen hundred and thirty-eight, be approved."
  In order to make the position clear I shall have to go back a short time. In 1935 an Anglo-Turkish Payments Agreement was negotiated. Under that agreement, we found, owing to a vast amount of goods being shipped from this country into Turkey against the goods shipped from Turkey to this country, arrears of payment amounting to £1,000,000. Therefore, we superseded that by the Anglo-Turkish Clearing Agreement in 1936, and that, in turn, proved unsatisfactory in that the arrears continued to mount at the rate of £300,000 a year. In March of this year I had a meeting with representative Chambers of Commerce in this country and pointed out to them that the situation was becoming extremely unsatisfactory, that already a man who shipped his goods to Turkey had to wait 19 months for his money, and that the only feasible way of getting back to a reasonable condition of affairs seemed to be to devise a scheme for limiting our exports approximately to the amount which the Turks could pay for them, and that the best way to do this would be a voluntary rationing agreement run by the various Chambers of Commerce, to whom the bulk of exporters in this country belong.
  The scheme did not meet with approval and in the meantime the Turkish delegation arrived here to try to negotiate a wider agreement for the development of their minerals, harbours and railways which we know as the Anglo-Turkish Credit Agreement. I pointed out to the Turks that we could not possibly begin to negotiate about further credits unless they would, as a preliminary and necessary part of the negotiations, do something to improve the clearing and stop accumulations of debt. A great number of different methods were explored, and finally, after long negotiations, we reached this rather complicated document which the House now has before it. Briefly,
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  the basis is the restriction by the Turkish Government of imports from this country on a non-compensation basis to a figure of £500,000 a year, which is the amount we estimate they can at present export to this country. I emphasise the word "non-compensation," because compensation trade is not to be restricted in this way. The basis of restriction is to be in proportion to the amount of British exports to Turkey in 1935, so that, if the scheme works as we anticipate, from now onwards no further arrears ought to accumulate. But there was left the point which was raised by my hon. and gallant Friend the Member for Abingdon (Sir R. Glyn), namely, as to what we were going to do with the arrears which already amount to £1,500,000.
  The Turks have agreed to three main ways of providing funds to clear off or reduce those arrears. In the first place, under the contracts which are to be carried out with Turkey under the £10,000,000 scheme, a certain amount of money will be paid to Turkish workmen and will be spent in Turkey. The Turks have agreed that the equivalent in sterling of that sum will be paid over to the credit of the Clearing Office, and we anticipate that on a total of £10,000,000, that sum will amount to about £500,000. That will be the first item towards clearing off the debt. Secondly, they have promised an annual sum of £100,000 which they anticipate will be available as surplus from the Anglo-Turkish Commodities Company; and, thirdly, they have agreed that 10 per cent. of the moneys derived from compensation trade should also be paid into the Clearing Office for this purpose. From these three ways we anticipate that a vast reduction of arrears will be achieved in the course of the next two years, and we hope that the whole of the arrears will be paid off in the following years. There is also provision under which money lying blocked in Turkey will be able to be transferred by means of compensation trade, a right which up to now has been withheld.
  Mr. Pethick-Lawrence: Will the right hon. Gentleman say exactly what he means by compensation payments?
  Mr. Hudson: What happens at present is that if an exporter in this country wants to send some goods to Turkey outside the clearing on a compensation basis,

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  he writes to his importer in Turkey and says, "Will you find someone in Turkey who is willing to send some goods to this country on what amounts to a barter basis?" One difference between the clearing and compensation is that the exporter in this country has to pay a premium of approximately 30 per cent. to get the necessary goods. He either recoups himself out of his profits, or, as I understand in the majority of cases, he adds that price to the amount which the Turkish importer has to pay. The effect of this Clearing Order will be to increase from 30 to 40 per cent. the premiums which the British exporter has to pay.
  That is as simple an explanation as I can give of a rather complicated clearing. The main justification lies in the fact that there was no possible sense in allowing British traders to go on accumulating these arrears of payments. As I have already said, a man sending his goods to Turkey had to wait for 19 months for his money, and if the whole system had been allowed to go on, in a very short time he would have had to wait three years. It was in order to put an end to that deplorable state of affairs that, with the assistance of the Turkish Government, we have reached—and I hope the House will so regard it—a reasonable and satisfactory arrangement.
  6.44 p.m.
  Mr. Benson: The right hon. Gentleman has presented a very clear statement of the Clearing Order we are now discussing, but to some extent he has achieved clarity by carefully leaving out all the difficult parts. This Clearing Order is a very great break with traditional clearing orders. There are three points which require to be stressed. The first has already been mentioned by the right hon. Gentleman, and that is, that this Clearing Agreement puts a definite limit on the amount of our exports to Turkey. In the future, or so long as this Clearing Order remains unmodified, we shall be limited to the exportation to Turkey of goods to the value of approximately £500,000. That means that we have cut our normal exports to Turkey by half. I realise that the £500,000 does not include any exports under the credits guarantee arrangement.
  Mr. Hudson: This does not limit our total exports to Turkey to £500,000. The
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  British exporter will be at liberty, as in the past, to export whatever he can, on a compensation basis, and it is a fact that compensation trade has been growing. There is the limitation to £500,000, on the conditions that I have explained, but the whole of our total exports to Turkey are not limited to £500,000 a year.
  Mr. Benson: The amount of compensation trade is extraordinarily small. From the most recent report from the right hon. Gentleman's Department, the trade returns show that in 1935 the total amount of trade with Turkey on the compensation schedule, that is, under Schedule 4 of the Principal Agreement, amounted to only £140,000. Only a certain amount of the imported goods contained in the compensation schedule are compensation trade, so that when we come to examine the figures, there is not very much trade that can have been carried on under the compensation provisions according to the figures for 1935. What is happening now I do not know, but we do know that of the £140,000 mentioned a certain proportion is not carried on a compensation basis.
  Mr. Boothby: Is it not a fact that the bulk of this trade will be carried on under the medium-term credits under the Exports Credits Guarantee arrangement which is not limited in the way the hon. Member is trying to suggest?
  Mr. Benson: If I read the Guarantee Agreement and this clearing Order correctly, the whole purpose of the £10,000,000 guarantee has nothing whatever to do with our normal trade. It is for the purpose of facilitating capital exports to Turkey, in order that Turkey may develop her mineral wealth. I am dealing now not with those extraordinary capital exports from this country but with normal trade. When we were discussing the last Order, the Chancellor of the Exchequer said that this Clearing Order would be a facilitation of our normal trade and that it would facilitate the repayment of frozen credits. I am very sceptical about that. Obviously, compensation trading can have no effect upon our frozen credits. The form of compensation trade which has been mentioned will leave the frozen credits as they were. There is another form of compensation trade by which if a man has blocked credits in Turkey he can import into this country certain goods, but if he does that

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  he has to pay a premium of something like 30 per cent. The result has been that the amount of credits that have been liquidated in the past by means of compensation trade has been extraordinarily small.
  Mr. Hudson: I do not think the hon. Member has got hold of the right end of the stick. For the first time, under this new Agreement, people with block credits will be allowed to export goods. Up till now they have not been allowed to export. The hon. Member seems to think that they have. The reason why block credits have not been released is not due to any falling off of compensation trade, but to the fact that the owners were not allowed to bring them out. The hon. Member is relying on our annual report for 1935 when the compensation trade was very small but, as I have already said, compensation trade has developed very largely in recent years, and now it stands at a considerable figure.
  Mr. Benson: Can we have the figure?
  Mr. Hudson: About £500,000.
  Mr. Benson: Is that for the purpose of unblocking credits or is it compensation trade carried on a mutual basis, where the exporter from this country sends goods into Turkey and receives in payment goods from Turkey?
  Mr. Hudson: I have explained that there has never been any compensation trade for unblocking credits. It has been on the mutual basis.
  Mr. Benson: Then from now onwards we shall be entitled to use this compensation trade for that purpose. I have fallen into error, but I make no apologies, for anyone who has read the agreement and the Order and can understand them completely has certainly far better brains than I have. In the future, any advantage that we are likely to get under this Order for the unblocking of credits will not for some time come from the normal payment arrangements set out in Article 5. As far as I can read this Order it is much more likely to make normal clearing arrangements for our blocked credits much more difficult. References have been made to the list of articles which are to be exported through Anglo-Turkish Commodities, Limited, which are to include metals, mineral ores and concentrates, coal, wheat, cotton, timber, fresh fruit and vegetables and canned
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  goods, and also about £120,000 from figs and raisins. The amount in respect of these commodities is not to be paid into sub-Account A of the clearing account but into the special account in the Ottoman Bank of Anglo-Turkish Commodities, Limited. These receipts are not to be used for unblocking our frozen credits normal trade payments. The purpose for which they are to be used is set out very carefully on page 4—for bills owing Brassert and Company; for liabilities accruing under the Guarantee Agreement; for liabilities under the Armaments Credit; for certain amounts to be set aside for the future purchase of ships, and to meet the liabilities on certain bonds. Moreover, the Guarantee Agreement liabilities are going to be fairly heavy. By 1945 the amount will be something like £1,000,000 a year—strictly speaking, £900,000. There will be very little left out of this balance to unblock our credits or to pay for the £500,000 worth of trade that is allowed.
  I do not think that we can look for a very rapid return on the £10,000,000 that are to be invested in Turkey in the development of her mineral resources. You cannot develop the mineral resources of a country very rapidly. It will be three or four years before the Turks are in a position to develop their concentrates and mineral wealth to any considerable extent, and the result will be that for several years to come it is highly probable that we shall find that the £1,500,000 of frozen credits will be fixed where they are.
  I shall be glad if the right hon. Gentleman will give us more information as to Anglo-Turkish Commodities, Limited. Are they to have a monopoly of the export of these commodities from Turkey that are scheduled? There is no specific statement that they are to have a monopoly either in the Guarantee Agreement or in the Clearing Order, but are they virtually to have a monopoly? Furthermore, why are Brasserts, a private limited company, to be put in a specially favourable position? Other companies in this country have to take their chance. With regard to the annuities payable to the Aidin Railway Company and the Istanbul Telephone Company, the right hon. Gentleman said in reply to the right hon. Member for West Stirling (Mr. Johnston) that the points at issue with

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  regard to those companies were being carefully looked after. I believe that at the present time, of the majority of Turkish bonds 50 per cent. are paid in foreign currency and 50 per cent. in Turkish currency. Can the right hon. Gentleman give us any idea of the amount of Turkish bonds held in this country which are under this fifty-fifty arrangement? If he cannot do so, will he tell us why the Aidin Company and the Istanbul Telephone Company are put in a relatively favourably position? There is one thing in this agreement that I do welcome and that is the establishment of the Anglo-Turkish Commodities Company. Here the Government are in effect setting up an Import Board and also a world sales organisation. We on this side of the House for many years advocated an Import Board, but we never went so far as to suggest a world sales organisation. We welcome the acceptance of a policy of import boards, and congratulate the Government on going one step further and making a joint arrangement with Turkey for the sale by the two Governments of Turkish commodities throughout the world.
  7.1 p.m.
  Mr. Silverman: I do not desire to enter into the complicated discussion on highly technical matters which is quite safe in the hands of my hon. Friend the Member for Chesterfield (Mr. Benson), who has just spoken. But I think, perhaps, the occasion ought not to pass without calling attention to a general question of principle lying behind this agreement. I hope the right hon. Gentleman will correct me if I misquote what he said, but I think the effect of it was that there would be very little purpose in entering into negotiations for a new financial arrangement with the Turkish negotiators unless some provision were to be made for honouring to some extent past obligations. That is an admirable principle, and I congratulate the Government upon their return to the acceptance of a sound principle of that kind. But my mind goes back to the discussion in this House about international affairs—not on that occasion international financial affairs, but international political affairs—when the House was very greatly divided as to whether it was possible in negotiating with other States about the removal of difficulties and doubts and misunderstandings
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  and suspicions, to have any regard to the past; whether it was not much better to say, "Let us sweep away all these doubts and misunderstandings and suspicions and start with a perfectly clean sheet on a fresh basis, without calling upon people with whom we are negotiating for any evidence of good faith, even though they are negotiating a new agreement, without their having first carried out the old agreements of the same kind."
  I am glad to see that the Government now accept the much sounder principle of saying to people who are in default on their international agreements, "Before we enter into a new agreement with you, give us some evidence that you propose to honour the old one." I cannot help wondering how much better the state of Europe and the world would have been if the Government had applied that principle to Anglo-Italian negotiations a month or two ago. What a difference it might have made to Austria, what a difference it might have made to Spain, what a difference it might have made to Czechoslovakia, what a difference it might have made to the peace of the world. I hope that now that they have by accident, in a matter of mere money, international debts, tumbled across the true principle, they will not be afraid to apply it, with results beneficial to the future of mankind in these very dangerous and difficult times.
  7.6 p.m.
  Mr. Pethick-Lawrence: I do not propose to follow my hon. Friend the Member for Chesterfield (Mr. Benson) in his detailed analysis of the proposals of this Order. Though he has, perhaps, not understood the whole of this arrangement, I venture to think he got nearer to understanding it than almost any other hon. Member of the House, and, therefore, he is to be congratulated on his analysis of the proposals. It is a well-known saying that error is the first approach to truth, and when he substituted concrete realities for the general fog which permeated most of the House, I think he enabled the House as a whole, by the enlightenment he brought to bear, and the corrections which the right hon. Gentleman was able to make when he went slightly into error, to understand what we otherwise should have failed to do. I do not propose to criticise the main provisions of the agreement. Granted all the premises of the Govern-

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  ment, and granted the facts of the Turkish situation, I think that probably it was essential to do a deal of this kind in order to enable us to get the whole matter put on a more satisfactory basis.
  The few remarks I propose to make will be directed to the subject of the light that this clearing agreement and the need for it bring to bear on the fiscal policy of the Government and of some of their most enthusiastic supporters. There must have been brought home to those who listened to the right hon. Gentleman expounding this agreement—and I could only wish that a larger number of Members who are very strong advocates of a tariff policy had been here to listen to him—a, truth which many of them for many years have refused to admit, that you cannot effectively sell unless at the same time you are prepared to buy. He told us that Turkey, which from many points of view has been a most exemplary country, had done everything that a tariff reformer in his most exalted frame of mind wanted to have done: it had gone on buying and buying and buying British goods, and it had sold us next to nothing in return. Now that is an ideal country from the point of view of a large number of hon. Gentlemen who are supporters of the present Government. And yet this country, which has done everything that it should have done, has been convicted of getting more and more into arrears of debt, and something has to be done about it. Hence this agreement. Because it is perfectly clear to the right hon. Gentleman that Turkey cannot usefully to this country go on receiving our exports unless in some way or another it is prepared to send us imports with which they are to be paid for.
  It is interesting to observe that the right hon. Gentleman was, I will not say critical, but doubtful, about the position with regard to other countries. They have committed the other unfortunate error of selling us a great many of their commodities without being prepared to purchase an equal quantity in return. There, again, he showed us the necessity of equalising the buying and the selling. But, of course, what the supporters of the present Government have never recognised is that there is such a thing as triangular trade, and that under a properly regulated system it may perfectly well be that one country needs more of our exports than it is able to import into
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  our country, but it makes up for it by means of a third, and a fourth and a fifth country; and it is only when you take all those countries into account that you get the equal balance of trade which enables the economic system of the world to go on. At last, by means of these clearing arrangements and the necessity for them, some hon. Gentlemen who support the Government, and some members of the Government themselves, are beginning to realise that international trade can be made to be profitable to this country and that the way to effect that is not by attempting to cut off all our imports in order to stimulate our exports, because that result certainly will not happen.
  I am not saying for one moment that we can go back to unregulated private enterprise in imports and exports, owing to a number of causes. For one thing, we are getting a large number of monopolies in commodities all over the world, held by a very small number of companies and firms, and the position we used to be in in days gone by cannot be repeated. Again, different Governments, for political or semi-political reasons, practise a number of financial arrangements which interfere with the normal flow of trade, and, therefore, I am quite prepared to admit—and I think all the hon. Gentlemen who sit with me are quite prepared to admit—that regulation of trade in some shape or form must be part of the necessary policy of this country as well as of other countries. We do not agree with the precise form of regulation adopted by His Majesty's Government. We do not think that the effect of these things should be to enrich private individuals and companies by making private profit out of international or national trade, but regulation there has to be, and it has to be done in the interest of the country and of the community as a whole. Something will have been gained by the Debate this afternoon, and something further will be gained as the clearing arrangements get more and more understood, if they succeed in banishing from the minds of a few of the right hon. Gentleman's supporters the idea that trade is a matter of encouraging your exports and cutting down imports.
  Question put, and agreed to.
  Resolved,
  "That the Clearing Office (Turkey) Amendment Order, 1938, dated the fifteenth day of

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  June, nineteen hundred and thirty-eight, made by the Treasury under the Debts Clearing Offices and Import Restrictions Act, 1934, a copy of which was presented to this House on the sixteenth day of June, nineteen hundred and thirty-eight, be approved."

  MILK (EXTENSION AND AMENDMENT) BILL.
  Order for Second Reading read.
  7.15 p.m.
  The Minister of Agriculture (Mr. W. S. Morrison): I beg to move, "That the Bill be now read a Second time."
  The House will remember that last summer a Bill similar to this was introduced, and I then said that I hoped that would be the last occasion on which a Measure of this temporary character would be necessary. The grounds for that hope seemed then to be fairly solid. In the first place, the Government's proposals for more permanent legislation were in an advanced stage of preparation and were, in fact, issued as a White Paper before the temporary Bill became law. In the second place, we had a session in front of us, and although departmentally there were two very large Bills to be disposed of, it seemed perfectly feasible that the proposals described in the White Paper would be given legislative form in time to enable them to operate from 1st October next. The course of a Parliamentary Session can never be predicted with accuracy by the Government; it is a matter for the whole House; and during recent months we have had to devote a great deal of time to questions of foreign affairs and defence, matters of perhaps less peaceful import than the subject of agriculture, and it thus became evident that it was not possible to pass the long-term legislation before the Recess.
  I need not tell the House that it was with the utmost reluctance that the Government come to this decision. It is a feature of the diversified industry of agriculture that each of its problems requires separate treatment. We have had Bills dealing with livestock, pigs and bacon, and a group of problems which are comprised in the Agriculture Act, drainage and disease, cereal production, land fertility, and so on. Many more problems await solution, and plans for dealing with them are in various degrees of prepara-
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  tion and consideration. It is the Government's intention to proceed with each problem legislatively as time and opportunity offer in an attempt to get a balanced agriculture founded on the principles of the Agriculture Act. One, and only one, of these problems is the problem of milk, and we hope to introduce legislation early next Session to give effect to the comprehensive policy described in the White Paper to which I have alluded. In the meantime, it is necessary to retain the present protection and assistance to the milk industry for another 12 months, and that is the purpose of the Bill. As the Bill is drafted very largely by reference to previous Acts, I thought it would be for the convenience of the House if a White Paper was available showing the relevant sections of existing legislation and how they will be modified if these proposals are accepted.
  Clause 1 continues the system of assistance which has been in operation for the past few years for another 12 months. That system concerns the continuance of advances to recoup the producers of liquid milk if they have to sell milk for manufacture at a very low price. The benefit of this provision goes to the producers of milk, not to the manufacturers, who have their prices determined by the price of competing imported products, and not by this scheme. That provision is familiar to the House and I need not waste any further time upon it. Clause 2 proposes an extension for 12 months of the period in respect of which Exchequer grants can be made to the milk marketing boards towards their expenses in giving effect to approved schemes for increasing the demand for milk. Of these schemes the best known is the milk-in-schools scheme, and the House may be interested in the figures. Before the scheme started about 900,000 children were receiving milk in school under arrangements made by the National Milk Publicity Council. This number had increased to 2,000,000 when the new scheme was launched in October, 1934, and it is estimated that by this time 2,750,000 children are participating. Over 23,000,000 gallons of milk were consumed under the scheme in England and Wales in the 12 months ended last September, and judging from recent figures which I have seen this is likely to increase in the following 12 months to such an extent as to involve a consumption of

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  at least 25,000,000 gallons. As stated in the White Paper, this scheme has undoubtedly proved its merits, and the Government attach great importance to its continuance. We have also taken the opportunity to give consideration to certain minor difficulties of administration which experience has shown to arise, and during the next 12 months we hope to, make improvements in that respect.
  Grants have also been made in the past to the milk marketing boards towards the cost of a scheme known as the Press and poster publicity scheme, at the rate of £30,000 a year in the case of the English board and £10,000 a year in the case of the Scottish board. The Government feel that the milk marketing boards should now undertake full financial responsibility for these activities, and it is proposed, therefore, to give no further aid to Press and poster publicity schemes after the end of next September. On the other hand, it is hoped to introduce in the autumn a scheme on the lines foreshadowed in paragraph 21 of the White Paper, under which local authorities will be able to secure milk at a reduced price for the purposes of their maternity and child welfare arrangements. Local authorities will thus be in a position to extend their present schemes and to make milk available to expectant and nursing mothers, and to children under school age, either free or at a reduced price as circumstances may require. Discussions are now going on with the milk marketing boards as to the arrangements by which this can best be brought about, and it is a departure which I am sure the House will welcome.
  In the meantime the Bill proposes that for those purposes the limit of the total Exchequer grant available should be increased to £750,000, that is to say £250,000 more than the £500,000 which in past years has been made available, and this will allow for the payment of grants for the maternity and child welfare milk schemes as well as for the various extensions of the milk-in-school schemes which are contemplated. I ask the House to recollect that this is the estimate of what we may expect to fall on the Exchequer in a full year; but it is hoped that the long-term legislation with its own proposals for financial assistance will be in operation well before the end of a year. Clause 3 of the Bill carries out the proposals which were contained in the
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  White Paper, that the boards should be relieved of liability to repay to the Exchequer advances made to them under the Milk Acts after 30th September last. If this were not done it would mean the possibility of the milk marketing boards having to repay to the Exchequer and then the Exchequer having to refund to them what they had repaid to the Exchequer. It is best to deal with that matter now. These are the main provisions of the Bill, and the remaining Clauses are consequential; but there is one matter arising out of the postponement of the long-term legislation on which I ought to say a word.
  It has been represented to the Secretary of State for Scotland and myself that many milk producers have during the past year incurred expenses in bringing their herds and methods of milk production up to "attested" or "designated milk" standards in anticipation that the increased premiums set out in the White Paper would become operative as from October next, as was originally intended. The proposed Exchequer assistance towards these increased premiums was, and still is, regarded by the Government as one feature of a comprehensive and balanced policy which contains other proposals to which the Government attach equal importance. It is essential in their view that the proposals should be enacted substantially as a whole, and the Government are unwilling to include in the short-term Measure now before the House provisions to enable Exchequer assistance to be given towards the payment of increased premiums on quality milks, as this course would involve an anticipation of one part only of what is a comprehensive and balanced policy. If, however, milk marketing boards should decide as from 1st October next to pay increased premiums and allow increased rebates for quality milks on scales approved by Ministers and corresponding to those foreshadowed in the White Paper, the Government will be willing to commend to Parliament, as part of their forthcoming long-term legislation, a provision authorising retrospective assistance from the Exchequer and putting the milk boards in the same financial position as regards Exchequer assistance from 1st October, 1938, as they would have been in if the long-term legislation had been passed this Session, and not the short-term

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  emergency Measure which is now before the House. It will be seen, therefore, that the Bill involves no new controversial principle. It continues the existing assistance for the necessary period to enable the long-term legislation to come into effect; but we have taken the opportunity, as I have mentioned, to mitigate the loss and disappointment which would otherwise be caused by this inevitable postponement.
  7.29 p.m.
  Mr. T. Williams: This is one more of those temporary emergency Measures of which we have had so many since 1934. Every year since 1934 we have had a temporary or emergency Measure of this kind from the Minister of Agriculture, always with the promise that something more will be done in a few months' time. In other words, the Government are always promising a little bit more sugar for the agricultural bird. I think that the predecessors of the right hon. Gentleman developed a new technique in politics. The agricultural industry has always been promised a little more just before the Parliamentary Session has ended in 1934, 1935, and 1936 and 1937, and now in 1938 the same process is continued. The Government hope not only to quell agricultural riots but to retain the support of the industry. If it were possible to legislate industry into a prosperous condition then agriculture would be the most prosperous industry in the world. I imagine that during the last five or six years, there have been introduced more Bills dealing with agriculture than with any other industry.
  When the Minister talks about a balanced, comprehensive policy for agriculture, I cannot help wondering how he intends to get that balance, considering the numerous Acts that have been passed in connection with agriculture during the last six or seven years. Apparently there is no finality to the introduction of these temporary and provisional Measures, and I am not quite sure what is the real reason for that. With regard to milk, there are constant complaints that the farmers are not receiving as big a price as they ought to receive, but equally there are constant complaints that the consumers are paying a higher price for liquid milk than they have paid at any other time during the last 15 years.
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  Therefore, there is some weakness in the industry, and so far the Government have failed to detect it, or, if they have detected it, have not had the courage to deal with it. Every year hundreds of millions of gallons of milk go to the factories for manufacturing purposes, yet millions of families get less than enough liquid milk, and a large number of families get no liquid milk. We know—and I am sure that the Minister knows as well as anyone—that the potential demand for liquid milk in this country is almost unlimited. Nevertheless, we have the curious set of circumstances that year after year temporary Measures have been passed, but, apart from the increase in the consumption of liquid milk in 1937 as compared with the previous year, nothing fundamental has been done to solve the big problem.
  This temporary Measure is nothing more than one of those Measures which tide us over a certain period, but does nothing to deal with the fundamental problem. Despite the promise made by the right hon. Gentleman, which was merely a repetition of the promise that he made 12 months ago, I ask him when the Government intend to face this problem. They do not lack information with regard to milk, prices, distribution, quality, disease, and so on. There have been commissions and committees galore. It cannot be because of lack of information that the Government have failed to make up their minds, nor do I think it can be a question of finance. I am not sure that the vested interests, although they may appear to be small, are not to some extent responsible for the inaction of the Minister and the Government.
  A short time ago, the comments of dairymen, milk retailers and distributors in certain parts of the country prophesying what the contents of the main Bill, which has not been produced, would be, disturbed the Minister to such an extent that he replied in a speech in which he said that when the Bill finally emerged, those who had been making those comments would be astonished to find the difference between the actual Bill and the Bill that had been prophesied. I rather gathered from that statement that there was some timidity on the part of the Government in facing those who might be hostile to the Government's bigger policy if the Minister made up his mind

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  to deal with the fundamental problem of distribution. Last week-end the Prime Minister told the farmers of the country that the Government could not bring forward a big, comprehensive Measure because there had been so many Debates on foreign affairs. The fact of the matter is that the Government have been as inept in handling foreign affairs as they have in dealing with agriculture, and if the Prime Minister had told the real truth, that would have been it. That, combined with the Government's fear of facing the vested interests, is the real reason the comprehensive Measure has not been produced. The producers and the consumers are being made to pay because of the ineptitude of the Government in regard to foreign affairs and their fear of dealing with the vested interests on the distributive side of the industry.
  I am bound to confess that hon. Members on this side cannot oppose this very small Measure. As the Minister has explained, it merely extends the subsidy for manufacturing milk. I would have preferred to subsidise the consumption of liquid milk rather than subsidise the milk that goes to be manufactured. There is no sense in calling upon the wife of an unemployed man to pay 2s. 4d. per gallon for milk when it is sold to factories at 6d. or 7d. a gallon. As the Bill merely extends the small subsidy for manufacturing milk, I do not see how we can oppose it in the circumstances. Nor can we oppose the money that is set aside to provide for cheaper milk in elementary schools and for expectant and nursing mothers. But we want to see something bigger than these temporary expedients which have been so frequent during the last few years. We want to see something that will be more permanent than legislation in this respect has been in the past. I have said that the potential demand for liquid milk in this country is unlimited. We know, however, that there are millions of people in homes with small incomes who secure less liquid milk than they require. It is the Government's duty to find some means whereby some of the hundreds of millions of gallons of milk will find their way into the homes where there is a low income instead of going to the factories. It is nonsense to talk about "keep fit" campaigns when, in a large number of homes, no milk can be purchased for the children. On 27th June, there was a
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  letter in the "Times," signed by the joint secretaries of the St. Pancras House Improvement Society, Limited, in which they recounted their experience in connection with 600 houses which they control for rent and other purposes. They wrote:
  "Our daily work among the tenants of this society (about 600 families) in St. Pancras makes it depressingly clear that there are many to whom the cost of fresh milk is prohibitive. Our society's rents are below the London average, and are further reduced for 75 per cent. of our poorest tenants by family rent allowances averaging 2S. 6d. a week and going up to 5s. 6d. Yet we find that the poorest families—say, 20 per cent.—can only afford tinned milk. Then come those (about 70 per cent. of our tenants) who manage to buy half a pint of fresh milk daily. This is pitifully little for a family, but fresh milk is regarded as a luxury, though it is greatly preferred to tinned milk."
  Then they give two cases:
  "Here are two typical instances: (1) A large family with father on low wages buys four 4½d. tins of milk a week and can afford no fresh milk at all, except what the children have at school. The two-year-old child has never tasted it. (2) The mother of four young children (husband on unemployment benefit) has gastric trouble, is recommended milk, but not being pregnant or nursing she is not eligible for cheap milk from a centre. She gives her children what little fresh milk she can afford, leaving none for herself."
  Those two cases in St. Pancras must be typical of thousands of cases throughout the country. Therefore, in the permanent scheme to which the right hon. Gentleman referred, I hope an effort will be made not only to bring about a reduction in the price paid by the consumer but to see that some part of the very large surplus finds its way into the homes with a low income, even if the Government have to put up the money for that purpose, for only then will it be possible for the producers to get a fair price and the consumers to get the quantity of liquid milk that they require. We are as anxious as the right hon. Gentleman—and that is saying a good deal—to increase the higher grades of milk, and he will find no opposition from this side of the House when he does something in that direction.
  But we want also what we consider to be fundamental, a rational distribution of milk. Information is in the possession of the right hon. Gentleman—I will not refer to it now, but I will refer to it later when the comprehensive and balanced scheme is prepared, if ever—showing that some distributors, where competition has been reduced to a minimum, are making

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  over 4d. per gallon profit on every gallon of milk they distribute, which is infinitely more profit than the average farmer gets for producing it; whereas in other areas those who distribute the milk are making anything from ½d. to 1½d. per gallon profit. That indicates that there is a severe weakness somewhere in the distributive system. It is the duty of the Government to see that there is no weak link in the distributive system and that there is the most efficient scheme that can be devised. We want to see something that is different from the half-baked schemes, the weak and vacillating Measures, in which the Government have held back because 20,000 or 30,000 people happened to stand in the way. If the Government think of a fair, reasonable and efficient scheme that will be of benefit to the producer and the consumer, nothing ought to bar the way. Failing the production of such a scheme, the right hon. Gentleman will meet very stern opposition from these benches. In view of the importance of this industry to the economy of the country, we would prefer to see a Measure to which we could give whole-hearted support, which would help the farmers as we want to help them, but at the same time would help the consumers.
  7.43 p.m.
  Brigadier-General Clifton Brown: The hon. Member for Don Valley (Mr. T. Williams) referred to the delay which has taken place in this matter, and he accused the Government of having dropped the main Bill because of the time taken up by foreign affairs. I think the Opposition ought to take some of the blame for the dropping of that Bill, because if it had not been for their constant interruptions in connection with foreign affairs we might have got on much better. The hon. Member also said that the Minister had plenty of advice from all quarters as to what the Bill should be. I quite agree with the hon. Member. There has also been plenty of criticism, but whenever the hon. Member addresses the House, he speaks with knowledge and gives knowledgeable advice to the Minister. Like most producers, I approve of the extension contained in this Bill, although I regret that the main Bill has not been brought forward. I also approve of the fact that the Minister has issued a White Paper explaining the provisions of the
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  Bill, which enables us to follow it more easily, and I hope that he will do the same thing in connection with other Bills. One of my regrets is that, contrary to the advice of the whole industry—certainly of the milk producers and I believe of the distributors as well—the Minister has omitted from the Bill the levy subsidy proposal which was generally recommended. If the Bill is to be on the lines of the White Paper, apparently that is not to be included. A levy subsidy on imported manufactured milk would, I believe, be much more suitable than other forms of subsidy.
  The Minister is to present his long-term policy later in a Bill which will, no doubt, be contentious. There are proposals in the White Paper which will, I presume, be in that Bill and they are of a very controversial nature, dealing with such matters as pasteurisation and the rationalisation of that distribution. I ask the Minister, when he brings in that Bill, to give us plenty of time to consider it before the Second Reading is taken. It will be a very technical Bill and will need a great deal of consideration on all sides. There is one thing in the Bill now before us which, notwithstanding the explanation in the White Paper, rather puzzles me. In the Schedule, paragraph 3 states:
  "Sub-sections (2) and (3) of Section eight of the principal Act shall cease to have effect."
  I have looked up the principal Act, and I find that these Sub-sections deal with provisions as to revocation of schemes. I cannot see how they relate to this Measure at all, and I do not know what this part of the Schedule means. Does it mean that the revocation provisions of the earlier Act are repealed in so far as the present Measure alters the scheme in relation to payments by the board to the Exchequer? Finally, I wish to have a clear and definite explanation of what the Minister means by "concessions to the board in regard to quality milk." I understand that the promises made by the Government to producers of quality milk are not to be postponed, but I do not see anything in the Bill to authorise the spending of that money to help those producers. People have gone in for T.T. and other licences on the assurance that the quality premium contribution of the Government would be £1,700,000 for the year ending September, 1939, but I find no mention of this matter in the Bill

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  though the Minister promised that it would be all right. I would like to be assured that this sum of £1,700,000 is to be paid.
  7.50 p.m.
  Mr. R. Acland: The Minister confessed that he stood before us a disappointed man. I cannot help reminding him that this is not the first time, nor I believe the second time, that he or one of his colleagues has been in a similar position. Almost exactly 12 months go the Minister of Pensions said:
  "In the Debate on 17th February, 1936, the Minister expressed the hope that it would be possible to lay before the House a more permanent policy in the Autumn Session of 1936. I will admit that when in February, 1936, I was privileged to stand here and move that Financial Resolution I thought it would be positively my last appearance as far as any extension under the Milk Act was concerned. I did not expect that the speech which I then delivered would be a sort of prima donna's good-bye."—[OFFICIAL REPORT, 5th July, 1937; col. 119, Vol. 326.]
  We have had the other prima donna performing to-night, and it is the same old song. I wonder what odds the Minister would offer me against the probability of his having to repeat the same performance 12 months hence. Indeed one would begin to feel a little sympathy for the hon. Member for Evesham (Mr. De la Bère) if he supplemented his "mischievous curiosity"—as I believe it is called in these times—by attending to take part in these Debates and giving us the benefit of his constructive suggestions. The natural desire of the Opposition to do what we can to divert this Government on to sound lines in foreign affairs was blamed by the Minister for his failure to produce a policy. I wonder whether it is not the case that even now, after two years, the promised policy Bill is not yet ready in draft.
  I hope the Minister will realise that there is a big job of work to be done even within the four corners of this Bill. I would direct his attention to an answer given to-day by the Parliamentary Secretary to the Board of Education which did not, I think, satisfy hon. Members on this side. The hon. Gentleman said that in every district "all or some" of the schools were providing milk. It seems to me a disgrace that there should be big gaps in this scheme and that some of the biggest gaps should be in those very areas where milk is produced. I deeply regret
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  to say that I understand that some of the biggest gaps are in my own county, and I hope this Bill will give the Ministers concerned an opportunity of seeing what they can do to repair those gaps.
  Of course the really large tasks in connection with this industry lie outside the four corners of the Bill, and those tasks have been well known for a number of years. In 1933 the Grigg Commission reported that the multiplication of effort in the distribution of milk while bringing no great advantage to the consumer, added in no small measure to the costs of distribution. The Committee of Investigation in 1936 reported that they had been deeply impressed with the unnecessary elaboration and waste of effort in the present distributive organisation. They had had evidence of over 20 distribution services operating in one street and they said that this apparently was not an unusual occurrence. They saw in the proper organisation of the distributive trades a real hope of reducing prices to the consumer. I hope that the Ministers concerned will give their attention to that job in a really big way.
  I understand that difficulties have arisen, largely in relation to the position of producer-retailers. I have considerable sympathy for the position of the producer-retailers, largely because I believe that in them, owing to the direct connection provided between the producer and the consumer, there is a possibility, perhaps the only permanent possibility, of supplying milk—at any rate when they reach the T.T. grade—to the consumer without that depressing habit of boiling it against which the hon. and learned Member for Argyll (Mr. Macquisten) so wittily and so ably campaigns in this House. Even the producer-retailers themselves would welcome some opportunity of working out, with the assistance of the Government, a system under which it would no longer be necessary for them to leave a pint of milk at one house and then to pass by 50 or 100 houses before coming to the house where they had to deliver the next pint of milk to the next customer. Whatever may be the difficulties in the way of organising distribution I submit that they must be overcome and that it is the Government's job to overcome them. Eventually the Government must make up their minds on these problems, and put forward a policy which they will be prepared to

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  ee through against opposition and I hope hey will not allow commercial interests o prevent the people of this country getting milk as cheaply as they might have it.
  There is another point which I have put to the Minister before without getting an answer which I could understand. It relates to butter-making. If we got a better price for our butter, we could give a better price for milk, and the farmers who sell liquid milk woud not have such a large levy to pay so as to bring the pool price up to uniformity. One of the reasons why we do not get the price which we might get for our butter, is because it is not graded to the same standard as Australian butter and butter from other sources. Are we going to put this matter right as part of the long-term permanent policy, or are we to continue to face the competition of imported butter which comes in graded regularly in two, three or four recognisable grades, with British butter which is not graded? A newspaper which attempts to quote the varying prices of foodstuffs from week to week has said that no article comes on to the market graded sufficiently regularly as to quantity and quality to enable it to be designated as "British butter." If you quote the price of British butter as Is. 6d. this week and Is. 6¼d. next week, you have no assurance that you are comparing like with like. The essential element in the grading of butter is to have a staff of butter graders. The Australians have a staff of butter graders trained for the task. In 1936 I put this point to the right hon. Gentleman's predecessor—
  "Can we have an assurance that the Minister will forthwith survey the possibility of finding in this country a sufficient staff of really skilled butter graders to cope, at the start, say, with 75 per cent. of the butter output in this country?"
  I received the following reply:
  "I give the hon. Member all the assurance in my power that from the point of view of efficiency and quality what he has said will not be lost sight of."—[OFFICIAL REPORT, 2nd March, 1936; col. 1150, Vol. 309.]
  I want to know what is meant by that kind of assurance. When one asks the Government the specific question, "Will such and such a thing be done?" and the answer is that everything will be done that is necessary towards efficiency, does that mean that the point that one suggested will be done or will not? I asked
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  a similar question two years ago, and was given an assurance. Have the Government in those two years surveyed the possibility of finding a sufficient staff of expert butter graders to enable us, as part of a long-term policy, to put standardised British butter on the market? If that has been done, I shall be delighted. If it has not, will the Ministry undertake to look into the matter at once so that when the Bill comes before us, as presumably it will, in 18 months or two or three years' time, we shall at least have laid a foundation towards getting a satisfactory butter industry?
  8.1 p.m.
  Mr. Hely-Hutchinson: It always seems to fall to my lot to speak in this House on complicated subjects or else on those that arouse no particular emotional excitement; but as one of the original co-opted members of the Milk Marketing Board, I think it is right that I should make such contribution as I can to the Debate. I would like to say, however, that I am the only member of that popular body who is not a producer, and, therefore, I hope the House will feel that anything that I may say on behalf of the dairy farmers is not the special pleading of an interested party. Hon. Members opposite who have spoken have spent most of their time in expressing their customary disapproval of His Majesty's Government in general and have said so little about the Bill that it is rather difficult to make out the extent of their approval of it. I hope I shall acquire merit with you, Mr. Deputy-Speaker, if I follow the unusual course of returning to the Bill itself. I am sure the dairy farmers will gratefully acknowledge the cancellation under Clause 3 of the liability to repay the substantial sum which they might have to repay in the event of a rise in prices of certain categories of milk products, namely, butter and cheese. They will also appreciate the extension for a year of the guarantee which sets a bottom to the prices of those commodities, though they feel that this concession is of little value, and indeed they hope it will prove to be of little value, because it is most unlikely in present circumstances that prices will reach that minimum.
  My right hon. Friend's statement with regard to the contribution from the Ex-

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  chequer towards quality milk will have served to relieve the very great anxiety that was present to the mind of dairy producers throughout the country. There is no doubt that during the last year, based upon the statement of the White Paper of July, 1937, a great deal of money has been spent by producers in bringing their herds up to the attested standard and their premises into a condition in which they could produce the quality grades of milk and it would have been a very serious disappointment to them if they had to face further postponement of the additional contributions from the Exchequer for quality milk from October 1st next. While I cannot, of course, give an undertaking on behalf of the Milk Marketing Board, there is no doubt in my mind that they will welcome the assurance that my right hon. Friend has given and will immediately look into the matter and see how they can finance the payments pending the opportunity for the Government to implement that assurance.
  My right hon. Friend has mentioned a fact which was also present to the mind of the Milk Marketing Board, that the £750,000 foreshadowed under Clause 2 for assistance to the approved arrangements for increasing the demand for milk and especially for the milk-in-schools scheme and the nursing mothers and child welfare schemes in Special Areas is unlikely to prove sufficient, especially in view of the contemplated extension of those schemes. The £500,000 already allocated in this year by no means covers the existing schemes on the subject. Out of that £500,000 one-seventh goes to Scotland and the remaining £430,000 to England, of which only £400,000 is applied to the milk-in-schools scheme. The assistance given to the milk-in-schools scheme by the Government was based upon a contribution of 5d. a gallon on the first 18,000,000 gallons and 2½d. on each subsequent gallon. The figures in the present year are, I think, nearer 27,000,000 gallons than 25,000,000.
  Mr. W. S. Morrison: They may be hearer 27,000,000 gallons. I made a conservative estimate.
  Mr. Hely-Hutchinson: On the basis of 5d. for the first 18,000,000 gallons and 2½d. for every subsequent gallon, the total amount required would have come
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  very near £470,000, so that this year the Milk Marketing Board is falling short by £70,000. It is worth mentioning how the farmers come out of the arrangement. Under the milk-in-schools scheme milk is supplied in the schools at ½d. for one-third of a pint, which works out at a 1s. a gallon. The distributors under a special arrangement are charging 6d., therefore if it was left there with no assistance at all the Milk Board would be getting 6d. a gallon for their milk as against 1s. 4d., which is the contract price. The arrangement of giving a 5d. contribution from the Government brings the price to the board up from 6d. to 11d., which we know is just about the average cost of production throughout the country; but from the Milk Marketing Board's 11d. has to be deducted 1½d. on the average for transport. Therefore, even that part of the milk which is being subsidised at the full figure of 5d. a gallon is being supplied at a loss by the farmers; and when we get into the second category beyond the first 18,000,000 gallons where the assistance is only 2½d., that milk is being supplied by the board at a price equivalent to 8½d. less 1½d. for transportation, or 7d. Any milk for which no assistance is given is being supplied by the board at 6d. less 1½d. for average transportation. It will therefore be seen that even on the existing basis we need substantial assistance from the Government in order that the farmer may not be supplying this very valuable service at a loss.
  The Milk Marketing Board realises the very great value of the milk-in-schools scheme and also the nursing mothers and child welfare schemes in Special Areas. They do not want to be put into the position, through lack of funds, of having to say they cannot agree to further extensions of the scheme. I therefore hope that my right hon. Friend will find it possible to give some sort of assurance that if it should prove necessary supplementary Estimates will be brought in. I should like to say how much the Milk Marketing Board and the dairy farmers welcome the Bill and hope it will receive a speedy passage. I do not wish to strain the imagination of the House by asking it to visualise a body of contented and satisfied farmers, but I think we shall all agree that a prosperous body of farmers is an essential element in our general scheme of National Defence, if

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  we are to maintain the supply of homegrown food.
  8.12 p.m.
  Mr. Hopkin: I also regret that it has been impossible for the Minister to bring in his Milk Bill. This is the second agricultural Bill which was promised which the Government have failed to bring in. The other was the Wheat Bill. I cannot understand how it is that the Minister, knowing the importance of the Milk Bill to dairy farmers in general, did not start working on it last July and work incessantly until he was able to bring it in even now. I believe the dairy farmers have come to the conclusion that the Government have let them down. They are told there is no Parliamentary time for the Milk Bill or for the Wheat Bill. They see that the Government have taken no steps at all to meet the disaster that has overtaken them in the mutton and the lamb trade. They see that prices are falling in the livestock market. On the other hand, they see with envy the certainty and the rapidity of action that the Government took when complaints were made about the dumping of Opel motor cars, and they wish that any action that they could take could be met with such swift and certain action. They feel that if there had been a real will to help dairy farmers there would most certainly have been a way. The farmers accepted this scheme five years ago on the basis of the promised control of imports of dairy produce. There has been no such control established and no such control is visualised. It is certain that the policy of the levy subsidy has been completely abandoned.
  My first objection to this Bill is that it retains the 5d. and 6d. guaranteed minimum prices. I argued a year ago that if those were the proper guaranteed minimum prices two years before, they should have been 6d. and 7d. last year, seeing that the prices of all feeding-stuffs had gone up. If that were true last year, it is truer still this year. Are these figures of 5d. and 6d. too much? How much does it really cost the farmer to produce one gallon of milk? I believe it is agreed that it costs 10d. to 10½d. at the farm to produce one gallon. If to that is added the transport costs, the interest on capital and the payment for work by the farmer and his family, it does not cost much less
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  than 1s. 1d. to 1s. 2d. How much does the farmer get for his milk? I have before me the accounts of a farmer in my constituency who produced in May this year 272 gallons of milk. For that quantity he received £8 15s. 1d. That works out at 7.6d. per gallon. That is the amount this farmer received for all the work, responsibility and worry of producing one gallon of milk. At the same time, that milk was sold in London at 2s. per gallon. Can anybody justify that? I agree with what has been said by my hon. Friend the Member for Don Valley (Mr. T. Williams), that this is a scandal that ought to be ended. It is a problem with which the Government ought to deal, to see how it is that the man who does the work and carries the burden gets 7½d., and the man who sells the milk in London gets 2s. a gallon.
  Another farmer produced 414 gallons of milk in April. For that amount, on the contract price of 1s. 4d., the sum which he would have got under ideal conditions was £27 12s. The 1s. 4d., however, was reduced to 1s. 0½d. through no fault of the board. The reason was that two gallons out of every five that this farmer, as every other farmer, produces, has to go for manufacturing milk. For this he received 5d. to 6d. per gallon. That reduced the £27 I2s. to £21 11s. 3d. Two other deductions were made—collection £1 1s., and standard freight reduction £2 16s. 11d.—and the amount the farmer put into his pocket was £17 12s. 9d. That works out at 10.2d. per gallon. That milk was sold in London for 2s. 4d. I submit that that cannot be justified. There must be something wrong when, between the man who produces the milk and the person who consumes it, there is this gap. The gap certainly ought to be closed.
  I have to alter the speech I was about to make at this point because the Minister has now announced that quality premiums will be paid from 1st October I am certain that the announcement will be received with thankfulness and joy by a large number of farmers, and from no county will he get more gratitude than from the county of Carmarthen. Hundreds of farmers have spent thousands of pounds in order to go in for attested herds on the assumption that quality premium, would be paid after 1st October. The figures prove that. In Carmarthenshire, in July, 1937, there were 535 accredited

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  producers. In June this year there were 677. In October, 1937, there were 61 T.T. producers. In June of this year there were 133. Let the House particularly note that in July, 1937, there were 197 attested herds in the county, and in June this year there were 452, which, I believe, is the highest in the country. About the same number are now going through the course of attestation and have, I believe, passed the first two of the tests. These figures show clearly that hundreds of farmers in this one county alone thought that it was worth while even to borrow money to bring their herds up to the best standard so that they could come under this scheme of quality premiums.
  May I support what has been said by the hon. Member for Hastings (Mr. Hely-Hutchinson) regarding the amount which has been set aside, £750,000, for schemes for milk in schools and welfare schemes? I agree with him that that figure is entirely inadequate. These schemes are the best way of helping the producer. All that I have said about raising the minimum prices of 5d. and 6d. for manufacturing milk to, say, 6d. and 7d., affects the farmer in but a small way. I suppose that at the best he can hope only for an improvement of two-fifths of a penny per gallon, but if the Minister could assist in widening the liquid milk market through these schemes the price would rise from 5d. or 6d. to 1s. 4d. per gallon not an increase of two-fifths of a penny but of 11d. per gallon, and not only would he be helping the producer but helping also the consumer, who most needs help.
  Let us consider the additional £250,000 which has been promised in this Bill. It has been said, and rightly said I think, that £100,000 of that is already wanted for the schools, which leaves practically £100,000 to promote welfare schemes. At present these schemes are more or less confined to areas which are not very populous, but if a populous area such as Birmingham came along with a welfare scheme, would not the whole of this money be completely exhausted in a short time? I do not think the Minister would stand up at that Box and say that the new Milk Bill will be through this House by next Christmas. Suppose that by the end of December the whole of this money is exhausted. Then one of two things must happen. Either the board must carry the loss or the schemes must come to an end. Where in this Bill has
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  the Minister taken power to come to the House to ask for money for more schemes, a proposal which Members on this side, anyhow, will support every time? Will the Minister undertake to bear the total loss of the Milk Board on the milk-in-schools scheme out of any balance arising on any other scheme, or do we understand that when the money is exhausted all these schemes must come to an end?
  The job of producing milk is a sevenday-a-week job—more often than not 16 hours a day—for 52 weeks in the year. It is a job in which either the farmer or his wife or son must give constant attendance at the farm. It is a job which must continue throughout the year. With the cost of feeding stuffs where they are at present—in the little example I gave a few moments ago five cows were kept and the feeding stuffs for the month cost £3 12s. 6d.—it can easily be seen that at present the dairy farmer is having a bad time. The profits are small, the risks are great and the responsibilities are heavy. The Government are spending a good deal upon increasing the fertility of the soil. Having created soil fertility, do they want to use it? If they do, let them say so, and then keep faith with the producer.
  8.30 p.m.
  Mr. C. S. Taylor: It has been stated that the continual supply of Motions put down by His Majesty's Opposition upon questions of foreign affairs is largely responsible for the delay in bringing the new Milk Bill before the House, and I rather agree with that explanation, but not altogether. There is no doubt that interests throughout the county began to organise themselves against that Bill long before they knew what it contained, and there is no doubt that certain popular newspapers stirred up a great deal of fuss and bother, and advised active opposition, long before the full facts of the Bill had been even considered. The hon. Member for Don Valley (Mr. T. Williams) said to-night that there was much greater scope for the consumption of liquid milk in this country, and I very much agree with him, but I feel it is time the Government came forward with some definite views on the question of pasteurisation or non-pasteurisation. There is an opinion expressed by a very large body of medical authorities in this country, and, indeed, by our own Medical Committee in this House, in favour of pasteurisation. They express their views rather forcibly in the

  135
  "Times," but that does not do very much good one way or the other. We have not yet had any observations from the Government on pasteurisation, and there is no doubt that a great many people will not drink milk, not, simply, because they cannot afford to buy it but because they feel that the milk which is being supplied by a great many distributors is very unsafe. It is no good to run a "Keep-Fit" campaign and advise people to drink milk when medical opinion expresses itself so forcibly against raw milk.
  I believe that a rationalisation of the distribution of milk would be welcome throughout the country. I do not believe that anybody, whether a producer, distributor or consumer, would really quarrel with a sane and sound scheme of distribution. It has been suggested to-day that some distributors are making 4d. profit while others are making a loss of as much as 1½d. or 2d. That is the case in the distribution of milk at the moment and it is bound to be so when there are three or four, or perhaps half-a-dozen, distributors of milk all going down the same road, one calling, perhaps, on alternate houses and another calling at one house at the beginning of the road and one at the end. Unless the Government adopt block distribution there is no doubt that distributive costs will be high. The difference between the profit or loss made upon distribution has been referred to, but the costs of production vary much more than do costs of distribution. The hon. Member for Barnstaple (Mr. Acland) spoke of English butter; there is no doubt that English butter is not graded in the same way as is butter from the Dominions. That is a good argument for the idea of a secondary products board which would be responsible for seeing that English butter was of a definite grade and standard and then the public would know from week to week that their English butter, like certain cigarettes, would never vary.
  A good deal has been made in the last few weeks about the dumping of Opel cars, but they are only one item of manufactured products dumped in this country at a price which may be below the cost of production. Very quick action was taken in the matter of the Opel car. I humbly suggest to the Minister of Agriculture that he should consult his right hon. Friend the President of the
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  Board of Trade to see how many agricultural products, not necessarily manufactured, come into this country from countries like Holland and Denmark. There is no doubt that the producer and manufacturer in this country suffer very greatly from competition with those countries.
  Mr. Hopkin: Through a subsidy.
  Mr. Taylor: Yes, and there is no doubt that the quota system is not working properly. Some countries evade their quotas by exporting manufactured products, such as condensed milk, to other countries and allowing them to be re-exported from there to this country. The goods are, therefore, not marked with the country of origin. When, for instance, the quota of A country has been used up, the goods are exported to B country and re-exported from there. They thus evade our quota restrictions. I suggest that my right hon. Friend might usefully confer on this matter with the President of the Board of Trade to see whether any anomalies can be removed. I am very sorry that we have not been able to have the Milk Bill introduced now. I firmly believe that had people not been so misinformed as to its contents, or what were supposed to be contents unfavourable to their interests, the Bill would have been before Parliament this Session.
  8.38 p.m.
  Mr. Ridley: If, in the next week or two, Members see a Maypole set up in New Palace Yard and people gambolling round it, they will know that a party of constituents from Carmarthen, represented in this House by my hon. Friend (Mr. Hopkins) have come to London to do honour to the Minister of Agriculture. We have been assured by a very large number of people that they are very disappointed at the non-production of the promised Milk Bill. In a sense, I suppose that one-third of a pint is better than no milk at all, and in the same way. to have this Bill is better than not to have a Bill, but as a substitute for the major Bill this is indeed a poor thing The hon. Member for Barnstaple (Mr Acland) has already described it as a piece of political procrastination. Not withstanding their respect for the Minister, a number of hon. Members will fine it, I think, as difficult as I did completely, to accept his explanation for not proceeding with the major Bill.

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  From the amount of literature that comes into the House from all sorts of interests in these matters, there appears to be a large number of people who do not like the prospect of compulsory pasteurisation or the prospect of rationalising the method of distributing milk. There is a vested interest which has managed very effectively to stay the Minister's hand. The Government have come to be known as one that will never stand up to anyone. They will not stand up to General Franco or to the electricity interests. I hope that before the week is is out they will stand up to the coal lords; and the Minister might have been expected to stand up to a herd of cows.
  According to the reply which the Minister gave me on 9th May, experimental schemes have been conducted by the Milk Marketing Board, and I would draw the attention of the House to what seems to be the significant part of the work. The experimental schemes were conducted in selected areas in which there had been a daily per capita consumption of .13 of a pint or 61 per cent. This means that the original per capita consumption in those selected areas was .2 and that it has now been lifted to .3; in other words in families in the selected areas the original per capita consumption of milk was one-fifth of a pint and it has now, by a special process used by the Milk Marketing Board and special encouragement, been lifted to something over one-third of a pint. Hon. Members need only examine their own domestic milk supply in order to understand how completely inadequate those amounts are compared with what we regard as normal and adequate in our own domestic requirements.
  The more I examine the figures of the special experiments conducted by the Milk Marketing Board the more appalled I become at the facts revealed. According to the "Home Farmer" for October, 1937, special schemes were providing milk at 2d. a pint to 4,691 families. They had been providing milk for families at about 25 per cent. of the price, when the positively alarming discovery was made that, before the scheme started, 970 families, or 21 per cent., had a daily per capita consumption of only .1 of a pint. I hope I am not encroaching on the limits of the discussion in underlining the point that there was in that case a daily per
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  capita consumption of milk of less than one-tenth of a pint. Surely the experimental schemes have produced enough data to justify a considerable extension of the schemes. In the sense that this Bill does nothing or hardly anything to make possible a widening of those experiments, and that we shall have to wait another 12 months before anything can be done, either in the enormous area outside, or within the selected and experimental areas, to deal with this important social problem, the non-production of the major Bill is indeed a great disappointment to everybody interested in that problem.
  In the very families in which there is a shortage of milk consumption there is a general shortage, and especially of protective foods. Such families have not sufficient butter, eggs, fruit or meat, and they are suffering from general food inadequacy almost to the point of physical starvation. I hope that the House will not mind if I detail personal experience which has some relation to this point, and to another point which my wife made yesterday when we were discussing the matter. She carried the matter a stage further by pointing out that the absence of milk in the home means unpalatability of what otherwise would be palatable foods. The Minister does not enjoy porridge without milk; it becomes a less palatable food. That factor further contributes to the general dietary difficulties of poverty-stricken homes. A friend of mine has in her house a girl from one of the distressed areas, and after the girl had been there for some time she was asked whether she would have some rice pudding, but Margaret, the girl, said very emphatically that she did not like rice pudding. She then recollected, and said: "I suppose I do like rice pudding, but just for a moment I thought you meant rice pudding made with water." What sort of race are we rearing on a diet of that kind?
  How can we feel comfortable in the face of the procrastination of the Government in dealing with this problem? It is an economic problem, and we must face the fact that the amounts allowed for unemployment benefit and unemployment assistance will not provide a diet of even minimum sufficiency. If the policy of the Government is not to be that of the New Zealand Government, namely, to raise

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  purchasing power in order to create and extend the demand for agricultural products, our Government must, for health purposes, use other measures to bring milk within the range of existing incomes, no matter how inadequate those incomes may be. It is startling to discover that our average milk consumption per head is the lowest of any great country in the world, and that our retail price for milk is the highest of any great country in the world. The two are, of course, related; they are, so to speak, the brother and sister, the light and shade, of one fact. To the extent to which policy can reduce the retail price of milk from the present abnormal figure of 3½d. per pint—the highest price that this country has ever known in July—to a figure which is even at all within the reach of people with inadequate incomes, we shall have done something, not only to stimulate the prosperity of the agricultural industry, but to stimulate the health of the people in those tremendous areas where it is now being sapped because of economic inadequacy. The Minister will say, brandishing the White Paper, that this is exactly what he proposes to do when time and opportunity permit. In the White Paper, issued exactly a year ago, these words were used:
  "Legislation to give effect to these proposals will be introduced as early as practicable next Session."
  That means this Session, which is rapidly drawing to its end. It may be that the Minister will tell us once more that time has stolen a march upon him, to say nothing of vested interests, and that, because the Government have been so busy with other things, they have not had time to deal with this matter. The proposals of the White Paper, therefore, except for the modification made by the Minister's statement, are not to be put into effect until October, 1939, and in the meantime, for another 12 months, the present inadequacies must continue, with all the appalling consequences which I have attempted to indicate. One-third of a pint is now being provided for an elementary school child when not less than one pint is reasonably required. The needs of nursing and expectant mothers and school children are satisfied to some extent in a very few specially selected areas, but in the country as a whole, in the Special Areas as a whole,
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  in the hard-hit areas as a whole, they are not assisted at all, nor is the question of cleanliness mentioned in the Bill. The exceptions and reservations made in the White Paper, and the time lags of two years in some cases and three years in others, will result in haphazard arrangements, some local authorities having orders and some not. The Minister may reply that these matters had better be discussed on the major Bill, but he ought to know that the House will expect a Bill that is major not merely in length, but in intention, purpose and contents. The delay in producing the major Bill is a very considerable disappointment, which has been modified to-night to some extent, but has not been modified at all in the direction which we regard as most important, namely, in the direction, by a considerable extension of the consumption of milk, of lifting and maintaining the health of our people.
  8.51 p.m.
  The Under-Secretary of State for Scotland (Mr. Wedderburn): The Government regret, as the hon. Member for Clay Cross (Mr. Ridley) regrets, the delay in the introduction of the main Bill, which we had hoped to bring before the House during the present Session. I do not propose to discuss whether the postponement is due, as was suggested by the hon. Member for Don Valley (Mr. T. Williams), to the ineptitude of the Government, or whether we ought rather to blame the loquacity of the Opposition on other subjects. The hon. Member has described this Measure as an annual July promise, and perhaps the necessary penalty of an annual July promise is that it must necessarily be accompanied by the annual July speeches. The speeches which have been made to-night are very much the same as those which were made in July of last year, and I am left with very little, or perhaps nothing, new to reply to to-day. What the hon. Member for Don Valley did say, however, was, as it seemed to me, very helpful to the purpose which I think all sections of the House desire to achieve, and, accordingly, the last thing I should wish to do would be to enter into any sort of controversy with him arising out of this Measure.
  He urged with some emphasis the necessity of having a better distributive organisation, which, of course, is what

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  the Government hope to achieve. There are great practical difficulties in the way of narrowing the gap between the price received by the producer and that paid by the consumer, but we have already declared that organisation is one of our objects, and I have no doubt that the hon. Member will give us his support. If he wishes to go further than we propose to go, that, perhaps, from our point of view, will be all the better. He also said something about the proportion of the total milk production which goes into manufacture, and the need for encouraging the liquid supply. That also is an object at which the Government desire to aim. It is, however, perhaps a little misleading to speak as if the whole, or a very large proportion, of that part of our milk production which is used for manufacture ought normally to be used for liquid consumption, because, as the House is aware, the production of milk is very much greater in summer than in winter. Unless you can persuade people to drink more milk in summer than in winter you will find that you have a surplus at some part of the year. I do not think milk is one of those beverages which is consumed in greater quantities at one time of the year than at another, and it is desirable that there should be no shortage; so it is inevitable that over the year there should be a substantial amount surplus to our liquid requirements which will have to go into manufacture. But the figures for last year, as compared with those for the previous year, showed a very great alteration in the proportions. The consumption of liquid milk increased from 669,000,000 to 720,000,000 gallons in England—that is an increase of 51,000,000—while the sales of milk for manufacture decreased by a somewhat similar amount.
  The hon. Member for Barnstaple (Mr. Acland) again raised the question of butter grading. The grading of factory butter is not strictly an agricultural matter, and although grading of butter is part of the National Mark Scheme, and advice is given to factories by officers of the Ministry, we regard it as primarily the duty of manufacturers themselves to see that their butter is properly graded for the market. The House will appreciate that Exchequer payments under this Act in respect of milk used for manufacture are designed not so much to foster a home butter industry as to give the Milk Boards
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  a minimum return for the milk which at present cannot find a market for liquid consumption.
  An hon. Member referred to New Zealand and Denmark. It would be hardly possible in this country to have a system of butter grading similar to that employed in those countries. In those countries butter can be conveniently graded at the port, but it would be uneconomic to centralise supplies for the purpose of grading in a similar manner here. Indeed under our present system, it would be hardly possible for the Government to organise such a system. However, the trade could do so. All the Government can do is to set up standards under the National Mark Scheme and see that they are observed.
  My hon. Friend the Member for Hastings (Mr. Hely-Hutchinson) and the hon. Member for Carmarthen (Mr. Hopkin) both referred to the possible inadequacy of the sum that is provided under Clause 2, though they spoke from rather different points of view. The hon. Member for Hastings thought that this sum might not be sufficient to reimburse the Milk Marketing Board for the expenditure it incurs under these schemes on the existing basis. He did not, however, take account of the fact that if it were not for the existence of these schemes the farmer would not be able to sell most of the milk except for manufacture, and would therefore be obliged to dispose of it at a very much lower price than he would have received if he had sold it for liquid consumption. The hon. Member for Carmarthen, speaking from another point of view, thought that the amount provided in the Bill would not be sufficient for what ought to be done in the way of promoting the greater consumption of milk, through the local authorities' maternity and child welfare centres, in the case of expectant and nursing mothers and children under five years of age. It is anticiated that the annual cost fo these schemes will eventually exceed the figure of £750,000 a year provided for in the present Bill. The maternity and child welfare scheme will, however, inevitably take a little time in getting under way, especially as progress will depend on the initiative of local authorities, and it is not anticipated that the amount required for milk supplied under cheap milk schemes in the

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  year covered by the present Bill will exceed £750,000.
  It is feared by some Members that this figure will itself act as a brake on the progress of the scheme. I do not think that that would be so. The long-term Milk Bill, despite all the forebodings of hon. Gentlemen opposite, will be on the Statute Book in less than a year from now, and, if necessary, provisions in that Bill for cheap milk schemes could come into force before October, 1939. Of course, that is a matter for consideration in connection with the Bill itself when it is introduced. The Government do regard as a most important part of their milk policy that part which is designed to increase the liquid milk consumption, not only for the benefit of the industry itself but also for the benefit of those considerable sections of our population among whom it is so very desirable to encourage a greater consumption of milk than there is at the present time.
  Question, "That the Bill be now read a Second time," put, and agreed to.
  Bill read a Second time.
  Bill committed to a Committee of the Whole House for To-morrow.—[Mr. Furness.]

  ESSENTIAL COMMODITIES RESERVES BILL.
  Read the Third time, and passed.

  HOUSING (AGRICULTURAL POPULATION) (SCOTLAND) BILL.
  Order for Consideration of Lords Amendment read.
  Motion made, and Question proposed, "That the Lords Amendment be now considered."—[Mr. Wedderburn.]
  Lords Amendment considered accordingly.
  Lords Amendment: In page 16, line 28, insert new Clause (Additional provisions with respect to loans by local authorities).

  (1) Where in pursuance of Section seventy-five of the, Act of 1925 a local authority advance money to any person constructing a house in respect of which they have undertaken to give assistance under Part II of this Act, being a person entitled to grant a heritable security over the house, then, subject to the provisions of this Section and to such conditions as may be approved by the Department, the advance may, in lieu of
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  being secured by bond and disposition in security or other deed of security, be secured by an order (in this Section referred to as a "charging order") made by the local authority providing and declaring the house, or the house and such other subjects belonging to the person receiving the advance as the local authority and such person may agree, to be charged and burdened with an annuity to repay the amount of the advance.

  (2) The annuity charged shall commence from the date of the order, and shall be a sum of such amount and shall be payable to the local authority or their assignees for such period of years, not exceeding thirty, as the local, authority and the person receiving the advance may agree.

  (3) A local authority shall not make a charging order, and a charging order shall not be effectual, unless—

  (a) the local authority have served on every person appearing in the Register of Sasines as the proprietor of, or as holding a heritable security over, the subjects or any part thereof to be charged and burdened with the said annuity, notice that if no objection is intimated to them in writing by such person within twenty-one days from the date of service of the notice, they intend to make such charging order; and

  (b) no objection has been so intimated by any person on whom notice has been so served.

  (4) The provisions of Section twenty-two of the Act of 1925, shall apply to a charging order made under this Section in like manner as they apply to a charging order made under Section twenty-one of the said Act, subject to the following and any other necessary modifications—

  (a) Sub-section (2) shall apply as if after the words "advances of public money" there were inserted the words

  "(d) any rentcharge secured on the premises by absolute order made under and in terms of the Improvement of Land Act, 1864, or the Lands Improvement Companys' Acts, 1853 to 1920;

  (e) any loan made for agricultural purposes in pursuance of the Agricultural Credits (Scotland) Act, 1929, by any company incorporated for the purposes of that Act, where such loan has been secured on the premises by a bond and disposition in security or other deed of security duly registered in the appropriate Register of Sasines; and

  (f) any charge on the premises created under any provision in any Act authorising a charge for recovery of expenses incurred by a local authority under Section one hundred and twenty-five of the Public Health (Scotland) Act, 1897, or Section twenty of the Act of 1925, or Section fifteen of the Act of 1930, or by an owner under Part I of the Act of 1925";

  (b) Sub-section (3) shall not apply.

  (5) For the purpose of this Section a notice may be served by delivering it to the person

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  on whom it is required to be served or by sending it by registered letter to such person at his usual or last known address, or if such person cannot be found, to the Extractor of the Court of Session. An acknowledgment endorsed on such notice or a copy thereof, by such person, or, where the notice is sent by registered letter, a certificate subscribed by the clerk to the local authority that such notice was duly posted and having the Post Office receipt for the registered letter attached, shall be conclusive evidence that such notice was duly served on the date stated in the acknowledgment or Post Office receipt.

  9.4 p.m.
  Mr. Wedderburn: I beg to move, "That this House doth agree with the Lords in the said Amendment."
  This new Clause is almost identical with that which was inserted in the Housing (Rural Workers) Amendment Bill the week before last, to enable, in certain circumstances, priority to be given for loans for the purposes of the Act, by local authorities.
  Question, "That this House doth agree with the Lords in the said Amendment," put, and agreed to.

  ANGLO-TURKISH (ARMAMENTS CREDIT) AGREEMENT [MONEY].
  Considered in Committee under Standing Order No. 69.
  [Captain BOURNE in the Chair.]
  Motion made, and Question proposed,
  "That, for the purposes of any Act of the present Session to confirm and give effect to an agreement made between His Majesty's Government in the United Kingdom and the Government of the Turkish Republic, and for purposes connected with the matters aforesaid, it is expedient to authorise the following payments under the said Act, that is to say—

  (a) the payment out of the Consolidated Fund of any advances made by the
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  Treasury not exceeding in the aggregate six million pounds;

  (b) the payment into the Exchequer of any sums received by His Majesty's Government in respect of such advances;

  (c) the payment out of the Consolidated Fund of any sums so paid into the Exchequer;

  and to authorise the Treasury to raise money and to create and issue securities for the purpose of making such advances as aforesaid and to apply any sums paid out of the Consolidated Fund under paragraph (c) of this Resolution in relief of the National Debt."—(King's Recommendation signified.)—[Mr. Stanley.]
  9.6 p.m.
  The President of the Board of Trade (Mr. Oliver Stanley): I do not think that it is necessary to trouble the Committee on this point, except to draw attention to the fact, as has already been pointed out on the Front Bench opposite, that it is because of the new procedure that we take the Bill first and the Money Resolution afterwards, and I think that it met with approval from all sides of the House.
  Mr. T. Williams: For the purpose of allowing Ministers to retire fairly early so that their thoughts will be clearer and more constructive, and that they will be able to produce real legislation, we do not intend to oppose this Resolution.
  Question put, and agreed to.
  Resolution to be reported To-morrow.
  The remaining Orders were read, and postponed.

  ADJOURNMENT.
  Resolved, "That this House do now adjourn."—[Mr. Furness.]
  Adjourned according at Nine Minutes after Nine o'Clock.