HC Deb 24 May 1938 vol 336 cc1067-178


Considered in Committee.

[Captain BOURNE in the Chair.]



Motion made, and Question proposed, That a sum, not exceeding £211,444, be granted to His Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1939, for the salaries and expenses of the office of the Committee of Privy Council for Trade, and subordinate Departments, including certain services arising out of the War."— [Note.—£109,000 has been voted on account.]

4.5 p.m.

The President of the Board of Trade (Mr. Oliver Stanley)

I must confess that the proceedings in the last few minutes have tended to put rather a damper on any speaker in this House; and I only hope that such will be my reticence in the course of my speech that I shall have no reason to fear any of those obscure terrors which the hon. Member for Dundee (Mr. Foot) threatened. It has been the custom of my predecessors, on the first occasion when the Board of Trade Vote is discussed in this House, to start by making a general survey of the course of trade during the year that has passed and the prospects of trade as they are at the moment. It is a practice which the Committee appreciates, and it is one which I intend to follow. But I must confess that when I was preparing my speech I found difficulty, not in knowing what to say but in knowing what, in such an enormous range as is covered by my Department, to leave out. I am sure that hon. Members will appreciate that if there are many matters to which I do not refer and which I leave to them to be raised in Debate so that they can receive an answer at the close, it is not because I do not think them important; it is merely because there is not time to cover all subjects. With regard to one matter of particular importance, which hon. Gentlemen opposite, I know, want to discuss—that is the question of coal—I shall not refer to it at all in my speech, as my hon. Friend the Secretary for Mines will intervene in the Debate later in order to deal with points that have been raised upon that subject.

It is just about 12 months ago that my predecessor, Lord Runciman, addressed this Committee on an occasion similar to this. In the course of that address he was able to give not only an extremely encouraging report of the year that was past but to express optimistic views as to the future. Indeed, the period in which he spoke, the spring of last year, was a period of the most intense industrial activity. In almost every branch of industry in this country orders were pouring in, but, as many realised at the time, those orders were not necessarily based on the actual level of consumption, but to a large extent were based on forecasts of increased consumption in future. The result was that not only was current production high, but order books were full. To some extent that very activity bore within it the seed of its own decline. The activity was of too feverish a character. Many of the orders being booked at that time were not really genuine orders, in this sense—there are examples which hon. Members in all parts of the Committee will know of—that they were based neither on the needs of the consumer at the moment nor indeed on the anticipated needs of the future, but were based very often on the fact that it was difficult to get delivery of more than a proportion of the orders that were placed, and the orders therefore were proportionately swollen in order to get the delivery which was required.

The results which have occurred in the 12 months which have passed, certainly as far as the year 1937 taken by itself is concerned, fully justified the prophecies of Lord Runciman. The year 1937, quite apart from certain weaknesses which developed towards the close of the year, was on the whole an extremely prosperous one for British trade. There was hardly a section of industry which was not able to increase its production, which was not able to increase its profits, where wages did not tend to go up, and where therefore the year contributed to the strengthening of that industry for the future.

I shall follow the course of previous speakers in my position by giving certain general figures for the year, figures of the kind which are used as the thermometer of industrial health. But I feel that it would be trifling with the Committee if I did not at the same time give some corresponding figures for the first four months of this year, to bring the industrial picture up to date, because although 1937 by itself was a good year, in the first four months of this year there has been, as the Committee generally knows, not only a certain slackening in the rate of increase of production that was going on before, but in some trades an actual decline. Before the discussion to-day the Committee will need not only the figures of last year, but the figures of the first four months of this year.

Take first of all the question of employment. The number of insured persons in employment in Great Britain in December, 1937, was 11,437,000. That is 200,000 more, on a comparable basis, than there were in December, 1936. The number last month was 11,390,000. That is 130,000 less than the year before, but still, of course, 2,200,000 more than in September, 1932, the lowest point of the depression. The numbers unemployed last month were nearly 300,000 more than a year ago.

Another test of the industrial activity of the country is that of railway receipts. Last year the total railway receipts were 4.5 per cent. more than in 1936, the increase being rather greater for goods traffic than it was for passenger traffic; but it is, of course, true that during at any rate some part of the year there was an increase in the rates charged, which makes a comparison with the previous year a difficult one. In the first 16 weeks of this year, however, the total railway receipts are only 0.8 per cent. more than in the corresponding period of 1937, and that in spite of the increased railway rates to which I have referred. Passenger receipts were 2.7 higher but goods receipts were 0.5 per cent. less. That tendency to decline has been a tendency which I am afraid has not been stable during the whole four months, but has declined at an increased rate over that period.

Another set of figures which is a very valuable test is to be found in the postal receipts. They were 4.3 per cent. greater in 1937 than they were in 1936, but in the first four months of this year they were only 0.4 per cent. above the corresponding period of last year, disclosing not a decline from what already was a very high level of activity last year, but a distinct slowing down of the rate of progress. The same thing can be said of the figures of the retail trade. The money value of sales was 7½3 per cent. more last year than in 1936. That increase was shared by all the areas except a comparatively small area in Central and West London. This area is, of course, quickly affected by movements on the Stock Exchange, and the decline in Stock Exchange activities which began last summer very quickly had a marked effect on these particular districts. The precise extent to which the increase in the money value of sales was due to an increase in the volume of purchases or to price movements is difficult to estimate accurately from the data available, but it is clear that the volume of retail sales did increase last year and has in fact increased over each of the last four years. During the first four months of this year the increase has still continued, but at a lesser rate as compared with the 7½3 per cent. of last year. The rate of increase in the average daily sales this year is 4.1 per cent., an indication, therefore, of some slackening in the rate of increase.

Sir John Wardlaw-Milne

Over 1936?

Mr. Stanley

The increase was 7.3 per cent. last year over 1936.

As regards the figures of industrial production there was last year nearly a 7 per cent. increase over the preceding year, following an increase of 9.5 per cent. in 1936 and 7 per cent. in 1935.

Mr. Aneurin Bevan

Does that mean that there has been an increase of 9 per cent. in capital production and an increase of 4.1 in consumption trades?

Mr. Stanley

There has been an increase of 7 per cent. in industrial production and an increase of 7.3 per cent. in retail trade.

Mr. Bevan

The distinction which is important is that it would appear that consumption trades have only increased by 4.1 per cent., while production trades have increased by 7 to 9 per cent.

Mr. Stanley

The 4.1 per cent. is an increase in the retail sales for the first four months of this year. I am dealing now with industrial production and giving the figures for last year when there was an increase of 7 per cent. over the year before. For the first quarter of this year industrial production is about 1 per cent. greater than a year earlier. That was a period of great activity. Retail sales show an increase smaller than that of last year. I do not think it is possible to draw conclusions between the two sets of figures of industrial production and retail trade, which the hon. Member seeks to draw because it leaves out the whole question of the export trade. With regard to external trade, last year the value of imports and exports was higher than any year since 1930. The value of imports was 21 per cent. greater than in 1936 and the value of exports 18 per cent. greater. Prices last year were considerably higher than in 1936, the rise being greater for imports than for exports, with the result that the increase in the volume of exports, 9½5 per cent., was greater than the increase in the volume of imports, 6 per cent.

I do not want to develop these figures or the corresponding figures for the first four months of this year because I hope later to deal with the extremely important and delicate question of the balance of-trade. It appears to me, from the figures I have given, that although production for the first quarter of this year still compares quite favourably with the very active period of the same time last year, yet in general the rate of increase has slowed down, and we all know that in certain particular industries not only has the rate of progress slowed down but that there has been an actual decline. What I think we are all asking is what is the reason why Lord Runciman's prophecy as to the year 1937 was quite correct and why it is that a longer optimistic view has proved not so accurate? The answer I am sure which comes at once to anyone who studies the question at all is the fall in commodity prices.

The fall in commodity prices coincided almost exactly with the first signs of any weakness in any of the industries of this country. In the spring of 1937, as hon. Members will recollect, commodity prices everywhere had an enormously feverish rise; using the "Economist's" figures they reached in the months of February and March last year the high total of 181.9 as compared with something like 140 for the average for 1936, and there were distinct signs not only here but in America that something more than a process of industrial consumption was causing this very violent increase, and that in fact a good deal of speculation was to be found in the commodity market. In these circumstances it was inevitable and indeed desirable that there should be some fall from an artificially exaggerated level. Hon. Members will recollect that the President of the United States gave public expression to the view in the spring of last year that the level of commodities was too high and should come down. Some fall, therefore, was both inevitable and desirable, but, once started, that fall has gone beyond the point where it was desirable to a point where by the uncertainties it has created and the losses it has made, it has had a serious effect upon world trade as a whole.

It seems to me that there are two main causes why this commodity fall was not arrested at the proper level and has continued its extremely disadvantageous decline. The first circumstance is the war between China and Japan. I think that has had a much greater effect on commodity prices and world trade than is fully realised by people in this country. It has had an effect both from the angle of China and from the angle of Japan. As far as China is concerned, over a period of two or three years she has been providing a market, not a great market but an increasing market for our export goods, and many of us, impressed by the new life in China, by the new organisation, by the greater security and by the prospects of raising the standard of living, were looking to this immense market as a possible solution of many of the export difficulties of this country and of other countries in the world. Of course, the effect of war upon hopes of that kind have been immediate and disastrous. Total exports fell from £3,880,000 in the first half of last year to £2,000,000 in the second half. For the first quarter of this year they are still on a low level. That, of course, is the obvious and direct damage done to our trade by this particular dispute.

What is less definite but just as important is the effect from the angle of Japan. Almost from the commencement of the dispute, certainly from the time it developed into a large-scale war, Japan has had to impose drastic import regulations. These import regulations were described as a restriction upon luxury imports. Anyone who considers the figures will see that in fact they go far beyond that and impose restrictions on and lessen the consumption of many of the primary commodities. Of all the figures the one which is most impressive and gives the best idea of what they have done to the general trade of the world is the figure for cotton. In the first three months of this year as compared with the first three months of last year the value of imported cotton has fallen from 345,400,000 yen to 73,700,000 yen, a reduction to something like 20 per cent. in the imports of cotton to Japan. We can all see what the ultimate effect of that reduction may be on Japan as an exporting country and the effect it may have on those who compete with her in the cotton markets, but the one immediate result of such a drastic reduction of purchases is to accentuate the decline in the raw material, to make more uncertainty and to add to the great difficulties of those who are conducting that trade. If I have given the cotton figures the wool case is almost as startling. Hon. Members know that exactly the same is the case of wool, and that it was the action of the Japanese buyers on the Australian wool sales last autumn which began the decline in the price of wool which in the last few years had appeared to have been arrested.

Mr. Holdsworth

Can the right hon. Gentleman give us the quantity; the amount is not altogether satisfactory. If we are to judge as to the effects we should have the weight.

Mr. Stanley

I cannot give the weight. The figures I have given were taken from the extremely interesting article in the "Times" the other day. It is, of course, possible to take into account the fall of the price of cotton and so work out the weight. Naturally the fall has not been so great in weight as in value although obviously it has been very considerable. The Far Eastern situation has been one of the causes of the fall. The other is one, to which I referred last November, when we had a discussion of this kind—the industrial decline in the United States of America. It is almost impossible for us to exaggerate the influence that the United States of America is bound to have on the commodity market. There you have 120,000,000 people, who normally enjoy a higher standard of life than any community in the world, who are dependent, for many of their requirements in raw materials, upon external trade. Therefore, the extent of their buying must have an important, almost a decisive, effect upon commodity prices generally. I will give one illustration of the decline of America as a purchaser of raw commodities. In 1937 they were buying from abroad commodities in raw materials at the average rate of 81,000,000 dollars a month, whereas the average rate for the first two months of this year was 49,000,000 dollars, a fall of 40 per cent. in United States consumption of raw materials purchased from the world outside her own boundaries.

Mr. Owen Evans

Has the right hon. Gentleman the figures of the manufactures from raw materials?

Mr. Stanley

I could give them but I did not extract them, because my argument was dealing more with the raw commodities, and I was using it as an illustration of the effect upon prices. Last November I ventured the opinion that the decline in America was due to causes more psychological and political in their character than causes of fundamental economics, and the junior Burgess for Oxford University (Sir Arthur Salter), who speaks with such authority in this House upon economic matters, agreed with me. I still hold that view. Unfortunately, there has in the interval been no change, but the decline which was then apparent has since continued. It is difficult for anyone, 3,000 miles away, to hazard an opinion, and it would be wrong for any of us here, certainly for me, to hazard an opinion as to the results or the effects of Governmental action.

It is true that industrial production in America, although it has fallen in the first quarter, has not been falling at the same rate throughout the quarter, and that the decline has been slower at the end than at the beginning. There has even been some slight recovery in the production of consumers' goods, and there has been a more than seasonal improvement in the value of construction contracts awarded. Hon. Members will have read in the Press that the President has announced a programme for stimulating recovery, what is technically known as pump-priming, the result of which cannot be apparent for some months to come. Recently one has heard opinions from people who have returned from the United States and who are connected with business opinions more hopeful of recovery than they were a few months ago, but one thing is certain, and that is that American recovery when it comes will be the biggest contribution that can be made towards a recovery in commodity prices, and the recovery in commodity prices is the biggest contribution that can be made to industrial improvement in this country.

Having given these general figures, I should like to deal with some of the industries in which hon. Members opposite are particularly interested. The Secretary for Mines will deal with coal. I want to say a few words about cotton, wool, iron and steel. Cotton and wool were the first and the most acute sufferers from this fall in commodity prices.

Mr. George Griffiths

If the Secretary for Mines is to deal with coal, will it be about II o'clock?

Mr. Stanley

No. It will be in the middle of the Debate. My recollection is that in the last year or two the same practice was adopted, and my hon. and gallant Friend will speak in the course of the evening.

The history of the cotton industry last year was linked in the most marked degree with the fall in raw commodity prices. Up till the autumn the outlook for the cotton industry had been more promising than it had been for many years. Spinning activity had increased to 92 per cent. of capacity, unemployment had fallen to under 10 per cent., exports of yarn were the highest since 1929, and deliveries of raw cotton to mills was the highest since that year. In August there were first published the preliminary figures of the American cotton crop which gave signs then, which were afterwards more than justified, of its being a record crop in American history.

The result was a catastrophic fall in the price of the raw material. So great was the crop even above the estimate that the price of the raw material fell at once, with the result that the favourable conditions in Lancashire have largely disappeared. This year exports have declined in yarns by 22 per cent. and in piece goods by 25 per cent., while unemployment has gone up from something under 10 per cent. to about 25 per cent. Lancashire and Yorkshire have been hit by two things. They have been hit by the fall as regards their own raw materials. [HON. MEMBERS: "How?"] Because once the price has started to fall people do not know where it is going to stop. If you could say that it would fall so much and no more, then the fall might stimulate rather than depress the price, but it is the feeling that one does not know whether it will not fall even more the next day, which leads to the results which we have seen.

Lancashire in particular has been hit very hard by this commodity fall and its effect upon their customers. The textile industry, particularly cotton, the cheaper grades of cotton, depends for its purchasers upon primary producers almost entirely. The big markets are in the East or in Africa among those who are engaged in the production of tropical and colonial products. No better illustration of that could be given than to quote Lancashire trade with West Africa. That trade went up by leaps and bounds in 1936–37 when the commodity prices in West Africa were rising, but the prices have fallen like a stone, owing to the cocoa dispute, and primarily the fall in the price of cocoa, and the consuming power of the native has been largely reduced.

These difficulties have given added point to the problem of reorganisation of the cotton industry. I do not know how far we shall be within the Ruling of the Chair in discussing a matter which may eventually result in legislation, but I may perhaps be able to say something on the Lancashire idea, or the idea of some people in Lancashire, as to reorganisation, and the negotiations which have been proceeding between themselves and me. It started last year when a deputation representative of Lancashire, including Members of Parliament, among whom was the hon. Member for Hulme (Sir Joseph Nail), came to ask the sanction of the Board of Trade to schemes for certain sections of the cotton industry, printing and dyeing. The decision of the Government was that we could not endorse those schemes. It was not only that those schemes contained elements which we could not approve, but we also felt that sectional schemes with no central guidance and not fitting, therefore, into the general picture of the industry as a whole, might appear to help this or that section of the industry, but might end by an accumulation of costly increases which would be disastrous to the industry as a whole.

I asked the Joint Committee to put forward general proposals to deal with the industry as a whole, and that was done last December. The Government considered the proposals and laid down certain outstanding conditions which were to be settled. The first of them was the question of a definition of the trade and the types of manufacture which were to be covered by the scheme. That is a matter which concerns not only Lancashire and cotton but other counties and other textiles. It was obviously essential that those people and those trades which might be covered by the scheme should know and be able to express their views upon it. Negotiations have proceeded between the Joint Committee and other textile industries, but they completely failed to reach any agreement between them. The position now is that I have myself during the past few weeks seen representatives of the Joint Committee, representatives of that section of the Lancashire cotton industry which is organising opposition to the proposal of the Joint Committee, and the representatives of other textile industries who may be affected by the proposal.

I have undertaken in the light of those interviews to lay the views of the Joint Committee before my colleagues in the Cabinet and to give them an early decision. Without going into the details of the scheme all that I would say this afternoon is that no scheme of this character, whether it is adopted by the Government or whether it is passed by the House of Commons, can, in the long run, have any beneficial results unless it has the great weight of the industry behind it. The whole desire of a scheme of this kind is that of self-government by the industry, the desire of the industry to run itself in a particular way, and that desire is bound to break down unless it is a desire that is experienced by the large section of the industry.

It is idle to deny that just as there is a very strong feeling in Lancashire in favour of this proposal, so there is a very strong feeling against it. Without in any way judging the respective merits of the two points of view, I should like to say that in the difficult times through which Lancashire is passing I can think of nothing more disastrous to it than a violent quarrel in the industry, with two sides split and indulging in violent propaganda, at a time when we want everybody to co-operate. It does seem to me that on all scores it is a situation which can best be met by the desire on the part of all to give and take, and to try to find whether differences are as acute as they would appear to be, and whether it would not be possible for them to do w hat the whole of this House would like them to do, namely, to produce a remedy for Lancashire. If they could bring before the House a remedy which would prove efficient in the case of Lancashire—

Mr. Remer

May I ask what my right hon. Friend means by a large section of the industry? Does he mean 80 per cent.?

Mr. Stanley

I was only making a general remark. I cannot put it accurately at the moment although, clearly, that is the sort of question which must be answered at the proper time. With regard to the question of the woollen industry that seems to follow much the same sort of course as the cotton industry. I have referred to the question of Japan and her abstention from the Australian market. The wool which was then 16 pence and dropped by Christmas to 13 pence is now about 11 pence. I am glad to say that for the past two or three months it has shown greater signs of stability and one does hear in the trade that that is having some effect and there are encouraging reports from some parts of the industry.

Mr. Levy

Would the right hon. Gentleman be good enough to deal with the textile woollen industry?

Mr. Stanley

Perhaps my hon. Friend would make that point in the course of the Debate. The other industries are those of iron and steel. I remember my Question times all last Summer and during the early part of the Autumn were almost entirely occupied in answering Members who had some firm in their constituency which was unable to get the steel or the iron which had been contracted for, in order to deliver it. Of course the early part of last year, and last year as a whole, was one of great industry, productivity and prosperity in the iron and steel industry. In 1937 production of pig iron rose to 8,493,100 tons and the production of steel ingots and castings rose to 12,984,000 tons. The figures are far in advance of anything that we have been able to show for the past 10 years. since that time, to a very large extent, output has kept up with demand. The delays have become less frequent and less long and even in the heavy section, which is still engaged to capacity and still has a large amount of orders on its books, the difficulty of delays has been largely done away with.

On the lighter side, there has been a considerable decline in the demands, and following upon that there has been a fall in the production. That is true of the output of pig iron and, unfortunately, during the spring a number of blast furnaces have been closed down. The hon. and gallant Member for Cleveland (Commander Bower) raised at Question Time a point of considerable interest. It was the action taken by the Iron and Steel Federation during the summer to try to meet what was then a situation of acute shortage, which, I venture to think, most people who studied the matter anticipated would continue for some time. The action they took was in two parts—first, to get through the Import Duties Advisory Committee, a reduction in the duties on foreign steel, both that imported under licence and the steel that comes in under different rates, not under licence.

Secondly, they wished to arrange for the purchase of scrap to meet the shortage which might be expected. As things have turned out the acute shortage passed more rapidly than was expected and to some extent the very large imports of iron and steel, which have taken place as a result of the policy, have been not an advantage, but an embarrassment, and account for some part of the unfavourable trade figures in the early part of this year, and also for the closing down of those blast furnaces to which I have already referred. I could not join in the comment of the hon. and gallant Member that this had been a mistaken and foolish action on the part of the federation. The danger at the time was very real. The danger was that a famine in steel would hold up rearmament and other important work, and the action taken was prudent. As hon. Members, when they read the answer I gave to-day, will realise, these import duties have been restored to the previous level, and to. a large extent the scrap and the pig iron purchased by the federation have already come in and no further commitment has been undertaken.

Miss Wilkinson

Does not that prove the contention that this matter is too serious to be left to the producing interests alone, and that there should be a greater representation of consumers of steel?

Mr. Stanley

I do not think that would have altered the case. The complaint here is that the industry made these arrangements for getting more steel and has now been left with it on their hands. Obviously the interests of the consumers would have been to press for more and more imports and the industry would have been left with more and more on their hands.

Miss Wilkinson

Yes, but it would have started earlier.

Mr. Stanley

There is another subject with which I would like to deal and that is the question of the balance of payments. The adverse balance last year amounted to £52,000,000, as compared with £18,000,000 the year before— although that £52,000,000 was affected to some extent by special transactions in silver amounting to £11,000,000 which though shown quite properly as part of the adverse balance do not give a true picture of it. That adverse balance of £52,000,000 is not of itself very frightening. It is true, the excess of imports over exports of merchandise have risen from £346,000,000 in 1936 to £432,000,000 in 1937. But an analysis of the cause of that rise would show these things; first, it was not due to the decline in our exports. Our exports had increased in volume by 9½ per cent. It was not due to the increase of our imports, which was only 6 per cent. in volume. The increase was not unexpected in view of increased prosperity. The increase of £86,000,000 in the adverse balance was due mainly to the rise in the price of imports. If you were to revalue the imports and exports of 1937 on the 1936 price level the adverse balance would be reduced to £8,000,000. This rising price of raw commodities was the one thing which all others had for some years been hoping to see. The fact that it was occurring did not give rise to any anxiety, because to a large extent the rising price of imports would be balanced by the rising receipts from exports. More disturbing than the figures of last year have been the figures for the first four months of this year. For the first three months, despite the beginning of the fall of commodity prices, the adverse balance increased. It was due partly to the increase of imports, but more to the falling off of exports. In April that tendency has been checked, and, compared with April last year, the adverse balance is less. One waits to see whether that tendency will continue. The striking point which hon. Members may not realise is that the whole increased adverse balance of trade in the first four months is covered by the increased adverse balance of trade of the United States. The increase in the adverse balance in all countries is £17,000,000. In the United States it is £22,000,000. With all British countries our balance has improved by £3,000,000 and with other foreign countries by nearly £2,000,000. It is true that this increase in the United States is due to certain fortuitous circumstances, such as a good American wheat crop and a bad Canadian one, and the increase in our imports of iron and steel to which I have already referred. But facts and figures of this kind need watching and must be taken into account in the negotiations now proceeding with the United States.

Mr. Holdsworth

One hears so many different accounts that it would be interesting to know how these figures stand in relation to manufactured goods. I hear stories which I am sure are incorrect.

Mr. Stanley

The rise in imports from America for the most part relate to raw materials or to the special classes of manufactures such as iron and steel. There is an increase of something like £3,000,000 in wheat, £3,000,000 in tobacco, £1,200,000 in iron and steel manufacture, and something like £2,000,000 in scrap iron and steel.

The whole question of the balance of trade leads naturally to another matter in which the Board of Trade is particularly interested and with which I desire to deal briefly. That is the question of trade agreements. By far the most important question arising in that connection is that of the negotiations which are now proceeding with the United States. Those negotiations have been protracted. Our mission has been there since last February. Hon. Members will recollect however that, under the American procedure, in connection with trade negotiation, provision is made for public hearings sometimes very prolonged and these were not concluded until, I think, some time in April. Any discussion between two great commercial countries like these must raise complicated and difficult problems and negotiations must necessarily be long.

I have already told the Committee of the great importance which I attach to a successful outcome of these negotiations. What I mean by a successful outcome— and only such an outcome will bring the least benefit either to us or to America or to the world—is a genuine trade treaty which provides for a fair expansion of trade on the part of both countries. Nothing is to be gained by some kind of political treaty and the United States and ourselves approach this matter from a purely economic angle. Nor do I think anything is to be gained by either side making anything in the nature of a unilateral gesture. The treaty when it comes, must be a treaty which can stand on its own legs, which is fair to both countries and which leads to a fair expansion of trade between the two countries.

The other matter to which I desire to refer in this connection, is that of the negotiations with India. Hon. Members will recollect that our Ottawa Treaty with India was denounced in May, 1936, as a result of an adverse vote in the Indian Assembly. In the Assembly, the spokesmen of the Government had argued strongly that the Ottawa Treaty was fair to both sides and that India under it was getting benefits as great as those she gave. Those views, however, were overlooked. They were defeated in the Assembly and as a result, in consequence of a promise made when they denounced that Treaty, prolonged negotiations have been going on to try to find a basis for a new treaty. Recently at the invitation of the Government of India—because it was the method of negotiation which they preferred and thought most likely to succeed—a delegation from the Lancashire cotton industry went to India to consult with what are called the unofficial advisers, that is the several gentlemen representing various industrial and agricultural interests in India who came over here with the official negotiators.

I am sorry to say that I heard only to-day that the negotiations between this delegation and the unofficial advisers have broken down, and that no basis of agreement could be found. Matters will now have to be resumed between the two Governments. I can only express my regret that it was not possible, by this method, to find some satisfactory settlement of the cotton question, because I cannot see how it is possible to conclude a trade agreement with India, unless we find a satisfactory settlement of the present cotton question and unless, in such agreement, we can get fair treatment for our cotton goods in India.

I would only add this with regard to the trade agreement policy. We have during the last year carried on the general policy of this Government, which has been to try by bilateral negotiations and by trade treaties, to reduce the barriers against our goods and so to expand, not only our own trade but the trade of the world as a whole. It is a method to which M. van Zeeland gave his blessing in his report. We believe in that method. We believe it has hitherto had a great deal of success and we desire to continue it. I am sure every one would wish to make it plain to countries abroad that, great as may be our desire to give them, as far as is compatible with fairness to our own manufacturers, access to this great consuming market, to a large extent the amount of that access must depend not only on us but on them. Unless they are willing to give us access to their market, as we give them access to ours, eventually ours must disappear.

We cannot any longer afford to make unilateral gestures in trade matters just as gestures of good will. International trade is vital to this country to-day, and under any agreement or any trade treaties with other countries, we must be assured of equal terms and fair play for our goods. It is a very difficult world in which to do business to-day. It is a very difficult world in which to negotiate. There are not many parts of the world now where you do not find some form of closed economy, whether it is subsidy, licence or control, the effect of which may be suddenly to upset any treaty and even to upset the course of ordinary commercial relations. To a large extent Governments are capable of pushing their consuming power exactly as they desire. This is even more a matter of the spirit than of the letter of agreements between Governments, and if foreign Governments and our customers in general in the world are not prepared to keep their markets open to our goods, then inevitably, through no action of the Government, through no decision of policy, the market here must contract.

He would be a rash man who, under present conditions, as illustrated so vividly during the last 48 hours, attempted to make any long forecast as to the course of trade in this country or in the world. Two very interesting reports have just been published. One is the report of the Bank of International Settlements, setting out the factors which differentiate the recession in America to-day from that of 1929, and prophesying a much quicker and sharper recovery. The other is the report just issued by Mr. Butler, of the International Labour Office, who also holds the view that the recession in world trade which took place in the spring of this year, is likely to be of comparatively short duration. He goes on to point out one thing which must be present to all our minds in a passage of solemnity and in a way of beauty which one would hardly expect to find in an economic report. The terrible tension under which the world is living to-day makes us not wonder that trade is declining but makes us wonder how trade ever recovered. It makes us wonder not how trade is lost but how there is any trade at all. It is a tribute to the immense potentialities of industry to-day, and to the invincible optimism of mankind, to the almost unbelievable prosperity which might come to the world if only these terrible clouds could lift and if only we could say to ourselves: For ten, or 15, or 20 years ahead, for my lifetime and that of my children, peace is certain and I have not to worry about the shattering of my security. There are many things which the Government can do for industry, whether by helping industry to reorganise, or by tariffs or agreements with foreign countries, but nothing of that kind compares in importance with what the Government can do for the industry of this country, if it can secure the relaxation of international tension, the removal of the fear of war, and the realisation that the springs of human activity and human prosperity would flow abundantly if only those terrors were removed.

5.12 p.m.

Mr. David Grenfell

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

I congratulate the right hon. Gentleman on his efforts to introduce a note of optimism into the presentation of the facts which he has given us this afternoon. I think he was over careful in his statement and in the anxiety which he expressed lest we should allow ourselves unwittingly to be influenced by the mysterious terrors to which he referred. The right hon. Gentleman had no need to draw upon his imagination or upon some secret source of information for the enlightenment of the Committee about these matters, and if I were to criticise the right hon. Gentleman's speech at all, I would say that he showed himself rather anxious not to open up too wide a field. Indeed he has been content with the repetition of figures more or less familiar to us, and has not launched into a thorough explanation of the causes of the present trade position. The question which he must put to himself, and which we must all ask ourselves to-day, is what is the reason for this very marked recession in trade or reduction in the volume of trade—I do not like the word "recession"—in 1938 as compared with 1937? The right hon. Gentleman is entitled to say that it is a difficult world in which to do business, but he did not relate the political difficulties of Europe and the world to our immediate difficulties in this country.

I feel sure there is much more to be said from his Department than he has said to-day regarding the causes of the reaction which we have witnessed since the end of last year. There must be some direct explanation of the present position which has not been offered us by the right hon. Gentleman. He has referred to conditions abroad and has attributed some of the trouble to the Chino-Japanese conflict. That is part of the explanation, but it is not all. Our trade with the East is only a small proportion of the immense figures which the right hon. Gentleman has quoted this afternoon. What he has said does not explain all. It does not explain the psychology of the position; it does not explain why there is all this unrest and uncertainty, and a reluctance to buy and sell. In order to find the reasons for those things, we must come to closer quarters with the subject. The right hon. Gentleman said that in America they are trying out some remedies. I am very much attracted by President Roosevelt's efforts, and I hope that he does not succumb to the fatalism which seems to have overcome His Majesty's Government, and which seemed to overwhelm the right hon. Gentleman from the beginning of his speech to the end of it. I shall not attempt to examine the position in the various industries on which the right hon. Gentleman made observations, as there are other hon. Members who are far more familiar with those industries than I am; but I shall make some general statements, because I do not think it is incumbent upon hon. Members on this side of the Committee to make a survey from exactly the same standpoint or to cover the same ground as the right hon. Gentleman.

However, I agree with the right hon. Gentleman that recent figures of trade and industry are disturbing. There is without doubt a general fear of serious depression. There is not an hon. Member who has not heard of the apprehension and concern of his constituents, and who has not received communications from this or that industry or authority regarding the effects of the trade decline during recent months. A fact which has been amply established and which need not wait upon the publication of any figures is that unemployment is on the increase almost everywhere. That fact alone is a matter for serious consideration by hon. Members. An increasing number of our people are failing to obtain employment, and if it were a question simply of making provision for the continued existence of the people who are thrown out of work, that would be an important enough matter for the Committee.

We ought now to devote ourselves to considering immediate steps for arresting a further decline in employment and a considerable increase in the volume of unemployment. That is a big enough problem, a heavy enough responsibility, to be thrown upon hon. Members and the Government; but when one ventures a stage further, and considers what will be the position two, three, four or five years ahead, and tries to imagine what the condition of this country is likely to be after the armaments programme has ended, one is appalled by the prospect. Unless the right hon. Gentleman and his colleagues in the Cabinet can give us something of real cheer, and not the whipped-up optimism of the latter part of his speech, unless he can give some substantial comfort to us, it will be very difficult to reassure hon. Members on this side and the public outside, who will take note of what we say.

The Minister has given us very little comfort this afternoon. Frankly, I am disappointed that there is nothing to dispel the gloom. As hon. Members who come from my part of the country will agree, there is perhaps more gloom, more pessimism and more despondency there than there has ever been; at the end of six years of depression in the South Wales area, people are to-day more disheartened than they have ever been during the whole of that time. Some words and some actions must come from somewhere to relieve the feelings of those people. Up to now there has been no evidence of any great concern on the part of the Government. During recent weeks we have heard speeches in the House about prosperity, but the word "prosperity" does not fit even the year 1937. The right hon. Gentleman used that word, and spoke about great prosperity and great production; but really the year 1937 was not one of comparative prosperity, for in that year a very large number of our people were not able to put in a day's work throughout the whole year. The word "prosperity" is not the right one to be used in that connection, and now that unemployment is increasing, it is rank blasphemy to refer to the condition of this country as being anywhere near prosperity. There is terrible distress, and despondency is increasing from day to day, because nothing is said either here or anywhere else, to give people in the Special Areas, the unemployed, any ray of hope or any courage to proceed on their hard and difficult way.

I regret to say that this afternoon I was not comforted by the Minister, and I regret that I have to bring to the notice of the Committee disturbing reports, which the Minister has not brought forward, showing that even rearmament has not brought work for all. There was an impression abroad last year that additional expenditure on armaments would bring plenty of work; indeed, I often heard it said in the House that there would not be sufficient workers to do the work which the rearmament programme would entail; I heard it said that there was already a shortage of labour. That has never been true. If there is a shortage of labour at a time when 1,750,000 people are unemployed, that is final evidence of a lack of organising ability on the part of those concerned with the running of industry from day to day. It is not true that, even with the expenditure of an additional £250,000,000 on armaments, work has been found for all the people in this country.

Sir Henry Fildes

Does the hon. Gentleman deny that there is a shortage of skilled labourers in some trades?

Mr. Grenfell

I have not met with such a shortage. I am sure that if there is one, it is due to lack of organisation, and not to lack of labour. This rearmament programme, which has been superimposed on our industrial system, has served as a camouflage to conceal the real condition of industry. The effects of the rearmament programme are not discernible to us. I confess that I do not know what industry specially benefited by rearmament, and I am not quite certain what industry has been stimulated by that rearmament programme. It has served as a kind of camouflage of the industrial situation, and has confused the judgment of many people who wish to understand what is taking place. The right hon. Gentleman referred to pump-priming in connection with America. Those who, like myself, were brought up in villages, where we used pumps, often resorted to pump-priming. It is a very good thing and it is fully justified when the lifting bucket fits too loosely in the pump barrel, but when it fits the barrel all right, one does not need pump-priming. The pump-priming to which the right hon. Gentleman referred is an expedient which is used when there is something wrong with the economic system. It is an attempt to put forward as a good working pump some expedient which prevents some leakage, but does not increase the capacity of the well, and does not add to our resources and supplies.

It is true that certain industries in this country have been stimulated by the appearance of this programme, but, frankly, if one balances the gains and the losses in 1938, compared with 1936, although we spent £250,000,000 of additional money collected from the taxpayers, the effect is negligible. It appears to have gone through the pump somehow, but it has not led to a larger volume of work and wages and more comfort and contentedness for our people. The figures for demand are declining. I will not go over all the figures, but I think I shall be able to show that there has been a falling-off in demand which can be attributed only to fear and panic caused by the rearmament programme itself. One cannot call attention to the risks of war and the need of preparation without driving some people off their ordinary course of life. I am certain that the falling-off in demand can be explained partly by the enormous expenditure on armaments, and the psychological influences of that expenditure. The right hon. Gentleman spoke about the psychological causes of the difficulties in America, but if he will look closer at home, he will perhaps find some psychological causes for certain of the things which trouble us here.

I will quote some figures to which the right hon. Gentleman did not call attention directly. The number of people unemployed in this country is 366,417 more than it was 12 months ago. The increase in unemployment goes on from day to day, and there is no lessening in the volume. I find it very difficult to explain how the sum of £250,000,000 can be spent without finding more work for people. Figures have been given again and again in the House to show that directly or indirectly the expenditure of £1,000,000 provides work for 4,000 people. If that figure be right, the expenditure of an additional £250,000,000 on armaments ought to have found work for 1,000,000 people. Yet we find that there are 130,000 fewer people working in April, 1938, than in April, 1937. I do not know where this expenditure goes, but that is a subject for investigation.

I wish now to refer to the widespread unemployment by reference to a few short notes which I have taken from the reports of the Ministry of Labour. I find that, as regards employment in April, there was in coal-mining a further decline; iron mining, further decline; pig iron, iron and steel and tinplate, further decline; textile engineering, further decline; shipbuilding, ship repairing, slight decline; textile industries, cotton, further decline, very slight, much worse than a year ago; woollen textiles, very slack; hosiery, slack; textile bleaching, bad; leather trades, decline, much worse than in December, 1937; pottery and glass, slight decline, slack on the whole; fishing, very bad; dock labourers and seamen, slack generally, and worse than in the corresponding period of last year; boots and shoes, increased unemployed. I relate those facts to the Committee because I want hon. Members to be seized of the very widespread decline in trade, for which no explanation has been offered. Attention must be given to this decline some day. If the Government cannot find an explanation, then their responsibility is indeed a formidable one. I would not like to occupy the right hon. Gentleman's position for another 12 months unless I made a closer approach to this problem than he has made.

The industries of coal, iron and steel, tinplate, textiles and building are those that need most attention at the present time. With regard to coal, there was throughout 1937 a fresh demand which was maintained until almost the end of the year. The production for November and December, 1937, exceeded 21,000,000 tons per month, but for January and the successive months of this year the production has declined. More than 1,000,000 tons a month has been lost in production in 1938. There has been a reduction in the inland and export sales. Pits have closed down temporarily or are working on short time. The number of men unemployed has risen every week. The percentage of unemployed miners has gone up from 11.8 to 14.4. In some districts the percentage is very much higher. Wales as a whole has as unemployed body now standing at 25.9 per cent. of the industrial population. The county of Carmarthen has 31.7 of the industrial population out of work, an increase of 11.4 in the last 12 months; Glamorganshire, 28.2, an increase of 4.2; Monmouthshire, 25.1, an increase of 0.8 per cent.

Coming to the coal mining areas, a place called Tunble has an unemployed population of 32.6 per cent., which is 22 per cent. more than 12 months ago; Mountain Ash 52.7, an increase of 29; Ogmore Valley 106, an increase of 85. That is the condition of the industry in South Wales which is the most important of all the coalfields, from which 71 per cent. of the British exports are sent and from which comes the best steam and anthracite coal in the country. That coalfield is sinking deeper and deeper into decline and poverty every day. It is true that in 1937 there were increased shipments to France, Germany, South America, Italy and Denmark, but there were markets in which we lost our orders. One of the greatest losses we incurred was the loss of the markets to Canada. That is very difficult to explain and there must be something wrong when we have this Government—the National Government, the Empire Government, the Government of all the talents. Why did they let slip that large market? Is it beyond their power to do anything to retain a market so closely connected with the producers on this side?

I want to say a word about the iron and steel trade and the tinplate trade. These industries produced a record output in 1937. They are now suffering with the others. Iron and steel production is down 6 per cent. in April as compared with April, 1937. During 1937 the output reached a figure of nearly 13,000,000 tons, a record figure. South Wales production declined a little more than English production for special reasons. Wales supplies more than 90 per cent. of the tin-plate production of this country. It is our oldest industry. We have been doing it in South Wales since 1670. We have done it well. There is no fault to find with the manufacture, or with the skill of our people, or with the processes of the industry. We have maintained first-class quality of production from the beginning and have been able to hold this enormous proportion of world trade in tin-plate up to this day. Out of a total of world production of 4,000,000 tons of tin-plate, we still produce in South Wales 1,000,000 tons, which is a large proportion after 40 or 45 years of world competition. It is a commodity that is growing in use and is continually being used for new purposes. It has been found suitable for a considerable variety of purposes and we are much concerned about the position. We are tied up with this industry in a very special way. Our coal trade and our iron and steel trade depend on it. We have lost tremendously because since 1937 the orders for iron and steel have declined to less than one-half and we are now producing less than 40 per cent. of our capacity as compared with at one time between 75 and 80 per cent.

We are very much concerned because there is apparently graver trouble ahead, for with the provision of an excess productive power of more than 50 per cent. there is to be additional production. We are to see coming into production in the next few months a new method of manufacture, copied from America and installed at large capital expenditure. We are expecting to have a continuous process of strip metal working in a few months time in South Wales which will produce, it is anticipated, strip and tinplate at a very much lower price than the present method employed. By this process 300,000 tons additional production will come into a market already 50 per cent. over-full. That is a tremendous danger to the trade. I and the hon. Member for Llanelly (Mr. J. Griffiths) represent more tinplaters than any other Members in the House. There is great anxiety in this industry and among the men in it. They are specially trained men, and there are no better workers in the world or in any industry. They have lived comfortably and with some security, and now this threat comes upon them. It is a threat not only to the individual workman but to the whole tinplate industry in West Wales. There is one township in my division where more than 60 per cent. of the people are employed in the industry. There are certain tinplate works, each of which is owned by a separate company. There are places in my constituency and in the neighbouring constituency where all the works are owned by one single manufacturing concern and where the word of one man can stop a whole community working. That is an immense power to be given to one man.

I want the President of the Board of Trade to pay attention to this terrible calamity. He talks about the catastrophe that might come. There is already one locally. Whatever happens to this country, you cannot do more damage to these communities than by closing down places of employment. I want the right hon. Gentleman to pay attention to the tinplate trade in South Wales. I do not wish to name firms or attribute motives, but here is a problem which affects not only the people in the tinplate trade but those in the coal trade and, very vitally, those in the steel trade itself. I want to say something about iron ore and iron and steel production in this country. There is a great fear that we shall cease to make sufficient pig iron in this country for our own use. We are closing down our blast furnaces and throwing people out of employment in that industry. That has a far-reaching effect. It is not a matter of concern only to the men or only to the people who work the blast furnaces. This trade is interconnected with others. In the making of one ton of pig iron there are consumed three tons of iron ore, one and a-half tons of coal, and eight cwt. of limestone. All these minerals have to be got and transported to a point where they are brought together in the blast furnaces and a considerable volume of employment is given in the process. Last year we produced about 1,000,000 tons of pig iron. The average price of pig iron is about £5 a ton, and that £5 is spread over to pay the wages of men in the coal industry, in the limestone industry and in the blast furnaces themselves. A tremendous network of expenditure and purchasing power is involved in the production of pig iron which does not count very much in the figures of British steel production.

This closing down of blast furnaces and the shutting down of iron ore mines has a very serious effect upon employment, and especially upon employment in the localities where that production is carried on. We have in South Wales iron ore deposits never wholly developed or exploited. They can produce at the present time a maximum possible of 5,000 tons a week, or 250,000 tons a year. They can produce at that rate over a considerable time. By going deeper a considerable body of iron ore can be got close to the point where steel and tinplate are produced and where coal is mined. All the elements are there together for the most complete and economic production of the finished steel product. I would like to ask the President whether he will not consult his Cabinet colleagues and the Prime Minister, to see whether he could not now as a measure of emergency—a short-time policy if you like—go on producing pig-iron. Why not produce 1,000,000 tons of pig-iron and let it be stored? It is not a perishable commodity and it will not be any less valuable 12 months after it is produced than on the day it passes out of the furnaces. The Government could, by suspending the closing down of these furnaces, keep the iron ore mines in production. I want to give figures which perhaps everybody can grasp without close examination. One hundred thousand tons of pig-iron needs for its completion about five times the weight of iron ore, coal and limestone. It will give employment for a full year to 3,000 men in every one of those branches of production.

I beg the President of the Board of Trade when he looks at South Wales and sees one industry dying to-day and another to-morrow, and the whole of them hanging on to each other in an effort to survive and dragging each other down, to do something immediately by the simple instruction which he can give to these people to go on producing iron ore. I do not mind if you produce this month more than can be consumed next month. They could go on producing for stock, they could guarantee a price—even the present price would be good enough— and that would set people to work. Many of them are men who have been out of employment for a long time, and after having had a short spell of employment again now find themselves thrown out once more, and with no prospects ahead of them. I shall pass over the question of textiles, because that is a highly technical industry which should not be dealt with except by anybody who is well conversant with it, but the figures published by the Minister of Labour should be regarded as a solemn warning by everybody, not only by the people of Lancashire, of the danger that awaits our industrial enterprise in this country.

I will come next to the question of motor cars, which has been discussed in the House previously and was raised at Question Time to-day. The present position is due to a special form of artificial competition in our home markets. Artificially low prices are responsible for the increase in the number of German motor cars imported into this country. I should hesitate to take up a case of this kind were I not convinced that this is no case of ordinary competition, that it is not even a case of ordinary dumping, but is a deliberate attempt to do something which, while benefiting the Germans, must dislocate our motor manufacturing industry and in that way create infinite harm. It may even have serious political complications, and I wish the Government to say something about the position.

The following information has been given to me, and I think it can be authenticated and is accurate. The number of German cars imported in 1933 was not more than 28. By 1936 the number had increased to 515, and in the first three months of the present year no fewer than. 2,974 cars were imported from Germany. They are light cars of a special type, and so they come into competition with only one type of car, the British manufactured car. They do not come into competition with Canadian and American cars, all those cars being over 17 horse power, but they do come into competition with the smaller cars produced in this country, and that competition is artificially stimulated by generous and large subsidies by the German producers themselves, under German Government auspices. That competition must, in the long run, be fatal. I do not say that the influx of German cars will drive out all our own cars, but it will make such inroads into our production of cars as to cause considerable difficulties indeed, and something ought to be said about the position by the President of the Board of Trade. I thought he would have said something in the speech he has already made.

When the costs of a typical light English car are analysed, it is found that the factory costs run to between £100 and £110, the whole of which sum is spent at home with the exception of £4, which represents the cost of the imported iron ore used in the manufacture of the metal parts, the rubber for the tyres, the cotton, and so on. Of that £100 spent on British manufactured materials, £80 to £90 is spent on labour and it represents the labour of one workman working for 20 weeks. Expressed in terms of home labour, one motor car represents work for one man for 20 weeks. The 3,000 German cars which have already reached these shores in the first three months of this year and are now parked at Southampton or elsewhere represent the work of no fewer than 4,600 German workmen who have been working, or 4,600 British workmen who have been unemployed. It is a serious position.

If it were not artificial competition I do not think anyone on this side of the Committee would be making a speech on these lines, but it is an abnormal situation. As I have said it is not even ordinary dumping, but something ever worse than that. I will give some figures to show the prices at which these cars are sold. The Opel cars from Germany, which are of 11.1 horse power, are sold at £135 to the buyer here. The Morris 12 horse power car costs £205, the Standard 12 horse power car £205, the Vauxhall 12, £215, the Austin 12, £220 and the Wolseley 12 £245. When the costs of manufacture are examined it is seen that they are not very different as between the English cars and the German cars. The cost of production of English cars retailed at these prices is £9 14s. per cwt. and the cost of production of the German car is £9 2s. 8d. per cwt. There is not much difference there, and it may be explained by lower wages or by other facilities.

The German cars have to carry the cost of freight charges and insurance before they reach the retail purchaser in this country, and it cannot be said that the cheaper price at which they are sold is due to the cheaper cost of production. I submit that it is due to the subsidy derived from the producers. The German car is sold in Germany at 2,100 Reich-marks, equivalent to about £175, but it is sold here after it has borne the burden of freight and insurance and the 33⅓ per cent. ad valorem duty at £135. These are facts which the Committee should know, and the questions which were put to the President of the Board of Trade and to the Chancellor of the Exchequer this afternoon deserve the fullest consideration, and a reply which will satisfy Members of this House to a greater extent than they have been satisfied before.

Then there is the question of whether the Customs duty should be charged upon the higher value of the car. I do not see why a car should be sold to purchasers in Germany for £175 and then represented to British Customs officers as being worth only £70 and be subject to duty only upon that fictitious value. If the car sells in Germany for £170, that is the value of the car, and it is the value on which it should be taxed. In any case it is open to very grave doubt whether anyone can justify charging the ad valorem duty on half the cost of the production of the car, and if that is allowed then the British Government are a party to subsidising these cars. If an American car is sent into this country and its value is said to be £200 they pay as duty £66 13s. 4d., but if the Germans send a car which is worth £200 and say it is worth only £100, they get away with a payment of only £33 6s. 8d. as duty. We are assisting in the subsidy of the car by that manoeuvre. The money for the subsidy in Germany is raised by a charge of 3 per cent. on the whole of the turnover of the producing interests in Germany. They form themselves into the Automobilindastrie Verband, and they collect the money which pays the subsidy to the exporter for each car sold in this country.

Mr. Levy

There is also the question of the manipulation of the currency.

Mr. Grenfell

That does not bear directly on this question, but it is a part of the general question affecting trade between the two countries, and it should not be left out of account by anybody who tries to find a way through the maze of these industrial and commercial conditions. This, however, is not one of the ordinary trade difficulties. This is a deliberate change in the methods of trading and the House must take note of it. It is not straight competition, and because of that I have felt quite justified in making these representations while holding the general view that the country will benefit by a return to the ways of Free Trade as soon as ever the world will come to an agreement with us.

The right hon. Gentleman left until the last moments of his speech any reference to the van Zeeland Report. That is a very useful report indeed, full of suggestions as to the direction in which all countries must move, and they must be examined under the direction of some leading authority. The world is suffering from a desire to arrive at self-sufficiency. Autarchy is an entirely mistaken idea of world prosperity. I am sure that it is the way back and not the way forward, and I hope that this Government will play its part in the promotion of international agreements—not exclusional agreements but general agreements—for the easing of trade facilities and for securing greater access to the raw materials of industry. I am sure that there is no way out of the psychological embarrassments to which the Minister referred save by a recasting of the whole economic system of trade and international commerce. All that has to be done, but I hope that the President of the Board of Trade, while awaiting the arrival of happier days for discussion and negotiation with other nations, will pay immediate attention to the conditions in our own country to which I have drawn attention. I trust that while working for a long-term policy, in which he may have to be joined by the representatives of other nations, he will immediately embark upon a short term policy to find employment and purchasing power for the people of this country.

5.57 p.m.

Sir H. Fildes

My first duty must be to congratulate the President of the Board of Trade upon his restoration to health. He is filling a position in which he does need our sympathy, because upon the efficiency with which he discharges the duties of that position depends, in my view, the livelihood of the vast majority of the working class in this country. I was very much interested to hear the hon. Member for Gower (Mr. Grenfell) giving utterance to some very sound sentiments on Protection. The motor cars to which he referred are, as is well known, the product of an American company which is manufacturing them in Germany, and he has raised some very pertinent points to which the Committee have a right to expect an answer. If they are selling a car in Germany for £175 and when it arrives at the Customs in Southampton its value has suddenly dropped to £70 or £100, then that transformation calls for some explanation. However, the subject upon which I wish to address the Committee is the general situation in the cotton trade. In the last 20 years our cotton export trade has seriously shrunk in volume.

The first point I wish to establish and to get into the minds of Members of the Committee is that the customers of the cotton trade are the poorest people in the world. I would ask hon. Members to consider the steps that have been taken in the last 20 years to meet the very serious competition from India, China and other producing countries which, years ago, were our best customers. What is the position to-day? The cotton spinner's wage is something like 11 per cent. more than it was in 1913 and the wage of the weaver something like 80 per cent. more than it was in 1913.

Mr. Tomlinson


Sir H. Fildes

If the hon. Member will look into the matter he will find that the standard rate agreed upon between trade unions and employers shows an increase of about 80 per cent.

Mr. Silverman

Is the hon. Gentleman referring to the actual scale of payments or to the amount actually earned by the weavers? The actual earnings of the weavers are lower to-day and are hardly more than 30s. per week. Twenty years ago that wage was worth only about 10s.

Sir H. Fildes

The scale of wages has been raised, but it has not been to the eventual benefit of the operative in the cotton industry. I have never been proud that the Lancashire man and woman turned out at six in the morning and worked until six at night for a totally inadequate wage, to make loincloths for natives in various parts of the world. I do not deprecate any movement that has taken place to enable cotton operatives to receive a living wage out of the industry. The operative is far better off, however, with a smaller industry capable of paying a proper wage, than with this desperate competition with the Japanese and the Indians, who are prepared to work at a very low wage indeed.

The Government could have done more. I do not know whether hon. Members remember the arrangement which was entered into and which was very unjust to this country, with regard to India and Burma, and which has given a greater advantage to the Indian producer over the producer of cotton goods in this country. Here I would ask hon. Members to follow my previous point, to remember that our customers are the poorest people in the world, and to remember also what we have done in trying to meet competition. It is not only that there has been an increase in the scale of wages for bleachers, dyers, printers and finishers, but that since 1909, when we had the trade we had not unemployment insur- ance, which is all very admirable. All kinds of burdens have been placed upon the competitive power of the industry in the open markets of the world. Rates are at least double what they were 20 years ago.

We are now paying for baths, wash-houses, public parks and social amenities of all kinds—[Interruption]—but you cannot do all these things without influencing your competitive power. I am trying to face the position. I am prepared to let go an industry which cannot provide those things and a reasonable subsistence wage. We have to find money out of the industry for Little-wood's pools. All such things come out of our competitive power. I am quite prepared to say that the man and woman who have worked hard all the week have a right to spend their money in the way they like, and it is no part of my argument to take those things away.

Mr. Sexton

Littlewood's is a loan club.

Sir H. Fildes

I will go back to the old days. Take Oldham. From 1903 to 1913, the average dividend earned by the cotton mills of Oldham was 2½ per cent., over the period of 10 years. I would ask hon. Members to look at recent legislation. We passed a Spindles Act. One of the first results of it was a levy on the industry which was estimated to yield £500,000 a year, or 2½ per cent. on £20,000,000 of capital engaged in the cotton trade. The levy is on the back of the competing power of our industry in the open markets of the world. [An HON. MEMBER: "You are not in a bad way."] A considerable part of Lancashire is not in a bad way. Very large fortunes have been made within the last five or 10 years in the cotton trade, by people who have taken the lead. They have gone away from the ordinary bread-and butter production of the industry.

One of the best things the Minister could do would be to subsidise and encourage young men to join the industry and to study and go through a course of research. Only in so far as the cotton industry can lead the world will it survive, while the Japanese are prepared to work for a handful of rice and a glassful of beer. In India also, people work for very low rates of wages. In 1938 it is unfair and it would be disgraceful to call upon Lancashire operatives to work at anything like the same rate of wages, in order to compete with the people of India. What is the spectacle? Referring to the competition in India, the President of the Board of Trade spoke of efforts to induce the Indian Government to raise the price of cotton goods to such a basis as would enable it to pay our 80 per cent. or 100 per cent. increase over 1913 and to maintain a standard of life much higher than those poor people in India enjoy. I am rather ashamed to think that we have sent people out there to plead that those poor people should be called upon to pay additional and unnecessary prices for their articles of clothing. What for? In order that a few of our people at home might get a measure of employment with a higher standard of living than is given to the poor people in India.

From practical knowledge I can say that the cotton industry is generally efficient. You can talk about the meat industry in America, where it is said that they use every portion of the carcase and can the squeak; in the cotton industry every pound, nay, every ounce, of cotton is accounted for, even though it is only in the shape of the dust extracted in the processes of manufacture. Suppose that some person discovered a new method of industry in the cotton trade; do hon. Members realise that he could not commence in business in Lancashire until he had paid levy to the Spindles Board, and that if the Spindles Board had been in existence for five years he would have to pay five years back-levy before he could commence his new business to bring salvation to the Lancashire cotton industry?

In the Spindles Act His Majesty's Government have made one of the greatest mistakes that have ever been made. We had a Coal Bill this Session. Let hon. Members consider the price of coal to the cotton spinner and follow it through the industry. Remember the increase of the cost of coal to the spinner, the weaver, the finisher, the bleacher or the printer, as the case may be. Taking the piece at 100 yards long, the increased cost of coal is responsible for a charge of over 1s. for every piece that is produced in Lancashire to-day. Bear that in mind that the poorest people in the world cannot afford to pay the charges that we keep multiplying and increasing the burden of our competitive industry.

A reference was made by the President of the Board of Trade to what had brought about the present very depressed condition of the cotton industry. I am sorry that we have not time to amplify this aspect of the question, but I will tell hon. Members the position. Immediately the Spindles Act was passed, a price-fixing board was arranged and the price of yarn was immediately fixed to come into operation upon a certain day. A week previous to that day all the salesmen went to the manufacturers and said: "If you place an order for yarn to-day you can have it at 1d. a 1b. less than we shall be able to charge next week." The whole of the industry covered itself with purchases. The manufacturers went to their customers, American cotton dropped 3d. a 1b., and the whole industry was left with dear yarn and cloth. It is on the shelves of the manufacturers and merchants to-day. Our competitors were not dragooned all to act at once. It was a case of when father says "turn" we all turn. That is all right when it is a turn in the right direction, but it was a turn in the wrong direction, and we have all fallen out of the bed.

That is what has happened in the cotton trade of to-day. There is a very serious situation in regard to all commodities. We were the first people to taste the bitterness of rationalisation. The Bradford Dyers, an association of all the prosperous piece dyeing firms in the cotton or woollen industry, the Calico Printers' Association, and others, are gathered together, and they have a standard of price that has gradually driven competitors out of business. Hon. Members may be surprised to hear that, in the different processes dealing with piece goods and cotton cloth articles after they have left the loom, a situation has developed in which practically all the water rights in Lancashire and Cheshire are in the hands of three or four groups of persons, who when they close a mill make it a condition that the water shall not be used for any of these processes, so that it is gradually brought into the hands of a very few people who are in control of the major processes through which the cotton cloth passes before it reaches the public.

All this proves that, as an industry, we can give up hope of ever supplying in any large quantity the natives of Japan, China or India. It would be necessary to reduce the wages of the workpeople to such a point—and I am not prepared to support that—that the game would not be worth while. But, if we concentrate on having an efficient industry, full of new ideas, going away from the past and reaching out, so that it may at one and the same time be capable of paying reasonable wages and giving the world a commodity which is a source of pride both to the producer and to the consumer. I hope the President of the Board of Trade will carefully analyse the proposals that have been submitted to him in a very nebulous form. I repeat that we cannot look for a restoration of those markets which were obtained and maintained by sweating the labour of the cotton operatives in Lancashire; and, now that the people of India have reached a point at which they are not only supplying their own needs, but are competitors in our other markets in the world, it is unreasonable and misleading if we try to contend for one minute that any of these proposals contain in themselves the germ of a resurrection of our cotton trade in India, China and Japan.

6.20 p.m.

Mr. O. Evans

I dare not enter into a discussion of the curious intricacies of the cotton trade, following an expert in that trade, but I am sure the Committee were interested to hear the censure which my hon. Friend the Member for Dumfries (Sir H. Fildes) passed upon the Government for their action regarding the cotton trade. He, at any rate, has declared to the Committee what he believes to be the very worst thing that the Government have done. Many of us have discovered worse things, but we have not yet decided which is the very worst. However, my hon. Friend has said that the Government did the very worst thing in passing the Spindles Bill. I listened with very great interest to the comprehensive statement of the President of the Board of Trade, and I am very grateful to him, as I am sure the Committee are. One may, I think, regard his speech as one designed to try to make us keep our spirits up, but at the same time he was clearly quite unable to make any rash promises as to the future. Although he was able to produce figures which did not look so bad, comparing sortie period last year with the year before, he was not prepared to give the Committee a clear picture of the actual condition of things as it exists to-day. After all, the most important thing is not what happened as between 1937 and 1936, or even between the first quarter of 1938 and the first quarter of 1937, but what is happening to-day throughout the country in the month of May, and what the manufacturers of this country consider to be the outlook for the future having regard to the state of their business and of their order books to-day.

I do not propose to follow the hon. Member for Gower (Mr. D. Grenfell), who drew a sombre and melancholy picture of industry to-day, and especially those industries with which he and the hon. Member for Llanelly (Mr. J. Griffiths) are familiar. I cannot say that that picture was in any way exaggerated or that it was in any sense too dark and gloomy a picture. The hon. Member, with his usual care and thoroughness of investigation, produced some very clear and definite pictures showing that, in certain trades at any rate, there had become established what he called unwillingly a recession, or reduction, or contraction in trade. He drew attention specially to the tinplate trade, which is of vital importance to certain areas in South Wales. Representing, as I do, an adjoining constituency to his, in which the centre of the tinplate industry is located, I would point out that the prosperity of agriculture in the surrounding areas is largely dependent upon the prosperity of industry in the industrial regions of South Wales, and, therefore, to all the agriculturists and farm workers in my constituency and in neighbouring constituencies it is of the utmost importance that the industrial prosperity of South Wales should be restored at the earliest possible moment.

There can be no doubt that, as we know the position, not from examination of past figures, but from the latest information that we have, the trend of trade is in a languishing direction. I do not want to weary the Committee with detailed figures, but I could produce plenty of evidence in relation to other trades which have not been referred to to-day. I want to draw the attention of the Committee to certain statements that are made in current trade publications, and to current estimates made by investigators into the condition of affairs at this moment. Take the metal trade, with which I happen personally to be more familiar than I am with textiles or coal. Take the most recent reports regarding, not only the metal producing, but also the metal consuming trades in the country. With regard to copper, for instance, it is stated in the technical Press that flat conditions prevail. In the case of lead, which comes into consumption in this country in various directions, there is stated to be a continued downward drift, encouraged by lack of consumer demand.

In iron and steel, to which reference has been made by the right hon. Gentleman, there is to-day a progressive decline. I saw it stated in the Press that the hon. Member for East Middlesbrough (Mr. A. Edwards), only a few days ago, was urging the Minister for the Co-ordination of Defence to establish a Government reserve of pig iron, because of the progressive distress owing to contraction of production in the area which he represents. He pointed out that, unless something was done, at least half-a-dozen more blast furnaces would be blown out, in addition to those which have been blown out in the past. The President of the Board of Trade referred to-day to the conditions of the trade in iron and steel scrap in this country. He referred to the steps which were taken by the Advisory Committee last summer. But what is the position to-day? This very day the trade is described as having relapsed into a state of torpor, with the consuming works embarrassed by heavy stocks. This is a bad sign for the future. It is further stated in the trade Press that the prices of this material would probably tumble if it were not for the controlled price agreement by which the existing price is maintained. Certain qualities of scrap, which are not controlled as regards price, have been marked down. I need not weary the House with other estimates of the present state of affairs in this country, from the "Economist," from the London and Cambridge Economic Service, and from one's own personal experience.

Let me take the case of the non-ferrous metal trades, with which I am familiar. One can theorise about the future, and about the reasons for this recession. Various opinions can be given, which never agree. But there are people who know the facts with regard to the posi- tion. The latest report from Birmingham, which has been, not unduly, but remarkably prosperous during the last two or three years, says that sales and deliveries have fallen, that new orders are not coming in as fast as they would like. Other centres—Sheffield, Glasgow, and Manchester—tell the same story, and the Minister himself referred to-day to the lack of steel. I assume he was referring more particularly to the alloy steels, the special steels, where a recession has been shown. There is a very serious setback, for example, in one commodity which has shown a great vitality in this country: that, is, the manufacture of stainless steel. As regards stainless steel from Sheffield and other areas, this country was well abreast of any other country, both as to quality and quantity. It only remains to say what is the effect of the rearmament programme upon these peace uses of this material. I am afraid it is only too true that where in the steel industry an emergency demand has occurred for steel for armaments, that is largely at the expense of the development of steel for peace uses.

Looking at the position now, in the month of May, it is no use trying to avoid the conclusion that there is a definite downward trend in a marked degree. Call it a retraction or a recession. A recession may lead to a depression, which may last for some time. I know the Minister quoted the opinions of prophets to the effect that this depression, if it should happen, would be a short one compared with the last. I have heard prophets before, and I prefer to wait and see. We have been warned from time to time not to talk about slumps. I am the last who would wish to talk about possible slumps, as any man who is engaged in business would be. But the hon. and learned Member for Greenock (Mr. Gibson) asked the Prime Minister the other day what were the Government's plans for meeting a slump. The answer the Prime Minister gave was that he had nothing to add to an answer of 14th December—that the situation has not changed sufficiently since then to warrant doing anything. The question that was asked on 14th December was as to what was the Government's policy to meet the serious unemployment problem that threatens the country in view of the oncoming slump, and the Prime Minister's answer was: I do not accept the implication in the question, and consider that talk of an on coming slump is not only exaggerated but dangerous."—[OFFICIAL REPORT, 14th December, 1937; col. 988, Vol. 330.] He said the country was in a far better position to meet a temporary decline in trade than at any time since the War. Somebody may understand what is the difference between a temporary decline in trade and a slump; but the expression looks to me to be a mere euphemism, designed to throw a cloak over the very ugly word "slump." I am bound to say that the situation, as I see it, has changed a great deal since 14th December, 1937, and the change has been so obvious in many respects and in many directions—it has even been indicated to-day by the Minister in his speech—that I fail to understand how the Government can deliberately shut their eyes to it. It needs no microscope to see it. It looks as if the Government are watching affairs to-day—industrial, commercial and foreign affairs—through the wrong end of the telescope, in order to keep realities as far as possible from their ken.

The Minister made to-day an observation which has often been made with regard to the effect of falling prices on prosperity and on the markets. It seems to be a sort of theory that a fall in prices in itself must mean a depression, and that a rise in prices must mean prosperity. With great respect, I say that the Minister cannot draw that conclusion at all. Every practical business man knows that when you have a falling market people have a tendency to withhold their purchases, because they want to find out where the fall starts; but that does not mean that low prices are going to result in a depression. The uncertainty of prices causes depression. What the world needs to-day is stability of prices. Take the position in the copper industry. Nothing was worse, from the point of view of the fabricator of copper and copper alloys, than to have the price of copper soaring up and up, without any means for the fabricator to know when it was going to stop. All these fabricators are looking for a stable level of prices. If there is one failure in connection with the economic system of the world to-day, it is the failure of those engaged to establish a sound level of commodity prices. That is the great weakness of our present system. I am not going to blame the Government for not doing that, but I would like to remind the House of one or two features of the great change since December last year.

The Minister drew attention to the great depression in the United States of America, which he attributed, to some extent, to the breaking out of the Sino-Japanese war. But have we not got a cause much nearer home? May I draw attention to the occurrences of the last week-end, and to two passages in the "Times" to-day? In the leading article, the "Times" says: Now that conditions are quieter—the improvement noted on Sunday night was continued yesterday—the suggestion may be heard here and there that the crisis was never so acute as it was made to appear. But the truth is rather the other way. All the elements of an international explosion were present.… So we were very near something like a catastrophe during the last week-end, although the people knew nothing about it. But whether they knew or not, it destroyed confidence in industry and trade. There is nothing like all these occurrences, week after week, for destroying confidence. The right hon. Gentleman the Member for Epping (Mr. Churchill) spoke last night. May I quote a sentence from the report of his speech in the "Times," in order to show what estimate he made of the week-end occurrences? He said: We have had an anxious week-end, and I do not think it will be the last we shall experience in the near future. We may expect a recurrence of this in future. In other words, we shall have the creeps from time to time; we shall see the ghosts of war, unless something is done to settle the question; we shall see people, exactly as we did in 1914, as I saw them in the clubs last week-end, around the tape machine, looking at the news as it came in every quarter of an hour. What a prospect for trade. We might as reasonably expect prosperity in such conditions as a farmer might expect good crops after a season of continuous drought or storms. What we want to know is, Is the Government's foreign policy designed to appease foreign nations, so that we may expect a lessening of such occurrences and a reasonable prospect of good trade?

I cannot agree with the suggestion made by the right hon. Gentleman, with regard to the American trade outlook. I cannot see any hope from the information which I get. Here is the sort of news one gets: "U.S.A.: Conditions have got worse and worse; steel production off, no recovery in sight; automobile sales poor, production declining." But the important thing, when one is speaking of the proposed American Agreement, is its tremendous importance to our own trade. The exports of this country to America in the first quarter of 1937 amounted to £12,707,000, and for the first quarter of this year they have gone down to nearly half. I was reading a little publication on Anglo-American trade relations, which makes a very detailed study of the subject. It says: The United States have the largest share of the British market, whilst as a market for British goods she is only exceeded by South Africa, India and Australia. It is very important to have that agreement brought to a successful conclusion as soon as possible, and I am glad to understand from the Minister that the agreement must result in an expansion of trade not only between the two countries directly, but for the rest of the world. The endeavour should be not so much to canalise trade between the two countries as to increase purchasing power generally. There is one thing that, in conclusion, I should like to ask whoever is going to reply for the Government. Let me remind the House of the terms of reference of the van Zeeland Report. An inquiry into the possibility of obtaining a general reduction in quotas and other obstacles to international trade. I hope that the Government will not lose sight of that. The Prime Minister was asked on the 31st March by an hon. Member on this side of the House whether he proposed to do anything in regard to the van Zeeland Report, and he replied to the effect that, in the present circumstances, it would be useless to do anything. I assume that he was thinking of the international situation and, I ask the Government to make some statement as to whether diplomatic inquiries have already been made, especially in industrial countries, which ought to provide good markets for world trade. I am not here to say what one thinks of the Anglo-Italian Agreement, but one effect of it should be better trade relations not only between Italy and this country, but between Italy and other countries. That can come only from a careful study of, and, if possible, the adoption of the proposals of the van Zeeland Report.

6.46 p.m.

Mr. James Griffiths

I join with hon. Members who have spoken in urging upon the Government that this is not the time for complacency in dealing with trade and the economic situation in this country. The President of the Board of Trade indicated that he would confine his remarks very largely to the three great and important industries—I think it was a wise choice in many ways—of cotton, iron and steel, and coal. These industries were built up in the last century very largely on the export trade. The parlous state of the export trade of this country ought to receive the very serious attention of the Government in these days. Shortly the President of the Board of Trade and his colleague the Minister of Labour are to receive a deputation from local authorities representing a population of well over 250,000 which has been built up over the last century and has become entirely dependent upon the tinplate and sheet trade, and the steel trade associated with it. This trade is now experiencing its worst period since the dreadful days of the McKinley tariff, which was an imposition that, almost over night, shut out this trade and reduced the industry almost to beggary. Unemployment in the tinplate trade is now 38 per cent., and the trade is working at less than 40 per cent. of capacity.

We are reaching a very curious stage in this country, and I was hoping that the President of the Board of Trade would indicate that it was the urgent desire in this country to establish some kind of economic staff. My hon. Friend the Member for Jarrow (Miss Wilkinson) will, no doubt, speak as eloquently as she always does on the desirability of new steel works in Jarrow, and I have to speak for my division which suffers because of competition elsewhere. We have reached a stage where we frequently quarrel with one another, and it is essential that there should be an economic staff in this country to deal with the location of industries. It would be a cruel thing if that of which the Government boast as being the biggest single contribution they have made to the depressed areas—the strip mill in Ebbw Vale—were to create in Llanelly, Neath, Port Talbot and Swansea a greater distressed area. It is a sad story of unemployment, poverty and bad trade, and I hope that some day shortly we may have an opportunity in this House to speed up the Royal Commission on the Location of Industry. We cannot afford to leave industry or the livelihood of people in the hands of financiers in London. We are reaching a stage when, whatever Government may be in power, the people of this country will compel steps to be taken to lift industry out of the hands of the financier and secure some kind of social control. The year 1938 appears to be witnessing the beginning of the recession in the coal trade. We all agree that 1937 was the most properous year in this country since 1929, which was the peak year of the trade cycle. Now we are on the downward path again. In 1937, in our own trade, in our own market, over which we have control, we attained the 1929 figure, but the export trade of the country was far behind the 1929 figures.

It is a perfectly fair deduction to make that, though 1937 was a peak year, just as was 1929, there has been a permanent decline in the export trade of the country. The year 1937 was the best year for the export of coal since the slump of 1931. We had an export figure of just over 40,000,000 tons, but a setback has taken place. If one reads the trade papers or the papers of the Tyneside, Northumberland and Durham, and of Scotland, or learns the condition of the export trade, it is clear that the bottom is coming out of the coal trade. The forward selling of coal is such as almost to make one dread the consequences. Though we touched 40,000,000 tons in 1937, the peak of 1937 was 20,000,000 tons below the export figure of 1929, so that there was a definite net loss of 20,000,000 tons in our export trade. In the first four months of this year, comparing the export of coal with the first four months of last year, there was a decline of well over 500,000 tons, and present indications, as given by those who are in authority to speak on the subject, are that our coal exports this year will be nearer 30,000,000 tons than 40,000,000 tons. That gives a prospect of unemployment in areas which are already poverty-stricken and does not permit of any complacency on the part of the Government, the Board of Trade or of this Committee.

May I refer to the particular coal trade with which I am associated, the anthracite trade? I believe it to be the best coal in the world. It is certainly the best anthracite in the world. It is an industry upon which 25,000 men depend. I sometimes think that we might try using anthracite in this House. We depend upon selling more than two-thirds of the anthracite we produce outside this country, being largely dependent upon France and Canada. We are losing very largely the French market, not only for anthracite, but for steam coal. There we are faced with a very difficult position. I cordially agree with what was said by the hon. Gentleman the Member for Cardigan (Mr. D. O. Evans) when he expressed the view that what particularly distressed the export trade was the failure to control and stabilise prices. This may be the fundamental flaw in the system for which many hon. Gentlemen stand and may, in the end, bring about its downfall.

The anthracite trade with France during the first four months of this year has been down by one-third as compared with the first four months of last year. Why is this so? Because the franc fluctuates up and down. The last fall of the franc has driven up the price of anthracite by 7s. per ton. That is the problem which faces the coalowners in South Wales. They do not know how to deal with the matter, but our competitors usually find a way. The Germans actually capture our trade by means of a subsidy. German coal sold to France has been subsidised by as much as 10s. per ton. How can you expect the coalmining industry to meet the competition of coal subsidised in that way?

The Labour Government built up the coal trade with Canada, and from Llanelly, Port Talbot and Swansea we can send coal to Canada at 17s. a ton. We can take a ton of anthracite to Montreal at a cost of 5s. less than we can bring it to London. We built up that trade until in 1935 we sent to Canada one-third of the anthracite exports, giving full-time employment to 7,000 or 8,000 men all the year round. We are now sending only 977,000 tons, a reduction of over 300,000 tons in two years, and we are still losing the trade. At the present moment trade negotiations are taking place between Canada, New York and Ottawa, and the Americans, who have their own economic problems, have tabled a claim that the duty of 50 cents per ton on the imports of American anthracite in Canada should be withdrawn, or that a duty of 50 cents should be put on Welsh anthracite. If that happens this will mean the loss of another market. The losing of the French and Canadian market 's bound to have a serious effect.

Representing these anthracite miners, having been brought up with them all my life, I will not sit down silent and see the Canadian market thrown away. It means putting 7,000 of my constituents out of work, and I will not see it without speaking out. A responsible trade paper refers to the fact that there is going on for some reason a continuous propaganda against Welsh anthracite in Canada. They state this alarming fact that Welsh coal costing 7.25 to 8 dollars per ton f.o.b. at Montreal is being sold to consumers at prices ranging from 14 to 16 dollars a ton. There is a cluster of middlemen standing between producer and consumer, fleecing both and sucking the trade dry. It is time the President of the Board of Trade looked into the matter. These things do not permit me to be complacent. The livelihood of my constituents depends on them, and it is my first duty to protect their livelihood.

7.2 p.m.

The Secretary for Mines (Captain Crookshank)

I intervene now because I understand that it will be for the convenience of the Committee that the wide picture that my right hon. Friend presented of trade conditions should be filled up. It struck me that something that fell from the hon. Member for Gower (Mr. Grenfell) was very much in accord with what my right hon. Friend had said. Speaking of what he conceived to be a falling off in trade generally, he put it down to the influence of fears that people might have from the talk of war and the growth of propaganda with regard to rearmament. The hon. Member for Cardigan (Mr. O. Evans) said that there was nothing like alarums and excursions week after week to undermine confidence. They were both echoing the final words of my right hon. Friend, who said that the best possible thing that could be done for British or world trade was to do everything possible to try to remove the fear of war. I am glad that the two party spokesmen opposite have brought the same consideration prominently forward.

The coal industry during 1937 passed through a better year than its immediate predecessor and, with an output of saleable coal of 241,000,000 tons, found itself from that point of view just about halfway from the lowest figure, which was 207,000,000 in 1933, and the highest, which was 276,000,000 in 1923, of all the post-war years. It is true that the export trade is better than it was in the immediate past, but not where it used to be in the grand old days. For all that, the amount of coal coming into the home market, at over 181,000,000 tons, is a record figure, and that, therefore, indicates the considerable activity that there was at home in the general trade sense during last year. I will try to bring the figures more up to date. I take the figures for the first quarter of this year. There actually the output for our home market was up by 3,200,000 tons, comparing the total saleable output between the first quarter of this year and the first quarter of last year. There is an increase again. That brings us to the end of March. Last year the Easter holidays came in the first quarter and this year in the second and one cannot get a fair picture till the end of the six months. There was also the Coronation holiday last year. Up to the end of March the position, as far as the output of saleable coal for the home market is concerned, was quite satisfactory compared with the previous year. since then in the last five weeks there has been some drop. The number of men in employment in 1937 went up to 776,000, which is the highest figure since 1932. The average cash earnings per man shift worked were at the highest figure they have ever been since 1920–10s. 8d. The average cash annual earnings were up to £144, as compared with £131 in the previous year, and show the highest post-war figure. Finally, the average number of man shifts was 270, the highest for any post-war year. Taking the various factors for 1937, we can see that, first of all, there was a record amount of coal passing into home consumption, the average number of shifts worked was the highest, wages were the highest for many years, the average annual earnings were the highest we have had and employment was on the upgrade and more regular.

Now I turn to the export trade. In 1937 we saw a rise in exports of coal, coke and manufactured fuel of 6,000,000 tons. They rose from 37,300,000 tons in 1936 to 43,500,000 tons and therefore the figure exceeds the average of the 1932–35 period. It would be true to say that 1936 had its own particular difficulties in the export trade. There was the beginning of the difficult situation in Spain, and exports to Italy had ceased. In 1937 part of the improvement to which I have alluded has been due to the coming into the market of the Italians, and during that year their imports rose from a very negligible figure to 2,200,000 tons. There were improvements to France, Germany and Belgium and, generally speaking, it looked as if part of it was due to a genuine trade improvement in the countries to which we export coal, and partly perhaps, owing to the fear to which the hon. Member alluded in the sense of general unsettlement, possibly combined with the rise in prices, there was more stocking going on than was normal.

Now I come to the beginning of this year. The first quarter showed a slight but definite check to the improvement of last year and the total cargo export was down by about 275,000 tons, or 3 per cent., compared with the corresponding quarter of the year before. But the drop for the first four months is nearly 1,000,000 tons, that is to say, from 12.9 to 11.9 millions. If it is any satisfaction to the hon. Member who spoke last, that drop does not appear to have been reflected in the same sort of way in the exports of the Bristol Channel ports.

One hesitates to say, with any great confidence, what is the cause of this drop in exports, but, of course, the hon. Member is quite right when he says that the fluctuations of the franc have had a very disturbing effect, and that brings one back to what the hon. Member for Cardiganshire said, that it is not the drop that matters so much as trying to secure some stability. The franc was somewhat erratic, and that naturally had a bad effect on the trade done with that country in coal. The corresponding drop in the German coal exports is a greater percentage drop than ours in the same period. I will not give the figures, because they are misleading. I do not want to say anything that is not perfectly simple in its understanding. Taking it on a quarterly basis, our first quarter last year was at a rate lower than the subsequent quarter, whereas the first quarter of the German was almost exactly a quarter of the whole year. Therefore it makes it appear that the German decline is very much greater than it may turn out, though in tonnage it is heavy— over 700,000.

The hon. Member says we must do what we can to try to remedy any drop in the coal export market. Besides watching the situation very carefully, which we have done, the Committee should remember that the coal industry has been given very much greater power of regulation and organisation. I know that the problem of the export coal trade is prominently before the coalowners at this moment, and, indeed, I have had occasion to see them during the last few months on this very topic. They are certainly considering what can be done from their point of view and are thoroughly mindful of the powers with which they are now vested. Briefly let me mention one or two of the countries. I have already referred to France. Last year there was a considerable increase in our exports to France. They rose from 7.3 millions the previous year to 9.2 millions. The question of the export trade in coal between France and other countries is extremely complicated by their system of allocations and supplementary allocations. Under the agreement of 1934 a certain percentage of imports was guaranteed to this country, and we have recently had information that certain points regarding these supplementary allocations are now being considered by the industry and the French authorities to try to clear up some of the difficulties. During the first quarter of 1938 there has been a drop in the total coal imports into France from 7,800,000 in the corresponding quarter of last year to 6,200,000 tons and a drop of some 700,000 tons in the French imports from this country. I do not know whether we have suffered more than other people.

With Germany our position is satisfactory so far as imports are concerned. Under an agreement in April, 1933, we were able to secure a monthly quota far in excess of what it had been before. Actually it had been 100,000 tons per month, and the quota was increased to 180,000 tons minimum last year at the end of April the average was 271,000 tons, which was over 50 per cent. above the minimum, and for the month of May the quota is 284,000 tons or 58.5 per cent. over the minimum. That is for imports into the German Customs area. In that direction there is some satisfaction as compared with last year. In 1932 and 1933 we imported into Germany 2,000,000 tons at a value of £1,300,000, and last year we imported 3,500,000 tons at a value of over £3,000,000.

Mr. G. Griffiths

Are you taking in Austria?

Captain Crookshank

No, this is Germany. There is no arrangement in these matters arising as a result of the incorporation of Austria with Germany. A word about Italy. In 1937 the exports to Italy rose to 2,200,000 tons with an f.o.b. value of £2,000,000. That was due to the commercial and clearing arrangement made in November, 1936. Hon. Members will know that there was a heavy burden of debt for coal which had been sold but for which no payment had been received. By the end of last year these old debts were pretty well cleared off, and by 18th March this year a new clearing arrangement was entered into.

Mr. Lawson

What about the old debts for coal?

Captain Crookshank

By the end of 1937 there were none of the old debts outstanding, and a new clearing arrangement, which was entered into in March of this year, dealt with the allocation of sterling. There was a certain amount of free sterling allocated for current trade, a percentage increased from 70 to 87 per cent. and His Majesty's Government were able to make a division of that amount, that 46 per cent. should be for coal exported and 41 per cent. for other goods. The result is that if at the end of this year there are some £7,000,000 in the clearing, the amount available for coal will be about £1,000,000 more than it was last year. Bearing in mind all the entanglements which naturally follow clearing arrangements, you have the arrangement that freights on coal shipments are to come out of free sterling and not out of clearing. I think we can say that last year was very satisfactory in the amount of coal taken up by other countries who have agreed to take coal from us. But there is an exception to be made. Discussions are going on with the Argentine where the figures are not quite satisfactory, and there is also Latvia, but that is a comparatively small market. Broadly speaking, it has been a very helpful arrangement to the industry, and the amount of the coal sent out last year was 12,800,000 tons—an increase on the year before, when the amount was 11,400,000 tons. It is, of course, an increase on the period when there were no trade agreements at all. In April, 1931, the amount was only 6,000,000 tons, last year it was over 12,000,000 tons, or more than 100 per cent. increase. A few difficulties arose with regard to coke, and the position at home has not been too easy, but I think it has been fairly well cleared up now. The Norwegians were unable to take their full quantity, but conversations have taken place, and I think we shall find that the matter will be satisfactorily settled. That is a general picture of the coal situation to fit in with the picture which my right hon. Friend gave of the general trade of the nation.

I must say a word on the anthracite position raised by the hon. Member for Llanelly (Mr. J. Griffiths). I know the anxiety he feels on this subject and the importance which it plays in the community he represents in this House. The saleable output in South Wales dropped last year compared with the year before, and also with the year previous to that. The saleable output in South Wales was 5,400,000 tons; the previous year it was 5,500,000 tons; and in 1935, 5,800,000 tons. The United Kingdom exports of anthracite in 1935 were 3,700,000 tons; in 1936, 3,300,000 tons; and in 1937, it rose to 3,800,000 tons. Broadly speaking, there is a fairly constant relationship between South Wales exports and United Kingdom exports. While last year the saleable output in South Wales was 5,400,000 tons, United Kingdom exports were 3,800,000 tons. The output during the first four months of this year of the United Kingdom was practically on the same level as last year, and it may surprise the hon. Member to learn that the exports for the four months were the same as last year. France has taken about 1,200,000 tons a year. The French market has gone down and, indeed the general market for anthracite has suffered more than the market for coal, because it is to France that we send some of the most expensive anthracite, and if the French fall on hard times they will probably buy a cheaper coal which has a bad effect on South Wales. Actually, of course, there was in these four months a considerable drop in the export of anthracite coal to France, exports reaching only 233,000 tons as compared with 325,000 tons in the same period of last year.

Italy, on the other hand, is very good. Let me also take the Canadian position. There was a drop in United Kingdom exports to Canada of about 150,000 tons in 1936 as compared with 1935. The drop may have been due to the fact that there were increased imports into Canada from Indo-China and Germany. Last year there was a change. Indo-China did not send any at all, and Germany declined by 100,000 tons but, on the other hand, there was a new country entering the market— Russia. When this matter was raised before I explained to the House that it was entirely within the competence of the Canadian Parliament whether they removed the embargo which existed on the importation of any Russian anthracite. That embargo was put on many years before, and they decided to remove it, with the result that there has been an influx of Russian anthracite into Canada. The Canadian Government stated that the Russian anthracite would not go in beyond a certain quantity, but they did not feel themselves justified in allowing the embargo to continue. That must have had some effect upon the exports of United Kingdom anthracite into Canada.

The hon. Member may rest assured that we are fully seized of the position of the anthracite trade. Only recently I had representations from that part of the coalfield in regard to the problem about which the hon. Member has spoken to-night. There is, however, another side to this question and another country is involved. The trade in anthracite with Canada takes place in the summer, when this and other countries are not wanting to buy anthracite in the same quantities; but the fact must not be overlooked that the anthracite industry has benefited relatively more than any other part of the coal industry as a result of our coal trade agreement with Italy. In 1935 we sent to Italy 250,000 tons of anthracite; in 1937, 333,000 tons; and for the first four months of this year, I am happy to say, the United Kingdom anthracite imported into Italy is substantially greater than the amount imported in the first quarter of last year, the amount being 156,000 tons. The point I am making is that we have been recovering a market which two years ago had almost entirely disappeared. That fact must be set to some extent in the balance against the argument which the hon. Member has made.

I have given a picture to the Committee of the coal situation as it stands. I should hesitate to make any forecast or prophecy of what may be the course of the coal trade during the coming months, but right up to the end of the first quarter of the year there has been no great diminution compared with last year; indeed, the reverse is true, and there has been an increase. As I have told the Committee, there has been an increase in output, but we have to set against that the fact that there has been the Easter holidays. The hon. Member and the Committee may rest assured that quite apart from my Department, the coal trade and the general trade problem is one that is never lost sight of by the Government. Hon. Members must not assume that because my right hon. Friend asked me to give the picture of the coal trade to-day that he is not anxious to do all that is possible in his Department and on behalf of the Government to improve the coal industry as the years go by.

7.34 p.m.

Mr. Riley

We have heard a good deal to-day about the cotton, the coal, the iron and steel industries, but very little has been said about the woollen industry beyond the very brief reference by the President of the Board of Trade. It is opportune that on behalf of the West Riding, which is always so modest in expressing its grievances in this House, to state the position of its woollen industry and its claim for consideration. I regret that I am not able to confirm what I regard as the somewhat optimistic statement made by the right hon. Gentleman. He said that during recent months the woollen industry had made considerable recovery, at least in some sections. He did not, however, specify which the sections were. If that statement had been made by the President of the Board of Trade or anybody else in any West Riding town it would have caused great surprise. As a matter of fact—and I have been looking into the position of the woollen industry in view of this Debate—I think we are entitled to say of that industry, particularly the heavy woollen section, that practically every town in the West Riding has been for several years in a state of depression and stagnation. In the case of the heavy woollen industry there has been a definite recession.

It is true, as the President of the Board of Trade said, that in 1935–36 and in the early part of 1937 there had been a somewhat steady advance in the condition of the woollen industry, but since then there has been a very considerable falling off. In view of what the right hon. Gentleman said as to the signs of recovery, I would point out that, taking the first four months of this year and comparing the exports of woollen goods with those of the first four months of 1937, the exports of woollen tissues amounted to the value of £4,387,789 in 1937 while the amount in the first four months of this year had fallen to £3,653,598, or a decrease of nearly £1,000,000. That decrease represents 23 per cent. compared with the first four months of last year, and it indicates that there has not been very much to be said as regards a recovery in the woollen industry.

I should like to deal with the situation in the woollen industry of the West Riding from another angle and to call the attention of the Minister to the serious situation which a review of the industry during the last 10 years reveals. I have been at some trouble to try to ascertain the facts from two points of view. First, as regards the population in the West Riding industrial towns and the numbers of persons insured, most of whom are engaged in the woollen industry. I would ask the Minister to reflect upon these figures. Last week, in the Debate on the Ministry of Labour report, figures were given for the country as a whole, showing that there had been an increase of insured workers of 2,500,000 in the last five years, or about 20 per cent. throughout the country. What is the position in the West Riding? I will take certain typical towns engaged in the heavy woollen industry. In Batley, which is indicative not only of the stagnation of the woollen industry but of its recession, in 1927 there were 15,420 insured workers, but in April of this year the number had fallen to 12,050, a decrease of 3,370. In the case of Shipley, largely a textile area, the numbers of insured workers in 1927 were 16,270, and in April of this year 13,260, a drop of 3,010. The same figures apply in varying proportions in other West Riding towns, for instance, in Morley where the decrease has been 1,090, and in the Spen Valley where the drop has been 4½ per cent.

The significance of these figures has to be viewed in comparison with the increase of employment in industry throughout the country, which shows a registered increase of 20 per cent. on the average. In the London area the increase amounts to, I think, 54 per cent. in the last four years, compared with a drop of 23 per cent. in Batley, of 18 per cent. in Shipley and of 7½ per cent. in Morley. These figures are indicative of a stagnant—I will not say a dying condition, a heavily depressed condition which may lead to a situation in the woollen industry analogous to the mining situation in South Wales, the North-East Coast and other parts of the country. That condition is not due to rationalisation. There has been a gradual fall in the industrial population in almost every town in the heavy woollen area. It is significant to notice that the percentage of unemployment has remained with little variation round about the figure of 20 per cent., rising to 35 per cent. from 1927 down to 1938.

I will give these other examples. In 1928 the percentage of unemployment in Dewsbury was 17.2, and in Batley it was 26.7; and in the course of the years the lowest figure registered in the case of Dewsbury was in 1936, when it was 12 per cent., and in Batley 15 per cent. In January of last year Dewsbury had 11.5 per cent. and Batley 12.6, but in December Dewsbury rose to 19 and Batley to 27, and in April of this year Dewsbury was 20.5 and Batley 29.5 per cent. Those figures are indicative of the condition of the woollen textile industry, and I want to know what the Government are going to do about it. Are we going to have some real response to the demand made by my hon. Friend the Member for Llanelly (Mr. J. Griffiths) that these conditions, not in the coal trade, not in the steel trade, not in the cotton trade, but now in the woollen industry, persisting over a series of 10 years, should be looked into and improved? Are the Government going to face the question of studying the rearrangement of the location of industry? It is obvious that unless it is possible to afford more favourable opportunities of increased exports—and exports have been falling—there must be some alternative organisation of industry so as to afford employment and the maintenance of purchasing power.

I need not remind the Committee how the conditions revealed by these figures, not only the stagnation but the actual recession, in districts in which this industry has been the staple industry for generations affect the whole local condition of trade of shopkeeping, and of business, how improvements due to social progress, which often raise the municipal expenditure and the assessments of property, are not met by a corresponding demand for the goods which are made, and how, therefore, tradespeople are compelled to ask what is going to be done. Is there no alternative form of industry other than textiles which might balance, and help us to maintain the standards of municipal development, without having to resort to increased rates? I hope I have said sufficient with regard to the woollen industry to indicate that this is a situation to which the Government ought to pay some attention. I think it is true that so far there has been no organised demand coming from the area, but the local newspapers have been full of it this last week or two, and arrangements are being made to press the the Government to do something, so that the West Riding may get some industry and its towns may have a chance of maintaining a decent standard.

7.50 p.m.

Miss Horsbrugh

I listened to the speech of my right hon. Friend the President of the Board of Trade, and as I continued to listen I became more and more disappointed. I thought I had made representations to the Board of Trade and to my right hon. Friend, and had spoken in this House, on the subject of a branch of the textile trade, namely, the jute trade, and in connection with the Indian Trade Agreement, and I had hoped that some notice would have been taken in my right hon. Friend's speech of the difficulties of that trade. In February last a Resolution was passed by this House, and the Government spokesman then agreed to it, to the effect that the difficulties of the jute trade and the necessity for safeguarding the interests of those employed in it would be kept in the forefront of the negotiations for the new trade agreement with India. I was, therefore, disappointed when no allusion was made to that trade this afternoon, and I fear that my right hon. Friend may have forgotten the various points that were put to him on the subject. I therefore venture to address the Committee once more on a subject on which I have spoken at least once every year since I entered this House in 1931. I hope this may be the last time but one when I shall so speak, because in these Debates, when hon. Members point out the difficulties of the particular trades in which they are interested, I am always looking forward to the time when I may be able to say that the particular difficulties in the industry with which I am connected have been solved, as I believe they could be solved.

The hon. Member for Dewsbury (Mr. Riley) referred to the fact of the decreasing numbers registered as employed in the woollen industry, and said that over and over again we heard in this House of the increased numbers of people in employment, but that those must be in industries other than those which we are discussing to-day. I think that is the case, and on these occasions, although one may become more and more gloomy as the Debate goes on, it is some comfort to remember that it is the industries in distress which are the subjects of debate. The hon. Member asked the Government to do something in connection with the woollen industry. We who have been realising the difficulties of the jute trade have asked the Government, not merely to do something, but to do something quite definitely. I will not weary the Committee with going over all the difficulties that I have enumerated more than once. When I heard the hon. Member for Llanelly (Mr. J. Griffiths), speaking of 1937 as a peak year of prosperity, I thought of the difficulties in Dundee and district, where since the beginning of 1935 the trade, which had become more nearly prosperous in the better conditions after the slump, was then put back by the removal of the control of looms, and hours in India.

Since that time in Dundee and district the jute trade has been getting progressively worse. I remember that the only two points that were suggested in the Debate in February by my hon. Friend the Financial Secretary to the Treasury, who was then Parliamentary Secretary to the Board of Trade, were that in the particular year 1937 there had been a certain improvement in the export trade and that more raw jute had been imported. On that occasion I put forward what I believed was the correct reason for that, namely, that fortuitous circumstances, such as the strikes in Calcutta and the floods in the United States, accounted for that particular increase, and to-day I would like to say that the figures for the first four months of this year prove that unfortunately I was right. The increase in the importation of manufactured jute piece goods from Calcutta is continuing, and we were told in 1936 that the amount imported was almost enough to kill the trade. The year 1936 did not see the peak of those importations, because 1937 showed an increase, and we see that they are still increasing in the first four months of this year. In the first four months of 1936 more than 46,000,000 square yards were imported from India; in 1937 they had gone up to 66,000,000 square yards, and in the first four months of this year they reached a total of more than 72,000,000 square yards.

It is impossible in these conditions that the jute trade of the United Kingdom, which unfortunately is situated in one particular district, the whole of which depends on it, can carry on. The exports to which my hon. Friend referred in the Debate in February showed again a decrease. They were up in 1937, owing to the floods in the United States and the increased orders for linoleum and linoleum hessians, but where in 1937 in the first four months 48,000,000 square yards were exported, this year we are back again to 24,000,000 square yards. The same story is found for the importation of raw jute, which were, in the first four months of 1936, 85,000 tons, going up, because of that particular thing last year, to 102,000 tons, but back again this year to 74,000 tons. We who know the working of the jute trade realise its desperate condition. It is nothing new. We have been pointing it out to the Board of Trade and have raised it in this House over and over again, and we have always said that it was not merely the difficulties of the present, but what we dreaded for the future. Our fears have been wholly realised, and the situation is now that the jute trade in this country cannot carry on unless something is done to regulate the amount that is imported from India into this country. We have received Government orders in Dundee and the district around, and we are thankful for them, but when we are facing unemployment up to 36 per cent in the jute trade and many thousands fewer insured persons on the registers than there were before, with imports still continuing to increase, when the trade is in one particular district like that, it is not only the unemployment in that particular trade; it is the unemployment resulting therefrom in other parts. Taking Dundee, over 26 per cent. of the people are unemployed, and each month the figures are getting worse. I noticed that the Indian mills produced in 1937 222,000,000 square yards more than in 1936, in one year alone. I then discovered that prior to the unsealing of the looms they held stocks of 190,000,000 square yards, approximately, and that in 1938 they had risen to 528,000,000 square yards, an increase of 175 per cent.

What is going to be done about it? I suggest that there is an opportunity, if only the Government will take it. We have heard that there is now a chance of agreement in the jute trade in India and an end of the war that has been going on between the mills in one association and those outside it. There is now a chance of agreement in the form of a regulation of hours. It is said that 98 per cent. of the mills in India are willing to sign an agreement and that the other 2 per cent. will probably come in. I trust the Government will do what they can to assist in such an agreement being reached. Once we had an agreement in India we could then see what agreement was possible between the jute trade in this country and the jute trade in India. I believe that we have our chance, not only because the difficulties have at last been realised in India, but also a new trade agreement with India is being negotiated.

I ask the Government to realise the enormous importance of this industry. I may be told that it is a small industry, which could be forgotten when the question of textiles and the Indian trade agreement was being mentioned to-day. But if there are 10,000 unemployed in one district, is it not our bounden duty to get them into employment, whatever the size of the industry? Nobody can say that it is unimportant to this country. If we go on as we are going now, the jute trade of the United Kingdom must be destroyed. In the situation in which the world is to-day, I doubt whether any Government could take the responsibility of leaving an industry of that kind to its fate, in face of the difficulties of the international situation.

A short time ago a new agreement with Southern Ireland was considered by Parliament and it has now come into force. In that agreement as in the Ottawa Agreements there has been some effort to safeguard to a certain extent the agricultural industry of this country. There is a regulation of agricultural exports from Ireland to this country in order that the agricultural community in this country shall not suffer. I ask the Government to consider seriously whether they cannot, in their negotiations with India, endeavour to get into the trade agreement some provision that jute manufactured in India and sent to this country should be regulated. Is there any reason why agriculture only should be considered in this connection? Is there any reason why jute manufacture should not also be considered since it affects the means of livelihood of 30,000 or more people and represents the difference between prosperity and misery in whole districts?

I believe that what I suggest could be done. I often feel that while other industries, like coal, cotton, steel and agriculture have hon. Members on all sides of the House to push their case and keep the Government reminded of them, the jute industry is, unfortunately, confined to one part of the country. My hon. Friend and I who share the representation of Dundee, however much we may differ on various fiscal questions have, at any rate, demonstrated that the strands of jute bind us together as far as this subject is concerned. We have both tried to impress on the Government the dire necessity of the city which we represent, and I think hon. Members will agree that we are right to continue to press our case. Although there may be only two Members in this Committee who are intimately connected with this question, I feel that if we continue to press it, other hon. Members will realise the difficulty and will join with us, on every possible occasion, in pressing upon the Government the necessity for definite action in order to get employment for these thousands of people who are not only miserable to-day, but who despair about to-morrow.

8.6 p.m.

Mr. Burke

The President of the Board of Trade this afternoon reviewed the conditions in three industries, namely, cotton, coal and steel, and indicated to the Committee that the cause of the decline in those three industries, which are our most important exporting industries, was the fall in world prices. I am not in a position to speak of the coal trade or the steel trade, but I suggest to the right hon. Gentleman, that in giving that as a reason for the decline in the cotton trade, he is very far from the fundamental truth of the situation. He told us that 1937 had been a very good year for the cotton trade, but that, unfortunately, there had been a falling-off since. He suggested that that falling-off was temporary, and that in a short time, we might expect the cotton trade again to revive.

Nobody connected with the industry will be misled for one moment by that argument. The simple fact is that the cotton trade has been declining for years. There was a slight flicker of life in it last year, but the process of decline has renewed itself, and the position of the industry to-day is very bad. The Minister referred to the trade which we had in West Africa, and suggested that the fall in prices had led to the loss of that trade. That is not the case. We certainly did capture the market in West Africa for a time, but that market was lost when the people who purchase cocoa from the natives on the Gold Coast depressed the price. The moment the price was depressed, our exports of cotton to that part of the world began to fall. They have dropped from 17,000,000 yards to 2,000,000 yards as a result of the impoverishment of the people. As the hon. Member for Dumfries (Sir H. Fildes) said, the people who buy cotton are the poorest in the world, and if they are impoverished by the action of a certain section of the commercial community, they cannot afford to buy the product of Lancashire, and Lancashire has to suffer in consequence.

We cannot possibly get that export trade back again. There is a good deal of dead wood in the cotton trade which will have to be cut away, but I would remind the Minister that this industry has been built up on its export trade, and that you cannot possibly find work for the 350,000 people in the cotton trade on the home market alone. The industry is sufficiently efficient to keep 90 per cent. at least of the home market, but it is the oversea market on which we depend, and there it is that Government policy has not helped. About 80 per cent. of the production of the cotton trade is produced for export. To-day, seven out of every eight looms in Lancashire make goods for people across the sea. The cotton trade is the first of our export trades. It has, during all the years of this century, been first in the list of exports. It represented 12 per cent. of our total exports. The first time in my recollection that the cotton trade has given place to any other industry in that respect, has been in the first four months of this year, when it dropped to second place in the list.

Before the War we exported 6,000,000,000 yards out of a production of 7,000,000,000 yards. What is the position to-day? We do not export 2,000,000,000 yards. We have last two-thirds of our export trade. Formerly we had 600,000 operatives in the industry; the number to-day is 350,000. At one time we had 800,000 looms in the industry. To-day, we have no more looms in the industry than we had in 1880. We are back again to the figure of 500,000 looms, and we cannot keep that number at work. This is not a matter of a drop in world prices last year. It is the steady decline of an industry due to factors which are, I admit, world-wide and external.

Two main factors have caused that decline. The first is the setting up of the domestic industry in India, and the second is Japanese competition. As far as India is concerned, I may remind the Committee of what I have already mentioned, that our total exports to the whole world to-day are about 2,000,000,000 yards. Years ago we used to send that amount, and more, to India alone. That is an indication of what the loss of 80 per cent. or 90 per cent. of the Indian market has meant to Lancashire. India was our largest market. It took, at least, one-third of our production. Years ago we used to export millions of yards more than Japan, but to-day Japan's export is greater than ours. Japan is sending more cotton piece goods into the world than Lancashire. The Far East market on which we depended so much has gone.

What does that mean to Lancashire? I have given some indication of the extent to which there has been scrapping of looms and spindles. That means either part time work or no work at all for many of our people. It means that, since last year, bad as things were then, there are 50,000 more cotton operatives unemployed. In my constituency a few years ago we had 98 mills. We have only 50 now. Over 30 mills are empty and derelict. There is no hum of activity, no racing machinery, to be heard in them. They are gaunt monuments of the depression and misery that are creeping over Lancashire. There are in Burnley 11,500 people who are unemployed—4,000 more than 12 months ago. I hope the Government will note these facts. That is what is happening in Lancashire, which is not affected by the armament programme, and which has not been touched by the so-called prosperity. The unemployment figures are going up every week, and during the first four months of this year, 166,000,000 yards less cotton was exported than in the very bad year 1937. That is a picture of what is happening in Lancashire. The young people are going away—there have been 1,200 transfers out of the Employment Exchanges during the last two years—and the townships are becoming townships of old people; the shops are closed, the mills are closed, the rates are high, and there is a struggle to keep home life in the town. We are told that the Government have no remedy.

I have said that there are two big factors, Japanese competition and India; but there are a great many other things, too, which contribute to the position in Lancashire. I have spoken of the Gold Coast. What do the Government intend to do in regard to the increase in the duties on cotton goods going into Egypt? The spinners have protested, and rightly so, because year by year Lancashire has been taking a bigger proportion of Empire cotton. There is then the question of Ceylon. Government policy, whether it be of a specific kind to help a particular interest or whether it be general policy, often has a very bad effect upon the trade of Lancashire. In the case of Ceylon, when we want to see the Government about the alteration in the tariffs and quotas, we were told that the Government had to agree to Ceylon making the new arrangements because it was politically expedient. But what did it mean to Lancashire? It meant that Japanese imports into Ceylon were increased to a great extent, and that the quotas for rayon and cotton clothes were increased by 50 per cent. We have just heard that Colombia has decided to suspend the import licences for cotton piece-goods. We have had a commercial agreement with Colombia since 1860, and we did £1,500,000 worth of trade with that country. That trade will go. Is it that Colombia intends to finish with that agreement because she has been taking £3,000,000 worth of goods from this country each year, whereas we have been buying from her goods to the value of £117,000? If that be the case, does it not indicate to the Government the kind of agreement that ought to be made— the kind of agreement which the Minister described this afternoon—an agreement that is fair to both sides and allows for expansion of trade as well?

I come now to another question which is seriously vexing the minds of people in Lancashire, namely, Japanese competition. A good deal of grey cloth comes into this country from Japan, is finished here, and is then exported to our markets abroad as United Kingdom products. That grey cloth goes to markets which are otherwise favourable to us, markets in which we have a quota and into which we go with favourable terms, such as Egypt, Australia and the Argentine. I know that the amount concerned is not a very large one, and the Minister may say that it is only a matter of 20,000,000 yards of grey cloth which comes into this country to be finished here; but I would remind hon. Members that in 1933, only 124,000 yards of that cloth came into this country, a negligible amount, and that in 1936—three years later—that 124,000 yards had jumped to 20,000,000 yards. It must also be remembered that a few years ago, Japan sent into India only 4,000,000 yards of cloth, whereas to-day she is sending 562,000,000 yards. The same sort of thing may happen in the case to which I am referring.

Mr. Ellis Smith

It is happening now.

Mr. Burke

The figure is increasing with alarming rapidity, and if the same process takes place as took place in the case of India, in a very short time we shall have ruined many other of our markets overseas. I would like to know whether the Government can deal with that position. The Japanese have also gone into the Central African market, and to-day their trade there is about seven times the amount of the trade which we are doing in yards, and, as to value, they have £1,340,000 worth of trade to our £207,000 worth. With the Congo Basin Treaty, they are able to get into that market on most-favoured-nation terms. I do not know whether the Government can do anything to revise that treaty, but it is certain that if they are able to produce as they do, they are not competing with Lancashire products on anything like fair terms. All over the world markets which once belonged to Lancashire are being flooded with goods from Japan. In the Dutch East Indies, the Japanese have increased their hold upon the market in the space of a few years, and as their hold grows, our hold is correspondingly reduced.

I should like now to say a few words about India. There we have lost our market because of the excessive protection which has been given to the domestic industry. Under the Ottawa Agreements, India enjoys equality of trade with this country and the Empire. Moreover, we take 30 per cent. of the products of India, and her exports to this country are growing. In 1929, the value of the cloth which we sent to India was £26,000,000, whereas in 1936 it was £5,000,000. On the other hand, in 1936 we took 500,000 bales of cotton from India, 150,000 more bales than we took in the previous year. Lancashire has done all she could to increase the use of Indian cotton for Lancashire cloths. What can we expect from India as a contribution to the policy of reciprocity? In pre-war days, India consumed about 5,000,000,000 yards of stuff. We supplied half of that amount, and the other half India made herself; but to-day the bulk is produced at home, and the little that remains is divided between this country and Japan. We ought to be able to get with India a different settlement from that which we had on the last occasion. I regretted very much to hear from the President of the Board of Trade that the negotiations have broken down. Now it is left to the Government to make a settlement. The people in Lancashire will expect the Government to insist on a better deal than we have had in the past.

Mr. Fleming

How does the hon. Member suggest that the Government can insist on a better deal between this country and India?

Mr. Burke

I am suggesting to the hon. Member that we are buying from India a very considerable amount of her products; we are taking 30 per cent. as opposed to the 15 per cent. which Japan is taking; and I suggest that the right line in all trade negotiations is to use the tremendous buying power which we have in this country to get better arrangements with those people who have something to sell. The cotton industry has sometimes been accused of being inefficient. The hon. Member for Dumfries said that we want trained men put into the industry. As a matter of fact, the industry spends a considerable amount of money every year on research. It has captured and kept home trade, and is able to deal in any part of the world with any competitor who does not have the advantage of excessive protection or of extremely low wages.

The difficulty with the industry is that it has grown too big for the markets, and what Lancashire is suggesting to the Board of Trade is that it should be allowed to organise itself. Someone has suggested that there are divergencies of opinion in Lancashire as to the advisability of the scheme presented to the Board of Trade. There always will be divergencies of opinion, in Lancashire. The amazing thing is that with this scheme there has been such an extraordinary amount of unanimity on all sides, and both employers and employes are united. Of course, there are people who are outside, but they are, in the main, people in a privileged position. People who have to fight, as Lancashire has to fight for every yard of cloth it sells, realise that there are only two alternatives—either the continual cutting of each other's throats for what markets there are and the continuance of the mutual murder society, as someone has described it, or making the industry into a unit in order to put it into a position to be able to compete better in the markets of the world. That is the first essential, and it is the first thing we are asking the Government to allow the industry to do. The second thing we are asking the Government to do is in their commercial treaties and in their arrangements with other countries to see that the cotton industry is not neglected and is not a mere "also ran," as has happened on other occasions.

The President of the Board of Trade said it was possible for the Government to do much for industry. The Government have attempted to do a good deal for other industries. They have gone to the aid of agriculture over and over again, and they have gone to the aid of shipping, coal, iron and steel. We are not asking for any subsidy. The other week the Government told us, when the Air Navigation Bill was before the House, that £3,000,000 was a negligible amount to spend in that direction. It is compared with the £61,000,000 that has been spent on Imperial Airways, but the cotton industry is not even asking for that negligible amount. It is asking only for powers to set its own house in order, to give it a chance in the markets of the world, to do what the late Prime Minister told us it was essential to do, and what everybody knows is essential, namely, to keep the overseas trade and, if possible, to make an expansion in our export trade. We must be able to do this if we are in any circumstances at all, or in any conditions, or on any decent wage level, to maintain the population of Lancashire and those other counties which have been so long dependent on the export trade. The record of the cotton trade and of what it has done to make this country commercially prosperous justifies us in asking the Government to give serious consideration to the plans that have been laid before them in order that the industry may regain confidence, and may not fall further and further back.

8.30 p.m.

Mr. R. Acland

I regret that I cannot follow the hon. Member for Dundee (Miss Horsbrugh) on the subject of jute, nor the hon. Member for Burnley (Mr. Burke) on the subject of cotton. I would like to draw attention to another industry, that of iron and steel. This is an industry which has received great favours at the hands of the Government. Not only has the whole of the rearmament programme gone in favour of it, but it has practically received from the Government whatever tariffs it wanted in order to keep out foreign competition and to negotiate with foreign competitors. These favours were given beyond all possibility of doubt on condition that the industry should do something in the realm of reorganisation. In a letter written to the Chairman of the Import Duties Advisory Committee, the Iron and Steel Federation in 1933 said that the assurances that a scheme would be prepared enabled the committee to recommend that the duties should be continued. In a letter written in April, 1933, the present Prime Minister said that the duties imposed upon foreign imports were intended to provide the opportunity for the reorganisation which was necessary.

The State, therefore, having eliminated foreign competition for the benefit of this industry the industry proceeded under that shelter to eliminate home competition. Through the control which the British Iron and Steel Federation exercised over all imports, and through their loyalty rebate schemes and other things, all firms making and using steel have come into close associations and amalgamations under the Federation. We now have a completely regulated industry, and competition and risk have been eliminated—the two things which have served in the past as the justification for profit. Prices are not now fixed in that industry by competition and by the most efficient firm quoting the lowest price. Output is not fixed by the man who does his job the best getting the biggest orders, Prices and output are fixed by decisions reached by some central board or other which decides on prices and distributes the output according to a quota scheme.

Mr. Peat

Does the hon. Member refer to home quotas or to export quotas?

Mr. Acland

I was referring to the planned scheme covering a great part of the industry under which the different producing units do not get their orders by competing for them and quoting the lowest price they can. They get a price which has been previously agreed upon, and the distribution of the orders is decided upon by some people who make a conscious decision on the matter.

Mr. Peat

Will the hon. Gentleman indicate the parts of the industry to which he refers? Can he give me information about the group which has this organisation?

Mr. Acland

My information on that relates to two parts of the industry— tubes and steel wire ropes. There has been a great deal of talk about making this industry into some great organisation working for the national good. The Import Duties Advisory Committee say: The problem is, therefore, to secure the systematic planning of the industry as a whole and the maintenance and development of internal co-ordination and co-operation with the aid of a tariff so far as necessary and with the continuance of international agreements whilst at the same time avoiding the evils of monopoly, safeguarding the public interest and fostering efficiency. A great deal has been talked about that, and what I am anxious to find out is how much has really been done. For example, there was to be a scheme of organisation supported by a central fund. The letter of 1933 from the present Prime Minister said: So long as the Government are satisfied of the determination of the industry to set its house in order they will be ready to give such support to those steps as may from time to time appear to be necessary. That letter was written in reply to another letter which said that the Corporation would be set up and that its functions would be: generally of a stimulating and coordinating character, backed by the powerful instrument of a central fund collected by a levy on the national production of pig iron and ingot steel. In 1933 that seemed a reasonable thing to hope for—this great corporation, with its fund, stimulating, unifying and creating efficiency. It was realised that one could not hope for that fund to be set up at once and the report of the Import Duties Advisory Committee says: Obviously such a levy scheme was not practical until the work of reorganisation was well advanced. The undertaking to introduce some kind of efficiency was given in 1933. For five years this industry has been receiving all manner of favours, and those were some of the objects to which it was then thought that the Central Stabilisation Fund might be devoted. I was going to ask the Minister not whether anything had been done in these directions, because it is always fairly easy for Members on the Government front bench to convince us that something is being done by a reference to committees which have been set up and are considering this and that matter.

I was going to ask a rather more searching question, by inquiring how much has been spent upon certain objects, because that seems a better test than the number of committees set up, the amount of consideration which has been given and the number of avenues which have been explored. I was going to ask how much had been spent on the various objects to which it was said, in 1933, that this stabilisation fund might be devoted; the concentration of production in the most efficient units; the elimination of inefficient units and their closing after agreement on suitable terms of compensation; the assistance of exports; grants to keep in production high-cost units whose production might be necessary at times of peak demand; the maintenance of some units, not required, upon a care and maintenance basis; the bringing about of fair delivery charges, research into new uses and market research. At Question Time to-day I received an answer from the President of the Board of Trade that this Central Stabilisation Fund, which we were told in 1933 was going to exercise such a great influence on the reorganisation of this industry, and was a condition of the favours which have been granted to it, has not yet even been set up. It is another example of cases under this Government in which industries take favours from the State promising all kinds of things in return, such as that they will convert themselves into semi-public services, and then, after the favours have been given, virtually nothing being accomplished, or attempted.

In this industry there is a pretty close price control. An article in the "Economist" records very substantial falls in output and a very substantial increase of stocks on hand, but as far as I can make out there has not been any reduction in the prices quoted in the statistical bulletin of the iron and steel industry. Prices to-day are just about the same as in November and December last year. That is not altogether surprising, perhaps, when there is a falling off in trade but prices not falling so as to adjust supply to demand. Prices remain pegged where they were pegged at a time when many of us believed they were being pegged high in anticipation of a fall in demand. We said then "Is it not wrong to announce fixed high prices for several months ahead?" but were told "On the contrary, it is a very generous thing which the Iron and Steel Federation are doing by giving steel users a guarantee of stable prices." Now we see that the demand has fallen off, prices remain stable, men are out of work and shipbuilders cannot get the steel which they require. That is what follows from price control.

Prices are supposed to be related to the costs of production, but I had some rather curious answers from the President of the Board of Trade when I asked questions last December about one section of the industry, that dealing with steel rods used to reinforce concrete. I asked: '' What are the raw materials whose cost contributes to the cost of production of rods for reinforced concrete work, and in what proportion do these several materials and the necessary labour contribute to the cost of production; and what were the changes in the costs of these materials or in the wages of labour which occurred between 1st January and 1st March, 1937, which justified the increase in the price of rods? I got a fairly vague answer: I understand that the cost of production of rods for reinforced concrete work depends mainly upon the cost of steel billets."— [OFFICIAL REPORT, 14th December, 1937; col. 961, Vol. 330.] It was added that the cost of steel billets had risen by so much and that wages had risen in proportion. It was not an answer which in any way enabled one to decide whether the permitted increase in the price of the rods was justified by anything which had happened in the costs of production of the raw materials or in regard to wages. Then I put down a rather more searching question on the same subject and got the answer: Information as to the costs of production of steel rods can only be obtained from the makers in confidence and cannot therefore be published. That is all very well, but if we are deserting competition in an industry, if we are to have this industry run supposedly in the interest of the public, is not this House and is not the public entitled to know what are the calculations upon which the prices are fixed? There was an addition to that answer: An investigation is now proceeding into the relations between the costs of iron and steel products re-rolled from billets and the cost of the billets."—[OFFICIAL REPORT, 1st February, 1938; col. 57, Vol. 331.] That was in February but I find from an answer given to-day that that investigation has not yet been concluded. It is only a small point, but it does not look as if this is an industry which is really moving to turn itself into the national service which it promised to become.

Over the whole of these price-fixing arrangements the Import Duties Advisory Committee keeps a general survey. I very much question whether that is satisfactory. The Import Duties Advisory Committee has been more responsible than any other outside body for the policy of this industry. The Government should realise that many people, not merely party politicians but people connected, for example, with the Birmingham Corporation, serious traders and steel users, regard this industry as a ramp, and that it cannot satisfy these people to be told that supervision is being kept by the very body which is responsible for the policy under which the industry has been developed. On page 82 of the Report on Steel by the Import Duties Advisory Committee, it is stated: That oversight … has developed gradually … and has so far devolved almost inevitably upon. us. … It is for His Majesty's Government to decide to what extent the oversight now being exercised … should continue and be recognised and if so, by whom it should in future be exercised. I do not know, but I would read that as a recommendation from the Import Duties Advisory Committee that it would probably be desirable that the oversight should be exercised in future by some other body whose sole function should be the oversight of the industry, and who should not be responsible for the policy that is being pursued.

One or two other things suggest to my mind that one might not be altogether wrong in saying that this industry is a ramp, and in doubting that it is a great and noble-minded concern interested only in the welfare of the country. For example, I cannot understand why the broad-flanged beam is not made in this country. Perhaps somebody who knows more will explain why a beam which is stronger per 1b. of steel per foot is not rolled in this country and can hardly now be brought in from abroad. It is made on the Continent. There is a British standard joist of the standard shape but, weight for weight—

Mr. Quibell

Be precise.

Mr. Acland

There is no need to be precise. Weight for weight the broad-flanged beam is stronger. [Interruption.] I have had this information from a structural engineer who is very well up in his subject, and who has shown me the tables.

Sir Joseph Nall

The hon. Member is raising the old controversy about the broad-flanged beam for making girders which has never been accepted by British builders or British rolling mills.

Mr. Acland

It was there, in the books: resistance to bending of one beam set against another; weight per foot in one column, resistance to bending in the next; the broad-band beam has it over the British standard section in class after class. The same in regard to the question of welding. I would like to know whether these things are true. I am informed that they are by a structural engineer of the highest repute.

Mr. Levy

I suggest to the hon. Member that book theory cannot properly be relied upon against practice.

Mr. Acland

What I am raising now is a purely practical point. When quotations are asked for a welded job of structural steel which requires less steel than a riveted job, the price of steel is advanced, I am informed, for the discouragement of welding. If there is a great and beneficent organisation overlooking the whole development of the steel industry it is time that that organisation set itself to the task of encouraging welding, even though a welded job required less steel than a riveted job. What may happen, and what, from the point of view of the steel industry, can be seen in many of our streets beginning to happen, is the replacement of structural steel by reinforced concrete, to the infinite disadvantage of people employed in producing steel.

Mr. Peat

Would the hon. Member give us further information as to how he knows for certain that steel used for welding is sold at a higher price than for riveting?

Mr. Acland

I think the hon. Member will understand that I cannot put a name to the individual across the Floor of the Committee. What I have described is not a satisfactory method of doing business. Instead of output being decided by competition it is decided by a fixed price quoted by everybody, and the output is allotted according to a quota scheme. Is that not putting temptation in the way of the largest firm, incidentally under the present arrangement for the supply of raw material from abroad, to raise the price of raw material for a time and to reduce the price of the finished article for a time and, having competed in that way for a number of years and reduced in that way the output of all the smaller and independent men, to fix a quota output all round for all time on the basis of the output for the last year?

I would put to hon. Members opposite and to whomsoever will reply, this question, which covers all the rest: When you are moved from an industry regulated by the free play of private competition to an industry which has to be consciously and deliberately regulated by people sitting round a table, fixing prices and distributing the output, who are the right people to make these decisions? Ought the people sitting round the table to be those who are interested in making money ought of the industry, or should they be independent men whose function it is to represent the nation as a whole?

8.54 p.m.

Sir C. Granville Gibson

I was very interested in the remark made by the hon. Member for Darlington (Mr. Peat) that what was required was stability of prices. No doubt every Member of the Committee would agree with that remark, but when the greatest consuming country of private products in the world, the United States of America, has 13,000,000 people unemployed, it is impossible to have stability of prices. Those who are engaged to a great extent in the export trade know that as long as you have that important country out of the markets there can be no stability of prices for producers. In various parts of the country there are few sections unaffected by the present world-wide stagnate condition of industry.

I was very much interested by the speech of the hon. Member for Llanelly (Mr. J. Griffiths). Of all the industries in this country that can consider themselves fortunate, and that have reason to thank the National Government, none has more reason than the coal industry. I do not mention that as a complaint at all; I simply state the fact. In every trade agreement the coal industry has had preference of treatment over other industries, and I am glad of it. It is one of the few industries in this country to-day that are reasonably prosperous. Sections of the steel and iron industry arc having a very lean time indeed. I have a great deal of sympathy with the hon. Member for Burnley (Mr. Burke), who spoke about the difficulties of the cotton trade, and asked the Minister what are the Government going to do about it? He related the difficulties that the cotton industry is having in facing very severe competition in the Far East. Anyone who knows anything about conditions in the East knows that the outlook for the cotton industry of this country is very dark indeed. I am one of those who are very sorry that that is so, but what can the Government do? The only thing they can do is to stop the goods about which the hon. Member spoke from coming into this country in large quantities. That would to some extent help our industry here. But Lancashire has not the slightest hope at any time in the future of recapturing the markets of the East. I myself have seen, in mills in Japan, women working for 6s. a week, 60 hours a week. How can Lancashire compete with those conditions? You may have all the co-operation mentioned by the hon. Member for Barnstaple (Mr. Acland), all the co-ordination, unification, efficiency of organisation, and elimination of inefficient units that you wish, but nothing of this kind will achieve the desired result of regaining those Eastern markets. The only thing that can be done at the moment is to see that at any rate the home market is protected. But I remember, during the time when Lord Runciman was President of the Board of Trade, that on every conceivable occasion when the imposition of a duty on any goods coming into this country was suggested, the Labour party voted against it and in favour of allowing foreign goods to come here and flood our market.

Mr. Silverman

The hon. Gentleman is complaining that the Lancashire cotton industry cannot compete in the markets of the East because the textile workers there work too long. Would he explain to the Committee why, in that case, the employers of this country united with the Government of this country at Geneva to oppose the adoption of an international convention for the establishment of a 40-hour working week?

Sir C. Granville Gibson

I am not going to be drawn away by that red herring. If I took up my time in answering that point, I should have to leave out remarks that I want to make. I have seen the conditions under which these people work in the East, and I say definitely that our cotton industry, unfortunately, has no hope for the future in Eastern countries against such competition.

The woollen textile industry in the West Riding of Yorkshire is, as was pointed out by the hon. Member for Dewsbury (Mr. Riley), having a very rough time. In going through my division from time to time, I used to see the various mills illuminated at night, but now, as I go along the roads, I see very few of them illuminated. Night shift work has almost come to an end, and many mills are working only three and four days a week. In six of the principal West Riding centres—Bradford, Halifax, Huddersfield, Batley, Morley and Dewsbury—in March, 1937, there were only 6,000 unemployed. To-day there are 21,600 unemployed, an increase of 15,600 in 12 months. With regard to machinery activity, all classes of wool textile machinery show a decrease of 12½ per cent. in activity as compared with a year ago. In March, 1937, the activity was 85.8 per cent., and in March, 1938, it was 73.4 per cent. At the present time orders are very scarce indeed. The remark is made by an hon. Member near me, "What about prosperity?"

Last month, 5,000 pieces of cloth came in from Italy, subsidised to the extent on the average of 20 per cent. Every week thousands of pounds worth of partly finished textile goods come in from Italy, and, having been finished in this country, large quantities of them are shipped out to various parts of the Empire as United Kingdom goods. Exports in the woollen textile industry have, unfortunately, gone down considerably in the past year. In the first three months of 1937, the export of tops amounted to 12,000,000 1b., and in the first three months of this year to 7,500,000 1b. At the same period last year our export of yarns amounted to 11,500,000 1b., and this year to 8,000,000 1b. Of finished tissues, our exports in the first three months of last year were 36,000,000 yards, and this year30,000,000 yards. Can it be wondered at that our exports decline when such large quantities of foreign goods come into this country, assisted by subsidies which vary from 20 per cent. to 40 per cent.? I have a friend who has three woollen mills in the West Riding. When he comes up to London and goes to see his customers, they put in front of him an Italian cloth with which it is impossible to compete because of the subsidy that is granted on it by the Italian Government.

Passing to another point, I was sorry it was impossible for me to be here when the President of the Board of Trade made his speech this afternoon; at that time I was at a meeting in another part of the country; but I understand that the question of imports of German motor cars was dealt with by the hon. Member for Gower (Mr. Grenfell). In answer to a question last week, the President of the Board of Trade stated that the imports of German motor cars were only about 12 or 14 more in the first month of this year than in the first month of last year. I do not say that he desired or intended to mislead the House, but as a matter of fact that did not represent a true picture of the state of affairs. The imports from Germany of one make of car alone amounted, in 1936, to 40, while in January and February, 1938, they amounted to 1,140. I am glad that the President of the Board of Trade has just come in. The imports of private motor cars from Germany in 1934 amounted to 28, while in 1935 they amounted to 264, and in 1937 to 5,174. Putting these figures into money values, in the year 1934 the imports of private motor cars from Germany were £6,000, and last year they were £408,000. This is a very serious matter indeed. At the annual meeting of the Association of British Chambers of Commerce about a month ago, at which I had the honour of being present, a resolution was passed calling the attention of the Government to the adverse effect upon our industry of the subsidies granted on goods coming here from various countries.

It is not a question simply of motor cars, or the importation of goods from any one specific country; but these subsidies are being more widely spread year after year. They started only after 1931 or 1932, when the National Government introduced tariffs; because they are the subterfuge being used by foreign countries in order to nullify entirely the effect of the tariffs. The Import Duties Advisory Committee was appointed by this Government to consider every specific industry and to recommend those duties which should be imposed, in order to give a fair competitive opportunity to the industries of this country. Those figures having been fixed, it is quite easy for any foreign Government to say, "If the duty on this article is 20 per cent., let us give a subsidy to our producers of 40 per cent." They can climb over those walls. That is what they are doing all the time. This does not apply to Germany only, but to a number of countries. I would remind hon. Members on my right that every one of these motor cars coming from Germany and all of these goods coming from foreign countries are keeping our men out of work.

Take Poland, for instance. There are subsidies on all kinds of goods from Poland: even on bacon, which is a primary product. Some of these subsidies go as high as 60 or 70 per cent. Take Hungary. In my industry, which is connected with leather, when any goods are exported from Hungary to this country [Interruption.] I suggest that I have a right to give an example of something about which I know. There is an export subsidy of 8 per cent. on goods coming to this country from Hungary—I suppose it applies to other goods as well, but I do not know. But when a payment of £100 is sent to Hungary, it goes back to the man in Hungary as £140 worth of pengos, with the result that he gets a further 40 per cent. subsidy, making a total of 48 per cent. It is no wonder that there are large quantities of goods coming into this country from Hungary. In 1934, the imports of boots and shoes from Hungary amounted to 3,780 pairs; last year they were 215,000 pairs. That is because of the assistance of the subsidy. Switzerland has disbursed considerable sums in respect of her exports to the country. Where there is any export trade which would be unremunerative at the prices necessary to secure an order, the Swiss Government provide the subsidy that is necessary. This is not fair competition. In Germany there is a levy for all industries. This amounted in 1935—which, I think, was the first year that it was in being—to 800,000,000 reichsmarks. This was used entirely for subsidising goods exported to various parts of the world. In 1936 this was modified to a small levy, with the result that it was expected in 1937 to produce 600,000,000 reichsmarks. This is equivalent to about 20 per cent. over the whole of their exports, and the subsidies they grant vary from 20 to 40 per cent. There are only a few industries for which they do not grant subsidies on exports.

I would repeat that a few years ago the Import Duties Advisory Committee was set up to recommend that certain duties be imposed on certain goods, and these countries who are carrying on this subsidy game find it quite easy to scale our tariff walls. I know my right hon. Friend the President of the Board of Trade stated only last week that they were looking into the matter, but we want more than that: we want action. The United States were faced with this subsidisation of exports from Germany and they immediately imposed an additional duty, over and above the ordinary rates of duty, on various commodities, to offset the amount of subsidy. I know that in Germany the subsidies are secret. I believe it is actually treasonable to divulge what the subsidies are. But if the United States do not know what a subsidy is, they put a figure which they consider will cover it; and the result is that dumping of German goods has stopped. Why cannot our Government do the same? If I send goods to Canada, I have to declare that they are not sold at a lower price in the Canadian market than in this market. Why cannot the Government take action on these lines? Subsidies will undo the work of the Import Duties Advisory Committee unless the Government take action. I hope the Board of Trade will do something, because this matter is becoming more and more serious every week.

I have reports from all over the country of firms being adversely affected by this unfair competition. I would remind my hon. Friends on my right that, however it affects employers of labour, it also affects the workers. In the woollen industry in the West Riding of Yorkshire a census has recently been taken of 50 firms as to their profits in the past year, and the profits averaged out at less than half of 1 per cent.; so the textile industry is not making good profits. We want prosperity, so far as it can be attained, in every industry, and while conditions outside our shores are so difficult, it is up to the Government to see that, as far as possible, our own market is secured to us.

9.13 p.m.

Miss Wilkinson

I want to speak very briefly to-night. The Minister has been asked to do things which it is not in his power to do. He has been asked to control commodity prices throughout the world. I have no doubt that he would be delighted to do so if he saw any possibility. I have to ask him to do something which it is within his power to do. I think that we ought to have some kind of finality as to what is going to happen with regard to the Jarrow steelworks. I think the Minister will remember—in fact he remembers only too well—that in June, 1937, we reached the end of a period of three years during which the Jarrow steelworks had been under consideration by his predecessor and his Department. We were told on 22nd June— nearly a year ago—that arrangements had been concluded for a new company to build and operate plants at Jarrow, and the "Times" said with joy the next day—they really had been very good about this matter—that the uncertainty as to whether Jarrow steelworks would ever be revived and the alternation of hope and disappointment were now things of the past. That was a somewhat optimistic view. I have gone on since then asking the Minister questions until we had the answer that he gave to-day. I cannot help feeling that this answer does not carry us very much further than the answer which he gave in January of this year. He says: The lease of the site from the Commissioner to the proposed company has been prepared and the few points which have been raised by the Promoters of the Company are now under discussion. I am really asking what we are to read into these particular words. There is a very real feeling in the town that the whole question of the Jarrow steelworks has been prejudiced. I am choosing my words very carefully, because I do not want to make any difficulties, but it is felt that it has been handed over to a company whose interests are really in the opposite direction, and that, far from having any special interests in steelworks at Jarrow, looking at it normally, they would prefer not to have these steelworks. There is a feeling that there has been a great deal of obstruction. I do not want to put it any higher than to say that that is the feeling in the town; it is expressed by responsible people on the town council and in Jarrow. If it is within the power of the Minister to say now that those fears and suspicions are quite unjustified, nobody will be more grateful than I and the members of the council of the town for which I am speaking. We feel that the official optimism about this business has really prevented the true facts from being known.

The statement has been made to-night of 1,200 men being employed at Jarrow. I pay tribute to the work which the hon. Gentleman the Member for Guildford (Sir J. Jarvis) has tried to do in this distressed area with very limited resources and with great difficulty. But it is not the case that anything like the number that the Minister mentioned are in fact being employed. We hope that that number will be employed. The reason which was advanced by the right hon. Gentleman's predecessor, that there was no market for such goods as Jarrow might have been able to produce, has been falsified over and over again. Owing to the appalling muddle in the trade we are landed in the present position, that blast furnaces have been closed down owing to undue imports. It proves that what is badly needed is somebody to take over this great industry and to plan it with some idea as to the future. We in Jarrow are not asking for something that will throw other people out of work, but the town, as the Minister knows, has been the victim of two cross-streams of rationalisation. There was the rationalisation of the shipyards, which murdered yards that would now have been in full work and would have been a national asset if they had been allowed to remain instead of being scrapped, and instead of the steelworks being a national asset, the interests of the Iron and Steel Federation have cut across it.

The feeling in the town, of hope deferred, is something which the Minister himself cannot really understand. If whoever is to answer for the Minister in this Debate could really say what the reply of the Minister to my question today really means, it would help a lot, or, if that is not possible, it would help if the Minister could give any promise when his statement will be elucidated. We are not asking for a steelworks out of charity. There is a magnificent site and the promise of capital, but whenever we seem to come up to the point of realisation there is obstruction or something to prevent it. What we want to get at is that something. Is it something that the Minister himself can deal with, or is it entirely outside his category? Are we really up against a blank wall in respect of the iron and steel trade, against someone who is not going to let us have that works? It will be far better to let us know. It might be possible, if a steelworks is not provided, to use the site in some other way. The hope of the whole town has been concentrated on the idea that there was to be a steelworks; the organisation has been put into being and experts have been appointed, and yet nothing has been done. I appeal to the Minister to make some statement to relieve the very great anxiety in this town.

9.21 p.m.

Mr. Peat

There are many aspects of this Debate which I should like to cover, but time is geting late and I do not want to stop other hon. Members from speaking. Therefore, I will confine myself to the question of the iron and steel industry. The hon. Lady the Member for Jarrow (Miss Wilkinson) has just mentioned the position of the Jarrow steelworks, and inquired whether, in the first place, the steel company which has control over it, is wittingly and intentionally thwarting the institution of an iron and steelworks in Jarrow, or whether the dead hand of the British Iron and Steel Federation is being laid on the enterprise. May I inform the hon. Lady that the British Iron and Steel Federation have nothing to do with this problem at all to-day. As far as the iron and steel industry is concerned, a modified scheme for an iron and steelworks is agreed, and as far as the big steel company to which she referred is concerned also, as far as I am informed, it is looking forward to getting on with the job, and has no desire whatever to stop or to thwart it. There are. I believe, difficulties in the way, some of which, I understand, have to do with the local authority, but it is not correct to suggest that either the British Iron and Steel Federation or the iron and steel company in question has any desire to put a spoke in the wheels of the new venture.

Miss Wilkinson

I can assure the hon. Gentleman that the town council are willing to do anything. There is no question of thwarting there.

Mr. Peat

I may be wrong, and I do not wish to stress the point, but I understood that there was some difficulty with regard to rights of way and transportation. There was another point raised at the beginning of the Debate with regard to the bulk purchasing by the British Iron and Steel Federation of pig-iron and scrap, and the answer was given by the President of the Board of Trade that of the scrap purchases there was still a certain quantity to be delivered. The position with regard to pig-iron is, I believe, that if the industry had not purchased pig-iron in bulk, as it did, it would have been purchased by individual members on their own account. The timing of the purchase of pig-iron was extraordinarily good, delivery being completed at the end of March, before the position became serious. The reason for the late delivery of scrap iron is in transport difficulties, over which the federation had no control.

These purchases in bulk were a very important feature of the federation's policy. The industry was faced with difficulties, with rising prices and an unequal position between members of the industry, so these purchases were made in bulk and the cost of the scrap or pig-iron was shared by the whole industry by a levy per ton. These purchases were a very essential feature of the difficult time through which the industry passed in 1937. I think a national stock of pig-iron might be a very useful thing, but I do not think it would be a very important feature in solving some of our unemployment problems, and if you had the stock it would have to be under the control of someone representing the industry so that the vast accumulation would not affect prices.

The hon. Member for Barnstaple (Mr. Acland) is apparently inspired by an astonishing venom against the iron and steel industry, partly I imagine because it has so far entirely controverted his theoretical ideas as to Free Trade. He accuses it of a great many things. He says first of all that it has received many favours from the Government. I believe that in 1931 the industry was gradually dying and, if it had not had some protection, the country would have been in a very bad way now that it is looking to its iron and steel industry for the rearmament programme. It was not a favour but ordinary common justice that the industry received when it got tariffs. I admit that the tariffs were given under the promise of reorganisation, and the next point that the hon. Member made was that there has been no reorganisation at all. He taunts the industry with pretending to be a sort of philanthropic society. No one has ever made that suggestion, and the industry would be the last to think of it. It is out to carry on in the most efficient way it possibly can, not only for itself but for its consumers, because it is wise enough to know that whatever injures its consumers hurts its own prospects at the same time.

The hon. Member drew a terrible picture of rings of people giving themselves quotas and starving the smaller men. I asked him to give me the industries concerned, and he mentioned tubes and wire ropes. The wire rope industry is outside the federation and I do not think tubes are affiliated to it either. He misses out of his calculations the millions of tons of steel manufactured and sold in this country without any sort of quota regulations whatever. He wanted to know what had happened to the stabilisation fund and what had been spent on marketing research and in modernisation of the industry in general. The industry is trying to make arrangements to bring the fund into being, but it is a very slow process. It is not an easy thing to build up a fund of that character. The industry has done a great deal in the way of reorganisation, and I admit that the stabilisation fund has yet to be brought into being.

The hon. Member asked how much money the industry had spent in modernising its plant and putting down new equipment. They spent £20,000,000 in 1936 and 1937, and this year the programme is so far £10,000,000. On research tens of thousands of pounds are spent every year, and for many years hundreds of thousands of pounds have been spent in helping customers to compete in foreign markets. At present that has been dropped because the export markets do not require it. The hon. Member made a very strong attack on the price structure of the industry. I believe that is the crux of the whole situation. The iron and steel industry covers 15 different but allied industries. It is also composed of 35 different trade associations. The whole principle of the price policy of the Iron and Steel Federation is that every consumer is a producer and every producer is a consumer. In other words, you have to look after your consumer, because he is a producer, and the industrial chain is made up of various links which start from the raw materials and end with the finished product and, if there is any weak link in the chain, the whole chain is jeopardised.

The industry has attempted to co-ordinate the whole of its price policy, which has been agreed, and related one stage of the industry to another. If you have an organisation like that and it is not watertight, it does not function at all and, if you have a co-ordinated price policy, it must work as otherwise it is no good at all. This policy is now being carried a stage further. The industry is trying to co-ordinate its policy with suppliers of raw materials. Prices are based on costs of production and to give a fair return to the producer. I do not suppose the hon. Member for Barnstaple appreciates what that means. In his theory of prices it is always the jungle law, that if you catch a man napping you pinch him as far as you can and put him out of business.

The iron and steel industry considers that prices should be fixed on a basis of cost and not on a succession of incidents which produce cold feet, hot heads and panic. If prices are on costs we get to the point of stabilisation, which is the next important factor. If you stabilise prices you have an opportunity of cutting out trade cycles. Some time ago, I am not quite sure of the date, an order was going to be placed by a shipowner with a shipbuilder for a ship. He was quoted £140,000, shall we say? Another shipbuilder heard of the price and offered to do the job for £125,000. The ship owner began to think, and he thought still harder, when another shipbuilder came along and offered to do it for £110,000. That being the position, he did not order the ship at all. That is why we believe that stabilisation in prices is most important. In May, 1937, prices were stabilised; they were raised by 20 per cent. against an increase in costs. They were stabilised to the end of this year, not in a falling market but at a time when steel makers, if they had been free to go outside the price control could have got £3 or £4 a ton for their steel more than under the price control. The prices which were agreed under contol were not minimum prices but maximum prices, and the stabilisation of prices appeared at a time when steel-makers might have got much more for their steel than they actually did.

One other point. The costs of production after the stabilisation of prices in May, 1937, continued to rise, and between May and December rose a further 15 points. Also, the prices fixed for steel were £2 to £3 lower than world prices. That does not look as if prices were stabilised on a falling market. Indeed, they were stabilised on a rising market and rising costs. I do not think that to-day there is any reason why these prices should be changed. I have mentioned coke. It is still a question whether if you purchase your coke cheaper you are purchasing it at a price which is remunerative to the man who makes it and whose batteries therefore may have to go out of commission. The hon. Member for Barnstaple said he thought the iron and steel industry and the Import Duties Advisory Committee were a racket. In using that expression he left himself open to the very grave charge of insinuating that distinguished countrymen of his, the Import Duties Advisory Committee, in looking after this great monopolist industry where collaborating to put profits into the pockets of the iron and steel makers.

Mr. Acland

I do not think the hon. Member should make a charge of that kind. What I said was that a number of people, not mere party politicians but serious men of business, are suggesting that the iron and steel industry is a ramp, and that as regards the Import Duties Advisory Committee it is not satisfactory to people to know that the function of looking after this industry is exercised by people who are responsible for creating the policy. I said no more than that.

Mr. Peat

Perhaps the word was ill-chosen. The Import Duties Advisory Committee may have a considerable amount of influence on the policy of the iron and steel industry. They are in favour of reorganisation and everything they have done has been to help and urge forward the reorganisation of the industry, and if the hon. Member admits that they are an impartial body, then the whole of his attack on prices falls to the ground. That impartial body is responsible for looking after any rise in prices, and, in addition, not only calls for costs but has the costs audited. That, in my opinion, indicates that the price to the consumers is regulated very carefully on a proper basis, which is costs by an impartial committee, and therefore I cannot see how the hon. Member can get away from that point. There is much more I should like to say, but time does not permit. In conclusion I ask the Committee to believe that the iron and steel industry has gone further than any other industry towards reorganisation. Its price policy is perfectly sound, it gives every link in its industrial chain a fair chance to live by the product it sells, and, finally, prices are agreed, after the most careful professional scrutiny, by a body which is impartial.

9.43 p.m.

Sir Nairne Stewart Sandeman

I am probably the only hon. Member who has been connected with the cotton and jute trade all his business career and I represent a cotton constituency in this House. I want to ask several questions and to make one or two brief comments. I want to know what is the position of the Enabling Bill? The position in Lancashire is more than grave. We are losing our trade, and we are trying in some way, with Government assistance, to get back some of that trade, but I am not at all certain that it is by Government assistance we shall get it back. That will have to be done by the people in the trade. One objection to the present method of the Enabling Bill, which may have to be passed because we can get it through quickly, is that you are in horizontal compartments. Suppose there are cotton goods stamped and dyed by five different processes. Each process has to make a certain profit, say 5 per cent., which is not very much, but by the time you have gone through five different processes it amounts to 25 per cent., which is a big sum. I always wonder why the Lancashire people, who are as clever as any other people. should find it so difficult at times to get on with their neighbours and to come to an agreement on a vertical plan. So far as this country and the home trade are concerned, I am certain that it would pay them out of hand to do that, and there would be no trouble in bringing it about.

As far as the export trade is concerned, it would help them to reduce their costs enormously, because they would not have these constant middlemen, about whom we hear so much, who have to get their rake-off in each part of the process. It might take a long time to do it, but I think it can be done. I often think of one who was asked how he got on so well, and he said, "You keep your light shining a little in front of the next." If Lancashire would only keep their light shining a little in front of the next—I think they are doing it, or trying to do it—they would have much greater success. They are going in for intensive research, which is a way of cheapening the cost of production, and they are also bringing out new things. I do not know where Lancashire would have been had it not been for artificial silk. They would certainly have been in a much worse position than they are to-day.

The message that I would send to Lancashire is, that the manufacturers there should get together and trust each other. They can do that if they get the right spirit. They are all wondering about each other and wondering what is going to happen. Let them get round a table and come to some sort of agreed system which would help to bring down their costs of production and help them to increase their exports. I suppose the Board of Trade is waiting for a perfect scheme for Lancashire. I wonder where the perfect scheme is to come from. I wonder whether the President of the Board of Trade would approach the Colonies with a view to facilitating our exports to the Colonies. Something could be done in that respect. I heard a very good speech the other day about West Africa. Several of my constituents write to me on the subject of exports to West Africa, and they refer to cocoa, and so on. I think that we have a good chance of selling cotton goods to our African Colonies.

I was very sorry to see in the Press that the Lancashire India textile talks have broken down. I believe the Lancashire representative, Mr. Campbell, wanted a reduction of the duties from 15 to 7½ per cent., but the people in India would not agree to a reduction less than to 14 per cent. The Lancashire people in the talks were speaking about 400,000 bales of guaranteed Indian cotton being consumed in Lancashire, with a hope of increasing the consumption to 1,000,000 bales. However, the talks have broken down. I hear that one of the Indian representatives is flying to this country to see what can be done about the matter. It does not matter much whether he flies or comes by boat, but when he does come here, how much further are we going to get on with the business? Is he coming about the trade agreement?

The President of the Board of Trade cannot have it both ways in these matters. He cannot tell us that we must not say anything about India putting on tariffs against Lancashire goods, and then tell us that Indian goods must come in here free. Perhaps in the smoke-room he will tell me a different sort of proposition. If India is going to humbug us in Lancashire and not give us anything; if it is to take up a non possumus attitude, why should we not give them something of the hair of the dog that bit us, and say, for instance, that so far as Indian jute goods come to this country we are not going to have anything to do with them? Unless we take up a policy like that and so show that we are not afraid, we shall get nowhere. The Indians will think that we are soft. This country must not allow itself to be thought soft. In my day I think I was a very good employer, and one of the reasons was because the people I employed knew they would get justice and not softness. The Indians realise straight talk and understand it.

The hon. Member for Dundee (Miss Horsbrugh) made a very good statement of her case for Dundee, but she made one mistake in saying that she and her fellow-Member in the representation of Dundee knew all about this matter. The fact is that from 1898 to 1927 I was working in the jute trade, and I knew it pretty well, and I know it to-day. I might add, for the information of hon. Members above the Gangway, that I have not a penny to-day in either jute or cotton. [An HON. MEMBER: "Perhaps in Russia."] Perhaps it is invested in gold mines in Russia. So far as the jute trade is concerned, I say that it can still be saved. We have got nothing for Lancashire from India, and as far as I can see we are not going to get anything, but we can save the jute trade for Dundee. We are told that there are 10,000 unemployed there. That is pretty serious. I know the jute workers and am very fond of them. We are told that there are 30,000 jute workers on the unemployment register, but that number must have been very much reduced, because people have gone to look elsewhere for decent employment. There is, however, probably 40 to 50 per cent. of the jute workers who are unemployed. Those unemployed people are drawing the dole, which is a pretty blue look-out for them. If the Board of Trade took up a firm attitude, those people could be saved, and they would have a decent wage to spend. If we had a large number of those people spending their money, that would find employment for other people.

Then what about the ancillary trades to the jute trade? What about the stevedores at the docks, the shipping people and others? What is in store for these people? The hon. Member for Dundee told us that stocks in Calcutta have risen. The normal thing for Calcutta to carry in stocks of gunnies is 190,000,000 yards, and now they have 528,000,000 yards, and where are these coming to? Most of them, I think, are coming to this country, and that means worse and worse for the people of this country. Who will score in this country? I suppose it will be the people who reckoned on a big drop in gunny prices. The people in Dundee will be put out of a job. I would ask the President of the Board of Trade to let the people in India have a little more of what he can give me so freely. He does not mind giving me a cursing, but it is the other people whom he ought to tell where to get off.

On the Government of India Bill we tried to put in safeguards on this particular point, so that there would be some sort of board to control duties and so on, but our Amendment was ruled out of order, or at any rate it was never called. I do not want to say, "I told you so," because that does no good. We are in a certain position now, and we want to make the best of it and to get out of it and do all that we can so that employ- ment in Dundee will be saved. We want to do something also to help Lancashire, and I think we can only do it by using the powers that we have. We are not afraid of India. We take far more from India than India takes from us, and we can pretty well dictate terms to India. I hope the right hon. Gentleman will pay attention to what has been said in this connection.

9.58 p.m.

Mr. Shinwell

This Debate has ranged over a wide field. We have discussed the cotton, the iron and steel, and several other trades, as well as the general trade position of the country, and there has been a similarity in the speeches from all quarters of the Committee. Grave concern has been expressed regarding the position of British trade, and complaints have been addressed to the right hon. Gentleman the President of the Board of Trade. These apprehensions and complaints are a vindication of the case frequently presented by the party on this side of the House. Within a few short months a significant change has taken place. The right hon. Gentleman, in the course of his speech, contrasted the position last year, when Mr. Runciman, as he then was, the then President of the Board of Trade, spoke on the general trade position, with the position as we find it now. Then we were living, so the right hon. Gentleman informed us, in an era of remarkable prosperity; now we are in the process of a trade decline. But I would remind the right hon. Gentleman that only a few weeks ago Ministers speaking on behalf of the Government scoffed at the very notion of a trade decline.

I have no desire to make party capital out of the speeches that were then made, but this is a matter very relevant to the present situation. For example, in the Debate on the Address, the Chancellor of the Exchequer declared that there was no ground whatever for asserting that there were palpable indications that our trade was approaching a decline. Surely that view has been falsified by the facts. He was followed subsequently by the Minister of Transport, who denied that the period of expansion had come to an end; in reply to a speech that I ventured to make to the House on 23rd March the Financial Secretary to the Treasury, then Parliamentary Secretary to the Board of Trade, said that most industries showed no signs of a check; and last, but not least, the right hon. Gentleman himself, speaking only a short time ago, said that the Government did not believe in the imminence of a slump. When those speeches were being made, we on this side of the House were described as dismal Jimmies. We were told that we were destroying confidence, that we were in fact, by our complaints and our forecasts, assisting to create a slump. Surely by now hon. Members opposite will agree that there was wisdom and foresight in our utterances.

I repeat that existing events, all the facts that have been disclosed in the course of to-day's Debate, thoroughly vindicate the utterances made by hon. Members on this side of the House, and it is clear that the optimistic utterances of Ministers of the Crown were not in any sense related to the realities of the situation. The right hon. Gentleman said that the situation was disquieting. May I say at once that that affords hon. Members on this side no elation whatever. We would wish it to be otherwise, but it would be sheer folly to ignore the facts. Only by a clear recognition of the facts is it possible to seek and find a solution, or, it may be, only a partial solution. It is significant, nevertheless, that in spite of all the efforts of His Majesty's Government—Import Duties, quotas, various restrictions in respect of production, subsidies and the like, and expenditure on armament production—we find ourselves now almost in the throes of another trade depression. If the right hon. Gentleman does not agree that a trade depression exists, I will refer him to the actual figures of trade. He disclosed to the Committee the statistics which are forthcoming from time to time from his own Department and, with the utmost good will, I am bound to say, that the right hon. Gentleman appeared to me to err on the side of optimism.

The figures are very serious indeed, particularly because the decline has been sharp and precipitate. That, I believe, is the most serious aspect of the situation. I would remind hon. Members that one of the reasons advanced against the continuance in office of the last Labour Government, was the need for correcting the adverse balance of trade. Hon. Members who were then in the House may recall the speech delivered, with such a wealth of forensic eloquence, by the right hon. Gentleman the Member for Spen Valley (Sir J. Simon). Speaking from the bench opposite, the right hon. Gentleman inveighed against the previous Labour Government. He declared that because of the adverse balance of trade, which he accused the Labour Government of having created, it was essential to adopt new trade and fiscal devices. He thereupon abandoned Free Trade and advocated a policy of Tariff Reform. Following the formation of the National Government, of which the right hon. Gentleman the Member for Spen Valley was a member, we had the Import Duties Act, the Ottawa Agreements Act and other legislation designed to improve the balance of trade.

What is the position after six years of legislation of the kind which I have indicated? In spite of all—and having meantime gone off the Gold Standard— we find that whereas in 1931, a year of undoubted depression, when the Labour Government were in office, we had an adverse balance of £405,000,000, in 1937 the adverse balance had grown to £432,000,000, and yet 1937, in the language of the right hon. Gentleman opposite, was a year of remarkable prosperity. Those are significant facts, and although it might be going too far to condemn His Majesty's Government for the present adverse balance of trade, it is equally clear that the previous Labour Government could not be held responsible for the adverse balance of trade at that time. If I may say so with respect, I detected in the speech of the right hon. Gentleman the desire to attribute the responsibility to world economic factors. For example, he referred to the trade recession in the United States, and also to the fall in prices. As regards the latter factor, may I remind him that the fall in prices is not necessarily a cause, but a symptom of depression? The right hon. Gentleman apparently forgot to take that into account.

He also referred to the position vis-a-vis, India. These are world economic factors, but we are surely entitled to ask the Government, upon whom a large measure of responsibility rests, what they are going to do about it? How are they going to correct the adverse balance of trade? The right hon. Gentleman tried to evade the issue to a modified extent by referring to the invisible exports. I venture the opinion that he was optimistic in his estimate. I notice that on 19th February, the "Economist" expressed the opinion that the estimate of the Board of Trade was inaccurate, and Sir Robert Kindersley said that our receipts from investments abroad were £17,000,000 more than the Board's estimate. So we cannot rely wholly on the invisible export figures presented by the right hon. Gentleman

In view of the speeches already made by my hon. Friend the Member for Gower (Mr. D. Grenfell)—complete as it was with figures and facts on the trade position—and by other hon. Members, I do not wish to dilate on the actual trade position. I would endorse in a sentence what has already been said. The situation, particularly in respect of our exports, is most disquieting, and there I leave it. The question which we have to consider is what is to be done about it. I approach this part of my subject with this observation. It is not the duty of the Opposition to present constructive proposals. That is the function of the Government, and if hon. and right hon. Gentlemen opposite doubt what I have just said, I refer them to the OFFICIAL REPORT and to the speeches which they themselves have delivered. At the same time, I agree that, in so far as the Opposition have ideas with regard to a constructive trade policy, those ideas ought to be presented, and we desire to make our contribution, particularly because the Government appear helpless and incapable of making up their own minds.

Let me give one illustration. The right hon. Gentleman referred to the Lancashire cotton industry. Everybody agrees that it is in a parlous plight, with exports declining and production diminishing, with thousands thrown out of work and with all the impoverishment which that entails. What was his contribution to the solution of the problem? He said he hoped that the various interests in the industry would co-operate. But suppose they do not? Suppose there is a recalcitrant minority? Suppose 10 or 15 or 20 per cent. of the elements in the cotton industry refuse to combine with the others and there is no agreement and no cooperation of any sort or kind? Are we to take it that nothing is to happen? Are we to understand that, in respect of this impoverished industry, the Government are shelving their responsibility and putting it entirely on the shoulders of the industry? Is that the only contribution that the Government can make? If that be so, I predict a very bad political time for the Government in Lancashire at the next General Election. If a serious slump is to be averted, hon. Members on this side believe that drastic methods should be employed. I say that more particularly because there is another factor in the situation to which attention ought to be directed. I will touch on it only briefly.

I refer to industrial production and its effect on unemployment. In 1929, the Board of Trade index figure of production was 108.5, and the unemployment figure in December of that year was 1,344,220; but in December, 1937, the production figure had increased to 136.8, whereas unemployment was 1,664,876. What does that mean? It means that although production increased by nearly 20 per cent., unemployment, instead of showing a decrease, showed an increase of almost 300,000. In short, we are producing more and more with less labour. I could furnish many illustrations to fortify what I have just said. I ask the hon. Gentleman who is to reply to the Debate—I express the feeling of all quarters of the House, I am sure, in congratulating him on his appointment, and assuring him of our good will personally, whatever we may think about the policy which he represents—to address himself to that significant factor in the present situation. If there is so much unemployment in South Wales, in the coal industry and in the tinplate industry; if blast furnaces are being closed down in Cleveland, Scunthorpe and elsewhere, and more men are being thrown out of work; if thousands are out of employment in Blackburn, Burnley and other large towns in Lancashire; if in the North-East, even in the prosperous mining area which I represent in the House, men are being thrown out of work—what is the solution? I beg the hon. Gentleman to address himself to that important consideration.

Before coming to what I regard not as a complete solution, but as only a partial solution, I wish to call attention to how a slump was averted in 1933. Let us consider the position. In 1931, there was the downfall of the Labour Government and a period of depression. In 1932, there was the Import Duties Act, our departure from the gold standard, and an impetus to trade. I am quite ready to concede that if, in the midst of a Free Trade system, one abandons fiscal devices and adopts new devices, that is bound to provide a stimulus to trade. For example, if now, in the midst of a high Protectionist system, one adopted a system of Free Trade and abandoned restrictions, it would provide a stimulus. That would be bound to happen. There was an impetus to trade arising from the Import Duties Act—I am ready to argue this with anyone, and to produce the necessary figures—much greater than arose out of the Ottawa Agreements. Most of the expansion came at the end of the year 1932 and in 1933, and not so much subsequently.

But in 1933, there was a new departure. I will not say that it was conscious, although perhaps to some extent it was, as it arose from legislation; but in a large measure it was simply the natural development of an industry arising from demand. This is what it was. There was a rapid advance in building construction. So rapid was the advance from the end of 1932 until 1937, that employment in the building trades increased from 634,000 to 911,000. These are remarkable figures, and that advance to a very large extent averted a serious slump. It was encouraged, of course, by the armaments programme. I know that hon. Gentlemen opposite deny that the armaments programme has been a contributory factor but everybody knows that it has. It would be interesting to know where the large sums of money now being expended in armaments production are going. Where is the employment being provided? Obviously there must be employment of some kind provided because of that expenditure.

Mr. Boothby

If what the hon. Gentleman says is true, how is it that during the period of rapid expansion we were arming to a much less extent than we are to-day when, according to the hon. Gentleman and others, we are getting into something very near a slump?

Mr. Shinwell

If I were to reply to that as thoroughly as the hon. Member's argument deserves, it would take up too much time. I am sure that the hon. Member appreciates that it involves a serious and prolonged economic argument, and I shall be glad to meet him on that ground some other time. What I have been putting to the Committee is unchallengeable, namely, that there was a rapid advance in building construction which, in large measure, averted the slump, and more particularly assisted the iron and steel industry. The one thing it did not do was to assist the exporting areas of the country. That is precisely why the Government had to come to the rescue with the Special Areas legislation.

What conclusion do we reach? It is that a similar stimulus is essential. We must now, to use the American expression, prime the pump; we must infuse fresh blood into the industry. That can best be done by adopting a scheme of public works on a very large scale. The Government themselves appear to have recognised this, for the Minister of Health has issued a circular to local authorities asking what their plans are for the next five years. That is a belated recognition of the truth that we on this side have so often observed. Nevertheless, it is welcome. But why stop at local authorities? Why not approach the public utility companies and ask them what their plans are for the next few years; and the large industrial concerns to ask whether they have any plans after the armaments programme has come to an end, as it is bound to do? Why should not the right hon. Gentleman or some appropriate Government Department send out to all those concerned and ask what their intentions are in respect of industrial production in the next few years? Then we shall have available a large mass of information out of which something useful may emerge. In the present situation we have neither information nor energy on the part of the Government.

It might be argued that a grandiose scheme of public works might lead to inflation to-day. I reply that in a period of falling prices—and I take the stand of the right hon. Gentleman himself, because he has referred to falling prices—there is no fear of inflation. Suppose there is a period of inflation, we may safeguard ourselves against it by relating prices more closely to actual costs of production and less to profits. In any event I am not much concerned about a little inflation. I do not believe a modified inflation can do us very much harm. My only doubt is whether money can be got for the purpose. Why do I express that doubt? Because the Government have already embarked on borrowing for armaments, and to that extent they may stultify the efforts of local authorities and the State itself when money is required in the future. Nevertheless, that method should be tried out.

There is much more that might be attempted. I do not deprecate the efforts now being made to arrive at a trade agreement with the United States, but I am bound to make this observation and I must do it briefly. What is the intention of the Government in respect of a trade agreement with the United States? Surely it is that the United States should purchase more goods from this country than they do now, and unless the United States are prepared to import more British goods the agreement from the standpoint of the Government and hon. Members opposite, and, indeed, from the standpoint of the country, is not worth the paper on which it is written, if, indeed, it ever reaches paper. An Anglo-American trade agreement may never be achieved. If it is not, what is the alternative? The same question applies to the negotiations with India, to which the hon. Member for Middleton and Prestwich (Sir N. Sandeman) referred. Suppose those negotiations break down. What is it proposed to do? To coerce India? We dare not do it.

Sir N. Stewart Sandeman

If the hon. Member asks me—

Mr. Shinwell

I am sorry, but I cannot give way. I have not the time. In the absence of these alternatives, some other alternative must be found. I do not rule out the possibility of increased trade with foreign countries, and I offer a suggestion, a very brief one—Why not more export credits for the Balkan States, for Yugoslavia, for Rumania, for Hungary and for Bulgaria? It may be necessary to bring those countries over to our side, for international reasons, but entirely apart from those considerations there is an advantage in employing British capital—and there is still plenty of British capital which can be employed—for the purpose of stimulating trade in those countries and thus benefiting trade here. Last, but not least, if international trade is contracting, and I am sorry to say that it is, and other countries have recognised it, it may be necessary to consider a further development of the home market. Other nations are doing it, and we may require to do the same, and that may mean a development in agriculture. Whatever it does mean, I believe that something of the kind must be attempted. Finally, I would say this to the Government: In the proposals that have been put by hon. Members on this side of the Committee we have not been thinking in terms of a complete solution of the unemployment problem, or of Socialism, or of the complete reorganisation of the industrial system. Not that the mess and muddle which was disclosed by the right hon. Gentleman himself— prosperity one year, acute depression the next; free imports one year, restrictions the next—not that that chaos, that absence of organisation, does not denote the need for drastic and thorough reorganisation; but in this Debate we are not asking for that. We are only asking for some steps to be taken, for plans to be adumbrated to mitigate the harsh details of the coming slump.

If the Government decline to take action, a heavy responsibility will lie on their shoulders. At the very least there ought to be a complete inquiry into the trade position. I say to the right hon. Gentleman with the utmost good will that he seems to be much too complacent. He was certainly much too complacent last year, and he still remains placid. A little more activity, inquiry and investigation are required, and perhaps a little more change of policy, even though it means departing from accepted standards. I have ventured to put these considerations before the Government in the hope that something will be done to save what remains of British trade and to prevent the slump which we believe— and the facts have supported us in this contention—is bound to come.

10.31 p.m.

The Parliamentary Secretary to the Board fo Trade (Mr. Cross)

This is the occasion for a review of the work of the Board of Trade. The field over which it can range is an extremely wide one, as I have good cause to know since I have been trying to absorb some of it in an exceedingly short space of time. I shall endeavour to cover all the questions which have been asked, but if I should fail, I will read the Debate with care to-morrow and I will communicate with hon. Members and endeavour to meet any point which I have not answered. I will begin by answering one or two points put by the hon. Member for Seaham Harbour (Mr. Shinwell). He put in a plea for export credits. He will be pleased to know that in 1935 the volume of our export credits outstanding was £17,000,000 and that that had risen by 1937 to the very high figure of £42,000,000. It has certainly gone a very long way in the direction which he desires.

He made another point regarding the increase of production which has taken place during the eight years from 1929 to 1937, and he pointed out that, comparing the figures of unemployment between those two years, the number of unemployed in 1937 was above the figure of 1929. The fact is very simply explained. The increase in production was accompanied by an increase in the number of people at work, which went up by 1,250,000. [An HON. MEMBER: "Did the population not increase also?"] What I have stated explains the increase in production very simply, and the hon. Gentleman did not appear to realise that. [An HON. MEMBER: "Read the speech again to-morrow."] The hon. Member spoke about the adverse balance of trade, and said that certain conditions existed to-day which were in some respects parallel with those which he experienced during his term of office, although, he almost said, no crisis has yet occurred. I might point out that the present Government appear to enjoy a very much wider measure of confidence—

Mr. G. Griffiths

As shown in the by-elections.

Mr. Cross

The balance of trade is being very carefully watched by my right hon. Friend, who does not intend to be caught napping or to be caught on the eve of an economic crisis, but there is no real danger.

The export of German motor cars to this country was discussed. Hon. Members asked whether there was not a certain amount of subsidisation going on in respect of those cars. There certainly has been a very large increase in the imports in the first four months of this year, as hon. Members are aware. The comparative figures are 3,183 German cars this year as against 1,049 last year and smaller figures in previous years. As to a subsidy, it is only right that I should put in the declaration of the German Government on this subject. They always deny that they give any governmental subsidy, but they do say—my hon. Friend the Member for Pudsey and Otley (Sir C. G. Gibson) gave us a good deal of information about the matter— that their industries impose a levy on themselves in order to offset the disadvantages which German exporters suffer as a consequence of the artificially high value of the mark. That system has been going on for some years, but we have no detailed information about it. The Opel motor car is manufactured by the General Motors Company, and their English branch import it. They assure us that, as I think has been stated before in reply to a Parliamentary Question, these imports are intended to cover sales for some time ahead and to allow for re-exports. Indeed, only 13 motors came in from Germany in the course of last month.

I ought to mention in this connection that German imports to this country as a whole have declined very considerably this year as against last year, and there is no evidence that German subsidised imports are constituting any real threat to British industry. In these circumstances no drastic action is called for now, but the matter will be very carefully watched in case measures should be necessary. The hon. Member for Gower (Mr. D. Grenfell) compared the price of the Opel car with the price of a United Kingdom car of 12 horse-power. I understand that the nominal horse-power of the car to which he referred is 11.1, ranking as 12 horse-power, but that in fact the capacity of such a car is considerably less than that of an English car of 12 horsepower. It is rated so high owing to the peculiar system of reckoning employed here, known as the Royal Automobile Club system. The hon. Member for Gower also said that a car costing 2,100 reichmarks in Germany was equivalent to a car costing £175 in this country.

Mr. Grenfell


Mr. Cross

I beg his pardon. The hon. Member said that there was a car costing 2,100 reichmarks in Germany, equivalent, on his calculation, to £175 in Germany, which was sold here for £135, even when freight, insurance and duty had been paid.

Mr. Grenfell

I think I did say £170.

Mr. Cross

I am told that the Opel car costing 2,100 reichsmarks in Germany is sold here at £149 10s., and that the car sold at £135 costs only 1,795 reichsmarks in Germany. I think the hon. Member had got the price for one model in Germany and for another model in this country. There is also the difficulty of knowing the proper rate of exchange to take. I think the hon. Member took the mark at 12 to the £, but a good many people hold the view that a rate of a little over 20 marks represents a truer equivalent as between the two currencies, and on that basis the cost of the car would work out at £102, and not at the figure which he gave.

Mr. Grenfell

I gave the exchange rate.

Mr. Cross

Reference has been made to what is called "pump priming." The hon. Member for Gower said he was pleased to see this effort of the United States of America, and remarked that nothing like it was being tried here. He wanted some such immediate effort for the purpose of dealing with unemployment. Hon. Members opposite have had some experience of trying to stimulate employment by the expenditure of public money. During their term of office they stirred up unemployment grants to local authorities, and periodically increased the rate of grant, in an endeavour to induce them to continue to spend money and incur further indebtedness. They also had a very large road programme. At that time it was calculated that £1,000,000 spent on public works gave employment to 4,000 persons, direct and indirect— 2,000 direct and 2,000 indirect. So that, to counteract an increase of, say, 5 per cent. in the rate of unemployment—that is, about 600,000 persons—it would be necessary to spend about £150,000,000 a year. It is my submission that an expenditure of that kind, added to the expenditure that we already have under the rearmament programme, would very rapidly call into question the stability of our finances in this country.

Following the period of office of the hon. Member's party, the National Government came in, and they found that there was a dearth of objects on which they could spend money—indeed, they had been exhausted by hon. Members opposite. I want to suggest how different the position would be if a slump were to come in the near future, because we have had no unrestricted expenditure by local authorities in recent years. The rise in the price of building material, difficulties in obtaining deliveries, and so on have led to a contraction in the amount spent on public works. I think we should also bear in mind that this method has been tried out in the United States on a colossal scale, and the Americans have crammed an immense debt on to their grandchildren—a thing we could not do, with the National Debt we already have in this country. And in the end, it cannot be said that the American method has proved as successful in obtaining recovery as our own.

But I will not say for one moment that nothing can be done. The hon. Member for Seaham himself referred to the circular issued by the Ministry of Health urging local authorities to make an annual survey of their capital requirements and to make such plans as would enable them to introduce an element of elasticity into their programme; but the difficulty remains that many local authorities' projects require immediate execution, such as rural water supplies. But to say, as the hon. Member did, that we are almost in the throes of a depression, is pure conjecture. The position is entirely different from what it was from 1929 to 1931. There is no over-speculative position in the stock market, there is no over-accumulation of commodities, no such disparity between agricultural prices and the prices of manufactured goods, no tightening of credit. The circumstances are entirely different. In any case, public money is already being spent on an unprecedented scale on rearmament. If a slump should come, that would be, at least, an extraordinary test of the value of spending public money on a colossal scale as a work provider. It is dangerous to build up hopes that this method can solve our troubles. Everything reasonable and practicable will be done in that way, and it will in some degree mitigate unemployment, but the truth is that no plans can to any large extent offset a very large increase in the percentage of persons unemployed in this country.

I was asked by the hon. Member for Gower and the hon. Member for Cardiganshire (Mr. D. O. Evans) whether the Government would consider accumulating pig-iron reserves in order to keep blast furnaces at work. The Government have decided, after full consideration, from every point of view, that they ought not to undertake the establishment of such a reserve at the present time, but they propose to keep the question under review.

The hon. Lady the senior Member for Dundee (Miss Horsbrugh) spoke of her disappointments in connection with jute. Perhaps she was not in the House when my right hon. Friend said that the negotiations between the unofficial advisers in India and the Lancashire delegation on cotton had broken down. Negotiations will now be conducted between the two Governments, and jute, I can assure the hon. Lady, will be kept in a very prominent position. The hon. Gentleman the Member for Barnstaple (Mr. R. Acland) put one or two questions, in one of which he asked why the British Iron and Steel Federation have not as yet established a central stabilisation fund. The Import Duties Advisory Committee said in their report that they were informed that a scheme has been adopted by the executive committee for the establishment of such a fund. It is not yet possible to say when definite conclusions will be reached. Several hon. Members opposite asked me a great many points in connection with the tinplate industry. I am not quite sure what the hon. Gentleman the Member for Gower had in mind, but I know that he could not have meant that no new plant should be installed in this country, and I do not know what proposals he wished to put forward. As I understand that the hon. Gentleman the Member for Llanelly (Mr. J. Griffiths) proposes to take a deputation to my right hon. Friend the best thing that I can do is to leave the matter with that deputation, with the assurance that my right hon. Friend will go into the matter very carefully with them.

The hon. Lady the Member for Jarrow (Miss Wilkinson) asked one or two questions concerning steel works in that town. I am a newcomer to this question of Jarrow. I have read through long documents giving the history of the various negotiations and preparations which have taken place, and I thought that the best thing I could do was to make a fairly brief statement of what they really come to. The negotiations between the Commissioner and the vendors of the site, and the negotiations between the Commis- sioner and the proposed company, are going ahead as rapidly as possible, but, in a matter of this kind, there are inevitably many technical and legal difficulties which take some time to settle.

Miss Wilkinson

I read that out myself as being the reply of the Minister to me earlier to-day. All that I asked in my simple little speech was that you should tell me what it meant.

Mr. Cross

I have abundant information on this subject, and perhaps the hon. Lady will give me an opportunity of seeing her privately. A number of questions were asked in connection with the cotton industry by my hon. Friend the Member for Dumfries (Sir H. Fildes), my hon. Friend the Member for Pudsey and Otley (Sir C. G. Gibson) and the hon. Member for Burnley (Mr. Burke), with whom I found myself, strangely enough, in a greater degree of agreement than usual. He asked me a question concerning the importation of Japanese grey cloth which was finished in this country and then re-exported as coming from Great Britain. Where there are quotas or some other similar restrictive control of imports in other countries we have tried, and have succeeded on a number of occasions, to limit any concession granted to us by the importing country to cotton goods spun, woven and finished in this country.

Mr. Burke

If this "spun, woven and finished" formula is insisted upon in Denmark, why can it not be insisted upon in this country?

Mr. Cross

It is not a question of this country but of the importing country and the terms that we can make with it. There are other countries which stipulate that cotton cloth, if it is to be recognised as British cloth, shall have a certain content of British work and material. That varies from country to country. We make the best terms we can, but we cannot on every occasion get the terms of "spun, woven and finished." The hon. Member for Dumfries showed some alarm lest my right hon. Friend should thrust the Cotton Enabling Bill proposals upon the industry in defiance of the wishes of a very large proportion of those interested. It is obvious that a scheme of this kind can be successful only if it receives the willing co-operation of the bulk of the interests concerned, and I know that my right hon. Friend takes the view that it would be useless to thrust such a Measure upon the industry if a large proportion of it was unwilling to accept it.

A number of Members have spoken of economic appeasement and made reference in that connection to the van Zeeland Report. I think the Government's desire for economic appeasement requires no emphasis from me. Indeed, it is exemplified in their request to M. van Zeeland to undertake inquiries as to the possibility of measures for freeing world trade. But M. van Zeeland in his report reaches the conclusion that there is such a multiplicity of problems in connection with international trade, and they are so linked up with political questions, that they can be solved only in an atmosphere of loyal cooperation between nations, and there must be a certain degree of confidence and good will, order and clarity, between nations before there is any real prospect of the type of suggestion that he has made meeting with any success. So that in the terms of M. van Zee-land's own recommendation the moment cannot be deemed to be ripe. In so far as soundings have been made of other countries, it has been their view that this moment is not propitious for exploratory work on these lines. Even the Scandinavian countries and Holland and Belgium, who are adherents to the lower trade barrier doctrine, have decided that in the present state of the world they cannot continue some of the obligations which they undertook towards one another only a year ago.

The hon. Member for Seaham said the Government were incapable of making up their mind and he wanted them to introduce some policy, if I understood him aright, which was going to meet the state of affairs which he anticipates is likely to develop in the near future. I would suggest to him that in another sphere, that of foreign affairs, there is an ever widening appreciation of the fact that adherence to a general policy without regard to the unpalatable facts of the situation is both impracticable and dangerous, and that the same considerations guide the Government in commercial policy as in other affairs. We recognise that we are living in a world that is changing extraordinarily rapidly.

It was only yesterday in terms, of history that there were thousands of in- dividual producing plants competing with considerable freedom one with another for the custom of the population of the world. To-day industries have been brought increasingly within the scope and control of national policies until we are not concerned with individual firms but with whole nations. We know that these national policies are liable to have the most disastrous effects on our trade by imposing rigid barriers, and more than that, they are often liable to have far-reaching effects in depressing world prices of primary products and thus break up the whole relationship between agricultural prices on the one hand and the prices of manufactured goods on the other, which is essential for the welfare of our trade and, indeed, essential for the welfare of the trade of the whole world. In my submission these are some very relevant and unpleasant facts we have to remember when discussing this subject. His Majesty's Government have no doubt at all that the best conditions for our trade would be a world where goods moved more freely, and they will do everything in their power to make that possible. There are countries with whom we wish to do a great deal more business, a revival of whose purchasing power would greatly help British trade, but which are at present unwilling to consider any relaxation of their systems. It may be for military reasons or from some mistaken notion that that is the best form of development, but whatever the reason is so long as these conditions prevail no one can look very far ahead and no one can evolve the means of suddenly inducing economic appeasement to break out among the nations.

In these circumstances, in my submission, what we have to do is to look at the problems which are presented to us by the actions and policies of other countries and to adapt and adjust our arrangements from time to time to see that their actions do as little harm as possible to our trade, and to find opportunities, if we can, to improve our trade. For instance, most people are in agreement with the declaration of His Majesty's Government that they do not like clearing agreements, but no one would, on the other hand, suggest that it was not a sensible thing to enter into a payments agreement with Germany and clearing agreements with a number of other countries when there is no other method of being able to trade with them. I suggest that these forms of national control may change our trading world to an extraordinary extent. It may be that we are going to live in a world which will settle down more and more to relying on home production for the most part, and otherwise will have its international trade strictly confined to narrow political channels instead of flowing freely and easily by a myriad channels as it does with free multilateral trade. His Majesty's Government hope that this will not be so, but they

may not be able to prevent it and no one can say that it will not occur. In these circumstances my submission is that we have no alternative but to continue a flexible short-term policy of adaptation and adjustment, though let it be added searching always for a glimmer of reason and when we find it, doing all we can to encourage it.

Question put, "That a sum, not exceeding £211,344, be granted for the said Service."

The Committee divided: Ayes, 129; Noes, 189.

Division No. 218.] AYES. [11.0 p.m.
Acland, R. T. D. (Barnstaple) Groves, T. E. Pethick-Lawrence, Rt. Hon. F. W.
Adams, D. M. (Poplar, S.) Guest, Dr. L. H. (Islington, N.) Price, M. P.
Attlee, Rt. Hon. C. R. Hall, J. H. (Whitechapel) Pritt, D. N.
Banfield, J. W. Harris, Sir P. A. Quibell, D. J. K.
Barnes, A. J. Harvey, T. E. (Eng. Univ's.) Richards, R. (Wrexham)
Barr, J. Hayday, A. Riley, B.
Batey, J. Henderson, A. (Kingswinford) Ritson, J.
Bellenger, F. J. Henderson, J. (Ardwick) Roberts, W. (Cumberland. N.)
Benn, Rt. Hon. W. W. Henderson, T. (Tradeston) Salter, Dr. A. (Bermondsey)
Bevan, A. Hills, A. (Pontefract) Seely, Sir H. M.
Broad, F. A. Hopkin, D. Sexton, T. M.
Bremfield, W. Jenkins, Sir W. (Neath) Shinwell, E.
Brown, C. (Mansfield) Johnston, Rt. Hon. T. Silkin, L.
Buchanan, G. Jones, A. C. (Shipley) Silverman, S. S.
Burke, W. A. Jones, Morgan (Caerphilly) Sinclair, Rt. Hon. Sir A. (C'thn's)
Cassells, T. Kelly, W. T. Smith, Ben (Rotherhiths)
Charleton, H. C. Kennedy, Rt. Hon. T. Smith, E. (Stoke)
Chater, D. Kirkwood, D. Smith, T. (Normanton)
Cluse, W. S. Lansbury, Rt. Hon. G. Soransen, R. W.
Cocks, F. S. Lawson, J. J. Stephen, C.
Cripps, Hon. Sir Stafford Leach, W. Stewart, W. J. (H'ght'n-le-Sp'ng)
Daggar, G. Leo, F. Strauss, G. R. (Lambeth, N.)
Dalton, H. Leslie, J. R Summerskill, Edith
Davidson, J, J. (Maryhill) Logan, D. G. Taylor, R. J. (Morpeth)
Davies, R. J. (Westhoughton) Lunn, W. Thurtle, E.
Davies, S. O. (Merthyr) McEntee, V. La T. Tinker, J. J.
Day, H. McGhee, H. G. Tomlinson, G.
Dobbie, W. MacLaren, A. Viant, S. P.
Dunn, E. (Rother Valley) Maclean, N. Walkden, A. G.
Edwards, A. (Middlesbrough E.) Markiew, E. Walker, J.
Edwards, Sir C. (Bedwellty) Marshall, F. Watson, W. McL.
Evans, D. O. (Cardigan) Maxton, J. Welsh, J. C.
Foot, D. M. Messer, F. Westwood, J.
Gardner, B. W. Milner, Major J. Whiteley, W. (Blaydon)
George, Major G. Lloyd (Pembroke) Montague, F. Wilkinson, Ellen
George, Megan Lloyd (Anglesey) Morrison, Rt. Hon. H. (Hackney, S.) Williams, D. (Swansea, E.)
Gibson, R. (Greenock) Muff, G. Williams, T. (Don Valley)
Graham, D. M. (Hamilton) Noel-Baker, P. J. Wilson, C. H. (Attercliffe)
Green, W. H. (Deptford) Oliver, G. H. Windsor, W. (Hull, C.)
Greenwood, Rt. Hon. A. Owen, Major G. Woods, G. S. (Finsbury)
Grenfell, D. R. Paling, W. Young, Sir R. (Newton)
Griffith, F. Kingsley (M'ddl'sbro, W.) Parker, J.
Griffiths, G. A. (Hemsworth) Parkinson, J. A. TELLERS FOR THE AYES.—
Griffiths, J. (Llanelly) Pearson, A. Mr. Adamson and Mr. John.
Acland-Troyte, Lt.-Col. G. J. Boyce, H. Leslie Cazalet, Capt. V. A. (Chippenham)
Albery, Sir Irving Briscoe, Capt. R. G. Chapman, A. (Rutherglen)
Anstruther-Gray, W. J. Broadbridge, Sir G. T. Christie, J. A.
Aske, Sir R. W. Brown, Brig.-Gen. H. C. (Newbury) Clarke, Colonel R. S. (E. Grinstead)
Assheton, R. Browne, A. C. (Belfast, W.) Clarry, Sir Reginald
Astor, Hon. W. W. (Fulham, E.) Bull, B. B. Cobb, Captain E. C. (Preston)
Balllie, Sir A. W. M. Bullock, Capt. M. Colman, N. C. D.
Barclay-Harvey, Sir C. M. Burghley, Lord Conant, Captain R. J. E.
Beamish, Rear-Admiral T. P. H. Butcher, H. W. Cooke, J. D. (Hammersmith, S.)
Beaumont, Hon. R. E. B. (Portsm'h) Campbell, Sir E. T. Courthope, Col. Rt. Hon. Sir G. L.
Bernays, R. H. Carver, Major W. H. Cox, H. B. Trevor
Birchall, Sir J. D. Cary, R. A. Craven-Ellis, W.
Boothby, R. J. G. Cazalet, Thelma (Islington, E.) Croft, Brig.-Gen. Sir H. Page
Crooke, Sir J. S. Holdsworth, H. Rathbone, J. R. (Bodmin)
Crookshank, Capt. H. F. C. Hope, Captain Hon. A. O. J. Reid, W. Allan (Derby)
Croom-Johnson, R. P. Hopkinson, A. Remer, J. R.
Cross, R. H. Horsbrugh, Florence Rickards, G. W. (Skipton)
Cruddas, Col. B. Hawitt, Dr. A. B. Robinson, J. R. (Blackpool)
Culverwell, C. T. Hudson, Capt. A. U. M. (Hack., N.) Ropner, Colonel L.
Davidson, Viscountess Hudson, Rt. Hon. R. S. (Southport) Ross, Major Sir R. D. (Londonderry)
Davies, C. (Montgomery) Hunter, T. Ross Taylor, W. (Woodbridge)
Davies, Major Sir G. F. (Yeovil) Hutchinson, G. C. Royds, Admiral Sir P. M. R.
Davison, Sir W. H. Inskip, Rt. Hon. Sir T. W. H. Ruggles-Brise, Colonel Sir E. A.
Denman, Hon. R. D. James, Wing-Commander A. W. H. Russell, S. H. M. (Darwen)
Denville, Alfred Joel, D. J. B. Salt, E. W.
Duckworth, W. R. (Moss Side) Jones, Sir H. Haydn (Merioneth) Samuel, M. R. A.
Dugdale, Captain T. L. Jones, L. (Swansea W.) Sandeman, Sir N. S.
Duggan, H. J. Kerr, J. Graham (Scottish Univs.) Scott, Lord William
Eastwood, J. F. Lamb, Sir J. Q. Seely, Sir H. M.
Eckersley, P. T. Law, Sir A. J. (High Peak) Shaw, Captain W. T. (Forfar)
Edmondson, Major Sir J. Leech, Sir J. W. Shepperson, Sir E. W
Elliot, Rt. Hon. W. E. Leighton, Major B. E. P. Shute, Colonel Sir J. J.
Ellis, Sir G. Levy, T. Sinclair, Col. T. (Queen's U. B'lf'st)
Elliston, Capt. G. S. Liddall, W. S. Smiles, Lieut.-Colonel Sir W. D.
Emery, J. F. Lindsay, K. M. Smith, Sir R. W. (Aberdeen)
Emrys-Evans, P. V. Lipsen, D. L. Somerset, T.
Errington, E. Lloyd, G. W. Somervell, Sir D. B. (Crewe)
Erskine-Hill, A. G. Loftus, P. C. Stanley, Rt. Hon. Oliver (W'm'ld)
Everard, W. L. McEwan, Capt. J. H. F. Storey, S.
Fildes, Sir H. McKie, J. H. Stourton, Major Hon. J. J.
Findlay, Sir E. Maclay, Hon. J. P. Strauss, H. G. (Norwich)
Fleming, E. L. Macmillan, H, (Stockton-on-Tees) Stuart, Hon. J. (Moray and Nairn)
Fremantle, Sir F. E Macnamara, Major J. R. J. Tasker, Sir R. I.
Fyfe, D. P. M. Makins, Brig.-Gen. E. Taylor, C. S. (Eastbourne)
Gibson, Sir C. G. (Pudsey and Otley) Manningham-Buller, Sir M. Taylor, Vice-Adm. E. A. (Padd., S.)
Gledhill, G. Margesson, Capt. Rt. Hon. H. D. R. Thomas, J. P. L.
Glyn, Major Sir R. G. C. Markham, S. F. Thomson, Sir J. D. W.
Gower, Sir R. V. Mayhew, Lt.-Col. J. Tree, A. R. L. F.
Graham, Captain A. C. (Wirral) Mellor, Sir J. S. P. (Tamworth) Walker-Smith, Sir J.
Grant-Ferris, R. Mills, Major J. D. (New Forest) Wallace, Capt. Rt. Hon. Euan
Guest, Hon. I. (Brecon and Radnor) Mitchell, H. (Brentford and Chiswick) Ward, Lieut.-Col. Sir A. L. (Hull)
Guinness, T. L. E. B. Morrison, G. A. (Scottish Univ's.) Watt, Major G. S. Harvie
Gunston, Capt. Sir D. W. Morrison, Rt. Hon. W. S. (Cirencester) Wells, S. R.
Hambro, A. V. Nail, Sir J. Whiteley, Major J. P. (Buckingham)
Hannah, I. C. O'Neill, Rt. Hon. Sir Hugh Wickham, Lt.-Col. E. T. R.
Harbord, A. Palmer, G. E. H. Williams, H. G. (Croydon, S.)
Haslam, Henry (Horncastle) Patrick, C. M. Windsor-Clive, Lieut.-Colonel G.
Heilgers, Captain F. F. A. Peaks, O. Winterton, Rt. Hon. Earl
Hely-Hutchinson, M. R. Peat, C. U. Womersley, Sir W. J.
Heneage, Lieut.-Colonel A. P. Perkins, W. R. D. Wood, Hon. C. I. C.
Hepburn, P. G. T. Bushan Porritt, R. W. Young, A. S. L. (Partick)
Hepworth, J. Procter, Major H. A.
Herbert, Major J. A. (Monmouth) Radford, E. A. TELLERS FOR THE NOES.—
Higgs, W. F. Ramsden, Sir E. Mr. Munro and Mr. Grimston.

Original Question again proposed.

Mr. J. J. Davidsonrose

It being after Eleven of the clock and objection being taken to further Proceeding, The CHAIRMAN left the Chair to make his Report to the House.

Committee report Progress; to sit again To-morrow.

The remaining Orders were read and postponed.

  1. ADJOURNMENT. 16 words
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