HC Deb 06 July 1939 vol 349 cc1581-600

Amendments made:

In page 9, line 25, leave out "products," and insert "any product."

In line 26, leave out "products," and insert "a product."—[Mr. Stanley.]

Mr. Stanley

I beg to move, in page 9, line 29, to leave out "prices," and to insert: price (hereinafter referred to as' the normal minimum price'). This Amendment, the Amendment in page 9, line 34, to leave out "charges," and to insert: charge (hereinafter referred to as' the normal minimum charge'), and the Amendment in page 10, line 16, to leave out "permitted price or charge," and to insert: amount determined in accordance with the provisions of Part I of the Schedule (Limitations on, and special exemptions from, determination of normal minimum price or charge under a price scheme) to this Act (hereinafter referred to as 'the maximum limit'), are really drafting in character, but they are introductory to the whole new system of price fixing which is contained in the Third Schedule. I think it would be very much for the convenience of the House if we postponed the discussion of this new system of price fixing till we get to the new Schedule, which is really the operative part. That will enable us to confine our discussion on Clause 9 to the question of conditions, and it will have the advantage that, when we reach the Schedule, we shall be able to discuss at the same time, not only the question of fixing the normal minimum price, but also the provisions that are being made for what we call the super-efficient producer. I think, therefore, that it will be for the convenience of the House if I postpone my remarks on this change in the system until we reach the new Schedule.

Amendment agreed to.

Further Amendment made: In page 9, line 29, leave out "such products," and insert "that product."—[Mr. Stanley..]

6.58 p.m.

Mr. Cross

I beg to move, in page 9, line 31, to leave out from "scheme," to the end of line 33.

This Amendment is consequential upon the later Amendment to which my right hon. Friend has just referred, as is also the Amendment to paragraph (c) (ii), in page 9, line 39, to leave out from "scheme" to the end of line 3 on page 10. I am entirely in the hands of the House, but I think it would be much more convenient, in view of the fact that the later Amendments are of considerable substance, to take them together, and it seems to me, therefore, that it would make for a better discussion if we were now to pass these two small Amendments formally, and take the discussion at a later point.

Amendment agreed to.

Further Amendments made:

In page 9, line 34, leave out "charges," and insert: charge (hereinafter referred to as 'the normal minimum charge').

In line 36, leave out "such products" and insert "that product."

In line 39, leave out from "scheme," to the end of line 3 on page 10.—[Mr. Cross.]

Mr. Cross

I beg to move, in page 10, line 16, to leave out "permitted price or charge," and to insert: amount determined in accordance with the provisions of Part I of the Schedule (Limitations on, and special exemptions from, determination of normal minimum price or charge under a price scheme) to this Act (hereinafter referred to as 'the maximum limit').

7.0 p.m.

Sir C. Entwistle

This raises the question of the determination of costs in the scheme.

Mr. Cross

I do not know whether my hon. Friend followed my right hon. Friend's suggestion that we should take all questions of price on the Third Schedule.

Sir C. Entwistle

I am perfectly willing to do that as long as my hon. Friend knows what is the point I want to raise. Paragraph (d) lays it down that the sectional board can reduce the price list without the consent of the Cotton Industry Board, but, if it raises the price list, the authority of the Cotton Industry Board is required. The point that I want to raise is this. When the Cotton Industry Board have made a determination of costs for the purpose of approving the price list, there seems to be no pro vision either in this Amendment or in the subsequent provisions for having that determination reviewed if there is an alteration in the conditions which form the basis of that determination, such as a change in wage rates, a change in the cost of raw materials, and so on. I should like to ask whether the Minister's Amendments will be considered from that point of view, because I think it very desirable that that power of revision should be in the hands of the board. If my hon. Friend tells me I had better raise that at a later period, having indicated what it is, I shall be glad to do so.

Mr. Cross

I do not know whether my hon. Friend will feel it necessary to mention the matter again. I know it is a point which my right hon. Friend has in mind and to which he proposes to give consideration with a view, possibly, to making Amendments, if practicable, in another place.

Sir C. Entwistle

I will not raise it again, having obtained that assurance. I have raised it now because I thought this the only place where I could properly do so.

Amendment agreed to.

7.3 p.m.

Mr. Cross

I beg to move, in page 10,. line 16, at the end, to insert: and also to consider, in the light of any recommendation made to them by the Export Development Committee, the extent to which, if they consented to that determination, they would in the first instance exercise in relation thereto the powers conferred on them by the provisions of the scheme having effect by virtue of the next following paragraph. This arises out of an undertaking given by my right hon. Friend in Committee to move an Amendment which would make it plain that a recommendation of the Export Development Committee on price concessions shall be made available before the price-fixing scheme is brought into effect. It was represented that, in considering the normal minimum prices, the Board should have regard to the ex tent to which they propose to consent to various derogations from those prices. It was also thought desirable that the announcement of the concession prices should be made simultaneously with the fixing of the price, because it might other wise occur that a new price is made above the price that had existed in the past, and the consequence of the fixing of that price would be to lose markets overseas and by the time the concessions had been published it would be too late to recover those markets. It is evident that those two things should be done simultaneously. The Amendment requires the Board, before consenting to any price determination, to have regard to any recommendations of the Export Development Committee and, in particular, to consider what derogation from the minimum prices they would be allowing at the outset.

Amendment agreed to.

Mr. Cross

I beg to move, in page 10, line 16, at the end, to insert: (e) may contain provisions empowering the board administering the scheme to make a determination whereby—

  1. (i) any product in relation to which a normal minimum price is determined under the scheme may be sold on any one occasion at a price less than the normal minimum price but not less than the price specified in the determination. or
  2. (ii) any product in relation to which a normal minimum charge is so determined may be subjected to the relevant process 1585 on any one occasion for a charge less than the normal minimum charge but not less than the charge specified in the determination.
if the quantity of the product sold or subjected to the process on that occasion is not less than such quantity as that board may specify in the determination, and may also contain provisions requiring that board to have regard, in making any such determination, to the saving in costs to a person selling the product or carrying out the process, as the case may be, which is likely to be effected by reason of that quantity of the product being sold or dealt with by him on one occasion. This Amendment also arises out of an undertaking given in Committee to consider whether we might change certain terms employed in the Bill which were too wide and would be better more precisely denned. The terms in question related to "circumstances, including the amount of business done, as may be specified in the scheme." That is an extremely wide expression. The purpose of the Amendment is to provide reductions in price for large orders in relation to the lower costs which result from large orders. I think this is a matter of general agreement amongst the interests affected.

7.5 p.m.

Sir C. Entwistle

I think my hon. Friend will agree that the Clause is really a substitution for the words as they stand in the Bill from line 39 on page 9 to line 3 on page 10, which we have already omitted. The Bill as it was before this Amendment was proposed said that the sectional board can fix the minimum charges, terms and conditions on which alone such products may be subjected to that process, and authorising or requiring the determination as aforesaid of different prices or charges according to such circumstances (including the amount of business done on the particular occasion) as may be specified in the scheme. The sectional board could fix different prices where the circumstances, including the amount of business done, were specified in the scheme. It was thought in Committee that that discretion or power given to the sectional board was made too wide and that it must be further particularised. That particularisation is what is in the present Amendment. But the alteration from the normal minimum price now given by this Amendment is only for a reduction of the price in the event of large bulk orders. There is no provision for an increase where the orders are small and where the cost of production would be different because of the smaller order, and it would, therefore, be possible for people to sell their goods under smaller orders at a loss, although the normal minimum price might provide for a reasonable basis of profit. That is not an unimportant point, because one of the troubles in the industry has been that in the scramble for business manufacturers have had to take very small orders, and it was the very smallness of the order that made it uneconomic, whereas if the order had been of a reasonable size a lower price could have been obtained.

This Amendment gives power to grade the price down in the event of a large bulk order, but it still leaves no opportunity to grade it up so as to encourage people to take small orders at a price which is only economic on the basis of orders of normal size. Under the Amendment as it stands, the sectional board might be driven to put the normal mini mum price on the basis of small orders, and under the Clause they would be able to grade down, and, as they could not grade up, in many cases the temptation would be for the minimum price list to be based on the smallest possible orders. That is a very undesirable thing.

Mr. Hammersley

Where does my hon. Friend derive his knowledge that in the event of the normal economic price being fixed on a maximum limit there is any restriction on any seller putting up his price for a small order if he thinks fit?

Sir C. Entwistle

I quite see that but it is very desirable, surely, to say, when you have a price list fixing a minimum price, that they cannot take less than a price for small orders, because you want to prevent the industry being run on un economic lines. Therefore, it is right that you should have your minimum below which they cannot sell according to the size of the order. The whole purpose of the Amendment is that there shall be a lower determined price list, in the event of large orders. Surely it would be logical to have an increase, if required, in the price list so as to discourage the taking of small orders. If a provision like this is not inserted to allow for grading up as well as down, the temptation will be for the normal minimum price to be determined on the basis of a cost of production which applies only to the smallest orders that are being obtained. That would be very undesirable, first of all because it is called a normal minimum price and, secondly, it is undesirable that your standard minimum price should be based on the practice of small orders, which one of the purposes of the Bill is to discourage, and, therefore, it is better to have your normal minimum price based on the cost of production of a quantity which is an average quantity and not an exceptionally small one.

I think this is a necessary provision if you are to obtain the flexibility that is required to work this price scheme in practice. As I understand it, the practice of a price scheme will be to have a price list which will be graded according to quantity. This Amendment provides for a lower price in the event of bulk quantities. I only want to make sure that there will be the necessary flexibility both ways simply for the purpose of discouraging small orders. I understand that the point has been raised by the industry with officials of the Board of Trade. The Clause only appeared on Tuesday. There has been very little time to examine it from a practical point of view, and it was impossible to frame any Amendment to carry out a purpose which, I think, is desirable. I am only asking whether my hon. Friend will consider the point with a view to a necessary Amendment being introduced in another place.

7.15 p.m.

Mr. Dodd

I think the House will have some difficulty in understanding the effect on the Clause of the many Amendments which are proposed, but these Amendments, taken in conjunction with the Schedules, which are to be considered later, represent a very valiant effort on the part of my right hon. Friend to meet the points of view put forward by members of the Committee upstairs. While the effect may be clear to those who were on the Committee, there is one phrase which, I think, wants a little clarification. That is the phrase, "on any one occasion at a price" in paragraph (e, i). I can understand what the proposal means in respect of a concession being allowed on a particular order at a particular time; but suppose an order of a similar character comes along afterwards, could that concession be repeated? I think there is substance in the point that my hon. Friend the Member for Bolton (Sir C. Entwistle) has made. In the sectional schemes latitude must be given upwards, as well as downwards. When it is a question of jobbing orders for small quantities, there is a case for increasing, and not decreasing, the price, for these very small orders are not economic. There are a number of other points which I wanted to raise, but which would be better raised on the Schedule. I think that the Clause, as now drafted, with the Amendment, taken in conjunction with the Schedule, is a masterpiece of drafting; and I congratulate the drafting staff on having incorporated an amazing number of suggestions which were put upstairs.

7.19 p.m.

Sir H. Williams

I appreciate the point made by my hon. Friend the Member for Bolton (Sir C. Entwistle), but we have to contemplate the very large order, which, because of its magnitude, represents a lower cost of production, and, therefore, can be sold more cheaply. It is often the case that when a manufacturer is asked for a small quantity the buyer is ready to pay a higher price. I should have thought that normal commercial practice would have covered this matter entirely. You must make the scheme as simple as possible if you are not going to destroy it. I hope my right hon. Friend will think twice or three times before introducing a new element of con trolled prices, which would involve the whole industry in great difficulties.

7.21 p.m.

Mr. Silverman

The hon. Member for Oldham (Mr. Dodd) said that, no doubt, those of us who were on the Committee would understand this. I confess, quite frankly, that I do not understand it. I think it is a mental impossibility for any body, no matter how long he spent on the Committee, to take a long, complicated Clause, such as Clause 9, to add to it or subtract from it 21 Amendments, occupying a page and a-half of the Order Paper, and then to have any adequate picture of what the Government are really asking the House to do. Would it not have been possible to include somewhere in an Explanatory Memorandum or a White Paper the Clause as the Government would like to have it in its final form, so that we could decide whether we wished to have it or not? I am unable to understand the cumulative effect of 21 Amendments on a Clause which was sufficiently complicated before.

Mr. Maxton

Has the hon. Member not seen a statement issued by the trade?

Mr. Silverman

I have had a great many statements issued by the trade.

Mr. Maxton

I found on the bench beside me a statement issued by the Joint Committee of Cotton Trade Organisations, which makes the thing seem to me to be very simple.

Mr. Silverman

I think the hon. Member will find that it is not so simple as he thinks. I, personally, have been very grateful for the assistance which all of us have had from people outside on the matter. They have been very helpful, and I appreciate their help; but the Government are responsible for this Measure, and not people outside. It may be that that explanation makes this very simple, but the Government has no responsibility for it. It is unfair to ask the House to deal step by step with a long and complicated series of Amendments of this kind, when it is impossible to understand what the effect would be unless the matter is dealt with in some compendious way.

7.24 p.m.

Sir H. Fildes

I would ask the right hon. Gentleman in charge of the Bill to reject the suggestion of the hon. Member for Bolton (Sir C. Entwistle), for this reason. It is very well known that in the cotton trade travellers are sent abroad, and prospective customers give a trial order to see whether a firm's quality is up to that of its competitors. If you are going to discourage these trial orders, out of which it is hoped to get big business, it will be a great mistake. I welcome the changed attitude in the House towards this Bill. The President of the Board of Trade has succeeded in making the lion, the tiger, the leopard and the Iamb lie down together, and if ever he goes into the entertainment world, provided that he can repeat these performances, he is assured of a livelihood. I hope he will stand firm in this matter, and not add another complication to this already very complicated, and, in my opinion, totally undesirable Measure.

7.26 p.m.

Mr. Cross

The hon. Member for Nelson and Colne (Mr. Silverman) fears very great complication as a result of these Amendments. I can assure him that, to some extent, the issue we are on now is a simple one, and there are only two more issues, I think, which need be raised on this Clause. The matters arising on the Schedule are, I think, a great deal clearer. My hon. Friend the Member for Oldham (Mr. Dodd) asked whether the phrase "on any one occasion" meant that these discounts could be given on more than one occasion. I am in formed that this precise terminology was employed by the draftsmen for convenience of reference to "that occasion" in line 11, and in order to avoid the situation in which the producer might be bulking a number of small orders and might get the discount as for a large-order. There is not a possibility of get ting this discount for repeat orders. My hon. Friend the Member for Bolton (Sir C. Entwistle) conjectured that the normal minimum price would be fixed, if I under stood him rightly, on the basis of small orders.

Sir C. Entwistle

No, I said that it was very desirable that it should be based on an average-sized order, but that in that case there should be a grading up and down; otherwise there would be a temptation to fix it on a small order, which was undesirable.

Mr. Cross

I misunderstood my hon. Friend. I understood that he was suspicious that the normal price would not be based on a small order. I want to point out that if we were to make an Amendment on the lines he desires we should have yet one more minimum price, and we have a lot already. We shall be unduly complicating the Bill if we add further minimum prices. More over, it would be not at all easy to draft such a provision. I was further discouraged from accepting the suggestion by the fact that the representatives of the merchants were extremely hostile to a provision of this kind. They argue—and the hon. Member for Dumfries (Sir H. Fildes) used some of their arguments—that the trial order is one of the most important orders to be placed, as it is sometimes the beginning of big orders at later stages. By introducing this Amendment we have gone some way in the direction which the hon. Member for Bolton desires, because, by encouraging large orders through giving discounts, we should tend to discourage the number of small orders which are placed in the industry. In view of all those considerations, I could not encourage my hon. Friend to think that my right hon. Friend would really be willing to consider yet again making an Amendment in the Bill such as he suggests.

Amendment agreed to. Further Amendments made:

In page 10, line 22, leave out "the products in question," and insert "pro ducts of the industry."

In line 24, leave out "products," and insert "a product."

In line 26, leave out "such products," and insert "that product."

In line 29, leave out from the beginning, to "or," in line 30, and insert: a price less than the price for the time being determined in relation to that product by the board administering the scheme, but not less than the price specified by the Cotton Industry Board.

In line 32, leave out "such products," and insert "that product."

In line 33, leave out "processes," and insert "any particular process."

In line 33, leave out from "of," to the end of line 35, and insert: a charge less than the charge for the time being determined in relation to that process by the board administering the scheme, but not less than the charge specified by the Cotton Industry Board.

In line 36, after "down," insert: in accordance with the following provisions of this Section."—[Mr. Cross.]

Mr. Cross

I beg to move, in page 11, line 2, at the end, to insert: (f) may contain provisions for securing, with respect to any product of the industry being a product of any such description as may be specified in the scheme, that no per son registered under the scheme shall sell that product, or subject it to any specified process, under any contract which does not contain such terms as may be specified in the scheme in relation to that product or which contains any term inconsistent with, or repugnant to, the terms so specified. This Amendment, together with two other Amendments on the Paper, namely, in Clause 9, page n, line 22, at the end, to insert a new Sub-section (3), and in Clause 12, page 15, line 40, at the end, to insert a new paragraph (c), relate to contracts and to the terms which may be laid down in a scheme which must be inserted in contracts. These Amendments are the outcome of consultation with the various interests affected. The first Amendment says that the terms of a con tract may be specified in a price scheme. At one time we thought the best plan would be to attach to a price scheme a standard contract, but eventually we abandoned that idea, because it appeared that it would be necessary in any one price scheme to attach several contracts to the scheme, and, moreover, that we could never be confident that we had inserted all the different terms that would be required in those contracts. We there fore resorted to this method, which is to lay it down that the terms of a contract may be stated in the scheme. These would be terms relating to such things as the necessity of adding the cost of packing or of transport of an article which was being sold and such things as putting down the conditions of payment, all of which are things which would otherwise provide an opportunity for a seller to get round the terms of a price scheme, and further terms, for instance, regarding de livery date. By only inserting the terms in the scheme, we leave scope for the addition of further terms in a contract, provided in the words of this Amendment, that those further terms are not "inconsistent with, or repugnant to, the terms "which are specified in the scheme.

The third Amendment, namely, that in Clause 12, says that the merchants are to be consulted by the bodies submitting the scheme as to the terms relating to contracts which they may mention in that scheme. The merchants themselves were anxious that this consultation should take place. The representatives of the Industry were entirely willing, and it is clearly desirable that the merchants should have the opportunity of expressing their opinions on these matters. The second Amendment, in Clause 9, page 11, line 22, concerns terms of resale, which is a very difficult problem. There are two main considerations which I think we should bear in mind in this connection. The first is that if resale is not covered, it would become impossible to have a price scheme. A spinner or manufacturer can easily set up a merchanting subsidiary which would in fact be himself in another guise, and he could sell to that subsidiary his yarn or cloth and then sell it again free of all restrictions. The second con- sideration to remember in connection with this is that the merchants are very insistent that they should be allowed to retain their complete freedom to carry on their business in the ordinary way, and they advance very good reasons for that desire. For instance, if the goods they have bought have missed their market, they must be at liberty to cut their losses, while, on the other hand, they hope to make a larger margin on goods which are more successful. The same difficulty does not arise when we are dealing with yarn or with grey cloth, and we have consequently provided in the Amendment for a spinner or a weaver to be able under a scheme to sell his yarn or his grey cloth on condition that it is not resold in this country at a price below the price that has been fixed in the scheme.

When we come to finished cloth, as I have already indicated, quite apart from the question of the desirability of fixing a price at which the merchants may resell that cloth, it is not, I think, practicable to control the price of resale. But that carries us one stage further. It means that the manufacturing concern which is doing its own merchanting would not be controlled except in so far as in selling its product it is directly covered by a price scheme. The Joint Committee of Cotton Trade organisations were agree able to the merchants not having their price of resale covered, but they were very reluctant that the vertical combine should have a similar freedom. But we came to the conclusion that we could not distinguish between them. In this case we have persons both of whom are performing the same function. They are both dealing with a similar product, and there seems to be no method of distinguishing between them, and even if there were, it would be inequitable. This is a matter which we have examined with the very greatest care. There has been ample consultation with all the interests affected, and I bring forward these Amendments with the recommendation that they are, I think, in all the circum stances the best possible solution.

7.42 p.m.

Mr. Hammersley

As the Parliamentary Secretary explained, the latter part of Sub-section (3) of the Clause will to a great extent mean that the merchants will be outside the scope of the operations of the Bill. It means, moreover, that the vertical combines that sell their own products will also be taken outside the scope of the Bill. It may be necessary that as this industry develops from the highly specialised condition in which it was a few years ago to a smaller and more integrated industry, we have to deal, as it were, with the position of the large people, and there will be scant room, I think, for the little men and women who are so dear to the heart of the hon. Member for Evesham (Mr. De la Bère).

743 P.m.

Sir P. Harris

I want to congratulate the draftsmen, from one point of view, on their ingenuity. But I must thank my stars that I am not in the cotton trade. It seems to me that before one could embark on any section of the trade one would have to be a skilled interpreter of what will be this very complicated Act of Parliament, and of this Clause in particular. This Clause is practically a Chinese puzzle, and I do not pretend to understand the repercussions of the Clause on the price of cotton goods and yarn. I feel that I must say that I do not take any responsibility for it. I do not know whether the whole Committee feel satisfied or understand the implications of the Clause. Frankly, I am not clear, but I accept the assurance that the trade as a whole and the various interests have been consulted and are satisfied. It may be that they do not quite understand the fullest implications of the Clause, but hope that its complexity will provide ample loopholes through which they will be able to find their way if they ultimately come across difficulties as the result of the passing of a Clause which is three pages in length, with four or five Sub-sections, and I do not know how many paragraphs lettered (a), (b), (c), (d), and so on.

Amendment agreed to.

Mr. Cross

I beg to move, in page 11, line 22, at the end, to insert: (2) The conditions subject to which any permission may be granted by the Cotton Industry Board in relation to any product in pursuance of the provisions of a scheme having effect by virtue of paragraph (e)of the preceding Sub-section shall be such conditions (if any) as appear to that board to be necessary for all or any of the following purposes, that is to say—

  1. (a) for securing that the quantity of that product which, on any one occasion, is sold 1595 or subjected to the relevant process by a person registered under the scheme, at a price or for a charge less than the price or charge for the time being determined in relation to that product by the board ad ministering the scheme, is not less than that specified by the Cotton Industry Board;
  2. (b) for securing that the goods to which the permission relates are sufficiently identifiable and, where the permission is ex pressed to be granted in relation to the goods as being ingredients of any particular product, that they are in fact used as ingredients of that product;
  3. (c)for securing, in the case of a per mission expressed to be granted for the purpose of maintaining or increasing the consumption of a product in a particular area, that goods to which the permission relates or goods of any specified description manufactured there from, as the case may be, are in fact consigned to that area; and
  4. (d)for regulating the prices at which goods to which the permission relates may be sold on any occasion. after they have been sold or subjected to the relevant process by a person registered under the scheme."
Although this Amendment is rather long and looks formidable, I can assure the hon. Member for South-West Bethnal Green (Sir P. Harris) that it is quite simple in essence. It relates to the conditions under which goods which are subject to price concessions may be sold. Under the Bill as originally drafted only the word "conditions" appears. That, clearly, was too wide. Under it almost anything under the sun might have been done. We were at pains to define more closely what we had in mind, and I think I can say in regard to the Amendment which I am now asking the House to accept that there has been the fullest agreement among all the interests affected.

The position is, that spinners, weavers and finishers in case of price concessions have to make some sacrifice in price, and it is, therefore, only reasonable that the merchant who particularly desires them to produce goods at a low price should him self undertake not to make more than some limited sum. That is provided for in paragraph (d). Further, when we are concerned with these low-priced orders, it is clearly desirable that as far as possible the order should be of a certain substantial size, because there is economy in production in producing large quantities of goods. For that reason we have taken power here that the size of the order may be governed. That occurs in paragraph (a). Paragraph (b) relates to the identification of grey cloths. When the industrialist is making these cloths at a low price, it is generally right and proper that he should be assured that they go to the markets for which they are intended. In order the better to keep track of these cloths, power is taken for them to be specially marked. If these marked cloths turn up in some markets where cloths can be sold at the normal price, and it is found that they are being sold at these low, cut prices, then it will be known that in some way or other they have missed the market for which they were intended, and that is something that ought to be investigated.

Mr. S. O. Davies

With what consequences?

Mr. Cross

There are very serious con sequences to the merchant if he can be shown to have been guilty of a mal practice, as in Clause 11. There is a further assurance that it is proper the industrialist should enjoy as to the goods reaching their destination, and that is a (type of documentary assurance which may be provided by means of a bill of lading or in some other way. In this connection the merchants' representatives showed themselves willing to give the fullest assurance possible in order to convince the Cotton Industry Board, and through the Cotton Industry Board the industrialists, that the goods do in fact reach the markets for which they are intended.

Mr. Charles Brown

This does not surely mean that the merchant has to keep track of the shirt until it reaches the back of the wearer?

Mr. Cross

We are thinking of piece goods here. Amendment agreed to.

Mr. Cross

I beg to move, in page 11, line 22, at the end, to insert: (3) The terms of contracts specified in a price scheme shall not include any term the effect of which would be to restrict or regulate any sale of goods after they have been sold or subjected to a process by a person registered under the scheme:

Provided that the terms so specified in a scheme containing provisions for the determination of prices in connection with the sale, by persons registered under the scheme, of any product of spinning, doubling or weaving which has not been subjected to any process of finishing, may include terms designed to secure that the price at which that product is sold in the United Kingdom on any occasion after the sale thereof by a person so registered is not less than the price for the time being determined under the scheme, being the price which would have been applicable to the sale of that product on that occasion if the seller were the person so registered.

This Amendment relates to geographical disability.

7.50 p.m.

Mr. Petherick

I beg to move, as an Amendment to the proposed Amendment, to leave out lines 4 to 11.

Speaking as a layman—when I say "a layman" I mean one who has not taken orders from the Joint Committee, the trade unions or anybody else—I am be coming rather confused as this Bill makes its progress. Unless one is conversant with all the inner workings of the trade, it is difficult to explain an Amendment like the one I now propose. As I under stand the new Sub-section it means that goods that are being bought by the merchants are the merchant's own, and he can sell them to anybody he likes and under any conditions he likes; but the proviso which I seek to delete is added, which implies that the Sub-section does not apply to spun yarn or unfinished cloth. The object of the Sub-section, as I understand it, is to put a stop to speculative purchases. I would point out that speculative purchases could be dealt with in another way. Another object of the Sub-section, as I understand it, is to pre vent evasion by sales to fictitious firms. If I understand the proviso aright, if a merchant has bought his goods under a price-fixing scheme, if they are then to be controlled, that is extremely dangerous for the interests concerned.

It seems to me that a provision such as this will interfere with perfectly legitimate business. There is a great deal of trade done by taking orders at the moment when the market is suitable. That applies in the cotton trade as in many other trades. If this sub-section goes through as drafted, a very large number of orders which are being placed and snapped up will not be placed in the future. That introduces undesirable rigidity. If that contention be correct, that will obviously destroy the incentive which is the main motive of the Bill. It will lead to what we have always feared this Bill will lead to, and that is a sort of hum-drum procedure of the B2 class. A great deal of business is only possible if the merchants can buy at prices which will allow them to resell at certain prices. If the resale is subject to fluctuating prices, then business is impracticable and orders are lost. Suppose a merchant has to resell at a fixed price and the buyer to whom it is proposed to resell goes into bankruptcy, or trade conditions change, or tariffs are put up against him; the merchant is not allowed to cut his loss, because the price is fixed, consequently, these goods become completely unsaleable unless a change is made in the fixed price.

Mr. Dodd

I cannot see that the hon. Member has followed the Clause as now amended. The merchant's price is not controlled. He has liberty of action. If he wants to raise or lower his price of the finished article he is perfectly en titled to do so. That is my under standing.

Mr. Petherick

Not in the case of the proviso. As I understand, it the Clause affects only spinners, weavers and finishers.

Mr. Cross

Yarn, or grey cloth.

Mr. Petherick

It would be better to give the merchant complete control over the finished article. Manufacturers would be deterred under the Clause as it stands. Many goods are manufactured for retailing at special prices, and they would be unsaleable if the price is advanced, because the market might disappear. If a merchant has bought goods at a certain price for resale and he has a loan against those goods in order to enable him to finance them, he would be in a very unfortunate position if a price was fixed at which he could not possibly resell. For these reasons, I think it would be better to leave the sub-section as it stands without the proviso, and I would ask the Parliamentary Secretary to look into the matter and see whether it is not possible to give complete authority to merchants who have bought goods to resell as if they were their own and they were unrestricted.

Sir H. Williams

I beg to second the Amendment.

Mr. Hammersley

I hope the Parliamentary Secretary will not agree to the Amendment. It would completely nullify the working of any price scheme. We have already taken from the ambit of price schemes the operations of merchants dealing with finished goods. The effect of this Amendment would be to take out of the price scheme merchants who purchase yarn or grey cloth. The Amendment would completely prevent the operations of price schemes and would wreck the Bill.

7.58 p.m.

Mr. Cross

My hon. Friend the Member for Penryn and Falmouth (Mr. Petherick) was mistaken when he thought that this provision has been inserted for the purpose of stopping speculation. The proviso is necessary in order to enable price fixing to occur. It is absolutely essential that we should govern the conditions of re sale. If resale is not covered, the scheme could easily be wrecked by a producer setting up subsidiaries in order to market his products. He could sell to himself as a yarn agent. The manufacturer could set himself up as a merchant in a separate capacity and do exactly the same thing as far as grey cloth is concerned.

Mr. Mainwaring

Surely, British capitalists would not do that.

Mr. Cross

I will not enter into that. We had better stick to our yam and grey cloth. The merchant has his full liberty where the finished cloth is concerned. If you give complete freedom to the merchant, as my hon. Friend suggests, in regard to yarn or grey cloth, you must give the same freedom to the manufacturer or the spinner when he is handling the product which he himself has made. If you do that you will open the door wide to evasion. I agree with my hon. Friend as to the desirability of freedom as a general proposition, but in this matter we have to compromise to a small extent. The finished cloth is subject to changes of fashions and to errors of one kind and another, which make it absolutely necessary that the merchant should be in a position to cut his losses and get rid of it, but where grey cloth or yarn is concerned, the same conditions do not apply. One can imagine extreme cases where they do, but they do not apply in the same way in the ordinary course of business, and it has consequently been necessary to cover them by this proviso, which is absolutely essential if we are to avoid the evasion of price schemes.

Mr. Petherick

I beg to ask leave to withdraw my Amendment.

Amendment to the proposed Amendment, by leave, withdrawn.

Proposed words there inserted in the Bill.

8.1 p.m.

Mr. Cross

I beg to move, in page 11, line 22, at the end to insert: (4) A price scheme may provide that any determination by the board administering the scheme of the normal minimum price or normal minimum charge in connection with the sale of any particular product or the subjection of any particular product to any particular process shall, in relation to

  1. (a) the sale of that product by persons manufacturing it in any such area in the United Kingdom as may be specified in the scheme, or
  2. (b) the subjection of that product to that process within such an area in the United Kingdom as may be so specified, have effect as if the price or charge specified in the determination were reduced to such extent as may be specified in the scheme."
This is the Amendment to which I was referring when I said that the Amendment was concerned with the geographical disability of Northern Ireland. The latter Amendment was one we had taken in connection with the earlier one under discussion.

Amendment agreed to.

Further Amendment made: In page 11, line 22, at the end, insert: (5) The provisions of Part II of the Schedule (Limitations on, and special exemptions from, determination of normal minimum price or charge under a price scheme) to this Act shall have effect for the purpose of authorising the sale of any product or the subjection of any product to any process at a price or for a charge less than the normal minimum price or charge determined in relation thereto under a price scheme."—[Mr. Cross.]