HC Deb 19 July 1939 vol 350 cc465-565

Order for Second Reading read.

5.35 p.m.

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

I beg to move, That the Bill be now read a Second time. I must apologise to the House that for the second time within a few days I have to explain another long and complicated Bill, but I can honestly assure hon. Members that in this case it hurts me more than it does them. I am unfortunate in being static while they have the privilege of being dynamic. Everyone will, I think, agree that a Bill of this kind is necessary; the only dispute between us will be as to the methods which are adopted. We all agree on the importance of the Mercantile Marine, none of us can be ignorant of the difficulties which it is now facing, and, therefore, we all feel that something has to be done to assist the Mercantile Marine in its struggle. It is therefore only on methods that we disagree. I do not think any words of mine are necessary to stress the importance to this country of our Merchant Navy. It has been done already by much more competent individuals, and I should not like to set the pedantic phrases of a mere politician against the purple passages of many poets. But there is one point in connection with the shipping industry which we must always bear in mind. In one sense, at any rate, it is unique.

There are a number of industries just as important, a number of industries which employ just as many men, and a number of industries whose diminution or disappearance would be staggering to the economy of the country, and would cause the gravest social consequences. But there is this difference about the shipping industry, that whereas the diminution or disappearance of other industries may be a catastrophe which we could survive, the disappearance of shipping would be vital, it would immediately reverse the progress of centuries and we should revert once again from an Empire to an island. It is no wonder, therefore. that an industry so vital as this should have already occupied a considerable part of the attention of the House during the course of the last few years. Hon Members will recollect that in 1934 we were debating a Measure dealing with the shipping industry, part of which was on similar lines to a part of the Bill we are considering to-day. I have taken the precaution of looking up the Debate which took place upon the Bill in 1934. The Government's case was then put very admirably by the Lord President of the Council, my predecessor at the Board of Trade, and a man with a great knowledge of the industry, and his Parliamentary Secretary, now the Minister of Supply, who is eloquent, I believe, in no fewer than nine languages.

I looked up the Debate for the purpose of seeing whether I could find some good extracts from it, which other people would not recognise, for my own speech, but having looked at it I read on with considerable interest. One thing in particular struck me about that Debate, and that was the very great difference between that period and the present. That Debate ranged entirely on economic lines. We have to-day to face and discuss very much the same economic questions which were discussed in 1934, although there has been a change in degree. People talked in that Debate, as they will in this, of the growth of foreign competition, the direct or indirect aid by subsidies from the State, of the over supply of world shipping and the under supply of world trade, and of the difficulties of maintaining a relatively high standard of conditions in our Mercantile Navy in the face of low standards and Government assistance in many other countries. Most of the arguments which were used then still hold good to-day and justify much of the Bill which is now being considered.

But there has been one very great change in the situation to-day as compared with that of 1934. Whereas then it was possible to discuss this question as though it was an economic question alone, to-day over the whole of our Debate must lie the shadow of a possible great national emergency. To-day we cannot think of the shipping industry of this country only as a desirable asset in time of peace; we have to think of it as a vital service in time of war, of war which may be on us within measurable time. That thought, to my mind, is a reinforcement for the proposals in the Bill which are old and a justification for the other proposals in the Bill which are new. The history of the shipping industry since the Debate in 1934, although it reveals very considerable superficial fluctuations, has shown little change in underlying fundamental conditions. Throughout the years 1935 and 1936, when world trade was slightly on the increase, the conditions of shipping tended slightly to improve, and with the help of the shipping subsidy in those two years the Mercantile Marine was, at any rate, able to survive.

In 1937 we had a complete reversal of conditions. It was a good year for shipping. Freights rose rapidly and laid-up tonnage in this country was reduced to a very low figure, and for the first time for many years orders flowed freely into British yards. If these conditions had continued there would have been no necessity for me to introduce a Bill of this character. Unfortunately, that prosperity was only a flash in the pan. There is no need to recount to hon. Members the economic causes which brought it to an end; the recession in America, the fall in commodity prices and consequent shrinkage in world trade. But, after the bright year of 1937, by the spring of last year, although perhaps we were not back as low as 1934, we were back to a position when the industry was faced once again with great difficulties.

Of course, all the time that these fluctuations were going on, the underlying factors remained the same. Even when there was increasing world trade, as there was between the years 1934 and 1938, the increase was not at all commensurate with the increase that was taking place in world shipping. One has only to look at the figures of international shipbuilding, not to wonder, but I think to be certain, that that abnormal increase in world shipping has not been due entirely to economic motives or economic considerations in the countries where it has taken place. Since 1914, the merchant navy of Japan has been more than trebled, the merchant navy of Italy has nearly trebled, and Germany, after the practical extinction of the whole of her merchant navy, has now regained the position she held in 1914. I wonder whether any hon. Member will believe that building to that extent, at a time when there was no corresponding increase in the total quantity of world trade, has been actuated by economic considerations.

It has been our attempt and our desire in past years to do what we could to adapt the quantum of world shipping to the quantum of world trade, because it is only if we get some such equilibrium between the two that we can hope for prosperous conditions for the shipping industries of the world as a whole. Of course, to try to adapt those two quantums does not simply mean that other countries are to have what they like, and that this country is to have what they leave. Over the last few years, it has been clear that the attempt which has been made to settle this question by co-operation, by international reasonableness, has failed; and as it has failed, even though that failure may be only temporary, neither this Government nor any Government could stand by and make no attempt to assist our industry to meet the subsidised and unfair competition which, very often for motives other than economic, is being set against v s the world over.

It is for that reason that, last summer, when the position of the Merchant Navy was already getting difficult, in a discussion on the Estimates for the Marine Department of the Board of Trade, when appeals were made from all sides as to what was going to be done to assist British shipping, I said that it was for the ship owners themselves, in consultation, to put forward proposals, and that the Government would consider those proposals, when they were put forward, with every sympathy. As a result of that statement, the shipowners as a whole got together, and worked out proposals for the assistance which could be given to the industry. Those proposals were submitted towards the end of last year, and were accompanied by a wealth of detail and argument in substantiation both of the difficulties with which the shipowners were confronted and of the proposals which they had to make It his not been possible for the Government to accept the shipowners' proposals in every particular, but on the whole they form the basis of the proposals that are now before the House. The Government have had to make certain additions to these proposals. After all, the shipowners were concerned only with the peace-time activities of the shipping industry and were putting forward proposals which would enable the industry to run under those conditions. The Government could not afford to be unmindful of the possibility of a national emergency, and therefore, we have added in this Bill proposals which are intended, at the earliest possible moment, to bring to our Merchant Fleet those additions which we believe to be essential for national security in time of war.

If hon. Members will turn to the Bill, they will see that in it are contained five separate proposals either of assistance to shipping or, through shipping, to shipbuilding. The first proposal, contained in Clause I, is a proposal for the renewal of the subsidy in respect of tramp shipping on the lines of that subsidy with which the House is already familiar. The details and machinery of this proposed subsidy follow very closely the details and machinery of the subsidies in 1935 and 1936, and therefore, I think it will be necessary for me only to point out to the House the differences between the new proposal and the old ones which were then in force. In the first place, the annual amount of the subsidy is different. Under the old proposal it was limited to £2,000,000, and under this proposal, it is £2,750,000. The basis for that increase is the very heavy increase that has taken place in the costs of the shipowners between 1934 and now. It is not only an increase in costs caused by an increase in wages and an improvement of conditions, including a shortening of hours, but an increase which is represented by almost all the material which the shipowners have to buy and the cost of very nearly all their stores. On the figures that were submitted, a good case was made out to show that a subsidy of the figure now proposed under new conditions is about equivalent to the subsidy that was previously paid under the conditions which then prevailed.

The second difference is that the subsidy provided for in the Bill is definitely granted for a period of five years. Before, it was left to an annual arrangement, subject to renewal every year by the House. If this subsidy and the confidence and competitive power which it gives to this section of the industry are to be used at all for the purpose of allowing them to reorganise and to give us any hope that, at the end of the period, they will be able to maintain themselves without Government aid, it is essential that they should be assured of this assistance for a long enough period to work out the possibilities of co-operation and reorganisation, and for the proposals to be put into effect, and, if they have results, to show those results before the period of the subsidy comes to an end.

As under the old subsidy, this new subsidy is payable only when the freight rate index is below a certain figure. Hon. Members will recollect that under the old subsidy, the datum line—the line at which the subsidy began to decrease—was 92. Under the new proposal it will be 95, based on the facts that not only have costs increased during the period, but undoubtedly the amount of assistance given to their national shipping by other Governments has increased. At 96 the subsidy begins to run off, until it disappears at the figure of 105. It is, of course, extremely difficult to come to a definite conclusion as to the point in the freight rate index at which the bulk of shipping is able to pay depreciation, the point at which it starts to make a profit, and the point at which the profit becomes large; but certainly in present conditions, although of course conditions may well change during the course of five years, my view is that, with the freight rate index at 96, the great bulk of shipping should be able to pay full depreciation and that by 105, when the subsidy runs off, the great bulk of shipping should be, in fact, making some profit. I am not at all ashamed of the fact that it should be making a profit, because if our idea of a more permanent future is that we should attract fresh capital into the industry, that the industry should be in a position, as we want it to be, to build new ships and keep the Merchant Marine up to date, it is quite clear that, unless possibilities, at any rate, are left of a profit being made, that capital is unlikely to be attracted.

There is one novel feature of the sliding scale for the payment of the subsidy which is due to the fact that this subsidy is to be payable for a longer period. Obviously, it would be quite inequitable if, for instance, the shipowners had two or three years in succession like 1937, which obviously left them with a very considerable margin of resistance against bad times in future, and then immediately they had one bad year, the subsidy became payable again. Therefore, we have made a provision either for an exceptionally good year or for an exceptionally bad year, either of which will have its effect upon the datum line at which the subsidy will be payable in subsequent years. The payment of this subsidy is subject to certain conditions which hon. Members will see set out in the White Paper. In page 9 of the White Paper, there is a condition with regard to the observance of National Maritime Board Agreements whenever applicable, a condition that British crews must be employed whenever they are available, and finally, a condition with regard to the employment of Lascars. The object of this new condition is that it will not be possible for a ship enjoying this subsidy to employ Lascars at Lascar rates under conditions or in places in which up to now it has not been customary for Lascars to be employed. It will not be possible for them to extend the normal customary scope of the employment of Lascars at the moment and to get subsidy. Included also in the White Paper, in page 15, are the shipowners' proposals for giving effect to the conditions I have laid down, that not only must they co-operate with each other, but in the period of relief granted by the subsidy they must make an effort to organise the industry on a sounder basis and be able, at the end of that period, again to stand on their own feet.

Mr. Benjamin Smith

Float on their own bottoms would be better.

Mr. Stanley

The hon. Gentleman's simile, although perhaps rather coarser than mine, is certainly more apt. One of the proposals deals not only with internal but also international co-operation. We are anxious that international cooperation to adjust the supply of shipping to the demand should be pursued, but we are not prepared to say that arrangements for international co-operation should be at the expense only of the shipping of this country. If international co-operation means that the merchant shipping industries of other countries as well as our own will make sacrifices we shall certainly support the shipowners in any attempt of that kind which they make, but we should not find it in the national interest to try to force a scheme of international co-operation or international rationalisation which was solely at the expense of the prosperity of our own industry.

The second scheme in the Bill is also one with which the House is familiar, as it has been dealt with in a previous Measure. It is a loan scheme for the assistance of shipbuilding. The assistance given under the earlier Measure proved extremely useful and I think something like 50 ships were built. Hon. Members will recollect that the basis of the old scheme was, "Scrap and build." Under the new scheme it will be a case of "Build, but do not scrap." The difference is that in the earlier case what the Government had in mind was the purely economic consideration. At a time when, as I have said, the supply of shipping was in excess of the demand they did not wish to stimulate artificially an increase in that shipping. Of course conditions are different to-day. With the possibility of an emergency in our minds, it is essential that we should have the maximum size of merchant fleet possible and nobody could suggest that it would be wise at the moment to scrip one ship for every one we built.

To some extent the economic difficulty is met by a proposal later in the Bill for the creation of a war reserve of tonnage by which ships, though not scrapped, will be withdrawn from the normal channel of economic competition. Contracts for cargo liners, tramps or coastal vessels entered into after 28th March of this year —the day on which I nude the statement on these proposals in the House—will be available for this loan. The amount is limited to £10,000,000 and as regards the period for which it will be available, a vessel will be eligible if the keel has been laid within two years of the date of the passing of the Act. The rate of interest on the loan will have to be fixed by the Treasury in respect of each particular loan at the time at which it is made. Those receiving loans will be under the same conditions as to co- operation as those receiving the tramp shipping subsidy and will, therefore, be bound in the same way with regard to the agreements of the National Maritime Board. This part of the Measure will not apply to Northern Ireland because they have already a simi- lar scheme in force there for their shipyards.

The third scheme is one of grants for shipbuilding. Everyone must have been concerned at the grave and rapid falling off in shipbuilding orders during last year. As I said before, during the latter part of 1936 and during 1937 shipbuilding orders were received in a volume which was, I think, the greatest since 1929 and for a short time a measure of prosperity was enjoyed by our shipbuilders. The falling off since then has been very rapid and very heavy. This raises two very grave questions in relation to a possible emergency. First there is the obvious fact that failure to build, while, all the time, ships are becoming out of date and are being scrapped, means the progressive weakening of our merchant navy. But from the point of view of security there is an even graver effect. The adequacy of the Merchant Navy in time of war must be dependent, to some extent, on the ability to maintain a satisfactory rate of building during the first year of war and in order to be able to maintain a satisfactory rate of building in the first year of war, it is necessary to have skilled shipyard workers available when the emergency comes. One of the problems of this rapid decline in the number of orders which are being placed and the possibility of even more shipyards being emptied, is that we might have a further dispersal of the body of skilled shipyard labour which had been re-collected by the better conditions of 1936 and 1937. This dispersal, if continued, might lead to a situation in which, if an emergency occurred, if war began and if it were necessary to accelerate building, all those skilled men would be scattered over the country and engaged in other jobs, and it would be impossible to bring them back again into the shipyards.

In the ordinary course of economics, without having regard to this question of an emergency, the Government would have been content to allow the measures already taken by them for the assistance of shipping to have their inevitable effect upon shipbuilding. If, in fact, the proposal for the tramp shipping subsidy puts tramp shipping in a satisfactory economic position, and if the proposal later in the Bill for a liner defence fund enables the liner services to be maintained and expanded, then, automatically, after a period, this will react upon the number of shipbuilding orders placed by those shipping companies. But this is a matter in which time is of the essence of the contract and an order for a ship to-day, is worth twice an order which may be placed a year or two hence. The Government felt it necessary to offer some special inducement to make certain that the yards which were emptying so rapidly should be filled now, rather than in a year or two. It was felt that the additions to the Merchant Navy should come now in anticipation of any possible emergency, and not later.

Therefore, this part of the Bill is, frankly, of an emergency character. I justify it entirely on the ground that it is necessary from the point of view of national security to have this increase in building now, and the proposals in the Bill represent, in the view of the Government, the best way of obtaining it. Under these proposals, a sum of £500,000 a year will be available for five years as grants to shipowners in aid of orders placed for shipbuilding It will be confined mainly to the type of ship which we need most in time of war, to the cargo liner and the tramp classes, those in regard to which there would be most cause for anxiety, should an emergency occur. The announcement that this grant in aid of shipbuilding would be available was made on 28th March. On nth April I sent out a notice asking that preliminary notifications of orders which were being placed should be communicated to the Board of Trade. The rush of new orders was so great that on 28th April it was necessary to suspend the acceptance of any further applications in respect of tramps at once and in respect of cargo lines as from the following day, 29th April.

At the same time as this suspension was announced, as hon. Members will see in the annexe to the scheme in the White Paper, a statement was made as to the maximum rates which would be payable in respect of each class of ship. Of course, the rate of grant is subject to the overriding condition that the total must be within the £500,000. If the amount of orders received on the maximum rate would bring the total above that sum, then the rate of grant would have to be scaled down to bring the total within that limit. In the period during which this offer was open, orders were actually placed for 37 cargo liners with a total gross tonnage of 210,000, and no tramps with a total tonnage of 495,000. At the same time there was notifications of proposed orders representing another 300,000 tons bringing the total, either definitely ordered or of which preliminary notification had been given, to over 1,000,000 tons. It will be necessary now to consider those individual applications to see whether each one of them is within the scope of the proposal in the Clause and whether it represents a definite order. We shall then be in a position to see whether the maximum rates stated in the White Paper are appropriate. If not, it will be necessary to scale them down to bring the total sum payable within the £500,000 a year. If, on the other hand, the whole sum is not required, then it will be possible to open the list for further applications until the new applications bring the total up to the figure of £500,000 a year.

There are one or two conditions attached to the receipt of this grant to which I would call attention. First, any ship in respect of which grant is received must remain on the United Kingdom register for a minimum of 10 years after completion. Secondly, in the rate of grant, a preference is given to coal-burning ships. We have no desire to dictate to the shipowner the particular type of ship which he should order. He is the best judge of the type of ship which is most suitable for the employment he has in mind but the advantage of having at least a good proportion of our ships capable of using in time of war, a fuel which is produced in this country and for which no foreign exchange will have to be paid, is obvious. This preference, therefore, has been given and from a preliminary survey of the figures, it would appear that a substantial proportion of the ships which have been ordered will be either coal-burning or dual-purpose ships. Provision is also made for the annual grant to be withheld in a particularly prosperous year, and the same criterion as that to which I referred in connection with the tramp subsidy scheme is being taken for a year of exceptional prosperity. The first grant will be made on the completion of the vessel or as soon as practicable after 31st March next year, and the recipients of the grant will be subject to the same conditions with regard to co-operation and observance of National Maritime Board agreements as those who receive the tramp shipping subsidy.

Now I will turn to the provisions of the Bill with regard to liner services. The position of the liner service has in the past two years been different from that of the tramp. Tramp shipping has been suffering from the general depression, in which more or less all have shared equally. The liner services, on the other hand, show great differences between one and the other. There have been many liner services in which the British companies have held their own, and have even been able to develop and extend. On the other hand, there have been services from which British companies have been driven or- services which British companies find it hard to maintain. The result is that in the case of the liner as opposed to the tramp, the difficulty is not so much general as particular. Some services arc not faced with foreign competition at all; some services are faced with unsubsidised foreign competition with which they are able normally to compete; but there are some services which have been faced in the past, and are being faced now, with foreign subsidised competition with which they cannot compete, with the result that sooner or later, unless something is done to assist them, they will be driven from that route.

Mr. Gallacher

What about the Clyde?

Mr. Stanley

Curiously enough, the thought had already occurred to me that that was a point which might be raised in the course of the Debate, and perhaps the hon. Gentleman will allow me to adopt my own chronology. This is not a case for general assistance; it is a case for finding out the exact service which is affected and confining any assistance that is necessary to that service and that service only. My own belief is that in very many cases, where a liner service is threatened by subsidised foreign competition, the knowledge that it will be possible for the British company to get the same assistance from their Government will be enough to make reasonable agreements, which are now refused by the foreign competitors, easy to obtain; and if they cannot be obtained before the help is given, then, frankly, I believe that the only way in which it is possible to obtain reasonable agree- ment is to let those who desire a rate war caused by their undercutting of freights have what they want and to stand behind our people in the same way as their Governments are standing behind them. I believe that in that case it will be possible to get reasonable agreements to cover many of these services.

The scheme of the Clause is to set up a Liner-services Defence Committee, consisting of three members, to be appointed by the Board of Trade. To them, the Board of Trade will refer any application by a British company in respect of help for a particular liner service, and it will be the duty of the committee to consider the applications and to report to the Board of Trade on the need for assistance in that particular case.

Mr. Benjamin Smith

Can the right hon. Gentleman say whether any particular line will be affected by this proposal?

Mr. Stanley

The hon. Member knows of many cases. He has referred to a document, which he knows extremely well, with regard to British shipping in the East, which sets out very clearly the need for some assistance of this kind. To qualify for assistance under this Clause, it will be necessary to show that, owing to competition from foreign shipping in receipt of official subsidies or assistance, the service is in danger of being curtailed or discontinued.

Mr. A. Jenkins

Does it follow from that there will be no financial aid at all in any case where there is not some form of definite subsidy from a foreign Government to a foreign line?

Mr. Stanley

If the hon. Member looks at the definition of subsidy, he will see that it is in the widest possible form, and really that any form of help officially given by a Government or a local or public authority would bring it within the term, but I propose to deal later with the sort of case which cannot easily be brought within that extremely wide definition.

Mr. T. Johnston

Will the right hon. Gentleman say clearly whether the subsidised competition to which he refers may be direct or indirect competition?

Mr. Stanley

I think that if the right hon. Gentleman will wait until I have finished, and then, when I am passing from the subject, if I have left anything out, draw my attention to it, it will be better.

Vice-Admiral Taylor

Will my right hon. Friend say—

Mr, Stanley

I really think I had better finish explaining this, and then, if I have done it imperfectly, perhaps that will be the time to ask questions,

Vice-Admiral Taylor

Can my right hon. Friend say whether the onus of proof rests on the people who put in their claim as to-the subsidy, either direct or indirect, and also as to the quantity, because it will be extremely difficult for the proof to be forthcoming on the part of the owner?

Mr. Stanley

The Committee has got to-be convinced, from one source or another that there is a subsidy, but quite certainly the Government are not going to withhold from the Committee knowledge which they may have as to the assistance which a foreign Government may, either directly or indirectly, be giving to shipping. The assistance which may be given by the Board will be given in several forms, in the form of a grant, or a loan, or a guarantee, or it may be used specially for the building of new ships. The amount is limited to £10,000,000, with a time limit of two years as an experimental period.

Now, if I may pass to the question which the hon. Member opposite anticipated, and on which I know the right hon. Gentleman opposite would desire to hear something, and that is the case, to which a good deal of publicity has been given lately, of the Anchor and the Donaldson Atlantic Lines. It is, I think, a matter on which probably most hon. Members of the House have received some publicity, and it is one on which I have received deputations, and I have been interviewed actually by those concerned with the management of those lines. It is, as I think all who have gone into the case agree, a very difficult and a very important case. It is not only that these particular lines are lines with a long history behind them, giving employment to a large number of people, but they are also the only big passenger liner companies operating from a Scottish port, and they play a very large part, not only in the economy of Scotland, but also in the national sentiment of Scotland as well. I quite realise that the disappearance of these lines would be viewed with grave alarm by Scottish opinion, and certainly it would be so viewed by the Government as well.

I have been asked whether the definition in the Bill is wide enough to enable these particular companies, under their particular circumstances, to make use of this Clause. It is not a question that I can answer, because it depends on the facts which they themselves will be able to adduce to this Committee in proof, but I would point out, in answer to the very proper question which the right hon. Gentleman himself asked, that the terms of the Clause are extremely wide. There is no limitation of the competition to direct competition; that is to say, there is no limitation to competition which lies between the same ports. It is not necessary to prove that there is a ship sailing from the same port, and going to the same port, in order to prove that this competition has occurred. It is clear that if we limited it to that extent, it might make nonsense of the Clause. What the Committee will have to ask itself is this: Can the line, whose competition is being complained of, in fact take passengers and cargo which otherwise would be available for the line which is complaining? That, hon. Members will realise, means taking into consideration things very much wider than the actual port of sailing or port of arrival. Are they in fact catering for the same potential passengers and the same potential cargo?

Mr. Gallacher

What is facing the Clyde —

Mr. Stanley

I know what the hon. Member is going to say, but if I deal with the matter as a whole, and answer questions afterwards, I think it will be the simplest way of doing it.

Mr. Gallacher

Not foreign subsidised competition, but subsidised home competition.

Mr. Stanley

That is exactly the point to which I want to come. I cannot say whether on the facts these two companies can bring their case within the terms of this Clause or not; that is to say, whether they can show whether there is any basis of foreign subsidised competition at all, or whether they have to rest their case on competition with internal lines. It is quite clear that the sort of case with which we have to deal, and the sort of case with which this Clause is intended to deal, has as its essence an element of foreign subsidised competition. It is because of that that this method of assistance has been adopted. It is because of that that you can contemplate that the use of the provisions of this Clause may bring this excessive competition to an end, that agreements can be made, that the payment of the subsidy becomes unnecessary, that the rate war is ended, and that a reasonable arrangement is arrived at. The whole essence, therefore, of this Clause is that you have to deal with subsidised foreign competition. If you meet it with the same weapon as your competitors are armed with, you may hope that both the problems you are meeting and the provision with which you are meeting them may be temporary. That is something quite different from a problem which has no basis of foreign competition, where the circumstances, therefore, may well be, not temporary, to be met with a grant which will enable this reasonable arrangement to be made, but may be permanent, needing, therefore, some permanent solution if they are to be of any good.

Because we have limited the general provisions of this Bill to the type of case which is the general type and the case which I have explained, it does not mean that there may not be other cases which are just as important in which assistance of one kind or another may well be justified. But though they may be as important they will be different, and they will rest on entirely different grounds, and the remedy to be applied may be quite different. If in any particular case of that kind help is necessary then the House should have the opportunity of judging that case on its merits. It would be something which falls outside this general scope of subsidised foreign competition and if it is necessary for anything to be done to assist, the House should have the opportunity of investigating the case, of knowing what the reasons for wanting assistance are and judging whether the assistance to be given is right and will be effective. That is not to say that any such case should not be referred to the Committee which we are setting up under this Clause. It may well be that the three men we choose would be the appropriate body whom I might ask to investigate any case. What it does mean is that if as the result of the recommendations they make there is to be financial assistance then, if such be the decision of the Government, in my view it should be the subject of special legislation and should not go through under a procedure in regard to which the House has been asked to consider one general type of case and will have had no opportunity of considering this other particular type of case.

I pass to the final proposal in the Bill, which is the formation of a Merchant Ship Reserve. That I need not discuss at any great length, because the principles of it have already been discussed upon a Supplementary Estimate, and since then the Board have had certain of the powers, at any rate, which this Clause will confer. It has had the power to purchase ships without, of course, the power of compulsory arbitration. I need say only this, that since the House discussed the Supplementary Estimate the Advisory Committee has been set up and a number of offers of ships have been submitted to it and examined by it. A large number of those offers have been rejected, either because of unsuitability or, most frequently, because of the small size of the ship. The type of ship we particularly need now is the medium-size cargo ship, whether tramp or liner, and in present circumstances we are not buying very small ships.

Sir Arthur Salter

I understand that this reserve is to be used not, of course, for peace-time needs but in war.

Mr. Stanley


Sir A. Salter

In that case is the right hon. Gentleman retaining for himself a discretion to act in these circumstances? Supposing that in two or three years' time the Government anticipated a war in a few months and were anxious to rush in additional stores, before that war came. They would have at that time £2,000,000 worth of tonnage. Are the Government allowing themselves discretion to use that tonnage for that abnormal demand as a method of war preparation? Otherwise, we should have the very anomalous position of the Government urgently de- siring tonnage but unable to get it except by withdrawing ships from services they ought to be engaged on, while at the same time holding these ships on the leash at a time when they could go out in safety and waiting until the moment arrived when they could only go out in imminent danger of destruction by submarines. Is the right hon. Gentleman going to leave it as a discretion and not an obligation to use the ships in that way?

Mr. Stanley

I quite appreciate the hon. Member's point, and I see the possibility of such a situation arising. I am not leaving myself discretion for this reason, that to have this considerable reserve of tonnage overhanging the market at a time when already there tends to be an over-supply of ships and in circumstances where the Government might bring them out at any moment would, I think, have an extremely bad effect upon the general level of freights and upon the general prosperity of the industry. The situation which the hon. Member envisages would be a situation in which ipso facto there must be already great prosperity in the shipping industry, because otherwise there would be plenty of ships available apart from this reserve. If that situation arose, it would be perfectly easy then to obtain from the House a release from our obligation, and obtain it in circumstances which would not do any harm to the industry, because automatically, in the case suggested by the hon. Member, the industry would be enjoying a measure of prosperity, and there would be an actual shortage of ships. I believe it would be perfectly possible, if those conditions did arise, to deal with the situation in that way, and it would avoid the great danger of the effect upon the freight market of having this reserve of tonnage unless there is some bar upon its use in time of peace.

Sir Alan Anderson

I suppose we are entitled to lay up the ships in any port, and keep them in any port, and so they could be kept in a port convenient for their use?

Mr. Stanley

Yes, that is quite true, because we have power in this Bill to move them from port to port.

Sir A. Salter

Across the sea when they would be in danger.

Mr. Stanley

If I may say so, that is an extremely unfair observation. The situation would not necessarily blow up in an hour. This House can do things very quickly, and I have no doubt that if that situation did arise it would be perfectly possible to get release from this restriction. There is only one other point to which I need refer, and that is a proposal that a permanent committee composed of shipowners and shipbuilders should be set up. One of the things about these joint industries which strikes the outsider is the tremendous swing in the rate of shipbuilding orders. When times are bad and shipbuilding prices are low nobody orders ships. When times become better and shipbuilding prices rise everybody wants to order a ship. Anything which could be done to level out the shipbuilding orders and have them given on an ordered plan would be of the very greatest value.

Miss Wilkinson

There is no representation for the consumers.

Mr. Stanley

This is a joint plan to be worked out between the purchaser and the seller of a commodity for levelling out the period in which orders are given.

Miss Wilkinson

But with no user representation.

Mr. Stanley

Well, the shipowner is the user. I do not think I need add to the description of this Bill which I have given to the House. I believe it is essential in present circumstances that assistance of this kind should be at the disposal of the shipping industry of this country. I do not disguise from myself the fact that the only real remedy for the shipping situation in this country and the world over is a restoration to a normal level of seaborne trade, and certainly the Government have in the past few years made every effort to get an increase in that trade. But when we see the closed economies which are in operation in many parts of the world it is idle to think that there is any rapid way of achieving that very desirable result, and until it is achieved I am convinced that assistance of this kind is necessary to preserve a service which is invaluable to us in time of peace and vital to us in time of war.

6.40 p.m.

Mr. Shinwell

I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof: this House realises the necessity for some assistance to enable British shipping to cope with modern conditions, but regrets that such assistance is not accompanied by a measure of public control, and is of opinion that more satisfactory and binding assurances with respect to the reorganisation of the industry and the all-round application of National Maritime Board Agreements with respect to crews and wages are required If any evidence should be required in support of the demand for a Ministry of Shipping it is to be found in the speech of the right hon. Gentleman and in his frequent appearances at that Box. In the last few months the right hon. Gentleman has introduced legislation dealing with trade, the prevention of fraud, the textile industry, and a variety of other subjects, and it appears to me and my hon. Friends, and I believe it is a view supported by hon. Members in other quarters of the House, that the vast ramifications of the Mercantile Marine, the range of legislation affecting it, and the need for adequate supervision of all the complicated questions touching it justify the institution of a separate Department to be called the Ministry of Shipping. I understand that the Government have already prepared plans for the establishment of such a Ministry at the outbreak of war. If that be true, it appears to me that the circumstances which confront us at the present time, the circumstances, indeed, which have impelled the Government to introduce this Measure, justify the establishment of such a Ministry at once.

I think it can be argued that an industry of this kind, involving capital of between £150,000,000 and £200,00,000, an industry that is vital to our trade and economic interests, ought not to be the Cinderella of the Board of Trade. There is a separate Ministry for coal and a separate Ministry for transport, and although I understand that the right hon. Gentleman, in replying to a deputation from several trade unions on this very point, urged that there were too many Ministries already, I suggest to him that it is not a question of whether or not there are sufficient Ministries now but whether such a Ministry is required having regard to the existing circumstances.

I will pass at once to the position of the Mercantile Marine. I yield to none in the desire—and in this I am supported by my hon. Friends—to maintain, I shall not say the supremacy, but, the position of the British Mercantile Marine. That is essential not only for the purposes of war but for the purposes of peace. It is essential in our own economic interests. At the same time, we must not make the mistake of taking measures which may have the effect of inflating the Mercantile Marine out of all proportion to our trade and economic interests. If that should occur—and it may very well do so unless there is adequate supervision and regulation and, above all, the requisite organisation—we may find that we have to use only a proportion of vessels in relation to our trade needs, and this may effect an extensive laying up of vessels, or, what is even worse, a serious decline in freight rates. Therefore the matter of assistance and organisation and the like, in relation to the Mercantile Marine, must be very carefully considered.

In the course of what I have to say I may indulge in what may be regarded in some quarters as captious criticism, but that is the last thing that I desire to do. I am bound to say, having regard to the fact that we are proposing to extend direct and indirect subsidies over a period of about five years, amounting to no less a sum than £25,250,000; moreover, in view of the fact that we are proposing to expend an additional £10,000,000 by way of loans and a further £2,000,000 for the purpose of building up a Merchant Navy Reserve, that we are entitled to ask many questions and to call—within the limits of debate—for a detailed investigation with regard to this large expenditure of public money. I agree with the right hon. Gentleman that, in the present position of the Mercantile Marine, some measure of assistance is essential. The right hon. Gentleman said something about the causes which have led to the decline of the Mercantile Marine, and I should like to add a few words to what he said.

The beginning of the decline of the British Mercantile Marine occurred during the last War. We were engaged in hostilities and, in consequence, Japan, who was not so extensively engaged as we were, and some of the Scandinavian countries, who were neutral, contrived to take advantage of the situation—quite properly in the circumstances—for the purpose of building a Mercantile Marine which, since that time, has developed until now it is in a condition of heavy competition with the British Mercantile Marine. Over and above that, shipowners are largely to blame for the present situation. Ever since the War there has been very little co-ordination among ship-owning firms in this country. We have almost the same number of units in the shipping industry as we had prior to the last War.

Sir Charles Barrie


Mr. Shinwell

I said "almost the same." I will deal with that point more exhaustively in the course of my speech. I think I am right in saying that there has been little attempt at effective coordination or amalgamation in the shipping industry since the conclusion of the last War. Instead of reinvesting some of their profits in the industry, shipowners have been too prone to take the cream out of the business and the British Mercantile Marine has suffered inconsequence. Be that as it may, we are-all agreed that some form of assistance is now required. We have to consider what is the most effective form of assistance. I should say at once that the party for whom I speak have definite-views about the granting of financial assistance. We do not regard subsidies as inherently unsound provided that proper conditions are laid down to safeguard the public interest. Perhaps I may now state what we regard as the requisite conditions for any subsidies granted by the State. The first condition is that subsidies should be intended to promote, the common good. That is an essential condition. Next there should be no-placing of a premium upon incompetence in any industry. Lastly—hon. Gentlemen opposite will not agree with me in this and certainly the right hon. Gentleman will not, because he emphasised that he was not taking the profit out of the industry—one of the conditions should be -that subsidies should never be granted if, in any way, direct or indirect, they are intended for private gain. It seems to me that those are the essential conditions prerequisite to the granting of any subsidy.

The shipowners cannot have it both, ways. Let us examine their position. They expect to preserve their independence. There is resentment at State intervention; no body of industrialists in this country is more individualistic than the shipowners. Now they come along and, while unwilling to relax their sovereignty, they ask the State for grants. In other words, they wish to be independent in respect of the conduct of their industry because they resent any form of intervention or interference, but, at the same time, by virtue of the demands they make and by virtue of this Bill, they are dependent upon State grants for the maintenance of the industry. They cannot have it both ways.

There is a peculiar feature to which I would draw the attention of hon. Gentlemen. Some months ago the right hon. Gentleman pointed out that the shipowners, having been asked to inquire into the matter themselves, had made several submissions to the right hon. Gentleman. I have the papers beside me but I shall not refer to them, except to say that the shipowners ask for financial assistance. They ask for £2,500,000 over a period of five years for the purpose of a tramp shipping subsidy. On the last two occasions, I think it was in 1936 and in 1937, the right hon. Gentleman said that the annual grant was £2,000,000. To the best of my recollection the whole amount was not expended, but that is another matter. Although the shipowners asked for only £2,500,000 annually for five years, the right hon. Gentleman has gone a bit further; he grants them £2,750,000 annually for five years.

Mr. Stanley

If the hon. Gentleman will look at the papers he will see that they also asked for £500,000 for tramp shipping in the near Continental trades, making £3,000,000 a year for both the deep sea and the near Continental services.

Mr. Shinwell

That is an extraordinary explanation. Surely the right hon. Gentleman does not expect to argue that because the Government resisted their demand it justifies the grant of an additional amount. But every man to his taste. If that argument suits the right hon. Gentleman he can have it. I repeat that, from the evidence of the White Paper, the Government are more generous than the shipowners ever expected them to be. When we come to the liner defence fund we find that although the shipowners asked for £5,000,000 the Government propose £10,000,000. I hope that the right hon. Gentleman can give us a similar explanation for that generosity.

Mr. Stanley

I have not the papers by me, but the shipowners asked for £5,000,000 a vear for five years. Is not £10,000,000 for two years, at the same rate?

Mr. Shinwell

According to the papers I have—and I have all the documents of the shipowners themselves, which they were good enough to send to me some time ago—my recollection is that the ship owners asked for £5,000,000. It is true that they asked for an additional amount for the near Continental trades but, so far as I know, there was no demand for £5,000,000 annually for five years. That is new to me. The Government have been more generous

Colonel Ropner

The hon. Geatleman must read the papers from the shipowners again, because he is making a most frightful mess of the figures.

Mr. Shinwell

The only thing I have to say about the figures in the pipers is that all that the hon. and gallant Gentleman has to do is to quote them, and I may be corrected. If the right hon. Gentleman is right, and the shipowners asked for £5,000,000 annually for five years, it seems to me-—while not accepting it for a moment—that the shipowners must regard the Government as a very soft thing from their point of view. I ask what ought to be done in relation to the granting of the subsidy. The first thing is that, accompanying any form of public assistance, there ought to be a large measure of public control. Where there is public expenditure there ought to be public control. There is none in this Measure. Nothing is contained in the White Paper, although, as I shall be able to show a little later in connection with tie liner defence scheme, there is very strong ground for some measure of public control having regard to the position of shipping on the Orient.

We are entitled to ask—the speech of the right hon. Gentleman bore out this contention—that the industry be conducted not in accordance with the special needs of the shipowners but in accordance with the national needs If that be a sound proposition, the very least the Government should have proposed was that on the committees which are to operate the subsidies—the tramp shipping administrative committee, operating the subsidy of £2,750,000 annually for five years, the liner defence committee and the committee to deal with the grants for building cargo vessels—there should at least be some direct Government nominees who would concern themselves primarily with the interests of the State, irrespective of the special needs of the shipowners. That principle has been recognised by the Government and by past Governments; for example on the board of the Anglo-Iranian Oil Company, formerly the Anglo-Persian Oil Company, there are two Government nominees, who are there to protect the interests of the State. That is their purpose. The Government ought at least to have provided for the presence of Government nominees, not a very large measure of public control, but an instalment in that direction. I am not arguing now for the nationalisation of the shipping industry, though I think that sooner or later that demand will become more impressive and more emphatic. I think the Government will have to recognise the need for much closer co-ordination. For the moment I am arguing that as a prerequisite of the granting of financial assistance certain conditions should be laid down, among them being a large measure of public control.

Now as regards the application of the subsidies, what is the position? The tramp shipping subsidy is to be granted to shipping firms who come within the scope of this Measure, irrespective, first of all, of the financial position of those firms, and, secondly, of the running costs of the vessels concerned. That seems to me a quite improper practice. The right hon. Gentleman well knows, though he has spoken of the depressed condition of merchant shipping, that there are many tramp shipping companies, and companies with which we are now concerned, who are earning a high profit and paying a high dividend. I am not going to weary the House by giving figures, but I am certain that even shipowning firms represented on the other side of the House are well aware of the fact that even some of their firms have earned high profits in recent years. I know that some firms have been unable to earn high profits or to pay dividends, but if I cared to quote, I might surprise the House by the disclosure of information about the financial position of some shipping firms. Sometimes it has occurred to me that as the means test is a test applied by the Government to the poor, it might well be applied here.

Now I come to the question of the difference in running costs, and here I want to refer to a matter which has engaged the attention of the shipping industry for some time in relation to the administration of the minimum freight scheme and the operation of the tramp shipping subsidy. I think it is true that the co-operation between British and foreign shipping which emerges from that scheme, while it has to some extent safeguarded the interests of British shipowners, has had the effect of conferring benefits on foreign shipowners, in spite of the fact that the running costs of foreign vessels are less than the running costs of British vessels. In particular, I direct attention to the fact that recently there has been a departure from an old practice in the employment of lascars on the North Atlantic trade, and I understand that German shipping lines are now employing lascars in that particular trade. It may well be that some of those German firms come ' within the scope of this Tramp Shipping Administrative Committee's operations and derive benefit from the minimum freights scheme. It seems quite improper that we should be providing subsidies and demanding cooperation among British shipowners— international co-operation, the right hon. Gentleman spoke of—when, in spite of lower running costs, foreign shipowners who gain from the scheme are able to engage in unfair competition with our own trade.

The right hon. Gentleman has designed a scheme in relation to the liner defence problem which is based, not on minimum freights, but on the merits of the case presented to the Committee about to be established by the right hon. Gentleman. In view of that proposal, instead of our providing subsidies for ship-owning firms, irrespective of running costs, irrespective of whether they employ lascar labour at low wages or British seamen at National Maritime Board wages, those firms ought to apply to a Committee set up by the Government, on which the Government have their own nominees safeguarding the public interest, and each case should be dealt with on its merits. I suggest that that is a much more effective and much fairer scheme than the one the right hon. Gentleman is proposing.

Now I come to the question of the liner defence fund itself. I agree at once that, having regard to the disclosures resulting from the investigations of the Imperial Shipping Committee, relating to shipping in the Orient, there is a need for assistance to the liners operating in those seas, but let us be quite clear about the position. It is all wrong to suggest that British shipping in the Orient is suffering because of heavily subsidised Japanese competition. Indeed, that is not the contention of the Imperial Shipping Committee. I admit that Japan does subsidise liners on her various trade routes to some extent, but the Imperial Shipping Committee, who are very largely a body of shipowners, agreed among themselves that the main cause of the difficulty in the Orient, affecting British shipping in those seas, was not heavily subsidised Japanese competition, but another factor of greater importance, namely, that Japanese shipping was related to Japanese finance and commerce, that Japanese commerce, finance, and shipping were co-ordinated and, last but by no means least, that Japanese shipping was strictly regulated in its operations by the State itself. There is no such thing as an unfettered and individualistic Japanese shipping concern. On the contrary, no Japanese shipping firm can conduct any particular trade without regard to the needs of the State itself; and it is because Japanese shipping is so highly co-ordinated and organised and rationalised that it has been able to a very large extent to drive the British mercantile marine from Oriental seas.

That brings me to the question raised when the right hon. Gentleman was speaking as to the application of the liner defence fund. I know a good deal about the causes of the liner decline on the Clyde. I can remember many years ago when four liners left the Clyde every week with 2,000 passengers, each proceeding either to Montreal, St. Johns, New York or Boston. All that has gone. There is, of course, not the same emigration, and obviously in the case of these liners the amount of cargo cannot possibly compensate for the loss of passengers. There is another reason also. We have all become familiar with the drift of industry to the south, and the same thing has happened in relation to shipping. At one time a great many liners left the Clyde. Many of those liners, because of the operations of particular shipping firms, are now operating from Liverpool and Southamp- ton; and, although I am the last person to try to deprive Liverpool and Southampton of the trade they have at the present moment, I am of opinion that those ports are highly congested, and that some of the trade might very well have been left in the hands of some of the other ports. I think that from the standpoint of our economic needs, and from the standpoint of passenger emigration, the Clyde is just as useful as the Mersey or the Port of Southampton.

Therefore, I would submit to the right hon. Gentleman that his arrangements for the application of the liner defence fund are a little vague. There was- nothing very definite about them. Committees are to be established and. claims are to be presented, and the circumstances are to decide, but that is all very vague. In view of that, I think we ought to lay down that in the application of the liner defence fund we ought not to have regard only to cases where there is subsidised competition, but to all the circumstances and the needs of the mercantile marine as a whole, and in particular to the needs of the various ports in relation to trade and in relation to our maritime and civilian population. It seems to me that that would be a much better approach to a solution of the problem than merely to apply the principle of the subsidies for liners to a particular group and a particular trade.

That brings me to the question of reorganisation. Hon. Members who have read the White Paper will agree with me that the question of reorganisation, as treated in the White Paper, is left very vague. I would like to know what is meant by reorganisation as stated in the White Paper. May I direct attention to the statement made by the shipowners themselves? What it amounts to is that the British liner companies declare that their industry is in a highly organised condition, and in a querulous kind of way they complain of the intervention of the Government, but they did promise—no doubt as a condition for subsidy—that they would re-examine the position, and see whether it was possible to create a more efficient organisation of the industry. Of course that is most unsatisfactory.

The right hon. Gentleman has come to this House frequently and, in his usual able and lucid fashion, has piloted Bills through the House on coal, textile and other subjects, all denoting the need for rationalisation. Take the case of coal. He piloted a very technical and complicated Bill through this House. What did it provide for? It provided for rationalisation, for amalgamation, for fewer units in the industry, for regulation of prices, for some kind of State direction of coal in the establishment of the Royalties Commission. The same, indeed, applies, not in the same degree but to some extent, to the Bill for the reorganisation of the textile industry. There is a reduction of spindles, there is rationalisation. The same applies also to steel and iron, because there we find an almost complete rationalisation. Hon. Members have frequently objected to this kind of rationalisation because they were afraid of prices rising unduly.

And yet, while the right hon. Gentleman has come to this House on behalf of the Government with rationalisation schemes denoting co-ordination and amalgamation of coal, textile, iron and steel, he leaves the question of reorganisation in the shipping industry, in spite of subsidies and financial assistance of various kinds, to the shipowners themselves. It seems to me that we have a right to demand, first of all, that reorganisation should precede the granting of subsidies, or, if the Government object to that, that reorganisation should accompany the granting of subsidies. That subsidies should be granted in the fashion the Government suggest, and that this reorganisation, so essential to the maintenance and the integrity of the mercantile marine, should be left to the shipowners does seem to me wrong.

May I direct attention to the fact that there are many subsidiary concerns in the shipping industry? There is no time to go into that, but I had 18 years' experience of this business on almost every dockside in this country, and I know how many subsidiary concerns, like dry dock concerns, shipchandlers and so on, operate as subsidiary companies, whose profits are not brought into the balance sheet when the accounts are made up. Moreover, I would remind the right hon. Gentleman that some shipowning firms derive more profit from the sale of snips than they derive from the actual running of their ships. These facts have to be taken into account in considering the question of reorganisation.

I venture to say that some provision should be made, before the granting of a subsidy, for fewer units in the industry. For example, I think it is right to suggest that some of the main lines might be grouped. In the North Atlantic trade, why should not the whole of the lines in that trade be grouped? I admit that in the case of the Cunard White Star Line there are certain American connections, but these have been got over in the past and could be got over now. There is the Anchor Line, which is now in the hands of the Runciman family, and I could tell a story about that, but I will leave it for some other occasion. There is also, I think, an Aberdeen Line in the North Atlantic trade, and there are several others. Why should not the whole of the North Atlantic lines be grouped, reducing the number of vessels if necessary, cutting out a lot of the dead wood, and, in short, rationalising the North Atlantic lines? The same could be done in the River Plate trade and in the South African trade. That seems to me to be much more sensible than parcelling out these doles to the shipowners without demanding the conditions which are so essential for the rebuilding of the industry.

I come now to what I regard as one of the most essential points of all. The Government propose to expend this money, and I agree that there is a need for the expenditure in the present condition of the Mercantile Marine, but what is going to happen after the money has been spent? What is going to happen, after the expiry of the five years, in relation to tramp shipping? What is going to happen in 1945 in relation to the liner defence fund when the money has been expended? It seems to me that we are entitled to know. Are the shipowners to come again and say that they are still in a depressed condition, that they have been unable to bring about the reorganisation of which they spoke five years previously, and that they want more money? That simply is not good enough. Unless we are assured of effective reorganisation in the Mercantile Marine, it is a gross waste of public money to grant this subsidy.

I shall not say anything about the loans for shipbuilding, except that I do not agree with the right hon. Gentleman in what he said about building ships and not scrapping. From what I know of the position, there are too many British vessels which are obsolete and ought to be scrapped. Many of them were built during the War; they were called standard vessels. During the War I was asked by the Ministry of Shipping to inspect the crews' quarters in these vessels and to report on them, and I saw some of them being built. Many of them are obsolete and ought to be scrapped at once. It seems to me that, while it is an excellent proposal to provide loans for shipbuilding—after all, the money has to be repaid—we ought not at the same time to retain many of these old vessels, which are really unworthy of the British Mercantile Marine and its traditions. I hope, also, that the right hon. Gentleman is going to safeguard himself to some extent by regulating the prices of raw materials for shipbuilding purposes, and, particularly, that he is going to regulate steel costs.

I should like now to say a few words on the tonnage reserve and the use to which it is being put. I do not believe it is satisfactory that we should use this reserve tonnage merely for the purpose of training or for purposes of storage. It seems to me that, if the Government are to enter into the shipping business and buy up a number of ships to the value of £2,000,000 over a period of time, many of those ships ought to be put into commission. It may be that to put them all into commission at once might have an effect on the minimum freights scheme, and it would have to be properly regulated. There is one very extraordinary fact to which I want to direct the attention of the House, I took part in the discussion some weeks ago in the Supplementary Estimate, when the right hon. Gentleman was proposing to spend this £2,000,000 for the purpose of purchasing reserve tonnage. Some ships have already been purchased. I find from the "Shipping World" of last week that one vessel—which, incidentally, was in the Spanish trade quite recently —of about 9,000 tons deadweight, built in 1912 and therefore is 27 years old, has been bought. As recently as November last, this vessel was on offer at £17,500, but the Government, with their usual generosity, paid £20,000 for it. It is true that this 27-year old vessel is said to have a speed of 11 or 12 knots, and therefore would be a useful unit. There was another ship which fetched £21,500, while its price at the year of last year was less than £20,000. It seems to me to be most improper, and a waste of public money, that we should be building up a merchant shipping reserve at the expense of the public in order to provide profits for some shipowners and ship-brokers, and I really think the right hon. Gentleman ought to look into that matter.

There are two further points in connection with the tonnage reserve. To what use are the vessels to be put, and how are they to be maintained? It seems to me that there ought to be proper maintenance crews in these vessels if they are to be held in reserve against an emergency. It is not sufficient, as a shipowner said in the House some time ago, when we were discussing: the Supplementary Estimate, that there should be merely a watchman on board with a can of oil. That is absurd. A maintenance party is needed in each vessel, so that it may be kept ready for emergency, and I hope the right hon. Gentleman will see that that is done, because, once these ships begin to deteriorate—they have deteriorated enough already because of their age—the deterioration will go on to such an extent that they will be of no use to the Government at all.

I beg the indulgence of' the House to allow me to deal with one mere point which is of supreme importance, namely, the conditions of the officers and men. Frequently, when questions affecting the officers and men are brought to the notice of the right hon. Gentleman, he propounds the query: Why cannot they apply to the National Maritime Board? I agree that the National Maritime Board has negotiated difficulties very successfully in recent years, but there is one difficulty. There is no appeal from the National Maritime Board, and, if there is no agreement between the two sides, a deadlock ensues, and the only alternative is for the men either to go on strike or to acquiesce in the owners' proposals. I believe that to be wrong'. It seems to me that, when any difficulty arises on the National Maritime Board on a question affecting industrial conditions, there ought to be provision for enabling either side, either the employes or the employers, to appeal to the Industrial Court or to industrial arbitration.

I want to direct special attention to the position of the masters. I recognise that in recent years there has been a definite improvement in the conditions both of the officers and of the men in the British Mercantile Marine, and I believe that to some extent that has been due to the Debates we had on the last Tramp Shipping Subsidy, since much of the improvement dates from 1936. It is still, however, the fact, though I agree it is not general, that many masters—I am not speaking of the officers generally—are unable to obtain leave from their duties for a short holiday. They are held down to their ships year in and year out, with no opportunity of escaping from the ship at all. Some shipowners will not give their masters leave. One of the difficulties about ships' masters is that there is no masters' panel on the National Maritime Board. There is an officers' panel and a men's panel, but not a masters' panel. It seems to me that something ought to be done in that regard, and I would ask the right hon. Gentleman to use his influence with the board or, if he cares to do so, with the shipowners, in order to provide for the institution at once of a masters' panel, composed very largely of representatives of the masters, so that these difficulties may be dealt with.

Lastly, I come to the question of training. I believe that, in spite of the high prestige of the complements of our merchant vessels, and of their high qualifications in general, many officers are ill-equipped for the tasks they have to undertake. That is due to the inadequacy of our training methods. Some time ago there was established a Merchant Navy Officers' Training Board with the support of the Board of Trade, but, in spite of that, the methods employed for the training of young men for the position of officers are most inadequate and unsatisfactory. What is required is something in the nature of a maritime university. After all, this is one of the most highly skilled professions, and, if some of our young men are ill-equipped because all they have been able to do has been to undergo correspondence courses, instead of being given the opportunity of attaining the highest skill, it is a mistake.

I hope the House will forgive me for having taken up so much time. I want to say, before I sit down, that we admit the need for the assistance which the Government propose, though we believe that the owners are very largly to blame for the present situation. We do not, however, propose to indulge in severe recriminations about that. We believe that, if subsidies are to be granted, they ought to be accompanied by public control; we believe that reorganisation ought to be effective; and we believe that the conditions of the personnel of the Mercantile Marine ought to be brought up to the highest possible standards. These men in the Mercantile Marine, while some of them may be rough, untutored, and perhaps a little uncouth, are the most generous of men. I have known intimately two classes of men, miners and seamen, and, as one of one of my hon. Friends says, they are both the salt of the earth. They deserve well of the country; and, when we are considering the provision of public assistance for the shipowners to rehabilitate the Mercantile Marine, one of the essential conditions is to see that the men employed—14,000 of them lost their lives in the last war—get a fair and square deal.

7.30 p.m.

Colonel Ropner

There was so much in the speech of the hon. Member for Sea-ham (Mr. Shinwell) with which I agree that I would much sooner not quarrel with him over the figures that he quoted. I hope he will accept my assurance that I have referred to the documents which he quoted and have found that, neither in the case of the liners nor of the tramps, have the Government actually provided the full amount for which either section asked.

I know that the Prime Minister will agree with me that the shock tactics of power politics pursued by aggressor States in international affairs form the most pressing menace to other nations. But I have often thought that if, as I hope, we escape the calamity of a war, it may be found that there is another danger, less violent in character but perhaps more certain, which threatens the well-being of the great democracies. There is not a totalitarian State which is not pursuing a policy of economic nationalism, entailing, so far as is possible, an economy of self-sufficiency, and while military operations on a national scale may be the greatest danger, economic war started years ago and has been pursued in a ruthless fashion on the industrial front ever since. The success achieved by nationalised industry—I hope the hon. Member for Seaham will take note of these remarks—comes not from its greater efficiency, but from the fact that behind nationalised industries are ranged the full resources of their national exchequers. The success of State-aided industries should not be used as an argument for nationalisation; but, on the contrary, it should often be a warning against nationalisation. One so often sees in connection with nationalised industries disciplined taxpayers being compelled to pay heavily for bureaucratic management, or mismanagement, and for uneconomic trading. Nevertheless, if the taxpayers of some nations are sufficiently docile, and if criticism is stifled, the fact remains that in the markets of the world private trading often becomes difficult, and occasionally impossible, unless the Government are prepared to counterbalance the subsidies and other forms of assistance given to foreign competitors without thought of economic factors. It is the fact of State aid to industry by foreign governments, and not the fact that many industries are nationalised or controlled, that disrupts, disorganises, and dislocates normal trade. I admit, in fairness, that, conversely, it is immaterial to my argument whether to meet that unfair competition our industries are nationalised or not.

In some form or other, aid must be given to those industries, of which shipping is one, that have to meet unfair foreign competition. Although hon. and right hon. Gentlemen opposite may not agree with me, I have no hesitation in expressing the belief that the best value for the money will be obtained, in the vast majority of industries, if State aid is given to industry run by private enterprise and initiative. Shipping is peculiarly susceptible to attack. Shipping trades in a market which is world-wide, and in that market the ships of all nations are, within certain limits, free to compete. It is from this market that British shipping is being driven. For 20 years, as the hon. Member for Seaham has reminded us, the British Mercantile Marine has been losing ground. The British Merchant Navy is being swept from the sea, not by fair economic competition, but as a result of the fulfilment of national policy followed by other nations. I hope that I have at least established this point, that if any industry—and again I must remind the House that shipping is one industry the survival of which is threatened—is to live under modern conditions it must be State-aided, whether it is nationalised or not. That is admitted in the first part of the Amendment.

The next question which all threatened industries have to face is that of how State aid can best be given so as to be, in the first place, most effective, and in the second place be least burdensome on the rest of the community. Generally speaking, the answer is a protective duty; but, unhappily for shipping and for some other industries, it is not possible to apply the machinery of a protective duty. Various suggestions—and I think mostly good ones—have been made in this Debate as to what should be done as a long-term policy. It is true that that which might bring most benefit to every branch of the shipping industry is the restoration of world trade and a greater flow of goods between the nations of the world. I hope that when the world returns to sanity the Government will continue their valiant efforts to increase the flow of goods throughout the world, particularly among the members of the British Empire. As a medium-term policy there occurs to my mind the question of trade agreements. This country provides a large and important market for many nations, and I suggest that the power which that gives to the Government in trade negotiations might be used, where they consider it advisable, to ensure that imports and exports from the country with which an agreement is being negotiated should be carried, ass least to a certain minimum extent, in British vessels.

But as an immediate shield against attack the only effective help which the Government can give to shipping is a subsidy. A subsidy has many very obvious objections. I am certain that no Chancellor of the Exchequer likes to give a subsidy. I am certain tint the; proposal is disliked by the President of the Board of Trade, and I can assure hon. Members that a subsidy is whole-heartedly disliked by the shipping industry. [Laughter.]I expected hon. Members opposite to be amused by that, and, having noted the presence o) the hon. Lady the Member for Jarrow (Miss Wilkinson) I expected her to be the most amused.

If she has any suggestion as to how the industry can be helped at present without a subsidy I can assure her that the Chancellor of the Exchequer, the President of the Board of Trade, and the shipping industry will be glad to hear of it. The problem has defeated the combined efforts of those three parties up to now. I repeat that the subsidy is much disliked by shipowners, but it is the only method by which immediate help can be provided. I hope that I have established, as a second point, that if, as is admitted in the Amendment, some assistance is needed by the British shipping industry, the only immediate assistance that can be provided is in the form of a subsidy, however much that may be disliked.

I will turn for a moment to an examination of the provisions of the Bill. There are five proposals; first, the tramp shipping subsidy; secondly, loans to assist the building of ships; thirdly, grants to assist the building of ships; fourthly, the defence fund, to be employed in defending liners against subsidised competition; and fifthly, the formation of a Merchant Ship Reserve. As the hon. Member opposite reminded us, the grand total of these proposals, at a maximum, is £28,250,000, spread over five years, with a further £10,000,000 in the way of loan, which would be recoverable. Before making a more detailed examination of those proposals, I would point out that the Bill itself is largely permissive, and, although the White Paper explains the intentions of the Government, it is possible, within the terms of the Bill, for the President of the Board of Trade or his Department to administer the law in such a way as to make the Bill entirely ineffective. I am sorry that it has not been possible to put more into the Bill and less into the White Paper. Needless to say, I have no reason to suppose that the President of the Board of Trade intends to use his powers in such a way, but I thought I should draw attention to the fact, because we cannot be certain that the present President of the Board of Trade will retain his office for ever. Of the five separate and distinct proposals, there is only one, the tramp subsidy, to which I desire to devote much time. But I want to occupy the time of the House for a short while in remarking briefly on the other four proposals.

Although the Bill is called the British Shipping (Assistance) Bill, there is one proposal which has not only not been suggested by the shipping industry, but which is positively disliked by the industry. There are two other proposals in the Bill, the inclusion of which, as the President of the Board of Trade has said, is on account of the desire of the Board of Trade itself, and I think he might have added, was certainly not suggested by shipowners. As I said in a previous Debate, the formation of a tonnage reserve, which is to absorb something over £2,000,000, was opposed by the shipping industry, but the President of the Board of Trade informed the industry that in his view it was in the national interest for the purpose of defence to form a shipping reserve, and, needless to say, any opposition which the industry felt to the proposal was immediately put aside. The President of the Board of Trade has the assurance of the industry that, in view of his statement that it is necessary for the safety of the country to have this tonnage reserve, the industry will do its best to co-operate and make the scheme a success. But I consider this to be something rather in the nature of panic legislation, necessitated by the startling decline in the numbers of the British Mercantile Marine, and had successive Governments heeded the warnings which they constantly received, and had they taken proper action at the proper time, there would never have been any necessity for this Government to buy old ships and form a reserve, for the British Mercantile Marine would not have declined as it has declined during the last few years.

I am fairly sure that the loans for building new ships were not suggested by the shipping industry, and they may or may not be welcomed. I understand that the money is to be lent at about 3¾ per cent., and therefore I cannot see that it can be of very much help in the provision of new ships. In any case, £10,000,000 is available, and it remains to be seen whether there are a large number 0f applications for loans or not.

With regard to building grants, I was very pleased to hear from the President of the Board of Trade that as a result of his announcement, orders had been placed for about 150 ships. It is a great thing for this country and for the British Mercantile Marine that such a large amount of tonnage should be added to that sailing under the Red Ensign. But surely it is unreasonable that these building grants should be dependent upon rates of freight. A ship that is built in this country is more expensive than a similar ship built in many other countries, and that is a permanent handicap throughout the life of the ship, and I really do not see the connection between this and the high or low rates of freight which such a ship may enjoy with the rest of the shipping of the world. The grant is presumably given to lessen to some extent the difference in cost between a British and a foreign ship. Perhaps the President of the Board of Trade or the Parliamentary Secretary will say more on that subject to-night.

It is altogether wrong that an increased grant should be given to ships built to burn coal only. As the President of the Board of Trade has said, shipowners should be the best judges of what is the most suitable ship for the trades in which they are engaged. It is not very long ago that shipowners were accused of being out of date because they had not gone in more extensively for Diesel ships. Now an inducement is being offered to build ships, which, if the inducement is effective, will persuade others, in some cases at least, to build ships which will prove uneconomic, and that is a mistake. Building loans and even grants, except for the express purpose of levelling costs as between this and other countries, should be unnecessary. As I think the hon. Gentleman opposite said—if it was not the hon. Gentleman it was the President of the Board of Trade—if British shipping is given a fair crack of the whip, then ships will be built by the industry as they are wanted.

Mr. Shinwell

That does not sound like me.

Colonel Ropner

If it does not sound like the hon. Member, it must have been the President of the Board of Trade.

Mr. Stanley

My hon. and gallant Friend is now lashing me with scorpions.

Colonel Ropner

I should like to congratulate the President of the Board of Trade upon having got rid of the defeatist policy of scrap and build. Defeatism was the atmosphere which appeared to permeate the Board of Trade a few years ago, and I am glad that it has been discarded, and that it is not necessary to scrap a ship before a new one can be built.

Mr. E. J. Williams

The hon. and gallant Gentleman has made a statement that coal-burning ships would probably be uneconomic. Can he give us some evidence of that?

Colonel Ropner

I could give a lot of evidence that a coal-burning ship would be uneconomic in certain trades. There are, however, many trades in which the coal-burning ship is still the most economic, but it is a pity to induce owners to build coal-burning ships to be used in a trade where oil-burning would be more economic. Unless that is the reason for the increase of the grant for coal-burning ships, I see no reason why it should be included in the Government's proposals.

There are other hon. Members in this House who can give a more well-informed and detailed opinion of the proposals with regard to liners. All I war t to say is that I hope that the discretion which the Defence Committee will be free to use will be as broad as possible. I see no reason why you should, on the one hand, help a British line competing against a subsidised foreign line, and, on the other hand, refuse assistance to a British line which is competing with a foreign line whose costs are very much lower by reason of lower wages. A large number of deserving cases might be excluded if the Committee is tied too rigidly to insisting upon direct subsidised competition as a qualification for assistance. I was not very struck by the argument of the President of the Board of that it was not his function this afternoon to define a Clause in the Bill which we are considering or to say what would be the view of the Committee when it considered a special case.

Mr. Stanley

I never said that. Although I gave what I considered to be the interpretation of this particular Clause, I could not say to what conclusion the Committee would come on the facts of a particular case that might be put to it.

Colonel Ropner

I do not think that we differ very much. I am not trying to misrepresent my right hon. Friend. We are engaged in making the aw and not in interpreting it, and if there: is any doubt whether the Committee will have this or that power, and, if this House thinks it advisable, it is the easiest thing in the world, by making an Amendment in the Bill, to give the Committee all the power we wish it to have. That would be a very much easier procedure than the suggestion of the President of the Board of Trade that every liner company which thinks it has a special case should ask for special legislation in this House. I really cannot believe that time would very often be found in order to give special consideration of that sort to the hardships of individual companies.

I want finally to deal with the tramp shipping subsidy. The sum of £2,750,000 a year for this purpose is a very considerable sum. But such are the terms and conditions of payment that the subsidy or full subsidy will not be paid when, on every ground, help should be given. I am sorry to say that every tramp shipping concern will be bitterly disappointed by the terms of the White Paper. If the President of the Board of Trade is constrained to think that that sounds ungracious and ungrateful as coming from a tramp shipowner, my reply must be that, if there is one-tenth of one per cent, of charity or anything more than justice in the Bill I will put my name below his to an Amendment to postpone the Second Reading not to this day six months, but to this day six years. Either the industry is or is not entitled to the assistance which the Government proposes. What is even more serious in the view of tramp shipowners is that the subsidy, administered as it is supposed that it will be, will not achieve the objects which, both the industry and the Government have in view, and the Board of Trade has already been informed of that fact by those who, during the whole of the most protracted and difficult negotiations, have so ably represented the tramp section of the shipping industry.

Those who are not engaged in the industry must, unless they have devoted a very considerable amount of time to pages 10, 11 and12 of the White Paper, be still considerably hazy as to the exact method of calculating and of paying the subsidy. It is with considerable hesitation, therefore, that I venture to make a few observations on this matter. When an efficient industry is in distress because of unfair competition, the problem may be regarded from one of two entirely different angles. On the one hand, in the case of shipping, the Government might say, "This industry must be kept financially solvent. When the competition of subsidised and low-cost foreign vessels depresses the freight market to a ruinous level, the British Mercantile Marine must receive a subsidy of sufficient magnitude to allow it to find employment for its ships at a rate sufficiently profitable to allow for depreciation, and for the payment of fair wages and salaries, and to give a fair interest on the capital employed. If that were the view held by the Government, in times of low freights a high subsidy would be paid and in times of high freights a low subsidy or no subsidy, but the gross revenue would be maintained by the combined pool of trading profits and subsidies.

On the other hand, the Government might have taken an entirely different view. They might have said," We are not concerned with the profits of shipping companies. Shipowners and all engaged in snipping are in a speculative industry. They must expect periods of bad trade alternating with periods of good trade, and on past experience the bad trade years will be of more frequent occurrence than the good, but that is something with which we as a Government are not concerned. But, "they might add," this unfair competition by State-aided foreign ships is a different matter altogether. To meet that position we will calculate a subsidy of a specific amount which we believe to be necessary to off-set the advantage of the subsidies received by the foreigner. When that amount has been determined, the shipping industry will get no more in bad times and no less in good." Whichever approach the Government had followed to the problem with which they were presented, there would be many who would say that either was a reasonable course to have taken.

Mr. Bracken

Does my hon. and gallant Friend maintain that any British Government would be justified in handing out large subsidies to shipping companies while they are making large profits?

Colonel Ropner

I have not advocated that view. I have merely said that there are two different approaches to the problem, both of which might be said to be reasonable. Unfortunately the Government have lacked the courage and fore- sight to hold to either view. Over a certain narrow range in the level of freights they appear to have taken the view that it is the financial stability of the industry, in which they are interested and the subsidy is paid according to a scale, which varies the amount when freights rise or fall. As freights rise, the subsidy is reduced, and finally abolished. But, if the subsidy disappears altogether when there are high freights, surely, to be consistent and to be fair and to achieve the object of the Bill, should the level of freights continue to fall below 95 per cent, of 1929 the subsidy should continue to increase. When freights are abnormally low the subsidy should be greatest, but it is at this point that the Government have abandoned its plan of guaranteeing financial stability, and the subsidy stands at a fixed amount however low the index level of freights may be, just as if the view taken by the President of the Board of Trade was that his chief concern, after all, was not the financial stability of the industry but rather a desire to off-set the extent of the advantage given by other nations to their mercantile marines through the medium of subsidies. It is in that way that the industry gets the worst of both alternative plans and the best of neither.

Now I am going to answer my hon. Friend's question. My own view is that the Government should endeavour to assess the average advantage held by foreign competitors and, having arrived at a figure, should give that amount to the industry; not more in bad times and not less in good, for in existing circumstances, in good times and in bad, and not less in good times than in bad, foreign merchant fleets gain ground and the British Mercantile Marine loses ground.

Mr. Bracken

Does my hon. and gallant Friend really mean that he wishes to turn the House into a universal soup kitchen for the benefit of the shipping industry?

Colonel Ropner

I should not like it to be turned into a soup kitchen for the benefit of anything, but I have not noticed that the hon. Member has suggested that protective tariffs should be abolished when times are good. If he had been present at the beginning of my speech, as I do not think he was, he would know that I was forced to admit that it is not possible to help the shipping industry by a protective duty, which in fact affords a measure of protection in good times and in bad. There are other disappointing features of a comparatively minor nature, but nevertheless of some importance, and I should like to ask my right hon. Friend one or two questions. First of all, why should the industry have to wait until July, 1940, before receiving any subsidy under the Bill?

Mr. Stanley

The subsidy dates from 1st January.

Colonel Ropner

It does not start until you get it, and the fact remains that the first payment received under the Bill will be in July, 1940. If there is a lag in the payment after the inauguration of the plan, I see no reason why that lag should not be taken up now and the first payment made in January, 1940. In the second place, why has the President fixed 95 per cent, of the 1929 level as the point at which the subsidy diminishes? There can be no real confidence in the industry if that figure is maintained, and it certainly will not allow the industry to achieve the objects for which the subsidy is being given. In the third place, what do the Government mean, and for that matter what do hon. Members opposite mean, by reorganisation and co-operation? The industry is doing what it can, but I must frankly confess that it cannot do very much. Co-operation with the hangman can go too far, and there are a large number of hangmen abort. One of them is called Russia. The name of another is Germany. Three more are called, Japan, Greece and Italy. It is really very little good asking shipowners to co-operate with other nations whose object appears to be to eliminate entirely the British Mercantile Marine. It we are to be on level terms with the foreigner or, better still, if we can force the foreigner to stop subsidising his ships, if we can revert to fair trade, I think I can, on behalf of the whole industry assure my right hon. Friend, and anyone else who is interested in the matter, that the industry will co-operate in every possible way so as to render assistance of this sort unnecessary.

8.11 p.m.

Mr. Graham White

I cannot claim to have any special interest or special knowledge of the shipping industry. The right hon. Gentleman apologised for having had to speak at great length on two occasions this week, and said that his mental distress was greater than that of the rest of the House. I have no means of knowing what degree of mental distress he has suffered, but I and my friends suffered no distress from his elucidation of a Bill which is recognised as being a complicated and a somewhat difficult Measure. He said straight away that it was necessary as an emergency Measure. Something had to be done for British shipping, both tramp and liner, and I do not know that anyone has differed from him in that opinion, nor do I. It is, however, admittedly a palliative. We cannot contemplate a position of this kind going on indefinitely. The hon. Member for Seaham (Mr. Shinwell) asked us to consider what will be the conditions at the end of five years, and went on to mention various conditions which he thought would be inevitable if the Bill was to deal with lasting conditions, and he said there would have to be a greater measure of public control. I am not sure that he did not underestimate the amount of public control that there is already in the Bill. It seems to me that, when all consideration has been given by the different committees, there is always the President of the Board of Trade, with very considerable power, and I have sufficient confidence in the Board of Trade to believe that they are not going to shovel out public money to inefficient people for the sole purpose of enabling them to pay dividends.

The hon. Member for Seaham touched upon the conditions of those employed in working ships. I am glad to think that there has been a noticeable improvement in this respect. I took advantage recently of an opportunity that offered to inspect the conditions of all classes of employes on board the "Mauretania." It is an exceptional case, but in conversation with those who were going to sea in her everyone informed me that the accommodation was better than anything they had ever seen before. [An Hon. Member: "A show ship."] I hope it is an example which is going to be followed. There have been great advances in passenger accommodation. I remember my grandfather, John Graham, who sailed out of Grangemouth as cabin boy on a collier and ended up as commodore of the Allen Line, at the time of the changeover from sail to steam, saying, when he came ashore from one of his voyages: "Some of the passengers on this voyage have been asking for baths on board ship. I wonder what they will ask for next."

Mr. Benjamin Smith

The crews have been asking for them ever since.

Mr. White

Let the crews go on asking until they get them. This Bill is only a palliative, and can be nothing more than a palliative. I regard it more in sorrow than in anger, sorrow that the British shipping industry which, as was said by the hon. and gallant Member for Barkston Ash (Colonel Ropner) does not want doles but would prefer to be making profits and sailing on its own bottoms, should be subjected to the present conditions. We hope that the day will come when better conditions will be possible. Meanwhile, we must all of us feel resentful against the general conditions in the world which compel us to consider, and even to welcome, uneconomic and unnatural proposals of this kind.

The hon. and gallant Member for Barkston Ash referred to economic nationalism. Subsidies, uneconomic and unnatural arrangements are the direct product of the international nationalism that is raging in the world. They are the direct product, the inevitable result, of the nationalism which is governing Europe to-day; a spirit of nationalism which is a narrow, selfish cult, which must inevitably land the country that is engulfed in it in moral and intellectual blindness. It is the result of that spirit that we are trying to cope with to-day.

In general, I should like to say that I think the Bill, as far as I am able to judge it, is well devised to meet the purpose for which it is brought forward. I certainly welcome the continuance of the scheme of loans for the purposes of shipbuilding, and I am glad that the former policy of build and scrap has been abandoned. I welcome the proposals for the continuation of grants which will enable shipbuilding to be encouraged and continued. The right hon. Gentleman has told us that the response up to the present time to the shipbuilding scheme has been highly satisfactory, but he could not tell us what the net result will be, because the project is under examination, and may be under examination for some time to come. I was sorry to hear him limit the benefits which might, perhaps, flow from this proposal. I should have thought that if upon examination it was found that there were ships which fell within categories which are considered desirable for the nation's service, that there would have been a balance of advantage, taking into account the employment which would be created, in allowing for a considerable expansion in the amount available for grant under that section of the Bill.

In regard to the Clause dealing with foreign competition on the liner service, I should like to refer to an observation which fell from the hon. Member for Sea-ham with regard to the need for the control of steel prices. There is a competition to shipbuilding in this country which is not founded upon Government assistance. There is a competition in shipbuilding which is not based upon subsidy. In Scandinavia and Denmark, for instance, there is a degree of efficiency in shipbuilding which is not related to Government subsidy, and I would invite the President of the Board of Trade to turn the searchlight once again upon the question of steel prices. The steel industry in this country now is a practical monopoly. We know that its profits increased enormously last year, although at the present time they may not be so great. In making that statement I do not wish to suggest that the monopoly position is being abused, but there is a monopoly position. In Belgium and some other countries the price of steel has not advanced to the same extent as in this country. Therefore, shipbuilders and shipowners are entitled to ask the steel industry in this country, or failing them somebody else, to see that they are not at a disadvantage in regard to the raw materials of their industry. That is a matter which should be kept under constant and careful scrutiny.

There is one further matter with which I should like to deal, and that is the proposal in Clause 6 in regard to reserve tonnage. I do not think anyone will quarrel with the object of that Clause in having a reserve of tonnage for use in an emergency. No one would wish to criticise the proposal to use that tonnage for training purposes, but where I differ from the right hon. Gentleman and the Government is in their policy in this matter. I remember that when the Essential Commodities Bill was going through the House, the right hon. Gentleman was urged to take further powers to enable him to import supplies in excess of the powers he was seeking, but he resisted the suggestion. Nine months later the Government took those powers in setting up the Ministry of Supply.

To-night, in response to an intervention by my hon. Friend the junior burgess for Oxford University (Sir A. Salter), the right hon. Gentleman again declined to take powers to utilise the reserves, if it should be thought fit, in advance of the emergency arising. The right hon. Gentleman seems to have less confidence in himself than the House and the country have in him. Nobody would imagine the right hon. Gentleman if he had those powers using them except in a proper way. In rejecting the suggestion, he based his argument on the ground that if there were a reserve of tonnage it would depress the market. No one could possibly imagine that he would use his powers in such a way as that. What we have to remember is that if we have the reserves of ships the most effective way to use that reserve is to use it now in bringing in the requisite commodities. The whole policy of food supplies in time of war could be modified and simplified, and the necessity for reserves might possibly be done away with by the use of tonnage at the present time.

We ought to utilise some of the shipping which is idle and bring into the country raw materials and foods. If we did that it would make the duties of the Fleet much easier, and lighten the work of the Mercantile Marine. It is highly desirable that the right hon. Gentleman should have powers which he can exercise over-night without having to come to Parliament. We know that the policy of the Government is to have in reserve supplies of food equivalent to about a fortnight's supply. A statement made earlier in the week in another place was that the total supplies of raw materials in the hands of the Government, plus private hands, is equivalent to about three months' supply of food in time of war. I can assure the right hon. Gentleman that that is a situation which is causing a great deal of anxiety. We feel that the shipping of this country should be utilised now, and that it would render other possible operations easier in time of war. There are certain conditions attaching to the grant. These require the industry: to do its utmost to promote international measures tending to adjust the supply of tramp tonnage to demand so as to safeguard the level of freight rates; to organise itself so as to satisfy the Government that at the end of the subsidy period it would be in a better position than it now is to maintain itself without Government assistance. I think that shipowners might be justified in asking the Government to promote such conditions in our commercial transactions and international relations which would allow shipowners and those who go down to the sea in ships to transact their business on a more rational basis.

8.28 p.m.

Commander Marsden

I desire to draw the attention of the House to one aspect of shipping, and that is the coastal trade. It seems to have been forgotten entirely. The Bill is called a British Shipping (Assistance) Bill, but I find very little assistance for the coastal trade in it. It is true that they may be able to borrow money on loan, but the next method open to them is through a grant. The first point I want to make is this. In the "Scrap and build" policy the general formula was that ships could benefit which were 50 per cent, overseas trade and 50 per cent, home trade. We rather thought that the same test would be applied in the present case, but it is not so. The wording has been altered, and now any ship which has any considerable interest in the home trade cannot benefit by a grant at all. Without prolonging my argument, because I feel that the right hon. Gentleman knows all about it already, I hope that at a later stage he will agree to something more than just "considerable." There is bound to be some argument as to what is meant by "considerable." If we are talking about £1,000,000 I should say that £100,000 is a considerable sum. Whether these ships do a considerable amount of trade in home waters is bound to be a matter of great argument, and I hope the right hon. Gentleman will see before the Bill becomes law the advisability of putting in something more like the old definition and accept some such term as "mainly," which would be 50 per cent, or more.

The hon. and gallant Member for Barkston Ash (Colonel Ropner) said rather emphatically that the only possible assistance shipping could have was some form of monetary assistance. I cannot agree with that at all. It is the only assistance which is being offered to them, but there are other ways of giving assistance. There is a reservation of the trade. It is rather curious that the coastal traffic is always put in such a funny position. If it is a question of reservation the Board of Trade say that they cannot have reservation because they are one of the great waterways of industry, and that if there is a reservation of the home trade at once the repercussions will be felt in China, India and the Dutch East Indies. When the Coastal Trade ask for assistance in a different form, then they are included together with railways and roads in the home traffic around these coasts. Therefore, I say that the coastal trade invariably seems to be overlooked. When they ask for any financial help the argument is that we cannot subsidise one form of traffic against another; that is to say, that you cannot financially help the coastal shipping trade because their competitors, the roads and the railways, will want the same sort of assistance. Already there is a discrimination against shipping through the National Defence Contribution. I am sure that hon. Members are fully aware of that, but the tax does not apply to such companies as water, electricity, the maintenance of our canals and inland waterways, the conservancies of rivers, or the carriage of goods or passengers by railways.

That is my point. There is nothing about excluding shipping from the tax, if they come up to the standard of profits they will be called upon to pay, while their competitors, the roads and the railways, will not be called upon to pay. In fact, the railway situation in this particular industry strikes me as being quite unique. The railways are being pressed by the roads on the one hand, and keep calling out for a square deal. They, on their part, are pressing against the shipping industry, but we do not hear so much about a square deal in that respect. I have various bills of costing of through traffic of heavy goods, which must almost invariably include the railway in some form or another, usually the railway at the port and fixed charges for discharging and stowing cargo. In one of these bills there is a charge of 12s. 9d. altogether, of which the railways got 9s. 9d. and the sea freight, which was about 250 miles out of a total of 300, only got 3s., and in that 3s. we have to remember that there are a number of fixed charges which the shipowner has to bear. The total amount of the profit accruing to him is very small indeed.

I should like to draw attention for a moment to another form of competition, and that in the competition of foreign ships in our waters. According to the figures that were given in the House last year, in 1911 there were 3,400 ships round our coast, employing 24,000 men. In 1937, the latest year for which figures are available, there were 904 ships, employing only 10,000 men. Admittedly the ships are rather larger now, but I do not see that there is much benefit in that; I would sooner see our eggs in a greater number of baskets. But do not let hon. Members think that because of that fall in the number of British ships and the total tonnage, there is any lesser demand for coastal shipping. The demand is being met by the Dutch. In 1930, the Dutch had 232 ships engaged in this trade, and in 1936 they had 1,673. They are round our coasts carrying goods which we should like our ships to be carrying.

What is the answer to this? Here I agree with the hon. Member for Seaham (Mr. Shinwell)—and this is about the only thing on which I do agree with him—that the answer might be to have one Minister responsible for all forms of shipping. With regard to the coastal trade, in questions and answers in the House, various points have been dealt with by the Minister of Health. The right hon. Gentleman sent a circular to public authorities asking them to insert in their contracts a provision for the use of British ships, and the response to that has been pretty good. The Minister of Agriculture deals with some parts of the fishing industry. The Minister of Transport arranges for transport in certain directions. Other Departments also are concerned with the coastal trade. For instance, there is the Admiralty, which the other day used a Dutch ship to take round potatoes for the Fleet; and the Ministers concerned were very shocked when they heard about that. There is also the Board of Trade. All these Ministers and Departments have something to do with the coastal trade, and yet not one of them is really able to look after the trade properly and see that our ships are used, I do not say to the detriment of—for we do not wish them any harm—but in preference to Dutch ships.

There is only one way in which coastal shipping may get some assistance as a result of the Bill, and that is through the loans for shipbuilding. But is that really going to be of much assistance? If a man is going to build a small ship for the coastal trade, he can get it built in Holland at considerably less cost than here. As a matter of fact, that great organisation, the co-operative movement, which in my more unsophisticated days I thought was pre-eminently an association that wished to employ British labour at the highest rates, is having a ship built in Holland. When it comes to buying in the cheapest market, they are as keen as any capitalist enterprise. They are having a ship built in Holland—and spending there thousands of pounds which might be spent in England—for the reason that it is cheaper to have it built in Holland. According to the figures I have, a ship of 230 tons can be built in Holland for something like £5,000 less than it could be in England. If any man can squeeze up enough money to pay the first instalment, he would be better advised, on purely economic grounds, to go to Holland and have a ship built there. I am afraid that these loans, as far as the coastal trade is concerned, will not help very considerably.

The coastal trade is a sea-bearing trade. In war time, all parts of the Mercantile Marine will be necessary, no matter where they are or what they are, but the coastal trade ships and men will be as much necessary as any other ships and men. These men have an intimate knowledge of our coasts, which deep-sea men have not, and if the coasts an; unlit, as was the case in the last war, this will be of great importance. The coastal trade will be absolutely essential far the distribution of foodstuffs round our coasts. One of the safest methods of distribution will be for the big ships to come into the ports and for food to be taken round the coasts in small ships. But if the ship are not there, that cannot be done. I do not think we shall get 1,673 Dutch coasters coming round our coasts in war time, when there is the chance of their being bombed, although I dare say a good many of them will come; but the more British ships we have to do the work, the greater will be our security and the more satisfactorily shall we be able to ensure food supplies to our people, for all around our coasts are small ports, none of which is very far from a big town. I hope that between now and the Committee stage hon. Members will think over what I have said, and perhaps support any Amendments that are brought forward for the purpose of helping the coastal trade.

8.41 p.m.

Mr. Benjamin Smith

The hon. and gallant Member for Chertsey (Commander Marsden) has made a plea for assistance to the coastal trade. He said, very rightly from his point of view, that the railways and road transport seek and obtain a square deal, but that the coastal traffic gets no deal. On the other hand, the President of the Board of Trade says, with regard to the claim for a subsidy to the coastal services, that it would not be right for him to subsidise one form of internal transport against two other forms. The hon. and gallant Member must know that, if he will join with us in making an approach to the Government, there is a way of avoiding the necessity of asking for a subsidy and of meeting the competition from Dutch ships. He knows that I should have to oppose him on the question of working conditions, pay and hours, if it were a matter of making a comparison with the railways and road transport. Those employed on the railways and in road transport are paid a fixed wage for their work, they have a guaranteed 40-hour week, holidays with pay and amenities that are unknown to the men employed in the coastal services. It is common knowledge that on the National Maritime Board and in this House we have demanded an improvement of the conditions of officers employed on coastal ships, who are, in some cases, working from 80 to 100 hours a week.

Commander Marsden

Why should the hon. Member think that I would oppose him in wishing these conditions to be bettered? I might not agree entirely with him, but on the general purpose of improving conditions, I should be with him.

Mr. Smith

The point is that the hon. and gallant Gentleman is associated with coastwise shipping, and I am afraid that he has to bear the burden and heat of the day in this House when he makes his claims on behalf of the coastal trade. These conditions could be altered. Foreign competition could be effectively challenged if the hon. and gallant Gentleman and his party would join with us in insisting that the whole of the coastal trade should be licensed on the basis of a scale of manning, accommodation, hours and conditions, so that no foreign competing ship, unless it fulfilled those conditions, would be permitted to take part in the coastal trade of this country. The solution is directly in the hands of the coastal trade, but I suggest that it cannot claim to have support in any or every direction unless it first puts its own house in order. What is the real element of competition from foreign ships? The President of the Board of Trade gave it as being 1½ per cent, of the total trade. I know that is not true, because between 70 and 80 per cent, of the coastal trade is more or less in the hands of one concern, and if it is the remainder of the coastal trade that really has to meet the element of foreign competition, the figure immediately rises from 1½ per cent, to 13 per cent., and to that section of the trade it is a real deterrent. However, I suggest to the hon. and gallant Gentleman that the way out of this difficulty is not to ask for a form of financial assistance that will inevitably bring the coastal trade into competition with two other forms of internal transport, but to join with us in our endeavours to get a proper system of licensing for the protection of the home trade.

The hon. and gallant Member for Barkston Ash (Colonel Ropner), with all the modesty which is inherent in shipowners individually and collectively, stakes a claim for a subsidy in perpetuity. He does not want a subsidy which is applicable only to bad times. He objects to the limitation of the period to five years. What he says, in effect, is: "If you will guarantee us a subsidy, in perpetuity if you like, or for an unspecified number of years, we will get busy in cutting the rates of the world to ribbons, knowing full well that we can always come back to the British taxpayer and be reimbursed for our losses." That is the effect of the statement which he has made here to-day. He assured the right hon. Gentleman the President of the Board of Trade that there was not much difference between them. The difference is just that —between a subsidy for five years and a subsidy for an unlimited period.

My hon. Friend the Member for Seaham (Mr. Shinwell) put the case in its general aspect on this Bill. The President of the Board of Trade, with that eloquence which he always displays, both in this House any when he speaks over the air, tells us that whatever other industry might be allowed to go out of business, it is impossible to contemplate for a moment allowing the shipping industry to go out of business. I agree with him entirely, but when he talks about the high standard of the conditions enjoyed by seamen in this country, as compared with the conditions of seamen of other countries, I feel that I must intervene in order to let in a little light upon that subject, and with the permission of the Chair, I propose to do so. The hon. Member who spoke from the Liberal benches was greatly surprised at the conditions and accommodation in the newest ship afloat, namely the "Mauretania," but I assure him that those are not conditions which apply generally in the liner, coastal or tramp trades. I have, in the last year or two, put to the President of the Board of Trade and the Minister of Health, hundreds of questions on the conditions of seamen employed in British ships. I have urged the President of the Board of Trade and his officials to get away from that complacency which seems to have crept into the whole policy of the Board. I have asked them to look at the problem as it is, and I propose now to give the House a few figures, which are not of my own garnering but have been collected by port medical officers of health and handed on to the Ministry. They relate to the conditions which apply in both British and foreign ships in various ports in this country.

I take, first, the case of the port of Grimsby. I find from the report that the medical officer inspected 1,415 British ships. He found structural defects in 227; dirt, vermin and other conditions prejudicial to health in 185. The number of foreign ships inspected was 474. Dirt, vermin and other conditions inimical to health were found in only 38. The report also states that where lighting is deficient, and especially in forecastles where lighting by oil lamps has to be resorted to; dirty and unhealthy conditions are frequently found. The report also gives figures of what are called nuisances which were found in ships as follows: dirty forecastles, 36; dirty cabins, 31; beds destroyed as verminous, 158; bunks, 82; food lockers, 93; dirty water tanks, 19; choked water closets, 34; verminous vessels, 239. The number of vessels fumigated was 192 and the number of vessels sprayed 52. That is a picture for the port of Grimsby alone, and that is only one report out of 102 submitted to the Minister each year. Let us take the great port of Liverpool next. The number of British ships inspected was 4,130 and the number of nuisances found was 605. In the case of foreign ships 1 349 were inspected and only 73 nuisances were found. So I think the right hon. Gentleman must really '' haul off '' this attitude of telling the House and the world what fine conditions exist for British seamen as compared with the seamen of other countries. There is a footnote to this report which says: Bug infestation of crews' quarters is a difficult problem but one that should not be beyond solution. Bugs are introduced into the vessels by men and the number of crews' quarters found to be infected is much too high. The unfortunate attitude adopted towards bug infestation seems to be that the condition is inevitable and that nothing can be done. This view can only be described as deplorable.

Mr. Deputy-Speaker

The hon. Member said he proposed to go into these matters with the permission of the Chair. I am not sure whether this is relevant to the Bill which is under discussion.

Mr. Smith

Surely the relevance is this. A subsidy is to be paid for the assistance of British shipping. The President of the Board of Trade has claimed that British shipping generally has a higher standard in these respects than the shipping of other countries. I submit that I am entitled to give these facts in reply. I may mention to you, Sir, that on previous occasions when the question of subsidy has been under discussion, the Chair has not adopted an attitude against these factors being mentioned.

Mr. Deputy-Speaker

That s a very improper observation to make. I was only making an inquiry, but the hon. Gentleman has made an observation which reflects on the Char.

Mr. Smith

I had no such intention I assure you Mr. Deputy-Speaker. I would call your attention to the Amendment which refers to: the reorganisation of the industry and the all-round application of the National Maritime Board Agreements with respect to crews and wages. I think that puts me within the terms of order. I was saying that in the case of Liverpool the number of nuisances discovered in ships was 3,918 including the following: dirty floors, tables and decks, 650; dirty bunks and bedding, 1,219; dirty partitions and ceilings, 394; accumulations of garbage and refuse, 121; dirty water tanks, 72; dirty and offensive bilges, 245. That brings to light the sort of thing that is going on in British ships to-day. Then take the case of the port of Cardiff, another essential port which deals with a good deal of our trade. In that case 4,068 ships, with a total tonnage of 3,920,000 were visited by inspectors, and the number of ships reported as having dirt, vermin and other conditions prejudicial to health was 880, whereas in the 466 foreign ships inspected only 167 nuisances were found. Again they set out the number of nuisances, which included food lockers 118, berths, wash basins, water pipes, and leaking decks 112, verminous crews' quarters 265, dirty crews' quarters 344, and foul accumulations 55.

These are real pictures as reported by the port medical officers of health on their examination and inspection of British ships. Then we get to Newport, another important shipping centre. In that case they examined 1,830 British ships, and they found 600 nuisances with dirt, vermin, and other conditions prejudicial to health. They examined 616 foreign ships, and the total number of nuisances discovered from vermin was 186. That again is a comparison that speaks better for the cleanliness of the foreign shipping system than for that of the British shipping system. What does the medical officer have to say? Twenty-two per cent, of the 2,400 vessels inspected had sanitary defects, according to the present standards laid down by the Board of Trade. He goes on to say: All these percentages of in sanitary vessels are higher than last year. That is important. The types of nuisances and defects show that 78 per cent, of the nuisances were due to lack of care and sanitary supervision of the living quarters, while 21 per cent, were due to defective structural conditions. With regard to individual nuisances discovered, dirt and verminous crews' quarters, berths, washbasins, etc., accounted for 44.7 per cent., foul water closets 7.8 per cent., defective and dirty food lockers 27.8 per cent., and foul accumulations 3.8 per cent. One could go on reading the whole 102 reports. Dirt, vermin, and other conditions prejudicial to health accounted for 786 cases, or a total of 78.8 per cent.

Sir Douglas Thomson

That has nothing to do with the structure of the ships at all.

Mr. Smith

No, but it goes on to speak of structural defects caused through wear and tear. Now we get to the Port of Glasgow, and there is much the same story to tell. One could go on reading about port after port, where the medical officer of health condemns the whole system of British shipping. I put a question on 9th March last to the Minister of Health, who is responsible more or less for this side of the merchant seaman's life, and I asked him for particulars of the nuisances and defects in vessels reported by port medical officers of health in respect of the year 1937 (the last available year) showing the number of vessels inspected, the number of British and foreign vessels, respectively, and the number of defects of original construction, structural defects through wear and tear, and cases of dirt, vermin and other conditions prejudicial to health? Here is the reply: According to the information contained in the annual reports so far received of the medical officers of health of the port health and riparian districts of England and Wales for 1937, and otherwise supplied to me, the following are the particulars desired by the hon. Member:

British Vessels. Foreign Vessels.
Number of vessels inspected during the year 66,087 29,865
Defects of original construction 2,148 1,845
Structural defects through wear and tear 5,630 2,020
Dirt, vermin, and other conditions prejudicial to health 10,578 2,747
—[OFFICIAL REPORT, 9th March, 1939; cols. 2330–1, Vol. 344.]
That is the Ministerial reply to my question, and if that does not justify the statements that I have made, and shall continue to make, I do not know what will. When subsidies are asked for by shipowners, we claim that those owners shall utilise some portion of the subsidies to render the British seaman more immune from disease and able to live under more healthy conditions, and to give him the benefit of at least some semblance of decent conditions. I know that there are shipowners, in this House and outside who play the game, and who come to me and say, when they are building a new ship, that to put in the accommodation that we seek will cost them £400 to £500 additional, and there are plenty of shipowners who do it, but I am dealing with what I must call the scallywags—there is no other word for them—who will get away with State money and put into the mouth of the Minister that this is a highly efficient service, a healthy service, whose conditions are so good when compared with those on the ships of other countries. Generally speaking, that is not true, though specifically speaking, of course, it is true.

What is the use of being mealy-mouthed about the thing? Let us face the issue and have done with it. The fact is that nearly all the old tonnage of British ships is lousy and bug infested, and the crews' quarters are in many instances such that hon. Members opposite would not put a dog in or stable a horse in ashore, yet human beings are compelled to live their lives and have their being under such primitive and filthy conditions. I claim, on behalf of men with whom I myself served many years ago, when the conditions in many cases were much worse than they are now, that if this subsidy is to be granted to shipowners, a condition of its granting should be that the crews' quarters, the general living accommodation of the crews, should be put on the highest possible standard of efficiency commensurate with the health and comfort of the people who earn their living in those ships. It is not fair that a shipping industry valued, according to the President of the Board of Trade, at no higher a figure than £150,000,000 to £200,000,000, or less, I am given to understand, than the total capital employed in the London Midland and Scottish Railway, should get away with the help that they are demanding, and that the Government are affording them, unless they play the game by the people who are earning for the State, year by year, no less a figure than £80,000,000 in, as I believe it is called, invisible exports. It is no use the President of the Board of Trade "Going on the air" as he did on 17th June to ask men who have served under these conditions to go back to them on behalf of their country; men who have got ashore into decent cleanly houses and have been able to rehabilitate their pride; asking them, on behalf of what Ruskin called, I think, "ilth," which is illgotten wealth, to offer their services again under such conditions as I have put before the House. I leave that aspect of the case, but I think it was right that attention should be focused on it, in the hope that something will be done to improve the conditions.

Coming to the method of the subsidy, the hon. and gallant Gentleman the Member for Barkston Ash and, I suppose, others connected especially with the tramp side of the industry., are highly pleased that this subsidy is to be given unaccompanied by any really irksome conditions; but the President of the Board of Trade pointed out that although the subsidy is being given in peace time yet behind it there i9 the shadow of what he called an emergency period, that is, a likelihood of war. I believe that the total number of ships laid down is 150; that it is approximately 1,000,000 tons of shipping, built or building, which is in the offing. It is true that this country cannot live without an effectual Mercantile Marine. By virtue of its island position it must import the greater part of its raw materials and foodstuffs, and in time of war the essentials for the maintenance not only of the people at home but of the forces sent abroad.

I would ask the Government why they have not considered speed as a condition of subsidy. To show the amount of tonnage that was lost in the last War I will quote from a gentleman named Liddell-Hart, who said in the Press last Sunday when dealing with the German submarine attacks in 1917: Although some 3,000 destroyers and auxiliary patrol craft were employed to combat them, they took so high a toll in one month, April, 1917, that nearly 1,000,000 tons of shipping were sunk. One ship out of every four left our ports never to return, and this country was brought perilously near to starvation. In all, they sank 11,000,000 tons of shipping during the War, equal to the total tonnage of the British Mercantile Marine at the beginning of this year 1939. I put it to the Government that they would have been wiser to give so much more subsidy for each additional knot of speed. Germany, Japan, Italy and Russia have all adopted the system of payment of subsidies for speed, and that is really one of the reasons why we have been pushed out of the Orient—that they have faster and more comfortable vessels.

Vice-Admiral Taylor

With regard to the losses which the hon. Member has mentioned he will remember that those immense losses were a direct result of the unrestricted submarine warfare which was put into operation by Germany, contrary to all the ancient rules of the sea. I do not see that there is anything very humorous in that.

Mr. Pritt

It would happen again.

Vice-Admiral Taylor

If the hon. Lady the Member for Jarrow (Miss Wilkinson) had been one of the crew on board one of those ships she would not have found it quite so funny.

Mr. Deputy-Speaker

The hon. and gallant Member rose, I thought, to ask a question. He cannot make a speech.

Vice-Admiral Taylor

I apologise if I was overstepping the bounds, but I wanted to ask the hon. Member to remember what was the cause of the immense losses, and that it was not a question of speed.

Mr. Smith

What I am saying is that low speed will be the reason for far greater losses in the event of a future war. The hon. and gallant Admiral seems to think that when you go to war you draw up a set of rules as for the boxing ring and that somebody says "Foul" if you "do the dirty" on your opponent. That is not my experience of war, and I am sure it is not his. War is the only occasion when every attribute of manhood other than pluck, "guts" and bravery is thrown overboard. If the successful prosecution of war and the life of this nation do depend on the volume of supplies reaching us from overseas, surely the Government must regard the speed of our merchant ships an important factor. It is agreed that we nearly lost the last War through the depletion of our Mercantile Marine by German submarines. Although the convoy system saved us from collapse we were at no time after the middle of 1915 able to build ships at a rate to keep pace with our losses. In one quarter our losses were 687,000 tons and the new ships completed totalled only 320,000 tons. Our available cargo space to-day is, I believe, 25 per cent, less than it was in 1913–14.

There is another aspect of the matter which has not been touched upon in the discussion. I believe I am right in saying that whereas a ton of accoutrements and supplies went abroad with every soldier in the last War, owing to the mechanisation of the Army, 12 tons will be nearer the figure in the future, and that will mean more space occupied in our ships and a need of more ships. The advantage of speed to our merchant ships is this: The average speed of a submarine on the surface is about 16 knots and under the surface about 10 knots. If the 150 ships that are being laid down have a speed not above 10 or 10 knots it is fair to assume that they will be admirable targets for enemy submarines.

Further, with the type of the old tonnage and the type of the new, the assembly of convoys creates the most efficient target for anybody, especially when one remembers that the majority of tonnage that we lost during the War was not lost on the high seas but at the entrances of ports and at this end of the trade routes of this country. The advent of the faster motor torpedo boat makes it possible, I agree, that even faster ships may be attacked by them, but the fact remains that if we had faster ships we would get, first of all, the advantage that no existing submarine could compete on the surface and could not compete at speed under the water.

That is the first thing. The second is that we should be able to do away with the convoy system as such, and with the whole gamut of war vessels, surrounding, head on and stern on either side, and convoying, a number of ships. Those vessels could be released for more effective work. At the same time by having the higher speed, with which I presume would go a larger tonnage, we should be getting the advantage of a quicker turn round and less time in port, which would have the effect not only of releasing ships for war service but of better supplying the needs of the nation with much less risk. It is well known that the three countries which I have mentioned are already subsidising their ships on the basis of speed. I will give a few particulars of these subsidies.

Japan has tankers and reconstructed tankers going up to 19 knots an hour. In Italy there are subsidies for ships over 14 knots, the subsidies increasing with the speed. A refitting subsidy is given for older vessels—none of that is contemplated in the present proposals—provided that the speed is increased by not less than three knots. A large number of cargo vessels in Italy are now being built with a speed of 16 knots. In America, subsidies are based on size and speed. There is an operating subsidy on distance run, and the speed of existing tankers is being increased to 16 knots. Twenty-four tankers are laid down now to have a speed of 18½knots. There are cargo ships of 7,000 tons that have been lengthened and fitted with new engines and boilers which increase their speed to 16 or 18 knots an hour. Cargo ships under construction are to have a speed of 16½knots. The report of the Imperial Shipping Committee states that German and Italian liners get substantial subsidies the effect of which has been to produce vessels of higher speed than can be justified for commercial reasons.

When we come to British ships, what arguments are adduced against speed? One argument is that it is uneconomical to run the ships. How long has it been that we study economy when war is with us? If faster ships are subsidised and faster speed is achieved, it is fair to assume that in peace time the owner, as with naval vessels, can run his ship at less speed and, therefore, with a lower consumption of fuel. Furthermore, one aspect of the shipowners' attitude, especially the tramp people, is that they like slow ships because these act as storage while the brokers in the market are able to manipulate prices and sell cargoes on the high seas. That is true. I have known for many years ships to lie up with grain for weeks at a time and pay a full crew, waiting for a market. Anybody who knows about shipping will agree that that is true.

The question of cost arises immediately. If we are to look at speed from the point of view of subsidy what will be the additional cost? I am credibly informed that cargo ships of 9,000 tons at 12 knots would cost us now about £150,000. A similar ship at 16 knots would cost £225,000. I see an hon. Member opposite who knows something about this subject scratching his head, probably wondering whether that figure is approximately correct. Anyway, it was given to me from a source which I believe is well founded. It states that the total additional cost would be about £15,000,000, and for the faster vessels £22,500,000. Is that a prohibitive figure if it enables us to do away with convoys and to get a quicker turn round and a better service during a time of apprehension or of actual war? I venture to suggest that, if the Government would consider the matter from that aspect, in the influx of new ships built under the conditions of the accommodation regulations in 1937, they would see an economic and military advantage, because those ships would eliminate in the course of a few-years those conditions to which I have had to direct the attention of the House and which exist in the obsolete ships that we have to-day. I, therefore, ask hon. Members when thinking of tonnage to see whether the Government are prepared to consider the question of changing the incidence of subsidy from a matter of bad trade and applying it merely on the basis of speed.

Much has been said about the Orient and the place of British shipping in general. Most of us have looked at the report of the committee which was set up in 1930 and reported in December, 1939. A month ago I asked the President of the Board of Trade whether he had done anything to bring about co-ordination with all the Dominions as recommended in that report. I was told that the matter was under consideration and that he had nothing to report. Yesterday I put a question to the right hon. Gentleman and the reply was that he had nothing to add to the statement which he had given me so long ago. The fact remains that, in the Orient, our trade is being taken from us daily, one might almost say hourly. The hon. and gallant Member for Barkston Ash was talking about the Totalitarian States. Naturally, as one who believes in private enterprise and private profit, the hon. and gallant Gentleman objects to any suggestion of nationalisation. What he does not object to is that the industry should make no success of a job and should then come here and get public money to put it right. It is not only asking for assistance over the next five years but for ever and ever, provided that bad times continue in their trade.

I should like the Parliamentary Secretary to look at paragraph 317 of the Imperial Shipping Committee's report, because he will see that it states: Another important source of strength behind Japanese shiping competition is the high degree of organisation, in part vertical and in part horizontal, which characterises the economic life of Japan. It is this which gives her merchants the power of routing cargo, bought in foreign ports for import into Japan, by Japanese ships. It is this also, in its financial aspect, which places such strength behind Japan's shipping companies. That is the report of the committee which has gone into the whole question. It says on page 318: In contrast to such concentration of strength, we have on the British side an absence of concentration, evident not merely in the number of the Governments which rule the British Commonwealth along its Eastern front, but also in the divided control of traffic. Then it goes on, page 319: No narrow view, confined strictly to shipping interests, will bring to light the reasons for the relative decline in the British mercantile marine in the Orient. They say: Tonnage of shipping is only one element in the carrying trade. There must be adequate cargo offering for conveyance, and fluid capital organised to finance its movement. In the large national interest import and export merchants are partners of shippers in a common venture. In the United Kingdom the conditions have been such that no attempt has been made to give formal expression to this interdependence of three interests. Therein, I suggest, lie most of the difficulties that apply not only to the shipping in the Orient, but to shipping in general. Shipowners are great individualists. They want to run their ships in their own way in competition with other countries and with other competing interests in their own country. But what they are really up against is the perpendicular and lateral economic system in places like Japan, Italy and Germany. Frankly, if we are ever going to fight them to get back the trade of this country, it seems to me that the type of subsidy which the Government think of applying to remedy the existing ills will be futile. Far better that they should face the issue of meeting the ships of foreign competitors speed by speed, size by size, capacity by capacity, and then go out into the world seeking the trade, and I am positive that, with the knowledge which the shipowners possess, and the good sense of the British seamen, they could face foreign competition with confidence. But the British seaman has never been asked to co-operate with the shipowners or with the Government in support of his trade. Never is it suggested that he should join any of these committees, that he can bring any thought to bear for the assistance of his own industry. No, he is a mere hewer of wood and drawer of water. He is the man who just does the work under the conditions I have mentioned.

Then it has been said that the National Maritime Board is the one place to which all the grievances must gravitate. How is the National Maritime Board composed? Is it a body which could, as it were, give the right pitch with regard to the wages and conditions of seamen? The conditions laid down are that any panel that is set up must have a majority of both sides who are concerned in a dispute. In the event of disagreement the question has to go to the whole board, and then there is no right of appeal, but the case can go to arbitration where a lawyer must be employed, whose decision will not be final or binding. What sort of conditions will that bring about when it comes to the masters? Never have the masters been called together for a period of approximately 20 years, but I understand that to-day, when subsidies are under discussion, an offer has been made to the. men. They have said that they would like to discuss with the men the calling together of a masters' panel, and to their honour the men have stated that this scrappy and jerky way is not the way to deal with these questions. "Far rather," they say, "that you should meet properly and lay down a proper constitution, so that we can bring into being the only panel that would work satisfactorily." I hope ultimately that through those panels for the complete co-ordination of all employed within the industry, conditions may be established for the benefit of those concerned and of the industry as a whole.

9.30 p.m.

Sir D. Thomson

I shall be brief and shall not follow the argument of the hon. Member for Rotherhithe (Mr. Benjamin Smith), excepting the first part of his speech. He spoke about the crews' accommodation, and I think he will have very general sympathy in all parts of the House and in the industry in the efforts he has made to improve crews' accommodation. I interrupted him, for which I apologise, to give the figures, and I should like to repeat them once again. In the British ships that were examined 5,600 had structural defects, and 10,600, approximately, suffered from dirty berths. The structural defects are a matter difficult to deal with, but the other matter is one that could be dealt with, but it is not entirely in the control of the shipowners. But it is a matter which can be dealt with, and, as the hon. Member knows, steps are being taken to deal with this matter as quickly as possible.

I feel some diffidence in being the third back bencher to speak from this side of the House. The second was directly interested in the trade, and I feel diffident because on this occasion it is a question of the liner defence fund, and I am interested in the liner trade. I do not propose to deal with the general merits of the proposal to subsidise shipping. I, personally, take the view that shipping is an export trade like any other; it competes in the markets of the world and sells transport in the open market. If the Liberal party were present at this moment we might be told that if an export trade does not pay, then it should be allowed to die. At the present time, of course, the position is taken out of the Shipowners' hands, because it is not a question of whether an industry is paying or not, it is a question of defence. We are faced with foreign subsidised ships, and in great measure those subsidies are paid in order to obtain or retain the foreign exchange, but in this country we must retain our merchant marine.

The hon. Member for Seaham (Mr. Shinwell) was not quite fair when he said that the shipowners come along cap in hand asking for subsidies. That is not a fair statement at the present time. The shipowners have been asked to maintain the numbers of our ships, which economically cannot be made to pay. If that is the case, and if, for defence purposes, we are asked to have more ships than economically be made to pay, it is hardly fair to say that the shipping trade is coming cap in hand for subsidies, when they are really being asked to do this in the national interest.

I should like to make a few remarks on the question of the liner defence fund. The liner problem is one of enormous complexity. There are ships like the "Queen Mary," and there are the large ships such as I myself am interested in, and the small vessels that would easily go into this Chamber, that ply across the North Sea and in the shore trade. I should like to suggest to the Parliamentary Secretary that the words in the Bill and the White Paper, "foreign subsidised competition" are too narrow. The object, I agree, is that the fund should be available to assist, after inquiry, any line that has proved a case. I think wider terms of reference should be drafted. There is the specific instance of a line running from the East Coast of Scotland to Latvia, and in competition with lower wages and lower conditions they cannot make the line pay. They may have to go out of business. Under these terms of reference they have no right to go to the committee at all, and ask them to look into their case. It is also pertinent to say that under this Bill they have no right to sell their line and their goodwill to their competitors, because their ships must remain under the British flag.

There is the other case of the Anchor Line and similar lines where the element of foreign competition does not come in. Suppose, for example, that a. route from New Zealand round the Cape to this country were subsidised, would the Parliamentary Secretary say that a line running via Suez should get the subsidy because the other line was in competition with it? It is very often the case in all parts of the world that there are two routes which can be used, and it may or may not be the case that ships on one or other of them are subsidised. I think my right hon. Friend said that cases such as that of the Anchor Line, or the case I have just instanced from Australia, where there is a subsidy and a lowerstandard of living, could be referred to the Liner Advisory Committee. I can not see how they can be. The White Paper says that the Liner Advisory Committee will be set up to advise the Board of Trade on any applications for financial assistance under the scheme, but if a line was not qualified to apply because it had not either foreign or subsidised competition, or both, it could hardly go to the Liner Advisory Committee. I am not asking that these lines should be given a subsidy, but merely that the terms of reference should be made as wide as possible, so that they may have the opportunity of stating their case.

Another point is that, in my opinion, the committee proposed for the liner defence fund is far too small. I do not think it is good to have a large committee, because probably it would not get the business done, but here there is only a chairman, who is probably impartial and independent, with two other members from the industry. Even if all three are from the industry, they cannot possibly cover the whole of this very complex industry. You may have one man who represents big ships, and one who represents small ships, neither having any knowledge of medium-sized ships. It is a complex industry, and I think that, if the committee could be increased to four or five, it would be more valuable.

There is one type of competition which cannot be met under the Bill, but which the President of the Board of Trade may perhaps be able to meet in another direction. I am glad to see that the hon. Member for the Scotland Division of Liverpool (Mr. Logan) is here, because he has put questions to the President of the Board of Trade about the large quantities of canned salmon which are at present in store at Liverpool. I will give the House an instance of what is happening. About 250,000 cases of canned salmon, each containing 100 tins or thereabouts, are at present in the North Island of Japan. No British line is allowed to go there, for strategic or other reasons. This large quantity of about 9,000 tons of canned salmon is coming to this country from Japan, and it must come in Japanese bottoms. How that can be met I do not venture to suggest, but it is a type of competition which should be and must be met, because it is quite a large trade which is being deliberately put by the Japanese into their own nationals' ships.

It is not possible now to discuss the details of the loan scheme, but there are two points on which I should like to make some criticism. In the first place, why has it been decided that the borrower under the loan scheme shall defer for two years the payment of any instalments? That period represents a tenth of the life of the ship, and two of the best years of her life. I venture to suggest that it would be imprudent to allow repayments to be deferred for two years. In the second place, could not the amount to be advanced by way of loan be limited to, say, 75 or 80 per cent. of the value of the ship, instead of the whole 100 per cent.? I apologise to my right hon. Friend if I have been critical of the Bill, but I think the whole industry is most grateful to him for the interest he has taken in this extremely difficult and complex subject.

9.40 p.m.

Miss Wilkinson

The hon. Member for South Aberdeen (Sir D. Thomson) has said that shipowners are not asking for a subsidy, but only for compensation for having to maintain ships which are uneconomic, but anyone who has been reading the trade papers for months past cannot have read an issue in which some section of the trade was not asking for a subsidy. It seems to me that the question of defence represents the only way in which the Government could think up a decent excuse for giving public money to the shipowners who manage their industry on the whole so badly. Those of us who come from shipping constituencies have listened to hon. Members in this Debate whose attitude has been that British shipowners have a right to keep a dominant position in the world's shipping trade in spite of the fact that this Government has had its Ottawa policy, and that it has done nothing but fix up tariffs and quotas ever since the last Election. Nearly all of this has affected our shipping, which nevertheless still expects to keep its predominant position in the world's trade, despite the fact that this Government is responsible for the tariff on steel, the result of which is that British steel is the most expensive in the world, and that the cost of ship construction in this country is correspondingly increased. We have already told the right hon. Gentleman that.

The Government have also encouraged National Shipbuilding Securities, Limited, to close down yards and to become, as shipowners have prophesied would happen, a builders' ring, with the result that we had Lord Craigmyle complaining not long ago that the Canadian Pacific Line could not give orders for two ships that they were intending to order in this country because the tender was about £1,000,000 higher than the next lowest tender for the two ships. The present position has been reached, not as a result of an act of God, nor as the result of a crisis in the world, although there is a crisis, but also because of the policy of this Government, which, whatever it has done in other directions, has had a most disastrous effect on the shipping industry as a whole. As a result of the joint efforts of (this Government, the shipowners, and National Shipbuilding Securities, Limited, we have reached a period of chaos, and the Government come forward with this Bill in order that the British taxpayer may save them from a national danger.

The hon. and gallant Member for Barkston Ash (Colonel Ropner) agreed with the hon. Member for South Aberdeen that shipowners do not want a subsidy, do not like the idea of it, and do not want any national control at all," but, by the time he had finished his speech, he had not only demanded a subsidy, but had demanded that the British market should be restricted to British shipowners. By the time they have arranged all that, there will be nothing for them to do but simply to pocket the profits, and not only the profits that they make themselves, but the profits which are supplied to them by way of a subsidy out of the pocket of the British taxpayer. The hon. and gallant Member for Barkston Ash challenged me to say how this situation was to be met; but how does this subsidy proposal meet the situation? You cannot get away from the fact that the net effect of the subsidy is simply to guarantee a profit to the shipowners. It does nothing at all to deal with those radical difficulties of the shipping industry which have reduced constituencies like the one for which I speak to a state of industrial decay. It was not a Member on this side, but the "Shipping World" which said that the subsidy is a drug, when the patient should be given a complete overhaul.

The trouble about this subsidy, for those of us who think something more radical is needed, is that inevitably it will lead to reprisals. The Minister himself threatened reprisals. His idea was that, while shipowners had been subjected to the minimum freight rate, he recognised that there was under-cutting, and he said that if other nations wanted an under- cutting war the Government would be prepared to stand behind our shipowners in giving it to them. But has he contemplated what, in fact, a real rate war between the various nations subsidising their shipping would mean? Take a flat rate of 10s. a ton. Britain would have to subsidise roughly 17,000,000 tons of shipping. What about our nearest competitors? Germany would have to subside 4,000,000 tons, Japan 5,000,000 tons, Italy 3,000,000 tons and Norway 4,000,000 tons. Admitting the difference in national resources, imagine those nations engaging on an economic rate war with us when we have 17,000,000 tons to subsidise. I hope that before the President of the Board of Trade light-heartedly lands us into a rate war he will consider what the effect will be on the unfortunate taxpayer.

The next question is, when is this subsidy going to stop? Sir Westcott Abell, of Newcastle, who is regarded by us in the north-east as one of the great pundits in the shipping world, stated in a letter which some of us have received that it was absurd to talk, as shipowners were doing, of a £50,000,000 subsidy; that in order to put the industry on its feet something like £100,000,000 was wanted. The Minister has come along with this proposal for £26,000,000. All this money is to be poured out, and in the whole scheme there is not one jot of public control. There are to be 20 shipowners, and the Minister does not even propose to put a public representative on the committee. It really takes one's breath away. I am not one of the old-fashioned laissez-faire Liberals, but when the Minister, who has made so many speeches—to say nothing of hon. Members behind him—about national economy, gets going on a subsidy of this sort he just ladles the stuff out.

What is wrong with the whole of the shipping industry? We were told by the various Ministers who have justified National Shipbuilding Securities, Limited, that here was a scheme by which the industry would be put on its feet. The Minister's predecessor and the Minister himself have justified this wonderful idea in that way. Sir James Lithgow, who happens to be a constituent of mine, argued that as a result no man would be displaced, but at the begining of 1939 nearly 40,000 were out of jobs. Here were National Shipbuilding securities, Limited, with the Bank of England behind them, being allowed to work out their policy, and what is the result? The Minister quoted from the "Daily Telegraph" a statement that we were sending representatives to Canada to arrange for ships. Here we have closed down magnificent yards, and the machinery has been bought at knockdown prices by Belgian yards, which, when there was a shortage of shipping, undercut us hopelessly by means of the very machinery that they had bought at scrap prices from the Jarrow shipyards.

There is perhaps something to be said for the soul of the Conservative party. Its Members do leave the defence of this dirty work to the shipowners who are going to profit by it. These people say that this is the most marvellous industry there ever was, and that there must be no national control because it is so marvellous. Look at this marvellous industry. Look at Jarrow, and at the hundreds of thousands of pounds that have had to be put into that town, in Poor Law relief and one thing and another, while the shipyard is not even kept going on a maintenance basis. We have an industrial cemetery there, and its machinery is being used to undercut our own industry. When these people have got us into that kind of mess we give them £26,500,000 of public money in order to keep them going.

You cannot divorce the shipping industry from the steel industry. There, again, you have exactly the same sort of thing as in National Shipbuilding Securities. They have had these tremendous powers behind a high tariff. These powers were given under promise of reorganisation. Now we see the same thing for the thirdtime—this assistance given and the vague promise that somehow or other they will reorganise themselves. There is nothing in the Bill as to what will be done if a measure of reorganisation which satisfies this Government is not carried out—andthis Government is easily satisfied when it comes to proof of need for the shipowners; I wish the Minister of Labour were as easily satisfied when it comes to proof of need on the part of the unemployed. The steel users are complaining and the shipbuilders are complaining. They say that they have to charge this tremendous price because of the high price of steel compared with the price at which they could get it if it were not for the cartel.

If ever there was a case which was justified to the hilt for some real scientific control of industry in the national interest, it is the case of the shipping industry. Everybody in this House is agreed that the shipping industry is vital to our existence. Those of us who went through the last War do not need to be reminded of that fact. If it is as vital as all that, can it possibly be left in the care of the men who have mismanaged it so completely until now? I want to be fair in these matters, and I agree that, if you took the example perhaps of an individual shipping line, you might point to a perfect miracle of organisation, but that is not the kind of watertight organisation of which I am speaking. A concern that may be so well organised that it goes like clockwork may be making a frightful mess of things in the shipping world. We have had booms and slums, and Jarrow shipyard had to keep up the capacity for building 60,000 tons at a time when there were only orders for a thousand tons on the stocks. The system of individual cutthroat competition has failed. Hon. Members opposite must admit that it has failed, and the only thing we have had put in its place is National Shipbuilding Securities, Limited, which has introduced a very close and tightly drawn price ring in place of certain chaotic competition, but it shows very little regard indeed for the national interest.

The shipping industry profiteered during the last War to an extent that no other industry profiteered, and it had huge profits to distribute at the end of the War It made profits to such an extent that the Prime Minister at that time said that he was ashamed of what he saw. They are now coming along, and are to be given taxpayers' money. In the interest of common decency, before this subsidy is handed out to the shipping industry, there ought to be an organising committee on which the public interest is predominantly represented. Is it too much to ask that from a Conservative Government? Such an organisation should have been insisted upon. Every shilling of the money to be handed out ought to be under public control. We do not know what may happen should an emergency come upon us. Our very life may depend on this industry, and yet the only thing that the Government can do is to shovel out public money to those who mave mismanaged the industry in the past. Hon. Members, rather than congratulate the Government on bringing in this Bill, ought to insist on the Government taking it back again until they can do something which is at least founded upon decency.

10.0 p.m.

Mr. Maxwell Fyfe

I should like for a few minutes to deal with the main point of the speech of the hon. Lady the Member for Jarrow (Miss Wilkinson), who seems to think that we on this side of the House and those connected with the industry are not prepared to justify our belief in this Bill. I have informed the hon. Lady in another connection that what mainly concerns me is the concentration of unemployment which exists in Liverpool, which I have the honour to represent. Of the 70,000 odd unemployed who were there last December, 40 per cent. were connected with this industry. That is one aspect of the matter with which we are vitally concerned. These sections of the population who represent so much in the contribution to national effectiveness should not be compelled to wait on the theorising of the hon. Lady before some assistance is given in bringing them back to work.

We further take the point of view that at the present time, when British ships have declined by 2,000 since before the War, and the ships of other countries have increased by7,000, it is idle for anyone to say that there has not been a concerted, definite and deliberate action on the part of the Governments of other countries to load the dice against the industry within our land. The position to-day is that, whereas in 1916,before the submarine blockade came to its height, we had 3,500 ocean-going ships, and over 3,000 available to do the work of this country, we have now only 2,300. At that time 1,100 of these ships were required for the needs of the Army and the Navy. Is the hon. Lady really content to wait until her theories are put into practice before we take some steps to remedy the position that there might be only 1,200 ships available for doing the ordinary carrying work of the country if we went into war to-morrow? Surely this is the time for immediate action, and it is because my right hon. Friend suggests that immediate action that we are behind him to-day.

I am prepared to meet—and I will meet it, I hope, quite fully—the point which the hon. Gentleman the Member for Seaham (Mr. Shin well) made regarding the objections he has to the method which is suggested in this Bill. As I understood his argument, to which I listened with all the care that I could, it was that the subsidy amount should not be granted until there was some measure of control, and that some guarantee of that sort should be given at the present time. I ask the hon. Gentleman to remember that we are dealing with two major aspects of this problem to-day. First of all the new one of the intended assistance to liners, and our old friend, which we have discussed so often, the question of the tramp section of the industry. The hon. Gentleman said that in the liner proposals there was no question of public control and no question of considering the more general aspect of public needs. I ask him to look at the provisions of the White Paper in this regard. He will remember that the Liner-Services Defence Committee is only a reporting committee which has to look into four special points, including the causation of the bad position of the applicant, and the other methods by which that could be put right apart from subsidy, the method of paying the subsidy if one should be granted, and whether it would affect any other portion of the industry.

These are all matters on which the Liner-Services Defence Committee has to report, and it has to have in mind in making the report exactly the matters practically in the words the hon. Gentleman used in his speech. They have to decide what other interests—for example shippers and merchants are specially mentioned—are affected. In other words, it is the province of the Liner-Services Defence Committee to put before the Board of Trade the facts as they see them, and public control is maintained because the ultimate piece of administration must be done by the Board of Trade, that is by the Government, representing the public. By that method you have obtained a reporting committee of the highest efficiency and you have retained in public hands and public control the ultimate executive act which must take place.

Mr. Shinwell

Since the hon. and learned Gentleman has referred to something that I said, I would remind him that the point of real substance in my remarks as regards the liner defence fund was that the proposal was too restricted in its scope, and that the subsidy should not be solely contingent upon subsidised competition from other maritime countries but should take into account all relevant factors in relation to the British Mercantile Marine.

Mr. Fyfe

The provisions contain exactly, practically in so many words, what the hon. Gentleman suggested. On page 21 of the White Paper not only is the Liner Services Defence Committee to take into account these four matters which I have mentioned in paragraph 3, but in paragraph 4 (a)they must have regard to the interests of British shippers, merchants and manufacturers who are or may appear to them to be concerned in the matter, and in paragraph (b) the maintenance of conference arrangements. If the hon. Member will combine what is contained in paragraphs 3 and 4 he will find that practically every aspect of British shipping is embraced in the combined paragraphs.

Mr. Shinwell

The best person to settle this matter is the right hon. Gentleman himself. I understood him to say that this did not apply to all liners and all trades, and I have asked him to-day to apply it to all liners and all trades.

Mr. Fyfe

It applies to all liners which choose to make this application to make use of this machinery. The hon. Gentleman said these provisions were very vague. I have now read them and, in fairness to the argument, which I know he wished to present fairly, it is difficult to find more express or more inclusive words to embrace the various problems which meet the shipowner to-day. I want to deal with a point that the hon. Member made on the other aspect of the case. The obligation that is placed on the tramp section of the industry is to continue the operations which were brought into being by the committee which administered the subsidy between 1934 and 1937, and it emphasised again and again that this is an international matter and that the committee must take every step that is possible to investigate the international complications and again report to the Board of Trade. To object to that as a practical method of dealing with the problem of tramp shipping is again to go very far from the actualities of the industry.

I would ask the House whether there are not some conditions which we are all agreed should be attached to any subsidy. One is that there is proof of unfair foreign competition. I ask hon. Members, irrespective of party, with regard, on the one hand, to the trade between India and Japan, where Japan has now, I think, 73 per cent. of the whole trade—63 per cent, of Bombay and 73 per cent. of Calcutta trade, where she had practically none before the War—can anyone say that deliberate national action on the part of Japan can be excluded from that? Can anyone say that deliberate national action—it may be from the most excellent motives—on the part of the Russian Government is not responsible for the fact that so much of our imports from Russia are carried in Russian bottoms? Can anyone say that there was not unfair competition in the American lines in the Pacific? For three years I have been pleading for consideration of that matter.

If that is the position, if unfair competition is established, if it is established that a vital national interest is attacked by that competition and, finally, it guarantees are obtained for the efficient running of the industry to which it is suggested that subsidies should be given, who can object in the present state of the world to that subsidy being put forward at the present time? The hon. Gentleman said he would add a further condition —the exclusion of private gain. I ask him to consider at the moment, dealing with the question, which I know is so much in his mind, that to-day we are short of ships, that, as he knows as well as I do, instead of 196,000 in our Mercantile Marine we have only 161,000, and we have 20,000 fewer fishermen to come into service if war were to start to-morrow, is there not before the House ample evidence of the necessity of swift and immediate assistance being given? I am sure he will allow me to combine with that an appeal for those in the industry who are out of work in Liverpool, which I know so well, and in other ports which hon. Members know just as well, and, tacking on to it the requirements of our national safety and assistance for those who are out of work, I have no shame, but pride and gratification, in supporting this legislation.

10.15 p.m.

Mr. Johnston

The Government are asking the nation to-night to subsidise private ownership of shipping in this country to the extent of £25,000,000. We are told that without that subsidy our seaborne traffic may fail us. We are told that many firms are verging upon bankruptcy and that the banks who, in fact, own so many of these shipping concerns now refuse to continue finding money for their development. We have heard some extraordinary statements from my hon. Friend the Member for Rotherhithe (Mr. Benjamin Smith), who has so much experience in organising seamen, about the scandalous conditions under which many of our seamen are housed. Taking all in all, our shipping industry does appear to be in need of some kind of assistance.

There have been many contributory causes of the parlous plight of this essential industry. Doubtless, there is a drying up of international trade, there are surreptitious subsidies being paid by foreign Governments, but surely in all parts of the House it will be readily admitted that competitive capitalism as a system is itself very heavily responsible for the condition of our shipping industry to-day. We have had fat years as well as lean ones, and in the fat years there has been waste and dissipation of essential resources. That is the common experience in every form of competitive capital, but nowhere in our economic history has there been anything to compare with the crazy profit ramps of the later war years in our shipping business.

My hon. Friend the Member for Jarrow (Miss Wilkinson) has described a speech, which I have looked up, of a Conservative Prime Minister, the late Mr. Bonar Law, who, standing at that Box, on 24th May, 1917, declared that he was positively ashamed of the shipping investments that he held and the extraordinary profits that were being returned to him out of the nation's needs. He described how, after paying all excess profit, and other forms of taxation, he was being handed an annual return of 47 per cent., during the darkest hour of the nation's history. The representative of the Ministry of Shipping stood at that Box and said that in the first 31 months of war the shipowners of this country had squeezed out of the nation profits to the extent of £350 000 000. In addition, there were great inflations of values. Ships that were sunk by German torpedoes yielded their proprietors more profit at the bottom of the sea than they did at the top, in heavy insurances and heavy values. In some cases they are yielding them now, five times their original capital that was sunk in the business.

There is one firm of Furness Withy and Company who in August, 1919, handed out to their shareholders £2,000,000 in bonus shares from an undisclosed reserve, and in addition they had on open reserve of £1,800,000. Another firm, the Tatem Steam Navigation Company, with a capital of £350,000 distributed over £1,000,000 in war loan script as a special gift to their shareholders. Owners got compensation of £104,000,000 from the nation for ships sunk the original cost of which was only £51,000,000, and there was the famous case of the Runciman Moor Line which wound up its fortunate life by handing out to its shareholders £14 for every £1 of script they held. These facts are undeniable, and there are thousands like them. Then came the lean years, the reserves had gone, there was not sufficient in the pool to meet the difficult times. The owners of this industry then come to the nation and say that they are in difficulties, they cannot carry on, they have to meet an intensified competition on the high seas; they have squandered their reserves and the Government must now come to their assistance.

How is the right hon. Gentleman proposing to face this question? No one blames him for the position. He has a difficult problem. He has an industry which even yet will not voluntarily reorganise itself. He has an industry in which the firms are losing money by competing against other firms, sending their vessels upon voyages in which they lose money in a wasteful, ruinous and stupid competition. He has an industry in which, for all we know to the contrary, the banks are seeking to get rid of the watered stock which they hold. The right hon. Gentleman, probably rightly, divides this problem into four parts and treats them separately. He says, first of all, that he will give a subsidy to tramp shipping provided that they are not engaged in the coastal trade. He does not ask them whether they need it or not. He asks them to make some attempt at reorganisation, whatever that may mean. that they will agree to make some attempt at rationalisation, and then he will give them some State money.

There is no pretence that all these firms require it, but the right hon. Gentleman does not do for the tramp shipping owner what he does for the liner owner, that is, impose a needs test. As far as I can see, all that he asks from the tramp shipping owner is some kind of attempt at rationalisation. I come to the next part of the problem which the right hon. Gentleman has to tackle. He says that new ships must be built. I agree. He says that he will give loans to certain shipbuilders. Again I agree. It is highly desirable that, if we are to give State money, we should take a mortgage. In these cases, at any rate, we get something as a nation; we get a mortgage on the boats until the loan is paid back. To that extent, I have no criticism to offer. But the right hon. Gentleman goes further and says that he will also give grants. If I read these intricate proposals rightly, the man may get a grant and a loan.

Mr. Stanley

indicated assent.

Mr. Johnston

The right hon. Gentleman nods his head. The man may get a grant and a loan. Why? If it is a right principle that State money for building new boats should be returned to the nation in one case, why should another man not only get a loan that he has to return, but get, in addition, this grant without, as far as I can see, any vital obligation resting upon the recipient? In the case of the liner subsidy, a means test is imposed. Need has to be proved. I recognise that this afternoon the right hon. Gentleman attempted to allay some of the apprehensions that undoubtedly exist in various parts of the country as to the effect which the granting of this liner subsidy to some firms may have upon other firms. As my hon. Friend the Member for Seaham (Mr. Shinwell) said, the words of the Bill, and even the right hon. Gentleman's statement, are still too vague and indefinite. I must say that I was alarmed when the right hon. Gentleman said that he was unable to declare firmly whether concerns like the Anchor Donaldson Line would come in for the same kind of assistance as their competitors in the Port of Liverpool are entitled to receive. I have here the re- port of the Chamber of Shipping, dated 10th January, which was submitted to the right hon. Gentleman and upon which, presumably, he has based the provisions of this Bill. That report quotes a recommendation which they put forward away back in 1934, and says: When any section of the British Mercantile Marine can show that a temporary subsidy is necessary and will ensure its preservation for the time. His Majesty's Government should favourably consider the granting of such a subsidy, taking care not to prejudice other competing sections of British shipping thereby. Further, they say: The commission, in addition to hearing the applicants, would take into consideration any reactions that the suggested aid might have on shipowners other than the applicants and would give any British shipowner apprehending such reactions, an opportunity to be heard. What are the apprehensions? Here is the great port of Glasgow from which shipping services have been in operation on the North Atlantic for three-quarters of a century. Millions of money have been spent on that port by harbour authorities —houses have been built, streets laid out, public services of all kinds provided. Here are two great lines which have been operating for three-quarters of a century across the Atlantic. Their opponents in Liverpool, the Cunard Line, get subsidies already. In the port of Glasgow the Anchor Donaldson Line have no subsidy. Now comes this Bill under which, as far as I can see, the Anchor Donaldson people will not only be unable to get any assistance but may find that their competitors are still further advantaged. At the end of the day we may find the Anchor Donaldson Line going out altogether and a very serious position, indeed, arising in the northern part of this island.

We have seen this in other instances. We have seen calico printing and other industries rationalised out of Scotland. That has not paid the Treasury or the nation, because it has been necessary for the State to carry burdens of public assistance, Poor Law and unemployment benefit which outweighed anything gained by this alleged capitalist rationalisation. I beg the Parliamentary Secretary to tell us clearly and precisely whether under Clause 4, liner companies whose opponents get subsidies, may also get subsidies if they can prove that they are being hit, directly or indirectly, by foreign subsidised competition, or as the result of any unavoidable circumstances. If it is necessary for the nation to preserve these shipping lines, it is no use having vague words and indeterminate statements and plausible explanations without any guarantees. Before this Bill goes on to the Statute Book we must have the most explicit assurances that in the attempts which the right hon. Gentleman is making to save our shipping industries, he is not going to knock out of the ring altogether old-established firms which are honestly doing their best, within the limits of the capitalist system. I am informed that a subsidised American shipping line has been sending a ship into the Clyde once a fortnight since the beginning of this year. It may be carrying whisky or taking out whisky and a few passengers—I do not know. But does the existence of that subsidised vessel, in the right hon. Gentleman's opinion, bring the Anchor Donaldson Line within the provisions of this Bill? I should be most obliged, and I know other hon. Members would too, for a clear and explicit statement from the President of the Board that in his view these Scottish firms are not being knocked out of the ring by the provisions of this Bill.

There is one part of this Measure that I should have rejoiced in, and that is the Minister's shipping reserve. He is buying £2,000,000 worth of ships. It may be that he is only going to get rubbish foisted on to him, and that it is only old, derelict vessels that the owners will part with, but still, in principle, this representative of an anti-Socialist Government declares that he is no longer going to allow private interests to sell vessels to Germany, Italy, Japan, or anyone else, either to be used on the high seas or to be broken up. He is going to step in to prevent that, and he is going to nationalise £2,000,000 worth of shipping. But immediately he comes to this decision what happens? The owners crowd round him and say, "You must not use these ships. You will be allowed to nationalise them, certainly, so long as you are paying a fair price for our old rubbish, but you must not use them. You can nationalise them, but you must stick them away at the Gairloch, you must take them out of the road. You will be allowed to train seamen on them, and we will let you store some potatoes or wheat in them, but you must not use these vessels on the high seas for trading. Nationalise them, but under such conditions that they will deteriorate, and at any rate they must not be used in competition with us. Only on these conditions will we permit you to have a national reserve of ships."

Well, that is not our idea of nationalisation. It is the biggest jump, doubtless, which the President of the Board of Trade can make, but I trust that, inasmuch as we are at war now in everything except bloodshed, the nation's last financial reserves are being called up, the militiamen are being called up, the right hon. Gentleman will not deal so tenderly with the vested interests on the high seas as his predecessor did in 1914-18. If this nation is to fight for its life and for its food supply, there is only one way in which we can be guaranteed safety on the high seas, and that is when our shipping is run or controlled as a public service, when private profit takes a secondary place, and when a public utility concern is the minimum that we on this side can accept. While we recognise the difficulties that the President of the Board has to face now, we shall feel compelled to-night to go into the Division Lobby as a protest against some of the Clauses of this Bill.

10.39 p.m.

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

While there has been a universal measure of agreement with the need of some assistance for the shipping and shipbuilding industries, there has been at the same time a certain volume of criticism of the methods to be employed, and hon. Members have raised a vast variety of points, to which I think it would be quite impossible for me to reply in full. I will reply to a great many of them, but many of them are Committee points, which I think we might better consider at that stage, and since they have now been made in speeches, it will afford us the opportunity of giving them further study before that point in the Bill is reached. The right hon. Member for West Stirling (Mr. Johnston) has raised various points in connection with the Anchor and Donaldson Atlantic Lines. May I repeat what my right hon. Friend has already made clear once to-day, that he very much appreciates the Scottish case, the importance of these lines to Glasgow and to the economy of Scotland and the strong Scottish sentiment in regard to them? He has already dealt very fully with that matter. The right hon. Gentleman also put one or two specific points with which I will do my best to deal. The Liner Services Defence Committee would be entitled to look at the effect which any subsidy which might be given to one British line might have upon another British line. In the White Paper it states under the heading "Investigation by Committee" that the Liner-services Defence Committee would state their opinion on certain questions, and one of them is whether the grant of assistance would affect other British shipping, whether liner services or not. As to whether the effect of a foreign subsidy may be indirect, I think that is fully covered in the provisions of the Bill.

Mr. Johnston


Mr. Cross

In Clause 4, Sub-section (3), where it says: if in the opinion of the Board it is, or was, directly or indirectly assisted by the Government.

Mr. Shinwell

That applies only in cases where foreign vessels are subsidised or in some way assisted by their Government. It does not apply in any other case, and there may be cases where a line of trade is not affected by competition from a maritime country where ships are subsidised, but may be affected by competition of another character. It is precisely that point which concerns us.

Mr. Cross

The hon. Member is perfectly correct in what he said. If I mistook the point made by the right hon. Gentleman, clearly I have given the wrong answer, but what I said was correct so far as it went.

Mr. Johnston

Where is the word "indirectly" found?

Mr. Cross

In line 38. The right hon. Gentleman also raised the question of whether the Anchor and Donaldson Atlantic Lines were covered by this Subsection (3). That, of course, must be a question for the interpretation of the Liner Committee. It is a question of fact whether the Anchor and Donaldson Atlantic Lines are or are not being affected by foreign subsidised competition. I am not saying that it covers any- thing more than that. Indeed, the whole purpose of the Clause is to give the Board of Trade power to help liner services which are suffering from foreign subsidised ships, and we are asking the House to give us the power to give financial assistance where there is some prospect of restoring a service which has either been knocked out or is seriously damaged. That means affording to a particular line a measure of temporary assistance which will enable the line to come to terms with its competitors, or, alternatively, if need be, to engage in a freight war and to win it. That must be a temporary assistance and not a permanent assistance, and as I understand the right hon. Gentleman what he has in mind is something which, if not permanent assistance, would necessarily have to go on for an indefinite time. Perhaps I misunderstood the right hon. Gentleman, and I see that he shakes his head, but in any case permanent assistance is outside the purpose of this Clause.

Mr. Shinwell

This is a point of real substance and I gather that hon. Members opposite are equally concerned with us in this matter. Take the case of a liner company operating from a particular port in Scotland or in England or Wales. It is not affected by heavily subsidised foreign competition, but it is affected by the intensive competition from another port or another liner company. Would that British liner company so affected be entitled to apply to the liner assistance committee for assistance? That is the point.

Mr. Cross

There clearly must be an element of foreign competition, however indirect it may be, coming into the case before it is possible for a particular line to be able to obtain assistance under this provision.

Mr. Johnston

If that is the view of the President of the Board of Trade, would he be prepared later on himself to put down an Amendment to Clause 4 or to accept an Amendment if we put it down, making it clear that any competition, direct or indirect, with foreign shipping, in respect of which official subsidies for assistance were provided, came under the terms of the Bill?

Mr. Stanley

As long as it maintains an element of foreign subsidised competition it is perfectly plain, and I think it is in the Bill, that it is indirect as well as direct. It does apply to competition coming from some port or ports elsewhere.

Mr. White

Would the right hon. Gentleman look at the Financial Resolution to see whether it is possible to make it plain there?

Mr. Cross

I hope that the answer which has been given satisfies hon. Gentlemen opposite. I have been asked a number of other questions and perhaps I had better get on with them as rapidly as possible. I was asked why the definition of a tramp voyage did not include loading on the berth. I recognise that that is a method by which tramp shipowners employ their ships. It is not covered by the definition of tramp voyage. With all good will, we have been unable to draft a Clause to cover this class without entitling liner owners to claim subsidies where they were not making a tramp voyage. It has been necessary to drop this, and the tramp owners have, I understand, withdrawn their request for this provision. My hon. Friend the Member for South Aberdeen (Sir D. Thomson), on the question of liner defence, asked whether, for instance, when a foreign subsidised line was operating to Australia by way of Panama in competition with a British line operating by Suez, the British line would be covered by the definition in the Clause in regard to competing with foreign subsidised shipping. I am advised that it would be covered, although one line was going one way round the world and the other line was going the other way, and that the British line would, in fact, be in competition with that line and would be in a position to make a claim.

My hon. Friend asked a further question about the repayment of instalments on the loan after the first two years period of the loan. I call his attention to the fact that the arrangement is optional with the recipient of the loan, the main purpose of it being that in the period during which the ship is under construction and the owner is receiving no revenue, he may be assisted by not having to repay the loan. My hon. and gallant Friend the Member for Chertsey (Commander Marsden) said a good deal on the subject of coasting vessels, regretted that they had not received a greater measure of assistance than they do in the Bill and declared that such assistance as was available by way of loan would not be of great value. The reason why there is no operating subsidy in respect of coastal service is that the principal competition of the coastal service is with internal forms of transport such as roads, railways and canals. These coasting vessels are also excluded from the liner defence Clauses for the same reason, and in fact there is no foreign competition with liner services in British coastal trade. The shipbuilding grants are for the purpose of encouraging the building of overseas tramps and cargo liners, and I think there is no reason to fear that there will be any insufficiency of coastal vessels.

The total net tonnage of all types of ships in the coastal trade is considerably greater than it was some 10 years ago. The volume of coastal trade tends to increase. The total net tonnage of ships arriving and departing was 44,000,000 net tons in 1927. The figure had risen to 58,000,000 net tons in 1937, an increase of over 30 per cent. In 1938 the figure was somewhat lower, but greater than in 1913, which was the busiest of the pre-War years. Nevertheless some coasting vessels could derive some benefit under the subsidy scheme. A number of them engage in tramp voyages to near Continental countries and become eligible for subsidies.

At the same time I think no real case for financial assistance could be made which would be comparable to the case which has been made by other sections of the industry. Foreign vessels represent an insignificant proportion of vessels arriving and departing—under 2 per cent. —although I know that in some areas and some trades this foreign competition can be very severe. The industry, as is fully realised, is a very important one, and the Government is willing to do everything it can to assist it in other ways. Representatives of the industry have discussed their affairs with my right hon. Friend, who indicated his view that further progress lies in the direction of co-operation in the industry and coordination with other internal transport. There might, for example, be established minimum freight schemes, which could be applicable both to British and foreign vessels. Other action has been taken in order to further the employment of British coastal vessels. Government De- partments require that British vessels should be used in coastwise carriage in orders in which they are concerned, and local authorities have been circularised by the Minister of Health. There has also been an approach to some other public bodies.

The hon. Member for Barkston Ash (Colonel Ropner) raised the question of the tramp subsidy only becoming payable in—as he put it—July, 1940. He is, of course, fully aware that the subsidy actually becomes operative, from the point of view of being earned, from 1st January, 1940, but even so, my hon. Friend feels that he would prefer that the subsidy should become operative at a much earlier date if that were possible. The reason why this date was fixed by my right hon. Friend is that he felt that it would be in the best interests of the tramp shipping section of the industry that a definite date should be fixed. At this stage we cannot say when this Bill will become law, and when it will become operative. It may well be that it would be a few weeks before the 1st January, 1940, but on the other hand that might not be the case. It might not be possible to get the Bill through in time for that, and in that case tramp owners would be faced with uncertainty as to whether, during this autumn or the winter prior to 1st January, certain voyages at the end of the year would be covered by subsidy or not. Therefore, believing it to be in the best interests of the tramp section of the industry, this date, the 1st January, 1940, was fixed. I might add that I should have thought that a question of a few weeks over a period of five years could not be a matter of very great importance, since what is lost at this end must be gained at the other.

A number of hon. Members have spoken of the desirability of greater public control of the industry than is obtained under this Bill. The conditions in the Mercantile Marine are, however, extraordinarily diversified. The management is a highly specialised business in regard to particular trades and particular areas, and, consequently, any form of, at all events, centralised control would hardly lead to more efficient management of the industry. But I think we should also bear in mind that this is not a question of subsidising in the national interest an inefficient industry. If the industry had been suffering from inefficiency, I imagine that this would have been a different Bill. I think, too, that some allowance should be made for the economic circumstances which have brought about a situation in which the industry has to come to the Government for assistance.

In the course of the last 10 years there has been only one good shipping year, namely, 1937, and in general the serious circumstances of the industry have had a weakening effect on its financial structure. Those adverse circumstances have not, of course, affected all sections of the industry at the same time or to the same extent, but it is nevertheless true that all kinds of shipping have had their periods of serious difficulty in the last 10 years, and that the same underlying factors are responsible for all their troubles. My right hon. Friend has already mentioned them. The quantum of world trade, although it. has been increasing in recent years, still persists below the 1929 level, while the tonnage of world shipping has not decreased, but, on the contrary, has increased. The tonnage under foreign flags has risen extraordinarily, due largely to the persistent building of Germany, Italy and Japan. The difficulties of British shipping cannot be claimed to be due to its own inefficiency. They are largely attributable to world economic conditions, coupled with the determination of a number of other countries to build fleets regardless of those world economic conditions. As regards reorganisation, we are faced with a situation in which the industry must be helped at once, and the question of the desirability of reorganisation, which would require prolonged study, is not one that could be dealt with prior to the giving of financial assistance to the industry. The hon. Member for Seaham (Mr. Shin-well) instanced the Cotton Industry (Reorganisation) Bill, but the cotton industry themselves sought an enabling Bill after giving prolonged study to their own problems.

Mr. Shinwell

They did not have a subsidy.

Mr. Cross

I think the hon. Gentleman himself referred to the cotton industry as being one which has recently been made the subject of reorganisation. He instanced one or two others, and rather suggested that the same sort of thing should be done for the shipping industry. I am only saying that in that instance at all events it arose from the industry itself, whereas, if I understood the hon. Gentleman aright, he was arguing that it would be desirable that the Government should present a Reorganisation Bill for the shipping industry.

Mr. Shinwell

That is what you did with coal.

Mr. Cross

It may be that the hon. Gentleman has a parallel there, but I feel that I had better not follow him on coal. Under the provisions of the White Paper, the Government lay an obligation on the industry to provide suggestions for its own reorganisation. It is the industry itself which should be best able to make suggestions as to the lines on which reorganisation, if it is desirable, could best proceed for the benefit of an industry which everyone has described as being highly individualistic. The hon. Member for Seaham (Mr. Shinwell) wanted a Government nominee on each of the Advisory Committees, but all the members of those committees are nominated by the Board of Trade.

Mr. Shinwell

Is that quite fair? The hon. Member knows the position on the tramp shipping committee.

Mr. Cross

There is a Government Member there, the rest being tramp shipowners nominated by the Board of Trade. The other committees are made up of experts and officials. The hon. Member referred to the appointment of Government nominees. I do not want to take an unfair advantage by taking him up on a single word that he used, but these are all Government nominees.

Mr. Shinwell

The Government may nominate persons connected with the industry. These are not Government nominees in the ordinary sense. On the Anglo-Iranian Oil Company the Government have two representatives. That is the kind of thing I mean.

Mr. Cross

My answer is not so far from the mark as the hon. Member would have us believe. He was dealing with the question of public control. These committees are only advisory. It seems to me reasonable to argue that this is an important factor in what the hon. Member described as public control. A point of fundamental importance from the Government's point of view is that the tramp owners and the liner owners, as regards their sections, and the shipowners and shipbuilders, as regards the future ordering of tonnage, have undertaken to give consideration to the question of how the position can be improved upon. It would have been impracticable for the Government to insist, as a condition, on any particular measures of re-organisation, but the hon. Member will be aware from the White Paper that we expect to receive reports from time to time.

Colonel Ropner

If the Government have made it a condition of receiving subsidy that the shipowners shall cooperate and re-organise, the Government must have some idea of what they mean by those two words. The industry is entitled to have some indication of the way in which the Government are thinking. Also, my hon. Friend has not answered the point as to why the datum line is fixed as it is.

Mr. Cross

The Government have asked the industry to explore possibilities, and the industry have promised to do so. Presumably they have not given the undertaking to do something which they are not capable of doing. My hon. and gallant Friend understands better than I do what can be done. If his own imagination boggles at the prospect, it is not to say that others will be in the same position as that in which he finds himself.

Sir Percy Harris

The hon. and gallant Member for Barkston Ash (Colonel Ropner) is a practical man in the industry and naturally challenges what is meant by the hon. Gentleman. Are they to be merely vague terms, or is there to be something in the Bill to enforce the terms, and if the terms are not carried out will the shipowners get the subsidy?

Mr. Cross

Some of the undertakings are conditions of receiving assistance. As to the particular point my hon. and gallant Friend was raising, namely, the question as to the reorganisation of the industry with an eye to the future, and being able to carry on without having financial assistance at some future date, I think there is in one sense a very fair sanction. As many hon. Members have pointed out, this is a highly individualist industry, and although certain hon. Members question whether they like receiving a subsidy or not, they must be extremely conscious that the more they receive subsidies the less they will be able to be individualist. I feel that in that connection it is very much better to succeed in evolving plans which will free them of any possibility of Government control in the future. I do not think that the hon. Member for South-West Bethnal Green (Sir P. Harris) could want a better sanction for shipowners than that which already exists.

The hon. Member for Rotherhithe (Mr. Benjamin Smith) raised a large number of questions, and in particular said that there should be Labour representation on the tramp shipping subsidy committee. The main work of that committee is concerned with the examination of claims for subsidy, and those claims have to be examined in the light of tramp shipping practice. I cannot see that a labour representative would be necessary for this purpose. But there is the requirement that the committee must consider conditions affecting employment. The scheme, therefore, provides for reference to the National Maritime Board in cases of doubt in all instances where there may be some question as to the applicability of National Maritime Board agreements or their interpretation. I might add to what I said of the Government representative on that committee that he will be there as an impartial person and in order to see that such matters are in fact referred to the National Maritime Board.

Mr. Shinwell

Does that apply to Lascar labour.

Mr. Cross

I think that if the hon. Member connected that question with some point a little narrower than Lascar labour, I might find him a reply.

Mr. Shinwell

I will do so right away. I am surprised at the hon. Gentleman, but I put that point in the course of my speech, and now I understand that the hon. Member would rather that I repeat it. The point is whether it is to be one of the conditions of the subsidy to tramp shipping that, if Lascar labour is involved the rates paid should be comparable to the rates paid to British seamen and that there should be no undercutting by one shipowner as against another.

Mr. Cross

The hon. Member must know that it is already set out in the White Paper that there are provisions for the payment of the usual rates to Lascars which are certainly not National Maritime Board rates. Where you have to employ two or three times the number of Lascars to white seamen, that would be a completely impossible position.

Mr. Shinwell

Is it fair that one ship should employ Lascar labour at much lower rates than British seamen receive under the National Maritime Board regulations. Lascars are employed at about £3 per month against £g a month paid to British seamen, and is it fair that the one shipowner should derive the same benefit from the tramp subsidy as the other shipowner.

Mr. Cross

I was trying to say, but the hon. Member intervened, that it is debatable whether the employment of Lascar crews is any cheaper than the employment of white crews. Many shipowners find that they cost at least as much. That is on account of the very much larger number of Lascars it is necessary to employ and to further incidental costs in regard to repatriation and so on. Further, Lascars are in the main employed in trades where they are far more easily available than white crews, for instance in the Eastern trades. There is a perfectly good provision in the White Paper to ensure that Lascar crews shall not be employed for the purpose of undercutting white crews, and it is a condition of assistance that Lascar crews shall not be used on routes where it has not been the custom to use them in the past.

A number of Members have argued that the Government should exercise a further measure of control in order to ensure that public money should not go out in the form of profits. The datum line is certainly not selected on a level to allow for profits. The object of the assistance is to maintain the shipping industry and to secure that ships and seamen should be adequate for national requirements, particularly in emergency. I think it is evident that the British shipping industry cannot on its own resources maintain its position, and the taxpayers' money must necessarily be added to the resources of the industry. That assistance is given for certain specific purposes. Shipping grants are given for the purpose of overcoming high costs and the difficulty of obtaining new capital. The tramp shipping subsidy is given to help to provide adequate depreciation for a period of five years. The need of this assistance has necessarily been determined in relation to the average experience of the industry. To adopt an individual basis, as the hon. Member suggested, would unquestionably put a premium upon inefficiency. It would mean that the biggest amount of assistance would be given to the most inefficient company and the smallest amount to the most efficient. It is obvious that some concerns which will participate in the assistance will achieve better results than others, and that may very well be the consequence of greater efficiency and better judged enterprise. There is almost universal recognition of the need of some assistance to British shipping. There is general agreement as to the desirability of increasing the tonnage of cargo ships in order that we may be better prepared for emergency, and agreement that we need to keep our shipyards and our men working. The problems which have been presented by the shipping and shipbuilding industries are varied. I think the Bill presents the most practicable solution and is in itself an important contribution to the defence of the country.

11.15 p.m.

Miss Ward

I wish to raise one point which is of importance to the shipbuilding and ship repairing industry, on whose behalf no one has said a word in the Debate. I therefore feel that I am justified in detaining the House for a few minutes. I should like to obtain from my right hon. Friend if I can, an assurance that a provision will be inserted in the Bill to make it incumbent on shipowners to have their repairs, where practicable, done by British ship repairers. If I understand the position aright, my right hon. Friend has obtained an assurance from the association of shipowners that they will carry out this policy, and I am certain the majority of shipowners will stand by this decision. I understand that they have already circularised the members of their Federation intimating that this is the policy they have agreed to adopt on behalf of the whole of the members of the Association.

I raise this point because I have in my possession evidence dated as late as 14th July, that a British shipping company has asked for quotations from Amsterdam and Rotterdam for carrying out a considerable overhaul of a ship, and up to date they have not even asked a firm in this country to quote. I am certain the House would be in general agreement that if we are going to give subsidies to the shipping industry, the interests of the shipbuilders and ship repairers also should be safeguarded, and in so doing the interests of those employed in those industries should be safeguarded as well. I will not develop the point now, but I should like an assurance that in the Committee stage my right hon. Friend will include a provision in the Bill to carry this policy into effect. I understand that in France and in the United States, when ships are repaired outside those countries, except where circumstances demand that they should be so repaired, the owners have to pay a. duty on the money spent abroad. If such provision can be made by the French Government and the United States Government, I see no reason why it cannot be made by the British Government. It would be far better if the assurance which has been given to my right hon. Friend could be embodied in the Bill.

11.19 p.m.

Vice-Admiral Taylor

From the speeches that have been made, there is complete unity on the question that it is necessary that Government assistance should be given to the shipbuilding and shipping industry. The Bill itself is a recognition of the fact that the shipping industry is of vital national importance to our imperial security, and also a recognition that the state of the industry is such to-day that it cannot continue unless it receives Government support. [Interruption.] I am glad to have the support of the Socialist party. They will agree with what I have said so far, though they will probably disagree with the manner in which the support is given, and they also agree with the reasons why the industry has got into the deplorable condition it has, that in the main it is due to the unfair competition to which it has been subjected by both direct and indirect subsidies by foreign countries.

I rose to make this point. The disease from which British shipping is suffering is no new one. It has been well known in the industry itself for many years, and also well known to the Government. I agree that the Minister has said that they would leave it to the shipowners to find a remedy, but as the shipowners could not agree the Government took no action. The result has been that the disease is now so deep-rooted that it will be extremely difficult to cure it. The tragedy to my mind is that action of this nature was not taken years ago when it would have been much easier to deal with the problem. It is well known that the shipping industry, particularly in the Far East between Japan and India and in the Baltic and in the Pacific, has been taken from our ships. We all realise that for imperial security we must have British shipping, and we cannot have these ships in time of war unless we have them in time of peace.

My point is this.[Interruption,] The President of the Board of Trade is responsible for British shipping, and also for a great many other industries as well. He would have to be a superman to devote sufficient time to look after the shipping industry effectively and at the same time to effectively deal with the other industries for which he is respon-

sible. I am not criticising my right hon. Friend. There is not a single Minister who could efficiently control and look after the shipping industry in addition to all the other multifarious duties he has to perform as President of the Board of Trade. I am convinced that there should be a Minister for Shipping, who would be able to devote his whole time to shipping problems. If we had had a Minister of Shipping years ago the industry would not be in the position it is today. I want to ask the Government not only to consider seriously the setting up of a Minister for Shipping, but to appoint such a Minister, whose sole duty it would be to look after the interests of British shipping, which is absolutely essential for the security of this country both in peace and in war.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 224; Noes, 141.

Macquisten, F. A, Raikes, H. V. A. M. Stanley, Rt. Hon. Oliver (W'm'l'd)
Magnay, T. Ramsay, Captain A. H. M. Stewart, J. Henderson (File, E.)
Maitland, Sir Adam Ramsbotham, Rt. Hon. H. Storey, S.
Makins, Brigadier-General Sir Ernest Rankin, Sir R. Strauss, H. G. (Norwich)
Margesson, Capt. Rt. Hon. H. D. H. Rathbone, J. R. (Bodmin) Stuart, Hon. J.(Moray and Nairn
Markham, S. F. Reed, A. C. (Exeter) Sueter, Rear-Admiral Sir M. F.
Marsden, Commander A. Reed, Sir H. S. (Aylesbury) Sutcliffe, H.
Medlioott, F. Remer, J. R. Tasker, Sir R. I.
Meller, Sir R. J. (Mitcham) Riokards, G. W. (Skipton) Taylor, Vice-Adm. E. A. (Padd., S.)
Mellor, Sir J. S. P. (Tamworth) Rosbotham, Sir T. Thomson, Sir J. D. W.
Mills, Major J. D. (New Forest) Rots, Major Sir R. D. (Londonderry) Thorneycroft, G. E. P.
Mitchell, H. (Brentford and Chiswick) Ross Taylor, W. (Woodbridge) Thornton-Kemsley, C. N.
Moreing, A. C. Rothschild, J. A. de Tufnell, Lieut.-Commander R. L.
Morgan, R. H. (Worcester, Stourbridge) Rowlands, G. Wakefield, W. W.
Morris-Jones, Sir Henry Royds, Admiral Sir P. M. R. Walker-Smith, Sir J.
Morrison, G. A. (Scottish Univ's.) Ruggles-Brise, Colonel Sir E. A. Ward, Lieut.-Col. Sir A. L. (Hull)
Muirhead, Lt.-Cot. A. J. Russell, Sir Alexander Ward, Irene M. B. (Wallsend)
Neven-Spence, Major B. H. H. Salmon, Sir I. Wayland, Sir W. A
Nicolson, Hon. H. G. Samuel, M. R. A. Webbe, Sir W. Harold
O'Neill, Rt. Hon. Sir Hugh Schuster, Sir G. E. White, H. Graham
Owen, Major G. Selley, H. R. Wickham, Lt.-Col. E. T. R.
Patrick, C. M. Shakespeare, G. H. Williams, Sir H. G. (Croydon, S.)
Perkins, W. R. D. Shepperson, Sir E. W. Windsor-Clive, Lieut.-Colonel G.
Petherick, M. Shute, Colonel Sir J. J. Wragg. H.
Pickthorn, K. W. M. Simon, Rt. Hon. Sir J. A. Wright, Wing-Commander J. A. C.
Pilkington, R. Smith, Bracewell (Dulwich) York, C.
Ponsonby, Col. C. E. Snadden, W, McN. Young, A. S. L. (Partick)
Porritt, R. W. Somervell, Rt. Hon. Sir Donald
Pownall, Lt.-Col. Sir Assheton Somerville, Sir A. A. (Windsor) TELLERS FOR THE AYES.—
Procter, Major H. A. Southby, Commander Sir A R. J. Mr. Munro and Mr. Furness.
Radford. E. A. Spens. W. P.
Adams, D. (Consett) Grenfell, D. R. Parker, J.
Adams, D. M. (Poplar, S.) Griffiths, G. A. (Hemsworth) Parkinson, J. A.
Adamson, Jennie L. (Dartford) Griffiths, J. (Llanelly) Pearson, A.
Adamson, W. M. Groves, T. E. Pethick-Lawrence, Rt. Hon, F. W.
Alexander, Rt. Hon. A. V. (H'lsbr.) Hall, G. H. (Aberdara) Pools, C. C.
Ammon, C. G. Hall, J. H. (Whitechapel) Price, M. P.
Anderson, F. (Whitehaven) Hardie, Agnes Pritt, D. N.
Banfield, J. W. Harris, Sir P. A. Quibell, D. J. K.
Barnes, A. J. Hayday, A. Richards, R. (Wrexham)
Barr, J. Henderson, A. (Kingswinford) Ritey, B.
Batey, J. Henderson, J. (Ardwick) Ritson, J.
Beaumont, H. (Batley) Henderson, T. (Tradeston) Roberts, W. (Cumberland, N.)
Bann, Rt. Hon. W. W. Hills, A. (Pontefract) Robinson, W. A. (St. Helens)
Bevan, A. Hollins, A. Seely, Sir H. M.
Broad, F. A. Hopkin, D. Sexton, T. M.
Brown, C. (Mansfield) Isaacs, G. A. Shinwell, E
Buchanan, G. Jagger, J. Silverman, S, S.
Burke, W. A. Jenkins, A. (Pontypool) Simpson, F. B.
Cape, T. Jenkins, Sir W. (Neath) Sloan, A.
Charleton, H. C. John, W. Smith, Ben (Rotherhithe)
Chater, D. Johnston, Rt. Hon. T. Smith, E. (Stoke)
Cluse, W. S. Jones, A. C. (Shipley) Smith, Rt. Hon. H. B. Lees- (K'ly)
Cocks, F. S. Kennedy, Rt. Hon. T. Smith, T. (Normanton)
Collindridge, F. Kirkwood, D. Sorensen, B. W.
Cove, W G. Lansbury, Rt. Hon. G. Stephen, C.
Daggar, G. Lathan, G. Stewart, W. J. (H'ght'n-le-Sp'ng)
Dalton, H. Lawson, J. J. Stokes, R. R.
Davidson, J. J. (Maryhill) Leach, W. Summerskill, Dr. Edith
Davies, R. J. (Westhoughton) Lee, F. Taylor, R. J. (Morpeth)
Davit, S. O. (Merthyr) Leonard, W. Thurtle, E.
Day, H. Logan, D. G. Tinker, J. J.
Dobbie, W. Lunn, W. Tomlinson, G.
Dunn, E. (Rother Valley) Macdonald, G. (Ince) Viant, S. P.
Ede, J C McEntee, V. La T. Walkden, A. G.
Edwards, A. (Middlesbrough E.) McGhee, H. G. Watkins, F. C.
Edwards, Sir C. (Bedwellty) MacLaren, A. Watson, W. McL.
Edwards, N. (Caerphilly) Maclean, N. Welsh, J. C.
Evans, D. O. (Cardigan) Marshall, F. Westwood, J.
Fletcher, Lt.-Comdr. R. T. H. Maxton, J. Wilkinson, Ellen
Frankel, D. Messer, F. Williams, E. J. (Ogmore)
Gallacher, W. Milner, Major J. Williams, T. (Don Valley)
Gardner, B. W. Montague, F. Wilmot, John
Garro Jones, G. M. Morrison, Rt. Hon. H. (Hackney, S.) Windsor, W. (Hull O.)
George, Megan Lloyd (Anglesey) Morrison, R. C. (Tottenham, N.) Woods, G. S. (Finsbury)
Gibson, R. (Greenock) Naylor, T. E. Young, Sir R. (Newton)
Graham, D. M. (Hamilton) Noel-Baker, P. J.
Green, W. H. (Deptford) Oliver, G. H. TELLERS FOR THE NOES.—
Greenwood, Rt. Hon. A. Paling, W. Mr. Whiteley and Mr. Mathers.

Bill read a Second time, and committed to a Standing Committee.