LIVERPOOL COTTON MARKET

HC Deb 28 March 1946 vol 421 cc591-667

3.39 p.m.

Mr. Oliver Lyttelton (Aldershot)

I beg to move, That this House regrets the decision of His Majesty's Government not to reopen the Liverpool Cotton Market and considers that the system of balk purchase under State control will hamper the manufacturer, increase the cost of cotton to the consumer and deprive this country of a valuable source of foreign exchange. I feel a great responsibility this afternoon in moving the Motion which stands in my name and that of my right hon. and hon. Friends, and I crave the indulgence of the House lest, in discussing it, I have to descend sometimes to technicalities. This afternoon we find the Lord President of the Council again in the position of wearing a borrowed coat, or, rather, he has had a coat thrust upon him. This time it is not a fur coat; it is the lugubrious garment, adorned with a dagger, of the President of the Board of Trade. He has got the dagger which is about to be plunged deep into the heart of a great British trade and a great British industry.

I am so bold as to think that the Lord President will wear the cloak and dagger rather uneasily, and that he may be prepared to tell the House and the Press a little later on that they are really not his own, but are borrowed just for the day. I have often heard him, when we were colleagues, use such phrases as, "The country has got to earn its living," or, "That is very bad business." I am sure that the Lord President said that sort of thing yesterday, and that he will say it again tomorrow; but today he must refrain from holding such language. Today he must make use of the very half-hearted brief with which the Board of Trade have provided him. I say half-hearted, not without knowledge of the subject, because I have presided over that Department 'twice in the last six years, and I have too lively a regard for the intelligence and wisdom of the officials to imagine they can be other than half-hearted about the destruction of a piece of British trade. Phrases, which I know are deeply and sincerely meant by the Lord President, such as the country must earn a living —a happy phrase—ill accord with the announcement of his colleague, which might well be paraphrased into, "here. is one of the ways in which we can prevent the country from earning its living."

The Liverpool Cotton Exchange has existed for more than roc years, and has about 500 members and 200 associate members. The Association and the Exchange command a larger body of experts than any other exchange in the world. Liverpool is the only market in the world which deals with cotton of all 16 cotton producing countries, and it is a truly international market for that reason. It is looked to not only by the cotton growing countries, but by all countries which spin cotton which do not necessarily have their own cotton. All producing and spinning countries use these facilities in Liverpool, and the market earns commissions and arbitration fees on cotton sold by one foreign country, and bought by another, even when that cotton never touches our shores. Liverpool Cotton Exchange provides a necessary piece of machinery by which the industry in this country is carried on. [Interruption.] I am sorry that hon. Members keep interrupting, but no doubt these facts come as a surprise. Liverpool Exchange also brings to this country large stocks of cotton, carried mainly at other people's risk, and a good proportion of it in British ships, and these stocks not only give manufacturers a wide choice of cotton to spin in peacetime—a very necessary thing in such a variable commodity—but also provide a useful reserve when war breaks out. The cotton industry not only brings commissions, but money by way of warehouse rents, which foreigners have to pay, and shipping, banking and insurance business in large volume. These are secondary, but hardly less important results which flow from the existence of this market.

The birth, growth and existence of the Liverpool Cotton Exchange are due to the desire, and, indeed, to the necessity, of growers, spinners and manufacturers avoiding speculation. [Interruption.] I realise how surprising the unvarnished truth may be to hon. Members who do not know it or who, perhaps, do not often hear it. I will illustrate the point. Let us imagine a cotton planter in the romantic Southern State of Tennessee. He has cotton which will be ready for picking and shipment in six months' time. He sees, in the local Memphis newspaper, that cotton for delivery ha Liverpool six months hence is at such a price that it will return to him the cost of growing it, fertilisers and so forth, and of wages for the plantation, and provide a modest profit for himself. He reflects that he is responsible for the plantation, for the men upon it and for keeping the plantation going, and that his job is to use his brain to grow cotton and not guess the market. So he decides to sell his cotton for delivery in Liverpool six months hence, or, in other words, he uses the market in order to avoid taking a risk. On the other hand, let us cross the Atlantic in our minds and imagine a cotton spinner in Lancashire. He has to make a price for 20 million lbs. of cotton yarn to a manufacturer about to offer cotton cloth to a foreign market. The spinner must protect himself against the danger of the price of cotton going up, firstly, while the offer is current, and before the business is struck or concluded and, secondly, during the period it takes to spin 20 million lbs. of cotton yarn. If cotton were to go up during either of these periods, he would lose money, he would lose big money very quickly, and employment in his mill would be jeopardised. He must avoid this risk, so what does he do? He buys cotton in Liverpool, and thereby hedges the risk. If cotton did go up during the open period when his offers were out, it is not a possibility, but a certainty, that his tender will be accepted, because it will have been put out at a price below that of current world prices.

I give this as an illustration to explain the reasons for the existence of the Liverpool Market, which is to provide an insurance market whereby growers, spinners and manufacturers can avoid the risk of speculation. It exists, on the one hand, to enable a grower to fix ahead the price at which he can sell his crop, and, on the other hand, for the manufacturer or spinner to fix a price on cotton which will cover the orders on his book, or which he hopes to obtain. The role of the cotton market is to eliminate speculation and risk from the industry, with its hundreds of thousands of workers dependent upon it. There may be some who are not familiar with the actual mechanism, and I will give a short illustration of how it works. A manufacturer of cotton piece goods makes an offer in the face of foreign competition to South America. His price is based on the current price of cotton. Let us suppose that cotton is 15 pence a lb. The business will obviously take time to conclude, and during that time he will be at a risk. Therefore, he buys cotton futures six months ahead. Let us suppose that he buys also at a price of 15 pence per lb. If the market goes up to 16 pence while the offer is still outstanding he will make a profit of one penny per lb. on the purchase price of the cotton on the market and a loss of one penny on the price which he has tendered for the cotton piece goods. In other words, he is all square. Similarly, if the market goes down to 14 pence per lb. during the currency of this offer, he will make a profit of one penny per lb. on his manufacture and a corresponding loss of one penny per lb. on the market operations. Again he comes out all square. This type of transaction is known as "hedging."

I hope that we shall not have the argument from the Treasury Bench that one of the objects which they have in mind in closing the exchange is to curb speculation, because it is demonstrable—and I have tried to demonstrate it—that the reason for its existence is to avoid speculation in the industry. I see an hon. Member wagging his head, but I will deal with the matter of speculation outside the industry later.

Mr. McGhee (Penistone)

Are those the only operations which take place in the futures market?

The Lord President of the Council (Mr. Herbert Morrison)

I do not dissent from what the right hon. Gentleman has said. There is the relief of the spinner from the element of speculation, but the right hon. Gentleman will not have completed the picture, unless he indicates to the House that it is inevitable that the clement of speculation has to be transferred somewhere else; and will he explain to the House where it is transferred?

Mr. Lyttelton

I do not propose to shirk the question of speculation by those not concerned in the industry, but the right hon. Gentleman is in error in thinking that "hedges" are necessarily trans- ferred to other people. That is not so, I think that the validity of what I have said will come out in the course of my argument. There are two questions: Firstly, why are there risks inherent in the business and why should prices fluctuate sometime violently; and, secondly, if the Government are willing to buy cotton in bulk and make a fixed price to the spinners and other manufacturers, what have the spinners and other manufacturers got to worry about? The answer to the first question—why are risks inherent in the business and why do prices fluctuate violently—is that cotton is an agricultural crop, peculiarly susceptible to weather and pests—the sun and rain, on the one hand, and, generally, the boll weevil on the other. If the conditions are ideal and the boll weevil is repulsed, the crop will be abundant, and sometimes the supply will exceed the demand and prices will fall. That is not because of wicked capitalists, in shiny top hats, who speculate in cotton, or because of a lack of national planning. It is because agricultural crops are subject to risks of sun and rain and the boll weevil, over which even His Majesty's Government's present advisers have no control, even by Defence Regulations. If the boll weevil should sustain a successful offensive against cotton—nothing personal is intended—the reverse will happen, the crop will be a failure, the supply will be less than the demand and prices may rise. In short, the boll weevil and the weather are the great influences which cause fluctuations in the price of cotton.

I would like to support this statement with figures. In 1916, 33 million acres produced 11. million bales. In 1921, 28,678,000 acres produced 7,945,000 bales. In 1937, 33,625,000 acres produced just under 19 million bales.

The Chancellor of the Exchequer (Mr. Dalton)

Are those the figures for the United States or for the world?

Mr. Lyttelton

The acreage is the United States and the grower is the United States. In those years, the acreage required to produce a bale was 2.88 in 1916; 3.6 in 1921; and 1.77 in 1937.

Mr. Robens (Wansbeck)

Is it not a fact that in the United States they are given a subsidy by the Government to plough back every third furrow?

Mr. Lyttelton

This is the yield of cotton per acre. It took only 1.77 acres in 1937 to grow a bale. These things are outside the control of His Majesty's Government. We are here dealing with the destruction of a piece of domestic machinery intended to avoid these risks falling on the domestic manufacturer. If the Government are willing to make a fixed price to the spinner, why should not the spinner sit back and have no worries? The reason is, that the risk that he runs is whether the Government have bought their cotton ill or well, and for other reasons which I will deal with later on. It is in the nature of things that a single bulk purchaser must, when dealing with a fluctuating agricultural crop like cotton, fare ill.

Before I discuss the question, let me remind the House that the President of the Board of Trade made the surprising claim that the experience of bulk purchase by the Government during the war gave evidence of how well the Government would buy cotton in peace time. That will be within the recollection of the House. I am going to expose the fallacy of that assertion, by asking the Government if they will tell the House what loss the Government made by buying and selling cotton since the end of Lend-Lease. I will give way now, if necessary, for the answer. I see that they do not know the answer. If they do not know the answer, would it not be as well for them to find it out before deciding to close the Cotton Exchange, which has bought cotton for the industry, at no cost of public money, and bought it very satisfactorily, for the last 100 years. I am sorry that question seems to have gone. so badly. I am now going to ask a much easier one, which I have no doubt the Government will spring to answer. Have the Board of Trade since their last purchase of raw cotton used the New York Cotton Exchange either to "hedge" or fix the price of cotton? There is no answer. Perhaps right hon. Gentlemen on the Front Bench will consult with one another and decide what the answer is to be. We are entitled to know the answer some time during this Debate. I hope that, on this occasion, they will abandon the practice, which seems to people of my political complexion to be becoming very frequent, of avoiding awkward questions.

No single purchaser of cotton, be it the Government or another, can eliminate the inherent fluctuations in the price of cotton which are due to causes over which they have no control. In bulk purchase, without the possibility of "hedging," if cotton is badly bought by the Government, and the prices are passed on to the spinner, another blow, and it will be a fatal one this time, will have been struck at the cotton spinning industry. If the Government wish to avoid this they will have to vary their prices to the spinners in accordance with world prices. If, for example, the world price of cotton falls below the Government fixed price, can the spinner rely on the Government following the price down day by day? If he cannot rely on that, how is he to compete, for he will be buying his cotton dearer than his competitor? If he can rely on the Government following the price down day by day what becomes of the specious argument that Government purchases make for stability? Could we have an answer to those questions? Incidentally, if the Government does follow the market down, they will make losses which the taxpayer —the much cow of the 10th century State —will have to meet. If the world market by chance—and I can assure the House it will rarely happen—goes up above the Government's fixed price are the spinners to be assured that the Government will not raise the price against them? would remind the House that the Government raised the price of cotton in 1944 by 4.½d. a lb. over night. If these are the kind of operations that go on what becomes of the argument that Government purchases make for stable prices? It is just nonsense.

I promised the House that I would give some other reason why a single purchaser cannot buy a commodity like cotton at the average world prices over a year or any longer period. A single buyer has to rely upon a statistical forecast on the crop, the' nature of the weather, the size of the crop and the general course of business in cotton manufactured goods. The whole of the transactions are based upon premises which are entirely uncertain. It is only by a forecast that a single purchaser is likely to purchase a fluctuating commodity like cotton. Where this differs from the ordinary course of business is that cotton is hedged, when there is a market such as the Cotton Exchange, by hundreds of thousands of transactions entered into by spinners, manufacturers and growers which are in no sense based upon a statistical or theoretical forecast of the. size of the crop and the probable price, but are based upon the orders taken day by day and hour by hour and placed on the order book. The man who puts an order on his book which involves the use of 500 bales of cotton at today's prices, has no great statistical forecast to make. He requires no cablegrams about the boll weevil. All he does is to buy 500 bales of cotton for three or six months' delivery, and thereby he covers himself against fluctuations in the price. In this way the countless series of individual transactions, which take place, secure that the industry, as a whole, is covered from hour to hour against the fluctuations in the price of the raw material, which goes into their manufacture. The hedge is a moving one, whereas the single purchaser, who has not access to the individual order books or to the offers which are open, has to use other data upon which to base his decision to buy, and is, in fact, a plain outright speculator.

There is another inherent reason why a single purchaser cannot buy cotton well, and that is because everyone in the cotton growing industry will see the Government buyer coming a mile off, just as sometimes you can tell the policeman by his boots. It will not be surprising during that period when it is known that the British Government have to buy cotton—and the fact cannot be concealed—if the prospects of the crop and the depredations of the boll weevil look calamitous. Or do His Majesty's Government really suppose that they can alter human nature, and create conditions under which sellers of cotton will be anxious to show that the price of their wares is going down? It will not be until the Government are known to have covered all their requirements, that it will be discovered that the forecast of the crop was much too pessimistic. If the crop should be a bumper one, and His Majesty's Government pay too high a price, the individual traders in other parts of the world who are fortunate enough to be clear of the President of the Board of Trade and his rigid regime will have bought their cotton at very much cheaper prices.

Whether my prophecy concerning crop prospects is too cynical or not, it is necessary to realise that conditions of plenty or scarcity are not ones which can be computed far in advance of their occurrence. The weather is a continual and changeable factor, and many times when the prospects were fair the weather has turned foul and the results have been poor. At other times the reverse will be the case. Even those who carry on the industry cannot judge of these factors accurately, and spinners all over the world conducting an industrial business, "hedge" not upon their opinions of what the market is going to he, but, as I have said, upon the state of their order books and upon actual orders received or offers made. I do not believe for one moment in the idea that London can teach Lancashire how to buy cotton. The only way they might be able to do so would be if the Government engaged a crystal gazer or an astrologer—if there is one unemployed after certain casualties that have occurred on the Continent. I see here another evidence of that most undesirable centralisation which is part of the Government's policy, and which is seeking, more and more, to try to run all business from London and from Whitehall.

The third main reason why the British Government will not buy cotton well is because they must always be the owner of large stocks of cotton with which to supply spinners. The Chancellor of the Exchequer laughs. I am awfully afraid that later on, he will be tearful. As I said, the third reason why the Government will not buy successfully is because they must always be the owners of large stocks with which to supply spinners. They will be, so to speak, always by the nature of things, one-way speculators. They will always be, in the vulgarism of the market, a "bull" of cotton. In fact, there is only one method by which His Majesty's Government can prevent having a large stock of cotton at risk, and that is by "hedging" their purchases by forward sales on the New York Cotton Exchange since they will have destroyed the domestic means of doing so. The British Government will be the only merchant in cotton in the world that must be perpetually a "bull" of cotton, without any protection against price fluctuations.

Mr. Fairhurst (Oldham)

Will the right hon. Gentleman tell us exactly what was the policy pursued by the Japanese when they were buying cotton?

Mr. Lyttelton

No doubt, we shall hear that in support of the Government's case. My right. hon. Friend the Member for Southport (Mr. R. S. Hudson) reminds me that the Japanese always hedged in New York and Liverpool. If any Member wants to know about this, or if the Government want to know about the results of bulk purchase, I suggest that they should examine the financial results of such purchase of cotton by the United States Government, who are much bigger people in this business than the Japanese ever were—

Mr. Fairhurst

I do not like interrupting, but would not the right hon. Gentleman agree that 70 per cent. of the cotton purchased in Japan was purchased by three firms only?

Mr. Lyttelton

The American Government will be found to have lost thousands of millions of dollars on the bulk purchase of cotton. If the Government want any practical reasons to drive home the theoretical argument I have been obliged to make, then they are there.

I now turn to another aspect of the matter, namely, the speculation which undoubtedly takes place in these markets by those who have nothing to do with the industries which the markets serve. First, let me assure the House that the influence of outside speculation on the cotton market is very small, and does not represent more than a small percentage of the total business done.

Mr. Rhodes (Ashton-under-Lyne)

rose

Mr. Speaker

lithe right hon. Gentleman does not give way, then the hon. Member is not entitled to interrupt.

Mr. Lyttelton

I do not want to be discourteous, but we have only a short time for this Debate, and I must continue. The world crop of cotton is worth£ 500 million sterling, and if that is turned over twice, theoretically that is a turnover of potentially £1,000 million, so that outside speculation is a small part of the business. It may come as a surprise to hon. Members opposite if I say that speculation, in The main, has a stabilising influence on the markets. All speculation is intended to buy commodities when they are cheap, and to sell them when they are dear, or sell them when they are dear and buy them when they are cheap. That is the object. But speculation, like many other things:n human affairs, is not always intelligently conducted, and I admit straight away that it is necessary to have rules to keep speculation, by those outside the industries, within bounds. That is not hard to do. For example, today commissions charged to those outside the industry are twice those which are charged to those inside, and it is also necessary, I think, to impose upon those who are outside the recognised traders' list the obligation to cover every transaction by cash. By these means it is easy to keep outside speculation within strict limits, and if it is within limits it is beneficial, and not harmful. Because an insurance market like Lloyds, which is necessary for shipping business, is used to speculate on election majorities, or even the removal or imposition or taxation by the Chancellor, that is no reason for abolishing Lloyds. But it is a reason for tightening up the rules and securing that Lloyds are not used for purposes for which they were not intended.

I have given an illustration of the necessity for the existence of this Exchange, and I now turn to the second part of the subject. The cotton market has meant that, year in and year out 1,000,000 bales of cotton have been carried in the warehouses in Liverpool. That has not been by any means all. The larger part has not been at the risk of British traders, but of shippers. This stock gives the spinner opportunity to select the type of cotton which will run best in his mill, and it has brought very valuable business in its train. It has, for instance, been the source of important gains in foreign exchange. All this business, owing to the decision of the President of the Board of Trade, will, in future, go elsewhere because the cotton futures market is necessary to the industry. I want to ask another question—and I am sorry to be so interrogatory. Are the Government aware that negotiations are already in train to start a futures market in Rotterdam, Ghent, or Antwerp? Is this the time to cancel these gains to this country? Is this the time to disrupt part of the mechanism of the cotton industry, which everyone of us wishes to see put fairly on its feet again? I ask the Lord President of the Council whether the Government have consulted on this matter the Cotton Spinners' Association, who are the consumers of our cotton, and whether their decision was discussed with Sir George Schuster and the working party which was set up? I have it on credible authority that that working party have not been consulted. This can easily be denied if my information is incorrect.

I am told that the President of the Board of Trade informed a deputation in November, that the decision regarding the Liverpool Cotton Exchange would be a Cabinet one, as it was a question which contained much political content. [HON. MEMBERS: "Oh."] Will the Government confirm that in their opinion this is the way they intend to deal with economic questions—that they do not intend to deal with such questions on their merits? The House is entitled to know. Anybody knows that no political considerations enter into the subject of the existence or destruction of this vast piece of machinery. If the working party are not consulted, what is the good of these working parties. How can they be expected to make constructive suggestions, when decisions are taken behind their backs, and without their knowledge?

I wish to refer for a few moments to the human side of this problem. About 7,000 men and women will be thrown out of work—

Mrs. Braddock (Liverpool, Exchange)

I challenge those figures.

Mr. Lyttelton

The hon. Lady is anxious to show that the incidence of this decision on her constituents will not be as bad as they themselves think it will be.

Mrs. Braddock

I will give the exact figures when I speak.

Mr. Lyttelton

I suppose the hon. Lady's role is to show that it does not matter to the Exchange Division of Liverpool.

Mrs. Braddock

The right hon. Gentleman will see.

Mr. Lyttelton

I think the Government might have heeded the Socialist Lord Mayor of Liverpool in this matter. Further, could they explain why no consultation took place with the trade unions concerned? Perhaps we can have an answer to that question? I have no doubt that Lancashire Members will deal more fully with these subjects. To sum up—and I apologise for keeping the House so long—this essential piece of trade machinery, a valuable source of foreign exchange, a valuable feeder to shipping, banking and insurance industries, is being wantonly thrown away on the mere ipse dixit of the President of the Board of Trade. If I did not know his habits so well, I should have thought that it was "tipsy dixit." Few more ironical things have happened—and many ironical things have happened so far during the life of this Government—than that a Minister who is supposed to be the custodian of British trade interests should be destroying one for the benefit of our foreign competitors, and this at a time when Government exhortations to work together to increase our exports, particularly invisible exports, have hardly died away on our ears. What a tragic spectacle it is to see the right hon. and learned Gentleman sawing away one of the branches of the tree on which he is sitting.

No reasons were advanced except the inadequate and, I think, totally frivolous one, that the Government will buy cotton better than the trade, that London will buy it better than Lancashire. All that is being done is that a market which exists to provide a hedge against risk and to prevent traders from having to speculate is being done away with in order that the Government themselves may speculate to any extent they please, which they will do exceedingly ill. A piece of machinery built up over 100 years is to be destroyed 'by a statement which does not occupy 100 lines in the OFFICIAL REPORT. I earnestly ask that the Government should reconsider this ill-judged step, and while we all recognise that at this moment there may be some passing reasons for not reopening the market, can the Lord President give us an assurance that he will look into the matter again, and not close the door on this necessary piece of commercial machinery?

I understand that His Majesty's Government are already approaching the spinners—as has been done before—saying., "We are going to hang the market in a week's time and we should be glad of your cooperation in telling us how to manufacture the rope." I do hope that they will reconsider this. I am told that His Majesty's Government are planning a businesslike scheme for buying cotton. Might they not take into account that there is a businesslike scheme for this purpose ready to hand, and that they have only to leave it alone to be satisfied.

4.22 p.m.

The Lord President of the Council (Mr. Herbert Morrison)

In the field of politics, I have sometimes used the phrase "the doctrine of some people in politics is to march through chaos to triumph." In this economic and financial discussion it seems to me that the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) has been seeking to prove that, somehow or another, we can walk in this business through chaos to order. With great respect, I do not agree with him. He painted a picture of the operations of the Liverpool and Manchester cotton merchants, and the cotton futures markets, which seemed to me a highly complicated one of a large number of people engaging in the purchase of raw cotton with the inevitable element of speculation—I entirely agree with him that speculation is inevitable and am not making it a moral crime—passed from the spinner and from the manufacturing industry on to the merchant, who took the risks. [HON. MEMBERS: "No."] Surely this is so. It is passed on to the Manchester and Liverpool Cotton Associations, on to the Exchange. That really is the virtue of the Exchange—it takes the risk. It offers the spinner the cotton at a firm price at a period ahead. This is the whole business of the futures market, that they take the risk to a great extent of what happens in the meantime.

Of course, there must be speculation and elements of uncertainty in the matter because, as the right hon. Gentleman said, nobody can be sure this month what the current price of cotton produced many miles out of the country is going to be in six months' time. That is a perfectly fair point. The spinner wants to know ahead at what price he can buy in a certain number of months' time. I should have thought that since the spinner wants to know where he is and we have to buy cotton as a nation, somehow or another, for somebody or another, the question is whether this is best done by a large number of individuals ordering and buying it from abroad and marketing it here through the exchange at home, so that it is ultimately bought by a considerable number of spinners. In fact, the question before the House is whether this operation of acquiring the cotton from numerous markets in various part of the world and selling it can best be done by a large number of operators in the competitive and speculative field or by a collective, adequately organised buying organisation with its agents, its observers, and its experts scattered throughout the growing areas of the world, having a proper organisation at home, knowing what they are doing, and serving the spinner in an organised, sensible, and proper manner. That seems to me to be the real issue before the House.

What the right hon. Gentleman has been trying to do is to seek to prove his case with good Manchester school argument—good 19th century Liberal stuff which I thought the Conservatives had dropped a long time ago, since the Liberals certainly have done so. With the true voice of the Manchester school, without conviction, and without proving it, he says, "Well, somehow or another, in some curious way, by some abstract law that I cannot vindicate, and cannot prove, if you let lots of men operate upon the market, purchasing in the world and somehow act as middlemen between the producers and the consumer or the manufacturer, all will work out for the best." That is what the argument came to. I make no abusive comments about it, nor am I making any moral condemnation of speculation as such. This is not the day and not the subject for such, because, inevitably, in the transaction of this business there is bound to be an element of speculation. We are buying ahead and "chancing our arm" on the purchase made today, as to what the price will be in the months ahead. Therefore the element of speculation is there, whether the purchase is undertaken by the Liverpool merchant and by the Liverpool and Manchester Cotton Exchanges or by an organisation appointed by the State to undertake this business on behalf of the nation and, as I see it, to render the best service to the spinners in particular, and the Lancashire textile industry in general, at the end of the business.

The right hon. Gentleman asked it we have consulted the spinners. The spinners met my right hon. Friend the President of the Board of Trade some little time ago, and put their views before him, both by oral observations and in writing. Therefore, before the decision was reached by the Government, the President of the Board of Trade was made aware of the views of the spinners.

Mr. Churchill (Woodford)

What were their views?

Mr. Morrison

As put before the President of the Board of Trade they were hostile to this proposal. On the other hand, we know that there are many progressively minded spinners. [HON. MEMBERS: "Who are they? "] I do not know and neither do the right hon. Gentlemen opposite, but we say, and we believe, that there are quite a number of spinners of a progressive and competent order, who think, (a) that this will not injure the spinning trade, and (b) that it may be of distinct benefit to the spinning section of the Lancashire textile industry.

Mr. Walter Fletcher (Bury)

What proportion of the spinners does that opinion represent?

Mr. Morrison

I am no more in a position to say, than is the hon. Gentleman.

Mr. Fletcher

I can say.

Mr. Morrison

Therefore, if we both confess our relative ignorance on the matter of proportion, we shall leave the matter where it is, and all will be well.

Mr. Marples (Wallasey)

If the right hon. Gentleman had consulted the spinners, surely he would have known.

Mr. Morrison

I have been perfectly frank in the answer I have given, and as to what the deputation said. But there is a division of opinion, if the truth be told, among the spinners; some think one way, some think another. It may well be that the majority of the spinners think against this proposal, but that does not necessarily mean that they are right.

An Hon. Member

Like the election.

Mr. Alpass (Thornbury)

They are only right, when they vote for hon. Gentlemen opposite.

Mr. Morrison

I do not know who is complaining about the election; I am not. But what does all this interrogation come to, in answer to which I have been perfectly frank? As far as I can see, in numbers the majority of the spinners take another view, but there is another proportion—I cannot be sure about the proportion one way or the other —

Mr. Lyttelton

It is small.

Mr. Morrison

I do not know. There is a proportion which takes the view that we are right, and they are not among the least progressive or intelligent spinners in the Lancashire textile industry. But what does it come to? What is the Opposition asking by all these questions, about what the spinners think? They are really asking this—

Mr. Lyttelton

I hope the right hon. Gentleman is coming to the other part of my question, which is, Was the working party consulted?

Mr. Morrison

I thought the right hon. Gentleman was treated a bit roughly by interruptions, but I am beginning to think the same applies the other way round. What does all this interrogation mean? Here we have an industry, the whole Lancashire textile industry, of which this is only a part, which everybody in every quarter of the House knows has been in a bad way right through the period between the two wars. Everybody knows that it has been highly conservative—I am not talking about politics but about practice; that it has been not too willing to be reorganised and that, as a matter of fact, previous Governments between the wars have not done much to reorganise and to make this industry efficient. The industry has not much for which to thank Conservative Governments between the wars, for little interest was taken in it.

What is the argument? That we have to take, so to speak, a referendum of the people in an industry which everybody must admit has been in difficulties between the wars; that we have to take a referendum of the people who have been running the industry in the period between the wars and, as a Government, secure their approval or disapproval of what we are doing. We are not going to do it. We gather, and we acquire opinions of people in industry to the best of our ability. We take the most serious account of the opinion of people who are engaged in industry—this textile industry or any other industry. We' are often very much influenced by the people who are engaged in industry but this Government, it must be understood, will not be the slave of anybody 'engaged in industry. We must judge our policy and frame our policy after discussion, after we have heard everybody; after the contribution has been made, then it is the duty of this Government, as it is indeed the duty of every Government —and I wish they all had lived up to it—in the light of all the information they have both from industry and from their own State Departments, to decide what the public interest requires. It is in that spirit that we have approached this problem which the House is discussing this afternoon.

I want to make this abundantly clear. The decision to continue centralised purchase of cotton has been taken because of the circumstances of this particular case, and not in pursuance of any doctrinaire policy of bringing all our imports, one by one, or all together under centralised purchase. We are considering the future of those materials in which war conditions rendered Government purchase necessary, in the light of facts and not theories, and we do not suppose that the facts need necessarily always lead in one direction. Indeed, it is the case that in regard to a number of materials, where the circumstances are different, and where, on balance, there was not sufficient public advantage in continuing importation through the Control the Government have already handed back importation to private enterprise.

That shows that the Government are willing to consider each case upon its merits. I wish I could congratulate the Opposition on being willing to consider each case upon its merits according to the public interest. It was perfectly clear from the speech of the right hon. Gentleman that he is convinced that, somehow or other, these accidental transactions are the best way in which to run industry. That is not necessarily the right view, and it is not necessarily the view of His Majesty's Government. The right hon. Gentleman said that in Liverpool they are dealing with the cotton produced from 16 cotton-producing countries, and that many commissions are achieved—

Mr. Churchill

What about the working party with which the right hon. Gentleman was going to deal?

Mr. Morrison

I beg the right hon. Gentleman's pardon; I was going to deal with the working party. The working party's terms of reference did not include this phase of operations. The working party's terms of reference refer to the organisation of the manufacturing industry, and I am hoping that their report will not long be delayed. They were not, however, expected or asked to go into this side of the problem, which was dealt with separately. Indeed, if we ask the working party at this late stage, as, of course, we could, to go into this problem and report upon it, it would mean further delay, and already we have been criticised by the people in the industry for not announcing a decision about this matter. They badly wanted a decision in principle, as to the future of the Cotton Exchange, and it was partly for that reason that we have given the decision already. I was also asked whether we had consulted the trade unions. There is no necessity to consult the trade unions because the views of the trade unions on this matter have been known for quite a time, and they expressed themselves earlier, as being in favour of the proposals which the Govern-merit have now adopted. Therefore we are proceeding, not by way of consulting the trade unions on a matter on which the trade unions have already expressed themselves, and on which we fully agree with the trade union point of view.

It is the case that cotton is grown in many countries of the world, and far from it being the case that this new system will restrict the expertness of the purchasing organisation of raw cotton and its knowledge of various foreign countries, it is my belief that the new organisation will give us a wider and better knowledge of cotton from a wider variety of countries than has been the case hitherto. In the main—I would not say exclusively—the Liverpool Cotton Exchange has devoted most of its attention to American cotton and Egyptian cotton. It is our belief that we must take notice of cotton wherever it is grown and become experts on its growth in every part of the world. For the life of me, I cannot understand why it is assumed that a national organisation of this kind, fully organised, with resources behind it, with a fully expert and large staff, cannot be as expert and as adequate and comprehensive in its service to the industry as a large number of separate and moderate-sized undertakings. The assumption seems to be all the other way. The right hon. Gentleman asked what the financial results of the wartime control had been. That is easy.

Mr. Lyttelton

I asked what losses had been made by the Government in trading in cotton since the end of Lend-Lease.

Mr. Morrison

I did not hear it that way. Anyway, the answer is not conclusive to anybody. I know the right hon. Gentleman had a limited time, and I am, trying to be considerate myself.

Mr. Churchill

That was not the question.

Mr. Morrison

It is disputed whether or not that was the question. I am going to give something that will be in HANSARD anyway. I can only give this answer. It will be appreciated that, in the time of the war, gains and losses in this matter were neither here nor there. Everybody will agree with that. We all agree so far. We had a war which we had to win, and commercial considerations did not apply too fully. There was a question on the Order Paper today by the hon. Member for Altrincham and Sale (Mr.Erroll), and here is the answer made by my hon. Friend the Parliamentary Secretary for Overseas Trade: In the period from April, 1941 ''— That does not quite meet the right hon. Gentleman. There is an implication here that may have a bearing on it— to March, 1945, the Cotton Control's trading in raw cottons has shown a loss of about £2 million. This excludes cotton obtained on Lend-Lease, on which there were notional losses. For most of the period, the Control's selling prices were deliberately maintained at a low level in order to stabilise the prices of yarns and cloth. Since April, 1944, the Control has traded at some profit. That is the answer to the Parliamentary Question and it is the best I can do for the right hon. Gentleman at the moment. It is significant that since April, 1944, the Control has traded at some profit. This new organisation will, of course, seek to pay its way. We shall expect it to seek to pay its way. My right hon. Friend the Chancellor is in no bursting hurry to subsidise it out of taxes, and it ought not to be subsidised out of the taxes, but there must be ups and downs in the industry. We must provide cover for the spinners. We shall provide cover for the spinners. The State organisation must have an element of risk about it, just as the existing organisation has. We anticipate that over the period of a reasonable number of years, income will balance expenditure. In some years there will be losses and in some years profits but, on the whole, it will be our object and our policy to see to it that the undertaking broadly speaking, pays its way.

Mr. R. S. Hudson (Southport)

Can the right hon. Gentleman explain how?

Mr. Morrison

By wise management. How else? By estimating as accurately as possible what prices it ought to charge, buying in the most advantageous way it can, and seeing that it conducts this business in a businesslike manner. Why the Conservative Party should always think that anybody who conducts a national business in the interest of the nation, is bound to be a tenth-class fool, I cannot follow. If it is the case, that all the businesses engaged in private enterprise never make a mistake, and that all the businesses engaged in national enterprise do, why is it that there are so many bankruptcies from time to time in private enterprise? This kind of assumption is childish. It really is a childish assumption that the State or national organisations cannot do anything with any degree of success. The right hon. Gentleman persisted in talking about a Government organisation and Government operations. This is not going to be a Government Department.

Mr. Lyttelton

I did not say so.

Mr. Morrison

Well, I know the right hon. Gentleman did not say so, but the ordinary, common or garden cotton spinner, reading the right hon. Gentleman's speech, will think so. That is what he was meant to think. There is far too much loose talk in this business of Government this, and Government that.

Mr. Lyttelton

In my argument I said that it was a single bulk purchaser. I have no doubt it will be a national cor- poration, and not a Government Department. It is a single bulk purchaser.

Mr. Morrison

We seem to be having unfortunate memories of what the right hon. Gentleman said. I am not going to accept all the blame.

Mr. Churchill

I do not think the right hon. Gentleman need have very much of the blame for this, judging by his speech.

Mr. Morrison

I am sure the right hon. Gentleman the Leader of the Opposition ' has come back a great expert on the growing of cotton. I only want to say that there was, I thought, an assumption behind the right hon. Gentleman's speech that this would be a Government operation. If he is quite clear that it is not a Government operation, and that it is another kind of organisation, that is all right, but I am bound to say that in the deputation I received yesterday there was a good deal of assumption that this was an official Government organisation. It will not be a Government Department. It will not be conducted in the ordinary way as a Government Department.

Mr. Lyttelton

Will it be owned by the Government?

Mr. Morrison

It will be promoted by the Government.

Mr Lyttelton

Will it be owned?

Mr. Morrison

It must be, in the sense that the Government finance must be behind it.

Mr. Lyttelton

And Government capital?

Mr. Morrison

Yes, somebody with finance has to stand behind this— [HON. MEMBERS: "The taxpayer? "] What is the matter with the Opposition? Otherwise, the spinners will have nobody to guarantee their prices and see that they are all right.

Mr. Lyttelton

Will there be a Government credit?

Mr. Morrison

Certainly, there must be Government credit behind it, but it will have its own till, and its own cash register, income and expenditure, and as it makes profits it will set some profits aside, presumably, in readiness for the days when it will make losses. It will be partly Government money, and partly money which will arise from trading operations. What shall we do? We shall set up this body and we shall employ first-class experts, in its operations. Surely, this new organisation, this modified cotton control, this development commission, will be able to buy brains of a first-class order, technical experts, who will be as competent to run this business as anybody who has been in it so far. Therefore, there need be no apprehension that we shall not run this business by technicians and experts, and with a very peat deal of freedom, so that they can run their business and conduct their operations without meticulous State interference at every point.

I am bound to say that I should not myself think, and I am perfectly sure that the President of the Board of Trade would not expect, that he should himself start determining what the price of cotton is going to be on a given purchase a few weeks ahead, or himself engage in market operations. [HON. MEMBERS: Who will?"] The President of the Board of Trade will do no such thing. Of course, he will not. We shall employ experts for those operations, first-class experts. I hope that the organisation will not only employ them, and pay such salaries as may be necessary, but that the spinners themselves will be brought in as active copartners and cooperators with the operations of this new corporation, and that will put them into a much superior position compared with the position before the war. I thought the right hon. Gentleman referred to this as a Government undertaking. He certainly referred to "London," and he certainly referred to "Whitehall." Therefore he should not be so indignant that I thought he had rather misled people as to the nature of the organisation by talking about "Whitehall."

Mr. I. J. Pitman (Bath)

May I ask the right hon. Gentleman a question? Where will the ultimate responsibility lie in this House? Will it lie with the President of the Board of Trade?

Mr. Morrison

According to the doctrine of the Conservative Party there ought to he no responsibility to this House whatever. [HON. MEMBERS: "Answer the question."] I am answering it. Of course, my right hon. Friend will accept responsibility. A Government guarantee will be behind the financial operations of the undertaking, and responsibility, answerability, will presumably be through the President of the Board of Trade.

Mr. Pitman

In Whitehall.

Mr. Morrison

If that interruption is meant to show that the undertaking will be managed from Whitehall, really I begin to wonder whether I am in the House of Commons or with Alice in Wonderland. I am asked to which Minister questions should be put, and I answer that questions should be put to the President of the Board of Trade, but this will not be a Whitehall organisation. It will not be a London organisation. This will be a Lancashire organisation. It will operate in Lancashire. It will live to serve Lancashire and the great textile industry of Lancashire. Lancashire has seen too many London financiers. I would be the last person in the world to repeat what was done under the system encouraged by hon. Gentlemen opposite, whereby London financiers got messing about with the Lancashire textile industry. Lancashire can be quite sure that, this new organisation will be a Lancashire organisation and that it will be looked after from the, point of view of the interests of Lancashire itself.

I think I have covered the points which were raised. [Laughter.] Yes, I think I have, all those put by the right hon. Gentleman in the course of his observations. I admit that I have not made a reasoned observation as to whether we consulted the Lord Mayor of Liverpool and if not, why not? The Lord Mayor of Liverpool is an old -friend of mine.

Mr. Marples (Wallasey)

Was.

Mr. Morrison

Believe me, I have had much more heated rows with him in the past than this. The Minister of Education had an awful to-do with him about women firewatchers during the war, and a good time was had by all, including us. That did not prevent us from being good friends afterwards. This is a free country. The civic head of Liverpool is entitled to his opinions. I do not know whether the House would expect me necessarily to engage in a close argument with the chairman of a municipality, or the Lord Mayor of the City of Liverpool, on a matter of this sort. We genuinely believe, having looked at this matter all round, that, on balance—I put it no higher than that, as I admit there are arguments the other way and it would be a wonder if there were not, but we have taken account of those arguments and tried to come to a reasonable conclusion—in the public interest, it will be better to organise this business competently and thoroughly and to employ first-class experts upon it.

It is our belief that by means of this national agency we shall get more stability, more reliability, in the purchase of cotton, more possibilities of future active cooperation with the manufacturing industry itself, if we do it this way, than if we reverted to a very- large number of private and separate operators. Believing that, on balance, this is the best thing to do in the public interest and that it is the best thing for Lancashire cotton, if we can do it this way, we commend the scheme to the favourable consideration of the House, and we ask the House to reject the Motion moved by the right hon. Gentleman.

4.58 P.m.

Mr. Raikes (Liverpool, Wavertree)

I am always surprised by the right hon. Gentleman, but I have never heard him less convincing than he was today. Humble Back Bencher that I am, I propose to examine the case that the right hon. Gentleman has put forward. He has said that this is not a political issue and that the idea of closing this market is that, on balance, he believes he will do better by bulk purchase. The right hon. Gentleman is closing a market which has played an honourable part in the markets of the world for a considerable number of y ears. It has been the one market which has established world prices and it has brought a prestige and an honour to this country throughout our history. Through the spot market, it made it possible for the most diverse forms of cotton to be examined, inspected and turned into a variety of Lancashire cotton goods that, by their variety, have secured trade that otherwise would never have been gained. All those advantages are to be turned aside because, having made an examination of the matter, the right hon. Gentleman and his right hon. Friends are confident that they can find something better. Where have they looked? Have they discussed the matter with the Working Party? No, that would mean further delay. Well, better to delay a little than to make a mistake which may bring chaos, not only on a great industry, but on the nation as a whole.

The right hon. Gentleman the Lord President of the Council and I will not disagree on percentages, as none of us know the percentages, but I think he will agree when I say that the large majority of cotton spinners are opposed to his scheme. I put it no higher than that; the majority are against it. He has not discussed the matter with the Working Party, he has not waited to discover what his own losses have been since the end of Lend-Lease. I should have thought that, if it meant a little further delay, it might be worth while to try to find out how much has been lost under control since the end of Lend-Lease, before finally clapping control on this industry in regard to bulk purchase. None of these things has been done, except that a few enlightened cotton spinners, unknown and unnamed, have patted the Minister on the back. Therefore, we are told they are the progressive elements in the cotton industry of Lancashire, a tiny minority of them.

What is the object of bulk purchase? It is twofold—greater stability and less speculation. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) has dealt with speculation questions. Whatever is being done under this scheme, the last thing which will be done is to end speculation. All it will do is to ensure that instead of private speculation, there will in future be public speculation—speculation at the taxpayers' expense. That must be so, because if we buy and world prices fall, we have two alternatives, and only two. If we sell to the spinners and the spinners find that, owing to variations of world prices, they cannot compete in the world market after they have bought the mules, they will have to be subsidised at the taxpayers' expense or go broke. From all we have seen of cotton controls of the past, not only in this country but outside, if there is one gambling certainty it is that the taxpayer has to pay the bid as a result of this experiment.

As a Liverpool Member for a brief period, I feel bound to say my say before that great city is stricken and smitten one of the greatest blows in its history. I know that the hon. Lady the Member for the Exchange Division of Liverpool (Mrs Braddock) is panting to get at me—in a political sense. I am sure she will support the Government and is in favour of closing down the Cotton Exchange. She may express a desire that the historic name of her constituency shall be changed into something less contaminated by big business of the past.

If we are to have varying prices, stability becomes impossible and nothing is gained by it. We must not forget that the spot market goes on, that in the past 1, 000,000 bales of cotton have come into the market, and that there were experts checking it off for every form and variety in order that spinners might choose.' That spot market has done more to make Lancashire trade attractive by specialising on carefully selected varieties than has anything else. We shall be told by the Government that the army of experts who arc to appear on the scene will be able to take the place of the old spot market. But this army of experts, with no one to compete against, will be merely under the eye of whatever corporation or board is set up. They cannot and will not select with the keenness which can only be obtained if they are competing against one another in very considerable numbers.

The Lancashire cotton market, quite apart from its role of fixing prices and so on, has earned a great deal of foreign exchange for this country in past days. There have been arrangements by which invisible exports have been realised by selling cotton to other persons without ever the cotton actually coming to this country Such things have brought foreign exchange, and we are told every day that we need to build our exports and get foreign exchange. That market goes and I imagine that somewhere about £17 million a year will be lost in foreign exchange. There will be no foreign exchange coming in under the proposed scheme, except occasionally through re-export, of which there can be but little. Liverpool will be superseded in the international market by Rotterdam, Le Havre and New Orleans and there will be a blow struck at the prestige of this country and Lancashire. All we get in return is a sort of sketched-out plan of something like the projected Coal Board. By buying in bulk at a fixed price the wretched taxpayer will be given a harder time than in the past. I hope it will give the Chancellor of the Exchequer the biggest headache he has ever had.

5.8 p.m.

Mr. Kirby (Liverpool, Everton)

I would like to convey to the Lord President of the Council my grateful thanks for the Socialist speech he made today. After hearing the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) who opened the Debate, I felt that the plausible way in which he presented the case might cause me to slip from my creed at any moment and come down on the same side as the Lord Mayor of Liverpool. I am glad that did not: happen, because it may have been followed, as I am a member of the City Council, by an invitation to accept the chair of that institution, and I do not want that to happen.

I feel that the case for Liverpool has not been properly put on both sides by the hon. Member for the Wavertree Division of Liverpool (Mr. Raikes). It is true that in Liverpool today there is wide agitation in regard to this matter, but it is strongly centralised, concentrated and organised agitation in regard to the announcement made by the President of the Board of Trade. As a Member for one of the Divisions of Liverpool, I have had no communication whatever from any constituent affected by possible unemployment or any aspect of the scheme. The whole agitation seems to be top heavy. The public in Liverpool and Lancashire generally are not nearly so interested as the hon. Member for Waver-tree would have us believe. The right hon. Member for Aldershot led us to believe that all the people engaged on the cotton market in Liverpool were public benefactors and he said that the Exchange had a good effect as it prevented speculation.

I do not see how that can be claimed, when those of us who come from the Merseyside know very well that crops were bought and resold, and bought again and resold again, long before they were ready for picking and long before they were grown. Then the cotton having, been put on ships coming from the United States and other places to Liverpool, it was resold again half a dozen times, and on reaching the Liverpool warehouses, was resold three or four more times. Every one of those transactions was meant to provide, even though in fact it may not have provided, a profit on the turnover for somebody, Even though some of the transactions were unsuccessful from the speculator's point of view, one may take it that, in general, the great Majority did achieve that object, that a profit was made, and the price to the consumers of cotton went up.

The right hon. Member for Aldershot spoke about fluctuations. Apparently, from his point of view, the only fluctuations that arise are those caused by the cotton getting wetted by rain or damaged by the boll weevil. But there are fluctuations in price that arise because of the operations of these people who want to open this speculative market again. The right hon. Gentleman did not say that it has been quite a common practice in Liverpool, when the warehouses were full and cotton was not getting the price which they thought it ought to get, to lock the doors of the warehouses, sack the warehouse porters and put them on the dole, and wait patiently until prices rose in order that they might release the cotton and get the profit they wanted. There is speculation in cotton. What hon. Members on the Opposition Benches want is that this country, after five or six years of State control of the buying of cotton, should go back to unrestricted competition and gambling in the very necessities of life of the people of this country. The right hon. Member for Aldershot said that the futures market was essential to the industry. He did not say, he did not prove—and nobody else can prove—why it should be necessary in the cotton industry and not necessary in any other industry. One does not hear of other commodities being bought and sold before they are grown.

Mr. Walter Fletcher

May I enlighten the hon. Member's ignorance by pointing out that the London commercial sales, the metal and rubber exchanges, mean that every other commodity of any importance is dealt with on exactly parallel lines in this country?

Mr. Kirby

I do not accept that. The ordinary exchange markets in other commodities are pretty straightforward buying and selling by people who want things and people who want to get rid of things. In the case of cotton, it is just like going into a gambling house. The people who are on the cotton market have no need for cotton, they are simply playing about with money in the hope of making a profit. They do not use the cotton, market it, or store it. There is nothing like the cotton market in other industries. It has been said that this matter has some relation to unemployment. I challenge the figure of 7,000. There were about 7,000 affected some five or six years ago, but we have had State purchase during the war and all these people have been employed, and there is no question of that number being dislocated and put out of their jobs. We shall have the support of the Ministry of Labour as regards this policy, and the Ministry of Labour will see that anybody who is discharged from employment in the cotton trade as being redundant will promptly get work in some other direction.

It amazes me that this Motion should have been put down under the names that appear on the Order Paper. Anyone would think that the idea of buying cotton by the State was a completely new idea. The idea was introduced under the barter scheme in 1939, when the Chamberlain Tory Government arranged a barter scheme with the United States for £10 million worth of cotton, a barter scheme under which we, getting the cotton because we anticipated an emergency, bartered tin and rubber, with the war in the offing. That was done by a Tory President of the Board of Trade. I was the only Member from Liverpool or Manchester, Merseyside or Lancashire, who challenged that in debate in the House, and I did not get any support from anybody. I pointed out that the Liverpool cotton market and cotton exchange could contribute and still serve the nation, but nobody took any notice of me.

The right hon. Member for Southport (Mr. R. S. Hudson) was the Minister who replied to that Debate on that occasion—9th June, 1939—and he did not even mention the Liverpool Cotton Exchange or any of the points that I raised. Who was President of the Board of Trade at that time? Another right hon. Member who heads the list of sponsors of this Motion, the right hon. Member for West Bristol (Mr. Stanley). When was the Cotton Exchange finally closed down? In 1941. Who was President of the Board of Trade then? The right hon. Member for Aldershot, who opened the Debate today. If it was good enough under a Tory Government and for war purposes, surely, it is good enough for Socialistic purposes. If it was possible and useful in war time, surely, it is likely to be useful now in these years of reconstruction. Everybody must recognise that today the world is in turmoil, and that if the Government are to do the right thing by the people, they must plan ahead, and see that all the needs of the people are being met. This is the only way to do it with regard to cotton. I am glad to have heard the speech of the Lord President of the Council. I am satisfied that that speech will rally to the side of the Government full support for their action.

5 18 p.m.

Mr. Selwyn Lloyd (Wirral)

I am very grateful for the opportunity of taking part in this Debate, because I was brought up and have always tried to earn a living on the Merseyside, and in my constituency, which has 110,000 electors, as compared with the rather smaller number of the hon. Member for the Exchange Division (Mrs. Braddock), there are very many hundreds of people who are vitally concerned in the future of the Liverpool Cotton Market. I found myself in disagreement with almost everything that was said by the hon. Member for Everton (Mr. Kirby), except in the first portion of his speech, when he said that he required the vigorous partisan speech of the Lord President of the Council to convince him after he had been almost convinced to the contrary by the right hon. Member for Aldershot (Mr. Lyttelton).

What we are attempting to discuss in this Debate, surely, is normal functioning in normal conditions. We are not dealing with wartime conditions. We are trying to examine the best way of serving the interests of this country in normal conditions. The first point, which I submit has not been met by hon. Members opposite, is the question of the effect of this decision on the commerce of the country. What hon. Members opposite often seem to forget is that we are a commercial nation. We are not a nation of primary producers. We get a great deal of our standard of living from, and we support a great many people in this country by, our commercial earnings. It is the interchange of commodities, international trading, insurance, banking and shipping services, the great number of services which a commercial nation offers to the world, which bring to it foreign exchange and enable it to give a decent livelihood to many of its people. It has not been disputed that the Liverpool Cotton Market was the only international cotton market in the world. There was no other which dealt in all classes of cotton from all cotton producing countries. Other exchanges were limited to the production of their own countries.

Liverpool permanently kept a stock of 1,000,000 bales of cotton. The Liverpool form of contract was well known and respected throughout the world. A vast number of transactions were entered into whereby cotton was shipped from one part of the world to another on a Liverpool contract, with the shipping arranged and the shipping documents going through Liverpool, and with insurance and banking facilities arranged in Liverpool, and with arbitration carried out in Liverpool. It is a remarkable tribute to the commercial integrity of this particular market that people in foreign countries were prepared to have their disputes arbitrated upon on the Liverpool market. That brought to the Liverpool cotton market, and to this country, a great deal of most valuable foreign exchange, and employment for the people. The Bremen market handled a very big business before the war, and that business will certainly not be handled by Bremen under modern conditions. There was a great opportunity for Liverpool to step in and get that business, but the effect of this decision will be that not only Bremen business but Liverpool business, will go to the competing exchanges of Ghent, or Rotterdam, or Le Havre. We shall lose, at this time of crisis in our affairs, a most valuable source of income to our people.

That is the first point, the effect on the commerce of our country. That has not been touched upon by previous speakers on the other side of the House. To turn to the local effect on Liverpool itself, this cotton market was essentially a matter of the small firm. There were about 200 trading firms on the cotton market, employing between 4,000 and 5,000 people before the war, that is to say, administrative staffs and cotton porters, who drew their livelihood through the operation of these firms. In addition, there were many ancillary matters—banking, insurance and the like—which also provided employment in Liverpool. A great deal of the business of Liverpool was directly attributable to the fact that the Liverpool Cotton Exchange was in its midst. It gave employment to many more people than the actual numbers I have already mentioned. There can be no dispute that this Government decision is a mortal blow to Liverpool as a commercial centre. That feeling is most widely felt on Merseyside. It may not have penetrated certain quarters, but the commercial interests of Liverpool—and the future of Liverpool as a commercial centre depend on them—people of all parties, of varying parties and no parties, are in no two minds that this decision means a mortal blow to Liverpool as a commercial centre.

My third point is a comment on the manner in which this decision has been made. When a man is on trial for his life, there are certain judicial proceedings. There has to be a preliminary examination, and a prima facie case has to be established by the prosecution. After that, the matter has to be investigated by a judge and jury. So far as the Liverpool Cotton Market is concerned—and this is a death sentence for it—all that has happened is that in August last year the President of the Board of Trade met representatives of the Association, and setting the black cap austerely on his head, pronounced the death sentence, as he said, for political reasons. He did then consent to receive representatives from the Liverpool Market.

Mr. Georģe Porter (Leeds, Central)

Is not murder the wrong analogy? Should not the hon. Member not have approached the question from the point of view of divorce? Is it not a case of the spouse not coming back to her husband?

Mr. Lloyd

I was making the point that in August last year, the President of the Board of Trade announced the decision that the market must go, and then consented to receive representations from the representatives of the market. A memorandum containing, in detail, many weighty arguments was put to him, reinforced by a memorandum from the Master Spinners' Association. There has been no attempt to discuss any of these representations, no counter-arguments have been put forward—I would also include the proceedings of this House so far—to the matters contained in that memorandum. All we have had is this brief dictatorial answer, the pronouncement by the President of the Board of Trade as he hurried out to catch his aeroplane to India.

It will be most unfortunate if this matter is dealt with on a political party basis, because I feel there is something much more fundamental at stake here than a question of purely party politics. I submit that there is a real case here for an independent inquiry into the facts of this matter. I will give hon. Members on the other side a point in regard to the nationalisation of the coal mining industry, although I do not agree with it. But I concede that there has been inquiry after inquiry into that industry, and every point of view has been ventilated almost ad nauseam. In the case of the Liverpool Cotton Market, this step is being taken without that independent inquiry, at which an opportunity is given to the interested parties to give evidence, and to have their arguments advanced and examined from one side or the other. I plead with the Government, even now, to hold their hand over this matter, so that there shall be an opportunity for full ventilation of the facts.

I wish to make only one other point. There is a great deal I should like to say, but as only about four hours have been given for this important Debate, it is impossible to put forward many points which should be raised on this important matter. A point which has not been dealt with at all however is the tremendous disadvantage of the Government entering, as a bulk purchaser, into these cotton growing countries. In Egypt, at present, the question of whether or not the British Government buy the Egyptian cotton crop is a first-class political issue. Everyone in Egypt has bought cotton, and is anxious to sell it to the British Government. If the British Government do not buy that cotton, they will have on their hands a first-class political crisis. In fact, the last purchases of the British Government Cotton Control from Egypt were at 23 pence per pound. That cotton has been passed on to the spinners at 15 pence or 16 pence per pound. In other words, the taxpayer has been subsidising the cotton purchased from Egypt, so I am informed, to the extent of of 7d. or 8d. per pound. In regard to this year's Egyptian crop there is a tremendous anxiety among Egyptians for the British Government to buy their crop, otherwise there will have to be some quid pro quo from the British Government. If private merchants were dealing with that matter, none of these considerations would arise. Next door to Egypt, in the Sudan, the British Government Cotton Control is also acquiring the cotton crop. It is paying a price which is many pence lower than the price which is being paid in Egypt.

We have reached such a situation that, where the Control is able to dictate the price in Africa, cotton growers are giving up growing cotton on the ground that it is unprofitable to do so. There is the position of this Government of all Governments, buying cotton in the Empire at a price which does not pay the growers. In other words, it is exploiting the Empire, and paying out to foreign countries sums for cotton which are greatly in excess of the price they are charging for it. I think that is a perfectly fair example. That is the type of danger which a Government bulk purchaser gets into when he enters a cotton growing country. That will happen in every case, in my submission, where the bulk purchaser goes to buy. There is something about a bulk purchaser which puts him at a grave disadvantage. I have been told before the war when the Co-operative Wholesale Society's buyer went to Athens to buy currants and his ship was sighted off the Piæs, the price of currants went up by 5s. a cwt. When his ship left,- the price went down by 5s. a cwt. That was simply because the producers and the merchants knew a big purchaser was in the offing. That is exactly what will happen. I am not saying that in criticism of the Co-operative Wholesale Society. It simply shows that when there is a big purchaser in the market, inevitably prices are put up.

In this highly speculative business it will be the Government who will speculate: it will be the taxpayer who will pay. This decision will inflict very grave damage upon the commerce of the country by removing a means of earning international exchange. In my opinion, it will inflict a mortal blow upon Liverpool, and I appeal to the Government to reconsider the matter.

5.33 p.m.

Mrs. Braddock (Liverpool, Exchange)

Let me first congratulate the Government upon their courage in taking a very definite stand, in relation to what is considered among working people in Liverpool to be the beginning of measures to control capitalist and Tory influence throughout the Liverpool area. When I listened to the speech of the right hon. Member for Aldershot (Mr. Lyttelton) I was reminded of an interview I had when I was elected for the Exchange Division. I could have imagined that the words which the right hon. Gentleman spoke were the words that were spoken to me during that interview. Of course, that leads me immediately to the conclusion that the case he stated was the case prepared for him by the Cotton Association in Liverpool.

I propose to divide my speech into two sections, dealing with the questions of the Cotton Association and of the cotton employees. I intend to take rather a different line in relation to the cotton employees. The Cotton Association in the Exchange Division of Liverpool has been, since its inception, the bulwark of the Tory administration in Liverpool. When elections were in progress and Labour representatives were reaching the stage when they might have been elected, the vast wealth and the vast amount of transport controlled by individual members of the Chamber of Commerce and the Cotton Association were used to bring in votes from such faraway places as Wirral, West Kirby, Southport, and Kirkdale. Wherever the Cotton Association people lived, their organisation was used, through the Tory association, in desperate efforts to get their votes into the Exchange Division. We, as working-class people and workers in the division, watched streams of beautiful cars, packed by men with business interests and their wives, pour into the Division of Liverpool, in which the Cotton Association is situated, in order to defeat the efforts of progressive thought in Liverpool. We watched that for a long time. We were the happiest people in Liverpool when it was known that this marvellous place, from which came all the wealth, on the one hand, and all the poverty, on the other, had, at last, fallen to a representative of the working classes.

It might be said that the Cotton Association consists of a series of small people who have linked themselves together to run a business. In that connection it may interest the House to know that no one can join the Cotton Association unless they can put down £10,000 immediately. I referred to a meeting I attended after I was elected. Perhaps I might be permitted to tell what I consider to be an important story in relation to this matter. On that occasion I listened with interest, for just about an hour, to the story of the purchase of cotton, cotton futures, and "hedging," and I can assure the House it was very interesting. When we had finished, it was obvious to those who were speaking to me, that I had no intention of supporting them. They suggested I might have a look at the gallery where there, were photographs of the founders of this great Cotton Association They took me along to see them. There were a lot of photographs in this gallery. I looked at them. I went over them right from the first one of 100 years ago. When I had finished, I turned to the secretary, who was with me, and said to him quite seriously, "Can you tell me how many of these people died in the workhouse? "I believe that immediately divorced me from any chance of ever being in the good books of any section of the Cotton Association.

It has been said during this Debate that this is the all-important matter in relation to cotton, and that nobody can do it as well as this group of financiers, who are there for no other purpose than to make profits for themselves. The question was asked whether the Board of Trade had made any representations to the Master Spinners' Association. Now, I happen to be fortunate enough to have the comments that were made just after the last war, when we were in a very similar position to that in which we are at the moment from a trade point of view —though a very different position from a control point of view. I have the comments of a gentleman named Sir Charles Macara, who was a former president of the Federation of Master Cotton Spinners' Associations. I think it ought to be on record in this Debate these comments were made. Sir Charles said: It is felt that one #of the greatest evils with which the cotton trade has to battle is the gambling which goes on in respect to the raw material. It is plain that the wild fluctuations in cotton with which the spinner is faced are largely responsible for the raising of prices to the consumer, and that no other factor works so detrimentally. When it is taken into consideration that the raw material is turned over innumerable times before it reaches the hands of the spinner, and that it is reasonable to conclude that a profit is made on nearly every transaction, it will be seen where the trouble lies, and how necessary it is in the interests not only of the planter, spinner, and manufacturer, but of the great body of consumers, that something should be done to eliminate this great bugbear of the industry.… A computation made recently was to the effect that for every bale of actual cotton grown 27 hales are gambled with. This is where the leakage is. The cotton grower and the spinner are making the sacrifices, while the gamblers walk off with the loot. How long are the cotton growers and the manufacturers of cotton goods going to be the puppets of those who neither grow, spin, weave, nor merchant the material? One has no quarrel with the legitimate broker in cotton, but it is monstrous that cotton should continue year after year to be the sport of thousands of outside speculators. These are not the criticisms of any Socialist, but the words of the late chairman of the Cotton Spinners' Federation. Let us look at the position for a moment, because I think that, in a Debate of this sort, there ought to be an opportunity for a statement of the actual position, in regard to those people who are dependent for their livelihood on cotton. The position is that, in Lancashire, between 1931 and 1939, when this form of cotton purchase through cotton futures was in operation, there were hundreds and thousands of spinners working short time—not because there was a shortage of material and who were receiving wages less than the amount paid in unemployment benefit to people who were totally out of work, and to whom no additional payment could be made by way of unemployment benefit, because the State said that wages could not be subsidised by unemployment pay. That was the position, and I only wish that my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman), whom I have known for so long, and into whose constituency I have very often gone, could back up this statement in the way in which he knows it could be backed up. This Government have made up their minds that that sort of thing is not going to apply again.

In regard to the international aspect of buying cotton, it is bought in Egypt and sent to America and is never seen here at all. Nobody here ever sees it. It is dealt with only on the basis of samples. That is international trade—but capitalist international trade. There is a different way of dealing with the situation, and this Government have found the different way of dealing with it. I will now refer to two conversations which I had last Saturday. A gentleman by the name of Major Thornton, a big noise in big business in Liverpool, came to see me with regard to a meeting which he was going to call, or to have called by the Chamber of Commerce in regard to this matter. During his argument in trying to persuade me to alter my point of view, he said, "Of course, if the Government are foolish enough to close this cotton market, all that will happen is that the-trade of cotton buying and the cotton futures market will move somewhere else "—to one of the three places referred to by the mover of the Motion. My reply to that is quite simple—Can hon. Members opposite say that capitalism is going to last? That is the answer to that question, and perhaps hon. Members opposite will have a look at it from that point of view.

Then there is the question of unemployment. While not so much noise has been made about it in this House by hon. Members who have spoken, there has been quite a lot about it in Liverpool. An agitation has been worked up—not among the ordinary workers, because they are used to unemployment, or have been up to now—but among the people who make up the great Conservative Party in Liverpool. There have been lots of conferences and much agitation. Let us think back just a little bit. The question of rationalisation comes into the question of nationalisation. I can remember, and many of my Liverpool friends will also remember, that the same type of person; and, in some instances, the same person, who was interested in cotton was interested in other business deals in Liverpool. I can remember the Eastern and African Corporation, who decided, between the wars, to rationalise their business, and their basis of rationalisation was to close down their offices in Liverpool, and move them to London, and the only people who were considered for any sort of employment there were those who had at least 16 years' service. There was no question there of how much unemployment was going to be created because of the move to London; it simply meant that more profits would be made by those concerned with the Corporation. I remember also the case of Levers, who decided to move from Liverpool to Ellesmere Port, and also decided that, of their employees in Liverpool, none could be employed at Ellesmere Port except those who had 15 or 16 years' service—no question of how much unemployment was going to be created, but only the question of a little more profit to be made.

There is another example. The Cunard-White Star was a big Liverpool concern which moved its works to Southampton, and its offices to London, creating a similar sort of situation in relation to those employed by them previously. These are matters that have to be considered when we talk about unemployment. I have been amazed to discover the Liverpool facts as to the supposedly large numbers who were to be affected by the closing down of the cotton market. The figure was said to be anything up to 7,500. Let us have a look at the actual facts. My first interview on Saturday was at the request of the Cotton Employees' Association. They asked me to meet them in relation to their position under any new scheme. I agreed to meet them, and they gave me some very interesting information. These are the actual figures of the persons employed in the cotton trade of Liverpool when the war broke out in 1939. It is true that there have been a few more, with men being released, but the figure was estimated to be the minimum figure on which the cotton trade could work in Liverpool. These are the figures: Clerical workers, 1,537; spot salesman and collectors, 531; other salesman staff, 272; ring traders, 157; permanent warehouse workers, 952; and casual warehouse workers, 613. That makes a total of 4,062 as the total figure of employment in that section before the war commenced. These figures were given to me by members of the Association themselves, and I was permitted to use them as the accurate figure, in relation to the employment through the Cotton Association and cotton trade in 1939.

Mr. Selwyn Lloyd

Surely, the position is that these are people directly employed, and that the figure does not include certain others, or any of those indirectly affected by the operations of the cotton market, of whom there are at least as many again.

Mrs. Braddock

This was the statement made by the chairman, who came to see me. I have come to the conclusion, by the way, that, in order to get what one says correctly reported by the Press, or anybody else, one has to have a stenographer there to take down what one does say. It is an advantage because what one says is actually recorded and one can refer to it again if necessary. The chairman said to me that they had come freely of their own accord and had nothing to do with the Cotton Association, and that they represented all employees of the cotton trade, whether clerical workers, ring traders, spot salesmen, permanent warehouse workers or casual workers. The figures given to me, covering the whole of the organisation, are 4,062 at tilt, end of 1939, out of which 1,954 went into His Majesty's Forces or into war factories. At the present moment, the total staff employed in the cotton organisation in Liverpool is 1,000. That is the position and those are the figures given by the people who represent the cotton employees in Liverpool.

Mr. Marples

If I may interrupt the hon. Lady for a moment, there are two points I would like to raise. The first is that the Cotton Exchange is not open at the moment, so that the statement about 1,000 people being employed is not quite accurate. The second point is that I would like to ask the hon. Lady whether every person who works on the Cotton Exchange is a member of that Association.

Mrs. Braddock

They tell me that all are included in their Association. On the hon. Gentleman's point about the Exchange not being open, I would point out that the firms have their workpeople —their clerical staffs and technicians—dealing with cotton at the moment, which proves that cotton can be dealt with efficiently by a staff of 1,000 and not by the tremendous numbers supposed to be employed prior to 1939. The question of the employment of these staffs is rather interesting. I have received the following letter from a person whose life has been spent either in the employ of cotton merchants or in the organisation of cotton workers. At the beginning of his letter, this man refers to the fact that I intended to speak. He says that he started as a cotton porter in the warehouses in 1904 and worked in that capacity till 1921, and then became an official of the trade union which took direct responsibility for the cotton warehousing porters in the establishments in Liverpool. Some of the things he says are worth noting: The season for American imports began about September each year and finished in May. In that season millions of bales of cotton came by different lines, White Star, Harrison, Welsfords Booths, and, during the first war and after, by American boats. This cotton was landed in Liverpool and had to be cleared from the docks in 72 hours.… In the business nothing is wasted. The bands, rags and damaged cotton is all sold. If cotton was exported to Spain, Japan or Russia canvas was piled on and bands all charged for as cotton. Twice in my experience cotton was sent back to America to break the rings out there and then burnt. They had another game in which big firms placed cotton on the market which was overstocked. They called this 'docketing,' and all these dockets, about too bales, had to be sampled and taken from one firm to the other in ten days.…There were also instructions to get the last ounce when weighing and men were at each other's throats over short weight. It also used to be a practice on Saturdays to flood the top rooms with water and this soaked the cotton and made it weigh heavier. Of course, we had to watch that the salvage man did not see us. Those are the sort of things that this person refers to, the sort of things that control by a Socialist Government will ensure will not be allowed to happen again.

Prior to the war, all cotton came through Liverpool, and this can still happen. The Government can make arrangements with Liverpool as being the most suitable port through which cotton can come. They can make arrangements in their bulk buying scheme to see that Liverpool plays its part in that type of organisation. There is one thing, at any rate, that might be considered by the Government. It is the question of using the skilled knowledge of people who have been employed in cotton purchasing, cotton sampling and cotton selecting when a scheme is drawn up by the Government and put into operation. The experience and knowledge of such people should be used to the very fullest. The cotton exchange employees, through their Association, are very anxious to give that knowledge to the Government if the Government desire to use it. I want to ask the Board of Trade to make arrangements to meet a deputation of those cotton experts in Liverpool who are employed in dealing with every aspect of cotton selection and cotton purchasing, and to listen to the facts they have to put before them because I am certain the Board of Trade can get this knowledge if it wants it.

The bulk buying scheme goes on from 1st April in one year to 31st March in the next. I understand it is a yearly arrangement in order to keep the matter open and under consideration. The employees are particularly concerned to know whether, for the next period at any rate, the same method of dealing with the situation can be continued so that there can be a breathing space to consider their present position. I would like to have said more, but I know that other hon.:Members want to take part in the discussion. I ask that the very fullest possible use of these people who have the knowledge and experience shall be made by the Government. In this trade, which has been built up by capitalism and capital private interests, there are many trained, expert technicians. Let us use those expert technicians and let us, as a Labour Government, offer terms to them for giving that expert knowledge. They want to be assured that there will be no round pegs in square holes. The people in the industry are anxious that no changes shall be made which would make a lot of staff redundant and make their position difficult. Everybody knows how difficult it is for people between 45 and 6o years of age, who have given most of their lives to a specialised industry, to find new jobs when they are out of work. A Labour Government ought to be able to use to the full the expert and technical knowledge of these people who have been employed in the industry for a long time. I would like to ask whoever is to reply to this Debate to say that as many as possible of such people will have the opportunity of giving the Government the advantage of their very full knowledge

6.0 p.m.

Squadron - Leader Emrys Roberts (Merioneth)

I intervene with some diffidence in what might be regarded either as a domestic Debate between representatives of Merseyside on the one hand, or as a private war between the Government and the Conservative Party on he other hand. I cannot help feeling that there is more uncertainty in this Debate than there has been in any other Debate in this Parliament. There is uncertainty about the facts which this House ought to know. There is some uncertainty about the views of the cotton spinners; that is admitted on both sides. It is also apparent that there is some uncertainty as to the number of people engaged directly and indirectly in the cotton trade. Uncertainty also prevails regarding the financial results of the operations of the Control Board, and concerning the manner in which the Control Board will function. All that uncertainty should not exist in a Debate on an industry which is so vital to the commercial standing of this country, and I cannot help reflecting that that uncertainty is the fault of the Government. It should have been removed before the Government made their original announcement to the House.

My natural disposition when I hear of the gambling and the large scale speculation that have been bound up with this industry, is to come down on the side of the Government and agree with the abolition of an institution which often has played so lightly with an essential commodity with resulting hardship to the consumer and also when firms overreach themselves, has resulted in unemployment far and wide, in Lancashire. But I have tried to consider this matter as dispassionately as I can. The Lord President admitted that there is a speculative element inherently bound, up with the cotton trade, because, whether or not one closes the Liverpool Cotton Market, we shall still have to deal on the cotton exchanges of the world, and the Cotton Control Board itself will have to face that element of risk. I asked myself certain questions before deciding what line I should take in this Debate. First of all, it is essential that any change should result in our being able to secure the raw material for Britain on terms better than those under the old system; in other words, it is no use making a change unless it is for the better. The Lord President said nothing to convince us that we should obtain the raw material more advantageously. In his original statement all the President of the Board of Trade did was to say that the Control Board would get the cotton on terms at least as economical as under the old system. That sort of argument is not sufficiently strong for changing this institution, for closing the Liverpool Cotton Market with its world wide contacts and its great repository of experience—an institution which has performed important services for this country in a commercial sense.

I refer in particular to the earnings of foreign exchange; there again, there is a large amount of uncertainty which ought to have been cleared up. There should have been an inquiry into the position of foreign exchange earned. It is not a matter lightly to be dismissed. We know that the international Cotton Market at Liverpool earned considerable income for this country; first, by profit on the sale of cotton by merchants to overseas buyers; secondly, by brokerage commissions on cotton sold from an overseas grower to an overseas buyer on a Liverpool contract;' thirdly, through substantial arbitration fees; and fourthly, through the visits of people from all over the world to buy cotton from Liverpool and who inevitably became involved in other transactions. Further, as the hon. Member for Wirrall (Mr. Selwyn Lloyd) said, there are other important ancillary services to consider, such as banking, shipping and insurance, dependent to a large extent on the Cotton Market. I cannot help feeling that the Government are throwing away an institution which has been a valuable source of invisible income to this country. Having examined these proposals for public ownership, I cannot think that the Government have made a convincing case for dispensing with this important source of income and foreign exchange. We are told by the Government it is important for this country to export as much as possible, and yet here is a valuable source of income for this country which we are throwing away without any sound case made out for it.

I would like the Government to say what is the relation of this experiment—as experiment, indeed, it is in peacetime conditions—on the International Bretton Woods Agreement. How does State trading fit in there? Is it altogether fortunate that we are embarking on it at this particular time? I would like to know the answer to those points, because I feel that the Lord President skated very lightly over them. He did say the Liberal Party had long ago left the 10th century laissez faire which dominated the Conservative benches, but I may inform him that we are. also far ahead of the specious blandishments which pervaded the Lord President's speech. We want to know how this Control Board will work. Whether or not you eliminate competition at Liverpool, and blot out this picture painted by the Lord President of a mass of men struggling for markets and cutting each other's throats, we shall still have other world markets and world-wide oscillations in price. Even though 'the spinners are supplied by the British Government or by a public board, these oscillations are bound to affect them because there will still be competitors in the foreign markets. How will bulk purchase work when the markets are falling? How will the Government afford cover to the spinners? Will this create another burden for the taxpayer? It may be that the Board will have so much profit that it can well afford to pay out of the profit, as the Lord President said it would, but he said nothing to relieve my anxiety that it may merely make losses. That means that the taxpayer will have to pay for the spinner's cheap raw cotton. The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) inquired whether the Cotton Control Board were, in fact, dealing in futures in the New York futures market at the moment. I would like to know whether the Government is hedging on the New York futures market. The hon. Member who asked that question rather conveyed the impression that that was being done. If I misapprehended him, I am sorry, but that was my impression.

Mr. Marquand (Secretary, Overseas Trade Department)

Perhaps I should say, that Question was on the Order Paper today and the answer was, '` No, Sir." The Government are not hedging on the New York futures market.

Squadron-Leader Roberts

But in spite of that assurance that they are not doing it at the moment, the Lord President did say in his speech that they would be providing cover. And yet how can they provide cover without hedging on a futures market? We would like that cleared up.

I would like whoever replies for the Government to clear up another point also. I think there is a case for regulation of these oscillating prices and these unstable commodities, but I feel the approach could be done much better, by starting to work through an international organisation rather than beginning through a State trading organisation which may jeopardise the Bretton Woods Agreement. We have not had any assurances or explanations on that from the Government. In the present state of the world economic position, a free organised market will produce the most desirable result; Government trading may make the Bretton Woods Agreement more difficult to operate. For the reasons I have given, I feel that the balance of the argument is with the Motion. Therefore, unless we have those arguments answered satisfactorily, I shall support the Motion.

6.12 p.m.

Mr. Rhodes (Ashton-under-Lyne)

Having listened to the Debate this afternoon, it seems to me that the case put forward by hon. Members opposite has been for one section only; not for the hard working mill managers, or for the persons in the mill, but for the people who, in the past, have been sitting pretty and have taken the loot. The hon. Lady the Member for Exchange, Liverpool (Mrs. Braddock) gave a quotation from what Sir Charles Macara said in the years between the wars. That was quite right. The late President of the Board of Trade tied to make out that there is no harm in the gambling which goes on in this trade. I came back after the last war, and put my wound gratuity into a small business, having had two and a half years in hospital before I did so. Unfortunately, with the ex-Serviceman's ill-luck, I bought when the commodity was high.

Mr. Beverley Baxter (Wood Green)

Hard luck.

Mr. Rhodes

As the hon. Member says, it was hard luck. It was 7½d.; it went to 32d., and came back to 5½d.—all in 20 months. By looking the matter up I can verify it, but it is there in black and white for anybody to see. If that is not speculation, what is? It may be argued that because of the conditions during the war, and the need for stuff on the shelves, it is very necessary for the price to go in that direction. However, there is no doubt that the variation in cotton prices in that time was directly due to outside gambling. The late President of the Board of Trade mentioned the countries producing cotton. I say he omitted quite a lot; in point of fact, he omitted 20. There are 36 cotton producing countries. The major cotton producing countries, producing 90 per cent. of the world's cotton are, United States, Brazil, China, India, Russia—nobody has mentioned Russia in this matter — and Egypt. Of the remaining 10 per cent., 6 per cent. is produced by five countries, 2 per cent. by four countries and 2 per cent., I admit, is taken up by the remaining 21 countries. In the case of Peru, Uganda, and Brazil, there never has been a perfect cover on the Liverpool cotton futures market. It has been an absolute impossibility for spinners in Lancashire, requiring, say, a super-white yarn for hosiery, to have a certain market because there has not been a cover. I agree a cover was provided under the cotton futures Market. However, the new system, brought in a week ago, definitely gives a cover for every single growth in the whole wide world, and covers it adequately and properly. The result is that at the present time a spinner can look with confidence to his future. He does not need to go to bed at night wondering whether the market is going against him or not.

The arguments which have been advanced from the other side have been for one small section of the cotton industry, which is incidentally almost out of the cotton industry. Why on earth did not the right hon. Gentleman opposite use the strongest argument for the continuation of the Liverpool futures market and the machinery set up there? He has missed it altogether; he fluffed it. I will put it into his mouth and carry on with the argument if he likes. It is the question of selectivity, and the ability to put the cotton, when it comes from America, on the table of the spinner in Lancashire in August, so that he can see what he is buying, and follow on from year to year. In the days before the war, it was a system that worked. However, do not forget this, that there has been a war. There was a war in 1914 to 1918. As far as I have been able to see, from 1921, when I came out of hospital, until 1939, the business elements in this country were hankering, with a kind of nostalgia, after conditions which obtained before 1914. The same applies to some aspects of trade unions too. What about the trade rates in the cotton industry? They are all based on 1913. Every time anybody mentions cotton wages, it goes back to 1913. That mentality goes back to the time of acceleration in the trade.

Whatever Government were in power, we could not possibly bring a cotton futures market into-operation for some time to come. With the present state of the world, there will be more national buying. There is no question about that. It has come to stay. In my opinion, there can only be genuine peace in the world by international cooperation and allotment of commodities, as has been said so often. The Atlantic Charter, Dumbarton Oaks—they are all the same. There must be a distribution of commodities to the places in which they are most required.

On the question of selection, I would put a few remarks to the Parliamentary Secretary to the Board of Trade. In Lancashire, there are people who cannot be equalled in any other country in the world. They are technicians, whose enthusiasm as cotton mill managers has given them an asset which no other country in the world possesses. I will explain it. It is easy to set up a cotton industry in any country where there is a background of primitive textiles. They can start making mass-produced cotton goods quite easily, so long as they have that background to carry them over the initial stages. But it is the years of experience that these Lancashire men have got that form one of our major assets. During the war, great strides have been made in setting up mills in other countries. In January I was in Switzerland, observing the development of textile machinery. Some people think that Switzerland is negligible as an engineering country—[HON. MEMBERS "No "]—all right, but I have heard it said; I agree with those who said "No," because I do not think it is. The number of automatic looms which I estimated were being produced in Switzerland was in the region of 5,000 per year. This is serious. When the Platt Commission came back from America they definitely said that the Lancashire cotton trade needed 200,000 automatic looms to set the industry on its feet. That was a few years ago. Our present rate of production of automatic looms is 6,000 a year. How long will it take to catch up? Shall we ever? It is very unlikely.

Mr. Erroll (Altrincham and Sale)

Can the hon. Member say what this has to do with the cotton market?

Mr. Rhodes

At the present time we can see that we shall lose a percentage of our mass-produced trade, so we must, without any question, give all the support we possibly can to the men in the industry who have specialised knowledge and can produce specialised cloths. Let me give an example. There is the question of the difference in grades. A man who is making super sateens requires a bright cotton which he purchases from the region of North Carolina. He could not use Brazilian for that. A tremendous lot of care will have to be taken by the Board of Trade to preserve the speciality lines which, in my opinion, are our hope for many years to come, and I hope that if he replies the Parliamentary Secretary will be able to say that we are taking steps to do so.

6.24 pm.

Mr. Walter Fletcher (Bury)

The extremely cogent argument of the hon. Member for Ashton-under-Lyne (Mr. Rhodes) against having a Cotton Board of great assistance, because it brings us back to what the Lord President of the Council said was the hub of the whole of this Debate. Will this new Board, when it is set up, be more efficient than the Liverpool Exchange or not? That is the whole of the argument. A great deal of other ground has been covered, but we have to come down to that, and so far, I have not heard a single argument to show that we can expect anything but an organisation, built up painfully at the expense of the public, which might, with good luck, be equal to the one which the Government are now so eager to destroy and that for the home trade only. The Lord President of the Council quoted "Alice in Wonderland "; his arguments also came from "Alice in Wonderland," and seemed to be based on the good old saying, "If I say it three times, it is so." But that was not very convincing to those of us who have any knowledge of this trade. I must confess to having been an associate member of the Liverpool Cotton Exchange for a good many years, and a good many years before that to having assisted in cotton growing in Uganda, and I have also dealt with commodities and been connected with commodity exchanges all my life. The one ray of hope that has come out of the Debate so far is the very clear statement made by the right hon. Gentleman that they do not propose that the action which they are now taking will be a sealed pattern for all other commodity exchanges, but when this experiment which they are undertaking fails, as it undoubtedly will, the, will not go on repeating the error.

The right hon. Gentleman used one expression which surprised me. He referred to the day-to-day working of the Liverpool Cotton Exchange as a series of "accidental transactions." What are these accidental transactions? They are, in fact, the vital and essential transactions which allow the manufacturer at this end to get exactly the grade and quality he wants when he wants it, and to fix a price for it, so that he can, in turn, pass it on in his sales, home or export. On the other hand, it allows the growers throughout the world to fix the price of their crops a good way ahead, which is not a gambling transaction, as appears to be believed on the other side, but is a necessary precaution to allow the producers to know their wage levels, and how they will stand financially at the end of the producing season. If hon. and right hon. Members will get it into their minds that that is the true function of any commodity exchange, and that such an exchange cannot exist unless it exercises that function, we should get well away from the red herring of speculation which has appeared so frequently in this Debate.

A suggestion has been made that the great inherent skill of Lancashire should be put at the disposal of this new and rather amorphous organisation which the Lord President was quite unable to define in anything like recognisable terms as a working entity. Many references have been made to skill in selecting and buying cotton and in working it on the loom; it is an inherited skill and a very great one. I would point out the inevitable result of putting it at the disposal of the Board. It is no use pretending that this publicly-owned corporation is anything. but a Government Department, once or twice removed. It is a very close relation, and the Government will be responsible for its relation, as we all find ourselves from time to time, and the taxpayer will have to pay for it. But what will happen? It will be like every Government Department or Government organisation of that sort—the U.K.C.C. was a good example during the war. Sooner or later the urge and the incentive which have made the Liverpool and Lancashire cotton buyer or cotton selector such an efficient man will go. It will depart altogether, and he will come to depend on pleasing the man next or next but one above him in the hierarchy.

It will not make any difference to him what the spinner says about it at the other end. There can be no mistaking that one of the inherent vices of bulk buying is that the spinner will have to take what he gets, and cannot ask for and get what he wants. That is the vital difference. It reminds me of the story of a man in the Far West town who went to a small restaurant, and was presented with a menu containing about 30 dishes. He selected half a dozen, but then mine host, with a large pistol in his hand, came along and said, "Stranger, you'll have hash." That is exactly the position of the spinner in Lancashire under this new scheme. He will have the hash that the Government will make of this particular transaction. I challenge anybody on the Government Benches to deny that we cannot sell to a man who is a spinner what we have not got in the country In stock. Government bulk buying is vicious and wrong from this point of view. It will always be infused with the political taint.

Nobody in the world knows better than the Chancellor of the Exchequer what happens when buying has to be done for other than purely economic reasons. He was Minister of Economic Warfare and I was his humble and very distant servant at the time. He knows that when, during the war, preemptive buying in Spain and in the Middle East had to be done, the prices paid were political prices and not economic prices, incredibly high. When Governments get together for transactions of this sort, then prices gradually get out of line with the economic price and become purely political ones.

Look at some recent transactions. There is the five-year contract for the purchase of copra in one part of the world which is going to guarantee that in three or four years' time prices will not be hopelessly out of line. What happens then? One of two things: either the British housewife will have to pay more for her margarine than she ought; or, if it is a question of exports. a subsidy out of the pocket of the Government has to be given to maintain our exports. That is one of the evils of bulk buying. The other is that it gives the Government the illusion that they have a much greater measure of control over world prices than in fact they have

We heard this afternoon one very curious statement, that there was a practice previously in Liverpool by which cotton was kept locked in warehouses in order to effect an alteration in price. I do not know whether this is a myth or a figment of the imagination, but it is certainly not in line with the facts known to everybody who has an interest or who should have taken an interest in cotton. There were between 7,000,000 and 10,000,000 bales of cotton lying in the hands of the Government of the United States of America. It was that enormous bulk and the question of how and when it was to be released that weighed over the market and margin prices.

What is to happen in these circumstances, when there is a surplus of cotton in the hands of the United States and our Government go to buy? Their position is absolutely hopeless. They can be dictated to. Whereas, if the transactions were carried through by "Mr. A "in Liverpool, knowing his opposite number in America, his opposite number being able to go to the American open cotton market to buy cotton in moderate quantities to fit in with the order he had from the spinner, then no disturbance of the market would take place. The total price paid for the same quantity as would have been purchased by the Government in bulk is spread over and weighs infinitely less in the market. The time factor comes into this. If one purchases 100,000 American bales of cotton over months instead of buying it all at once at the price on that one day, it is infinitely better. The gamble is practically nil. By buying in bulk and negotiating through diplomatic or official channels one always gets the wrong price. Such a powerful triumvirate as the President of the Board of Trade, the Lord President of the Council and the Chancellor of the Exchequer, armed with half a dozen mandates and a few Orders in Council going over to America, would not be able to get a better bargain. The Socialist Government in Australia have not been able to prevent two consecutive years of drought. It is worth while pointing out facts like these to hon. and right hon. Members opposite to show them the truth and to show them how to look at schemes like this objectively and not politically.

The Liverpool Cotton Exchange is a well-established organisation built up through many years. Every cotton exchange in every country in the world has paid its tribute to the Liverpool Cotton Exchange as being essential. I was engaged in 1939 in the project for releasing the 10,000,000 bales of cotton in the hands of the American Government so that they could be evenly distributed in an orderly way throughout the world. I negotiated with the Government of the United States on that particular project. It came very near to completion. It was only a legal difficulty that held it up in the end. I should like to inform Members of the House of the fact that it was the insistence of the American Government at that time that the Liverpool Cotton Exchange was to be used as the basis for the prices for this transaction because they thought that was the correct means of ascertaining world prices and of how to distribute that cotton evenly.

In six years trade throughout the world has been destroyed. We come to the end of the six years. One of the first actions the Government take in Liverpool is to destroy something which Liverpool, by and large, admires, which is recognised to be of importance. It is capable of improvement. I noticed a phrase in the statement of the Board of Trade referring to the cotton market and saying that the prewar type was no longer needed. We can modify that machine. We can have controlled and canalised speculation. But because there may be weaknesses in it and it may need improvement it is the height of folly, which will be remembered against this Government and against the President of the Board of Trade and the Chancellor of the Exchequer in particular, to destroy, at one blow, that organisation earning foreign exchange and fitting in with Bretton Woods and international commerce, especially when the Government have not been able to show that they can replace it with anything better at all.

The indignation of this House ought to be expressed very strongly. We shall have a display of forensic brilliance from the Chancellor of the Exchequer in a few minutes, I do not doubt. I would say to the House, "Do not trust him, gentle maiden." On this occasion he will pull not only the wool, but the cotton over our eyes. Let us make certain of one thing. This Thames-side octopus, the Board of Trade, is about to put a tentacle across the Mersey and the Wirral. The Chancellor of the Exchequer may say it does not belong to him. But, nevertheless, it is to be London controlling Lancashire and Liverpool trade. As one representing a Lancashire industrial constituency—and there are not so many of those animals on this side of the House—I should like to say with fervour, to the Government: " Use your great strength, use your great power in a way that will do you good throughout the country and earn you the real gratitude in the years to come of the country and even of hon. Members on this side of the House. Reconsider your decision. Show your strength by compromise and not by slaughter."

6.38 p.m.

Mr. Fairhurst (Oldham)

I have been disappointed with the Debate this afternoon, and especially with the speeches from the Opposition Benches. I feel that I could have brought half a dozen mill managers from Lancashire who could have made a better technical case than our friends on the Opposition Benches have done. I have only a very limited time, and so I shall have to cut out a considerable amount of what I wanted to say, but I want to remind the House of the Balfour Report of 1924, Part 3, "Survey of Industries." Dealing with the Liverpool Cotton Market it states: In the range of cotton dealt in and the extent of business, Liverpool is the most important market in the world. It is far more than a mere channel through which the raw material of the industry is obtained. It is a highly organised speculative market, with all that that implies. It seems to me that most of what we have heard this afternoon from the Opposition Benches has come from the memorandum submitted by the Liverpool and Manchester Cotton Association. I suggest that this is a highly profitable venture for those concerned, and that it did not help the industry when the industry was in a slump. Nor can it be denied that managers of spinning mills and weaving establishments have passed many sleepless nights owing to the sometimes violent. oscillations of the cotton market, the many hourly, daily and weekly fluctuations of that same market. People who argue that gambling was unknown on the Liverpool side, are people who do not desire the full facts of the case to be known. There have often been times when the spinners and manufacturers have simply not known what to do or how to face the problems caused by Liverpool and Manchester. The position before us resolves itself into how best to buy raw material to feed the Lancashire cotton industry. ' Is the system which has grown up with the industry, the now highly organised and profitable affair, the best one possible, or is the method forced upon us by the war more direct and sensible? Has not the method adopted during the war proved itself to be a less speculative way for the spinners to get the raw materials which they required? Has it not been found, within the structure built up under war circumstances, that there is a possibility of a far more stable edifice, with less gamble and more safety? Will not the proposed method more closely conform to a new superstructure which must be erected if the cotton industry is to survive and flourish?

Sir William Darlinģ (Edinburgh, South)

Will the hon. Member please read that again?

Mr. Fairhurst

Is it possible for the methods and technique of the Liverpool cotton market, as it has been known in the past, to fit in with changed methods of production? Remember that the chaos in the cotton industry prior to the war tended to strangle it, and this was evident not only on the spinning and manufacturing sides, but also on the Liverpool and Manchester side. I cannot visualise any working party in the future existing long, if it fails to realise or ignores the impact of the revolutionary conditions which we shall have to face m the new industrial world.

We have been told that the whole business is a highly intricate one. I have spent a considerable time in ascertaining the facts, and I want to put the case fairly. Liverpool and Manchester have at times been definitely antagonistic to the industry. Many times, when the manager goes to his mill in the morning, the first thing he has done is to get hold of his "Manchester Guardian and to have a look at the price of cotton. Immediately he finds that something has gone wrong, and then for the rest of the day he has done everything he can to put right what has gone wrong at the Liverpool end. Often he finds, when he has done that, something has gone wrong at the Manchester end, and in consequence he has spent all his day bothering about Liverpool and Manchester. Considerable fortunes have been made in Liverpool, and those concerned have not cared "a tinker's cuss" about the industry so long as they could get a rake-off. I suggest to the Government that the pronounced policy is sound. It will stand the test of time, and it will eliminate the gamble and the speculative element in the industry. If it does only that, it will have done a really good job.

6.45 p.m.

Mr. R. S. Hudson (Southport)

The hon. Member for Oldham (Mr. Fairhurst), in the very interesting and thoughtful speech which he has just made, put his finger on the real point of this Debate. He said that the real problem we have to settle is how best to buy cotton for Lancashire. He asked whether the old method which was tested before the war was the best method, or whether the system which has been evolved during the war should be developed. That is the problem which the House has to face today. I am not without sympathy with the Lord President of the Council in the position in which he found himself during these last few days. I am not blaming him for this, but he clearly knew little about the subject and was speaking from a brief. As my right hon. Friend the Member for Aldershot (Mr. Lyttelton) said, it was, judging by his speech, a very half-hearted brief. The Lord President spent a considerable time, in the early part of his speech, defending himself against the accusation that this scheme had been brought in without prior consultation, and without adequate time for consultation between the different sections of the industry. He said that the industry last November had put their case before the President of the Board of Trade, and that again they had seen him yesterday. That is not consultation. I would remind the Lord President of the Council of words he used in a Debate in this House on 18th February, 1943. He stated: "This is a country in which, if you do things without giving reasonable opportunities for consultation with the persons who are affected—I am not talking about the vested interest necessarily, but about organised labour and the professional associations—they will be very cross, and there will be trouble."—[OFFICIAL REPORT, 18th February, 1943; Vol. 386, C. 2047.] He went on to say that the word "consultation" is a very blessed word. His interpretation of the word "consultation" has "suffered a sea-change," since he was a member of the Government of my right hon. Friend the Member for Woodford (Mr. Churchill). No one can begin to agree that what, in fact, has taken place has been consultation.

In the whole of the speech of the right hon. Gentleman today, he did not attempt to answer the very pertinent question put by the hon. Member for Oldham. The question is what is the best way to buy cotton. All the Lord President said was that he considered his scheme was the best, and he did not give a vestige of evidence to show how it is best, or why anyone thinks it is best. He stated that a certain number of people in the spinning industry agreed with it, but did not tell us their names, or whom they represent, but merely said that they were progressive. The test of these things is experience, but, before we pass on to that, let me deal for a moment with this problem of speculation. Practically every Member on the opposite side of the House has talked about the evils of speculation. The right hon. Member for Aldershot was at pains to show that, although there may have been a certain amount of gambling outside, the essential functions which were discharged by the Liverpool market before the war was the elimination of speculation as far as the spinners were concerned.

Over a long period of time, a scheme had been worked out by which the spinner who entered into a contract to sell yarn could be assured that, however long it took to complete the contract—whether six weeks, six months or a year—during the whole of that time, provided he had hedged in futures, he would be able to get cotton at the same price. This is a point with which the Lord President of the Council entirely failed to deal during the whole of his speech—that the spinner was confident and knew that he could buy cotton on a particular day as cheaply as any of his competitors abroad. He was certain that on that day, no other spinner, whether in this country or abroad, could tender for that contract on a cheaper basis. The new scheme, as we understand it from the little amount of explanation which the Lord President of the Council has given, does not deal with that at all. We shall be glad, when the Chancellor of the Exchequer comes to reply, if he will follow up with details. The spinner in this country requires reassurance against two risks. He requires reassurance against the risk that during the process of manufacture he will not be able to get cotton at the same price as he originally bought it, and against the risk that someone abroad will be able to buy cotton cheaper.

The great danger of this scheme is that the spinner is being asked to quote at a fixed price, so far as the foreigner is concerned, but not so far as his English competitor is concerned. He is gambling, if he does that, with both hands tied behind his back, because the foreigner, by "hedging," is able to assure himself that the price of cotton in the world market will not alter. All the Englishman is assured of is that if there is some internal levy, at some future date, he may be reimbursed for any increase in the price of cotton that may take place. That will not put him in a good competitive position at the moment.

I think it was the hon. Member for Ashton-under-Lyne (Mr. Rhodes) who said that whatever else the cotton merchants in Liverpool did before "the war, they certainly made plenty of money. Let us examine that. It is very common for speakers to talk about the middlemen as parasites. What does the middleman actually do for the cotton industry? He handles the crop, he moves it, he finances it, he classifies it, he distributes it, he blends it, and, finally, he holds it until it reaches and is absorbed by the mills of the world. As a result of years of experience, and because you have some of the keenest business brains in the world in Liverpool and Manchester, Liverpool has become the centre of the cotton markets of the world. Why is a Liverpool quotation and contract taken as a standard for the world? Because the business men of the Cotton Market of Liverpool have proved, over many years, that they are the most efficient in the world, and provide the best services to the world, and, therefore, they have attracted the custom of the world. That is the result of the development, over the years, of modern methods of financing large consignments of cotton, and they have brought the cost of doing this so low, that it represents a negligible percentage of the total cost of the turnover. The Liverpool cotton merchant is prepared to carry out the various services which I have enumerated, at an average cost of one per cent.—£1 per £100.

The right hon. Gentleman the Lord President of the Council claimed that under their new scheme, they would give a better service to the manufacturers and spinners than is given by the present merchants. What possible basis has he for that claim? Can he point to any Government Department, to any State-sponsored corporation, that will provide administrative conveniences at as cheap a rate? Let him take, for example, a Department where there is no risk at all—the administration of unemployment insurance. That is a perfectly fair test. Does the House know what it cost immediately before the war to administer unemployment insurance? The cost was nine per cent.—nine times as much to administer something which entailed no risk at all, compared with the risk of the administration of the whole of the cotton transactions done by the middlemen of Liverpool. There is no reason to believe that a corporation set up on the lines suggested would do any better.

The right hon. Gentleman claimed that the relations between this corporation and the manufacturers would be closer and more pleasant. That is not so, if experience during the war is any test. The cotton spinner before the war was accustomed to receive at the hands of his merchant first-class service. He ordered various qualities of cotton, exactly suited to his trade. The merchant provided him with a continuous run. It was exactly the same, week after week, month after month. If, by chance, there was a variation, the spinner was entitled immediately to ask for damages or claim rebate, and to go to the Court of Appeal. What happens today? The spinner is told, "Here is your bale "of cotton, and you have to buy it with all faults." He has to take exactly what he is given. If he complains, the controller says, "Do the best you can with it. You have no competitors. We take whatever you produce, and we are paying a handsome margin for manufacture, so what is your trouble? "That is all right in war time, but what chance is there of administering a scheme like that in peace time, with competition abroad, and when everything depends on getting the right type of cotton which you require. With the increase in cotton spinning, and manufacture abroad, we have to rely on superfine quality—on the very best—and how can the spinner do that, under the conditions to which he is subjected today? What guarantee is there that the corporation the Government propose to set up, will be able to give him the same service as he gets from three or four people all competing for it? The Government can now say, "If you do not like it you can leave it alone."

The Lord President of the Council talked about the cost. At present, the whole of the risk at any rate during prewar years was shouldered by private enterprise, and it did not cost the taxpayer one penny. What is the future going to be? My right hon. Friend the Member for Aldershot pointed out the disadvantages of bulk purchasing. The Lord President of the Council said it was much better and the Government would actually get much better terms through purchasing through, one or two centralised bodies rather than having to depend on a number of independent individuals. What proof is there of that? What happened during the war when we had bulk purchases? Do not let us forget there are no inherent advantages in bulk purchases except when dealing in manufactured goods from a standardised line—goods which come off a machine where the advantage of a long run is secured. We are not dealing in anything standardised when we talk about crops and especially cotton crops, and there is no inherent advantage in bulk purchase. On the contrary, there are grave disadvantages, because when everybody knows that there is a single purchaser, the sellers get together and "gang up "on that individual purchaser. That has happened in practically every case where the bulk purchase of crops has taken place.

We have had a lot of experience of it during the war. The Lord President of the Council knows that perfectly well. He was in the Coalition Government and he knew what was happening. He never said one solitary word as to the machine to be used in the Government's new corporation suffering from that grave disadvantage. What did happen during the war? For example when Lord Woolton —and I imagine no one could find a keener buyer than he is—was buying through a large number of individuals in the early days he paid 75 cents for wheat. When the purchase was concentrated in the hands of one buyer, and every one knew who that buyer was, and that it was the British Government, the price of wheat advanced to 85 cents in precisely the same circumstances. What happened in cotton?

Mr. H. Morrison

Does the right hon. Gentleman assert that we could have bought food cheaper during the war if there had been a lot of competitors in the world's market; and is he now a strong opponent of the bulk purchasing of food? I thought he was a supporter of it.

Mr. Hudson

I am glad to have elicited that interruption; I was rather hoping for it. The right hon. Gentleman stepped right into it. There is an essential difference between food and cotton.

Mr. Morrison

Does the right hon. Gentleman support the bulk purchasing of food?

Mr. Hudson

I support the bulk purchasing of food.

Mr. Morrison

I am glad to get the Tory Party tied down to something.

Mr. Hudson

No one to my knowledge, on either side of the House, has ever suggested that to get food as cheaply as possible it should he got by bulk purchase. As between food and cotton, quite different reasons apply. What we try to do in the case of cotton, is to buy the raw material as cheaply as we possibly can for our manufacturers who require it cheaply in order to help them to compete in the world markets. The question is, Will the bulk buying of cotton make it cheaper? We can see what happened in bulk buying during the war. We decided in 1941 to buy Peruvian cotton. The world price before the Government's first inquiries were cabled to Peru on 13th June, 1941, was 6d. a lb. The Chancellor of the Exchequer will appreciate that, because he was at the Board of Trade. The first purchase was made on 13th July, exactly a month later, but during that period the price rose from 6d. to 7.26d. a lb. and by the time the Government Control had completed its purchase of a fixed quantity, the price had gone up to 8.75d. per 1b.

The right hon. Gentleman was asked by the right hon. Member for Aldershot to give some figures and information as to what happened in his purchase of cotton on the New York Exchange since Lend-Lease ended. I shall be very glad to be corrected if I am wrong in the figures I am going to give. My information is that the price of May futures in New York on the date of the Control's first inquiry on 16th January, 1946, was 24.47 cents per lb. The date of the first purchase was 21st January but by that time the price had gone up to 24.65 cents per lb. and on the date of the fixation of the price of the first purchase to 25.50 cents per lb. Those two examples, I think, are fairly conclusive evidence of what happens when a Government goes into the market and is known to go into the market. The interesting thing about this last case in New York was that as soon as the British Government had finished their purchase, the price immediately fell.

What has been the result? The result has been that if the British Government had passed on to the cotton manufacturer the price paid, they would have been handicapped by comparison with foreign competitors, to the extent to which the Government bought at too high a price. What has actually happened is this. The Lord President of the Council said that the Government were balancing their expenditure with their receipts. I am told —and I should be glad for the Chancellor of the Exchequer to correct me, if I am wrong—that at the present moment cotton bought in New York is sold to the British manufacturer at something like 2d. per lb. less than it really costs the Government. That obviously involves the taxpayer in a loss, but the Government are making up the loss by grossly overcharging the British spinner for cotton brought from Egypt and other parts of the world. That may be all right during a period like this when the whole thing is in a closed economy, but when we get back to real world competition and when markets are free it may be an advantage to sell American cotton at 2d. cheaper to British manufacturers, but the Government will not be able to overcharge British manufacturers for cotton bought in Egypt or in some other place like that, because the spinners of Egyptian cotton will be unable to compete with the foreign spinner who is able to buy Egyptian cotton at a much cheaper rate. Then the Government will inevitably face a huge loss which the taxpayer will have to bear. Therefore, I suggest that there is nothing that we have heard today to suggest in any way that this new system is going to be better for the spinner or put him in a better position than he has been in the past and there is nothing to show that it will not cost the British taxpayer sums of money, and possibly very large sums indeed.

There are two other arguments to which I want to refer briefly. The first may appeal to Members opposite. They have been preaching for years the benefit of internationalism. The Chancellor of the Exchequer, when he was President of the Board of Trade, was extremely anxious to see an agreement made with the United States Government. Since then he has supported the same thesis in this House, in speeches advocating the maximum expansion of world trade on a multilateral basis. I am sure he would not disagree with that. He has always argued that it is to our advantage, as a nation, that trade barriers should be reduced, that all encumbrances to a free flow of trade all over the world should be abolished as far as possible, at any rate, that the maximum free flow of trade should be secured. In order to do that he has been prepared virtually to eliminate in the Imperial ties of Preference—

Mr. Dalton

No.

Mr. Hudson

There is nothing in the world which represents, to a higher degree, the idea of multilateral trade in a free market, than the Liverpool cotton industry. The Government intend to abolish that in favour, not of a bilateral system, but of a unilateral system. I therefore find it difficult to see how the right hon. Gentleman can reconcile his present attitude.

My final point is this. From the dawn of history a succession of communities have risen to greatness in the world on the business of turning over goods. Phoenicians, Venetians, Carthaginians, Greeks, Dutch and, finally, ourselves, attained that position because they, and we, performed a service which was required by the populations of their and our respective eras. In addition, we have benefited by our historic policy of being a country which has offered refuge to persecuted sects or individuals. In the Middle Ages we owed the great development of our cloth industry to the asylum we gave to the Huguenots. Since then, we have given asylum to men and women who were the victims of Nazi persecution. We have benefited by that policy. In fact, you may say that we have imported, not unemployment, but employment as a result of that policy. It is ironic that the first people to reverse that historic doctrine, on which this country has become so great, should be a party which calls itself "Labour." What the Socialist Government are doing, by their policy, is to select a particular set of people for persecution. The Lord President of the Council admitted that when he said that this particular industry, or part of it, was being selected, and that others performing similar functions would go scot free. The Socialist Party, by destroying the businesses of these men in Liverpool, will be exporting, not unemployment, but employment.

Make no mistake about it, just as a watch cannot go without a balance wheel so world trade in cotton cannot exist without a futures market. Close Liverpool, and the world will have to find an alternative. There are plenty of claimants to the succession. Rotterdam, Antwerp, Ghent and Havre all enjoy more or less the very special advantage which Liverpool has by virtue of its geographical position and hours of opening of its market, overlapping, on one side, in the West, New York, and on the other side, in the East, Bombay and Alexandria. Close Liverpool, and one of those four cities will take its place. Close Liverpool, and you are gratuitously transferring to one of our competitors all that body of invisible exports, all that great national prestige involved in shipping insurance, arbitration fees, margins and the like, which Liverpool has built up over the last 100 years—

Mr. Edward Porter (Warrington)

It produced unemployment for the cotton weavers of Lancashire. Can the right hon. Gentleman solve that?

Mr. Hudson

You are gratuitously giving away all the things which Lancashire has built up. Well might the Lord Mayor of Liverpool, a Socialist—not a bloated capitalist, or a wicked speculator—say "I am satisfied that a grievous blow will be struck, unless the Government do not suspend their scheme, and take into closer contact the people involved in it."

7.17 p.m.

The Chancellor of the Exchequer (Mr. Dalton)

We have had a most interesting Debate on an exceedingly important matter for the future of our country. I think I shall get agreement in my first statement, namely, that whatever the view of the Government on this subject might be it would be quite impossible to revert now, at once, to the prewar arrangement, even if that was desirable. I gather that the right hon. Gentleman opposite agrees with that. It would be quite impossible to do it yet. It would be quite impossible, I am informed, even if we desired to do it, to do it for two or three years. On the other hand, again apart from whether or not our decision is right—and I shall argue that it is—there is much to be said for giving certainty and decision in this matter. Delay, ambiguity, the possibility of not knowing either one way or the other, with nobody knowing where he is or being able to plan the future, is a most undesirable state of affairs[Laughter]—well, I should have thought so. In other matters I am often told so from the Benches opposite. I say that it is right to terminate uncertainty, and that is what we have sought to do.

During the war we learned, I hope, a great deal. Among other things, we learned how it was possible to organise the purchase and distribution of cotton under a new system, a system very different from the prewar system to which Members opposite would like to revert when it becomes possible. When I was at the Board of Trade I gave close and anxious attention to this matter, and sought to inform myself fully about it, and I found that the way this industry was organised during the war was one of the outstanding administrative successes of our war economics.

That is largely due to the fact that it had at its head a man of very great and outstanding experience, business acumen, and dynamic personality, Sir Frank Pratt, a remarkable personality who did a magnificent piece of war service in his organisation of the cotton control. He is himself a spinner in a large way and was head of the Lancashire Cotton Corporation before taking over the cotton control. He has now gone back and I am permitted to say without any breach of confidence—because I have been speaking with him and seeking his advice with that of others on this matter—that he is emphatically in favour of the policy which the Government are putting forward. When hon. Members opposite ask, "How is opinion among the spinners? "that is a very reasonable question, but account must also be taken of the number of spindles for whom the spinners speak. Sir Frank Pratt is entitled to speak for a very great many more spindles than any of those who have taken the other view

Mr. W. Fletcher

For less than 10 per cent.

Mr. Dalton

Ten per cent. is not a bad figure to begin with when you are building up support. He is definitely on the side of the Government in this matter and thinks that it would be very injurious to the productive capacity of Lancashire to revert to the prewar arrangement or anything like it.

I should like to say a word about the fluctuations in the prices of cotton.

Squadron-Leader Fleming (Manchester, Withington)

rose

Mr. Dalton

I should like to go on if I may. Time is getting short and I do not want to detain the House too long. We are running a little behind the time table, and although I make no complaint about that, I should like to be able to state the case in my own way. With regard to the fluctuations of cotton prices the right hon. Gentleman who opened the Debate used an argument—which I find rather theoretical—that speculation tended to stabilise prices. I remember reading that in an old textbook many years ago, but I have never really believed it and I do not think the facts as they were before the war support the view. I hold in my hand a table of figures showing the fluctuation in the Liverpool, spot cash per pound prices of certain principal types of cotton, including middling American, in the years before the war, when there was no economic reason for fluctuations as wide as are shown here. It was the great amplitude of these fluctuations which was one of the disadvantages against which the Lancashire industry had to struggle, and in order to try to cope with them it had to make up these very ingenious inven- tions of futures markets, hedging and so on.

I will quote one figure only in order to state the case to the House. If we take the To prewar years and consider the fluctuations over the yearly periods, we find that in no fewer than five out of these to years there was a fluctuation between the highest and the lowest price in the course of the year of 45 to 65 per cent., and in one year the range was even greater than that—it went up to 66 per cent. I venture to say that that is far beyond any fluctuation which can be justified by the weather or the boll weevil of which the right hon. Gentleman spoke.

Mr. Lyttelton

Will the right hon. Gentleman also give the figures for the fluctuation of the yield per acre, or lay some emphasis upon it?

Mr. Dalton

I admit that the weather and the boll weevil were not inactive agents in this matter. When the right hon. Gentleman was speaking I ventured to ask him a question as to whether the figures he was quoting referred to the United States only or to the world as a whole, and he replied that they were for the United States. So are the figures I have just quoted, but the particular proposition which I submit to the House is that when we take account of the many different sources of supply all over the world—which tend themselves to have a certain stabilising influence as between themselves since the boll weevil is not equally active at any given moment in all the different areas of North and South America and all the other Continents—these fluctuations are much too wide to be defended. Outside speculators deliberately operate in such a way as to bring them about and that is one of the things against which the cotton industry has to be protected. In all the discussions we hear, including the right hon. Gentleman's very clear and interesting speech, a veil of silence and reserve is always drawn over those persons who, having no stake at all in the industry, butt in and conduct speculative operations made possible by the futures market and hedging facilities, and who sweep the prices upwards when they are tending to go up and downwards when they tend to go down. And largely because of their ignorance of the market and conditions in the industry, their tendency is always to exaggerate the existing movement of prices.

This is my view, and it is also that of many well qualified to speak, including Sir Charles Macara. I was very disappointed to miss the speech of my hon. Friend the Member for Exchange, Liverpool (Mrs. Braddock) because she gave a most admirable quotation which I had by me also and which I was intending to use. Since she has used it I must not repeat it, but Sir Charles Macara—who was President of the Master Spinners' Association and is entitled to speak on the subject—states in powerful language and with great emphasis what my hon. Friend has quoted. It is on the records of HANSARD and will, I hope, be read by anyone who did not hear it. He said, in effect, that the trouble in Lancashire came not from within the industry but from outside gambling. The spinners, the manufacturing worker, and even the merchant make sacrifices while the gambler walks away with the loot. That was the view of Sir Charles Macara. [Interruption.] He was a great man. He was not a Member of the Labour Party and I do not know what his politics were, but he knew what he was talking about.

Mr. Churchill

He also said that it was impossible to see how the cotton industry could be conducted without a futures market.

Mr. Dalton

No doubt it was bearing that in mind, too, that the very able persons who now organise the cotton control have made a provision which will be a substitute under this new policy for the futures market and which will indeed be much more effective. Here I quote the "Manchester Guardian "trade notes of r9th March, which say that the new scheme for "cover" provided by the control—that is the Cotton Control— gives the spinner much more complete protection than he could obtain before the war by hedging in the futures market So we can improve upon all that is good while at the same time, I hope, eliminating that which has been very harmful in this industry in the past.

I wish to speak for a moment of a point that has been quite properly and clearly raised in the Debate and to which, in my present office, I shall not be assumed to be insensitive. It is the relation of the Government's new plans to the balance of payments and foreign exchange transactions arising from the prewar arrangements.

I have done my best, while studying this matter, to have the net foreign exchange earnings of the prewar cotton market estimated accurately, and the best advice I can get is to this effect: that in regard to commissions on transactions between foreign countries and the earnings from re-exports, the volume of business was not large relatively to the other items in our balance of payments and, indeed, relatively to comparable earnings in other commodities, such as grain. We made much more, I am advised, out of transactions in grain than out of transactions in regard to cotton, and I am advised that in the case of cotton, the earnings under these heads are estimated to have been in prewar years between £350,000 and £500,000 a year. In addition, there were certain associated foreign exchange earnings on freights, insurance and banking which are put at perhaps the same amount again, with the result that the top limit at issue here is £1,000,000 a year. We do not want to lose £1,000,000 anywhere if we can collect it, but at the same time we must have a sense of proportion and if, as I believe, we can assist the productive side of the cotton industry and enable the flow of exports of finished cotton goods to go forward in greater flood than otherwise they would, then I venture to say that we shall very easily overtake this £1,000,000 which we may be losing under this head, by a number of millions of pounds a year—I hope £10,000,000 a year—which we shall be able to get in the more stable conditions which we seek to get from the proper flow of our cotton exports. None the less, I thought it right to give that estimate as the best that I am able to offer hon. Members, and it is my duty to offer them such figures as I can on that matter.

With regard to the Cotton Control, I have argued that it has been a most efficient machine, and still is, but it is intended by my right hon. Friend the President of the Board of Trade, as he indicated in the statement which he made to the House on the matter, not merely to leave the Cotton Control as it is, but to build it up, to develop it, to adapt it to the conditions of peace, and to establish a permanent central purchasing agency for our cotton. I entirely refuse to accept the view that if, as is our intention, we bring into this new peacetime organisation some of the ablest men —and that is my right hon. Friend's intention—with the best knowledge of the trade whom he can collect, many of whom would, I am sure, be very glad indeed to assist him in this; men with knowledge of the merchanting side, men with knowledge as practical spinners, and others—I entirely reject the view and so, I think, will any reasonable commentator, that we cannot meet so relatively simple a problem as that of keeping in this country a good and varied stock of the various types and varieties of cotton. Surely there is no insuperable difficulty in doing that? They must closely study this industry, closely study the needs and requirements of the particular spinners, and they must do their best to meet them. They will have experts retained in the various countries where cotton is grown. I do not really think there will be quite the degree of difficulty which the two right hon. Gentlemen who spoke from the other side have said, not quite the same degree of difficulty, and the Government broker, —I call him the Government broker, though it begs the question which I am anxious not to raise, and I am anxious not to deceive hon. Gentlemen opposite—but the spokesman or the buying agent of this Commission will not, I think, cut quite so poor a figure in his dealings with those who have cotton to sell.

The relationship between the Government and this agent, as my right hon. Friend the President explained, is quite simple as we envisage it. The agency will be located in Lancashire and not in London: It will consist of Lancashire men with knowledge and competence. It will have sufficient but not, we hope, an excessive staff. There will be certain savings in the total labour force as corn-pared with what there was before the war, but we hope and believe that in the conditions of full employment, which we hope we shall be able to achieve, there will not he a net displacement of labour. We hope that those who are still capable of work will be able to find suitable work even though not in exactly the same form as before the war. In reply to my hon. Friend the Member for the Exchange Division of Liverpool, may I say that either my right hon. Friend the President of the Board of Trade, or someone associated with the Board of Trade, will he very happy to receive a deputation such as she suggests, and to discuss with that deputation just how the best use can be made of all the skilled talent available. I do not believe myself that there will be any unemployment problem created as a result of this policy.

Finally, I would urge upon the House that we should be able to procure through this purchasing agency, first of all, a much more stable price than we have ever ' had before, not an eternally unchanging price, but a much more stable price but with much less inlet for various speculative elements who, as I have said, are not always mentioned in these discussions but, none the less, have been the niggers in the woodpile until now. In addition to this, there is no reason why this agency, should not keep in this country a stock of cotton at least as large as was made here by the other agencies before the war, at least as varied, possibly more varied. And there is no reason why they should not meet, as exactly as they were meeting before the war, the requirements of individual spinners. The close association of the agency with the spinners as a whole will, I think, guarantee that. As Mr. Gladstone used to say, it is certainly not beyond the wit of man to accomplish these things; certainly it is not beyond practical wisdom to do these things.

Far my part, I am convinced that if we have an organisation of this kind, it will be a basis on which we can build a more prosperous cotton industry in Lancashire in the future. Lancashire has been through bad days and has great problems in front of it. It would be going outside the scope of this Debate if I were to indulge in any further suggestions as to how the Lancashire cotton industry should be put upon its feet in the future, but I am quite sure it must have a solid basis on which to stand, whatever else we do with regard to the industry. It must be assured that there will be no more gambling with the livelihood of Lancashire by people who live in London or elsewhere in the country. I am sure that the step the Government are taking which is being challenged tonight, but which the Government have decided should be taken, is the first step in the resuscitation of that great cotton industry in Lancashire on which so many millions of our people depend, and which is so essential for our future export trade. It is at any rate of significance to know that in the Division which will shortly follow, a majority of the elected representatives of Lancashire will vote against the Motion that has been moved from the other side.

Question put, That this House regrets the decision of His Majesty's Government not to reopen the Liverpool Cotton Market and considers that the system of bulk purchase under State control will hamper the manufacturer, increase the cost of cotton to the consumer and deprive this country of a valuable source of foreign exchange.

The House divided: Ayes, 186; Noes, 337.

Division No. 111.]	AYES.	[7.38 p.m.
Agnew, Cmdr. P. G	Grimston, R. V.	Peake, Rt. Hon. O.
Aitken, Hon. Max	Hannon, Sir P. (Moseley)	Peto, Brig. C H M
Amory, D. Heathcoat	Hare, Lieut.-Col. Hn. J. H. (W'db'ge)	Pickthorn, K.
Asshelon, Rt. Hon R	Harvey, Air-Comdre A. V.	Pitman, I. J.
Astor, Hon. M	Haughton, S. G.	Ponsonby, Col. C. E.
Baldwin, A. E.	Headlam, Lieut.-Col. Rt. Hon. Sir C	Poole, O. B. S. (Oswestry)
Barlow, Sir J.	Henderson, John (Cathcart)	Price-White, Lt.-Col D.
Baxter, A. B.	Hinchingbrooke, Viscount	Prior-Palmer, Brig. O.
Beamish, Maj. T. V. H.	Hogg, Hon. Q.	Raikes, H. V.
Bennett, Sir P.	Hollis, M. C.	Ramsay, Maj. S.
Birch, Lt.-Col. Nigel	Holmes, Sir J. Stanley	Rayner, Brig. R.
Boles, Lt.-Col. D. C. (Wells)	Hope, Lord J.	Reed, Sir S. (Aylesbury)
Bossom, A. C.	Howard, Hon. A.	Reid, Rt. Hon. J. S. C. (Hillhead)
Bowen, R.	Hudson, Rt. Hon. R. S. (Southport)	Renton, D.
Bower, N.	Hulbert, Wing-Cdr. N. J	Roberts, Sqn.-Ldr. Emrys (Merioneth)
Boyd Carpenter, J. A.	Hurd, A.	Roberts, Maj. P. G. (Ecclesall)
Bracken, Rt. Hon. Brendan	Hutchison, Lt.-Cm Clark (E'b'rgh W.)	Robertson, Sir D. (Streatham)
Braithwaite, Lt.-Comdr. J. G.	Hutchison, Col. J. R. (Glasgow, C.)	Robinson, Wing-Comdr. Roland
Bromley-Davenport, Lt.-Col. W	Jarvis, Sir J.	Ropner, Col. L.
Bullock, Capt. M.	Jeffreys, Ceneral Sir G.	Ross, Sir R.
Butcher, H. W.	Keeling, E. H.	Sanderson, Sir F
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)	Kerr, Sir J. Graham	Savory, Prof. D. L.
Byers, Lt.-Col. F.	Kingsmill, Lt.-Col W. H.	Scott, Lord W.
Carson, E.	Lambert, Hon. G.	Shephard, S. (Newark)
Challen, C.	Lancaster, Col. C. G.	Shepherd, W. S. (Bucklow)
Channon, H.	Langford-Holt, J.	Smith, E. P. (Ashford)
Churchill, Rt. Hon. W. S	Law, Rt. Hon. R. K.	Smithers, Sir W.
Clarke, Col. R S.	Legge-Bourke, Maj. E. A. H.	Snadden, W. M.
Clifton-Brown, It-Col. G	Lennox-Boyd, A. T.	Spearman, A. C. M-
Cole, T. L.	Lindsay, M. (Solihull)	Spence, H. R.
Conant, Maj. R. J. E-	Linstead, H. N.	Stanley, Rt. Hon. O.
Cooper-Key, E. M.	Lloyd, Maj. Guy (Renfrew, E.)	Stewart, J. Henderson (Fife, E.)
Corbett, Lieut.-Col. U (Ludlow)	Lloyd, Brig. J. S. B. (Wirral)	Stoddart-Scott, Col, M.
Crookshank, Capt. Rt. Hon. H. F. C.	Low, Brig. A. R W.	Studholme, H. G.
Crosthwaite-Eyre, Col O. E.	Lucas, Major Sir J	Sutcliffe, H.
Crowder, Capt. J. F E.	Lucas-Tooth, Sir H.	Strauss, H. G. (Com. Eng. Univ'sities)
Cuthbert, W. N.	Lyttellon, Rt. Hon. O.	Taylor, C. S. (Eastbourne)
Darling, Sir W. Y	MacAndrew, Col. Sir C.	Taylor, Vice-Adm. E. A. (P'dd't'n, S.)
Davidson, Viscountess	McCallum, Maj. D.	Teeling, William
De la Bére, R.	Macdonald, Capt. Sir P. (l. of Wight)	Thomas, J. P. L. (Hereford)
Digby, Maj. S. W.	Mackeson, Lt.-Col. H. R.	Thomson, Sir D. (Aberdeen, S.)
Dodds-Parker, A. D.	McKie, J. H. (Galloway)	Thorneycroft, G E. P.
Donner, Sqn.-Ldr. P. W	Maclay, Hon. J. S.	Thornton-Kemsley, C. N.
Drayson, Capt. C. B.	Maclean, Brig. F. H. R. (Lancaster)	Thorp, Lt.-Col. R. A. F.
Drewe, C.	MacLeod, Capt. J.	Touche, G. C.
Dugdale, Maj. Sir T. (Richmond)	Macpherson, Maj. N. (Dumfries)	Turton, R. H.
Duncan, Rt. Hn. Sir A. (City ot Lond.)	Maitland, Comdr. J. W.	Vane, W. M. T.
Duthie, W S.	Marlowe, A. A. H.	Wakefield, Sir W. W.
Eden, Rt. Hon. A.	Marples, A. E.	Walker-Smith, D.
Erroll, F. J.	Marsden, Capt. A.	Ward, Hon. G. R.
Fleming, Sqn.-Ldr. E. L.	Marshall, D. (Bodmin)	Watt, Sir G. S. Harvie
Fletcher, W. (Bury)	Marshall, S. H. (Sutton)	Wheatley, Colonel M. J
Foster, J. G. (Northwich)	Maude, J. C.	White, Sir D (Fareham)
Fox, Sqn.-Ldr. Sir G.	Mellor, Sir J.	White, J. B. (Canterbury)
Fraser, Maj. H. C. P. (Stone)	Morris-Jones, Sir H.	Williams, C. (Torquay)
Gage, Lt.-Col. C.	Morrison, Maj. J. G. (Salisbury)	Williams, Gerald (Tonbridge)
Galbraith, Cmdr. T D	Morrison, Rt. Hon. W. S. (Cirencester)	Willink, Rt. Hon. H. U.
Gammans, L. D.	Neven-Spence, Sir B.	Willoughby de Eresby, Lord
Gates, Maj. E. E.	Nicholson, G.	Winterton, Rt. Hon. Earl
George, Maj. Rt. Hn. G. Lloyd (P'ke)	Nield, B. (Chester)	York, C.
Glossop, C. W. H.	Noble, Comdr. A. H. P
Glyn, Sir R.	Nutting, Anthony	TELLERS FOR THE AYES:
Gomme-Duncan, Col. A. G	O'Neill, Rt. Hon. Sir H.	Mr. James Stuart and
		Mr. Buchan-Hepburn.
NOES.
Adams, Richard (Balhant)	Allen, Scholefield (Crewe)	Attewell, H. C.
Adams, W. T. (Hammersmith, South)	Allighan, Garry	Attlee, Rt. Hon. C. R.
Adamson, Mrs. J. L.	Alpass, J. H.	Austin, H. L.
Allen, A. CI. (Bosworth).	Anderson, A. (Motherwell)	Ayles, W. H.
Ayrton Gould, Mrs B	Fraser, T. (Hamilton)	Mainwaring, W. H.
Bacon, Miss A	Freeman Maj. J. (Watford)	Mann, Mrs. J.
Baird, Capt J.	Gaitskell, H. T. N	Manning, C. (Camberwell, N.)
Balfour, A.	Gallacher, W.	Manning, Mrs. L. (Epping)
Barnes, Rt. Hon. A J	Ganley, Mrs. C. S	Marquand, H. A.
Barstow, P. G.	Gibbins, J.	Marshall, F. (Brightslds)
Bartlett, V.	Gibson, C. W	Martin, J H
Barton, C.	Gilzean, A.	Mathers, G.
Battley, J R.	Glanville, J. E. (Consett)	Mayhew, C. P.
Bechervaise, A. E.	Gooch, E. G.	Medland, H. M.
Belcher, J. W.	Goodrich, H. E.	Messer, F.
Bellenger, F. J	Gordon-Walker, P. C	Middleton, Mrs. L.
Benson, G	Grenfell, D. R	Mitchison, Maj. G. R.
Berry, H.	Grey, C. F.	Monslow, W.
Beswick, Flt.-Lieut. F.	Grierson, E.	Montague, F
Bevan, Rt. Hon. A. (Ebbw Vale)	Griffiths, D. (Rother Valley)	Morgan, Dr. H. B.
Bing, Capt. G. H. C.	Griffiths, Rt. Hon. J. (Llanelly)	Morley, R.
Binns, J.	Griffiths, Capt. W. D. (Moss Side)	Morris, Lt.-Col. H. (Sheffield, C.)
Blackburn, A. R.	Guest, Dr. L. Haden	Morris, P. (Swansea, W.)
Blenkinsop, Capt. A.	Gunter, Capt. R. J.	Morrison, Rt. Hon, H. (Lewisham, E.)
Blyton, W. R.	Guy, W. H.	Mort, D. L.
Boardman, H.	Greenwood, A. W. J. (Heywood)	Moyle, A
Bottomley, A. G.	Haire, Flt.-Lieut. J. (Wycombe)	Murray, J. D
Bowden, Flg.-Offr. H. W.	Hale, Leslie	Nally, W.
Bowles, F. G. (Nuneaton)	Hall, W. G. (Colne Valley)	Naylor, T. E.
Braddock, Mrs. E. M. (L'p'l, Exch'ge)	Hamilton, Lieut.-Col. R.	Nichol, Mrs. M. E. (Bradford, N.)
Braddock, T. (Mitcham)	Hannan, W. (Maryhill)	Nicholls, H. R. (Stratford)
Brook, D. (Halifax)	Hardman, D. R.	Noel-Buxton, Lady
Brooks, T. J (Rothwell)	Hardy, E. A.	O'Brien, T
Brown, George (Belper)	Hastings, Dr. Somerville	Oldhfield, W. H.
Brown, T. J. (Ince)	Haworth, J.	Oliver, G. H.
Brown, W. J. (Rugby)	Henderson, A. (Kingswinford)	Orbach, M.
Bruce, Maj. D. W. T.	Herbison, Miss M.	Paget, R. T.
Buchanan, G.	Hewitson, Capt. M.	Paling, Rt. Hon. Wilfred (Wentworth)
Burden, T. W.	Hobson, C. R.	Paling, Will T. (Dewsbury)
Burke, W. A.	Holman, P.	Palmer, A M. F.
Castle, Mrs. B. A.	Horabin, T. L.	Pargiter, G. A.
Champion, A J.	Hoy, J.	Parker, J.
Chater, D.	Hughes, Emrys (S. Ayr)	Parkin, Flt.-Lieut. B. T.
Chetwynd, Capt. G. R.	Hughes, Hector (Aberdeen, N.)	Paton, Mrs. F. (Rushcliffe)
Clitherow, Dr. R.	Hughes, Lt. H. D. (W'lverh'pton, W.)	Paton, J. (Norwich)
Cluse, W. S.	Hynd, H. (Hackney, C.)	Pearson, A.
Cocks, F. S.	Hynd, J. B. (Attercliffe)	Peart, Capt. T. F.
Collick, P.	Holmes, H. E. (Hemsworth)	Perrins, W.
Collindridge, F.	Irving, W. J.	Piratin, P.
Collins, V. J.	Isaacs, Rt. Hon. G. A	Platts-Mills, J. F. F.
Colman, Miss G. M.	Janner, B.	Popplewell, E.
Comyns, Dr. L.	Jeger, G. (Winchester)	Porter, E. (Warrington)
Cook, T. F.	Jeger, Dr. S. W. (St. Pancras, S.E.)	Porter, G. (Leeds)
Cooper, Wing-Comdr. G.	Jones, A C (Shipley)	Price, M. P.
Corbet, Mrs. F. K. (Camb'well, N.W.)	Jones, P. Asterley (Hitchin)	Pritt, D. N.
Corlett, Dr. J.	Keenan, W.	Proctor, W. T.
Corvedale, Viscount	Kenyan, C.	Pursey, Cmdr. H.
Cove, W G.	King, E. M.	Ranger, J.
Crawley, Flt.-Lieut A.	Kinghorn, Sqn.-Ldr. E	Rankin, J
Daines, P.	Kinley, J	Rees-Williams, D. R.
Dalton, Rt. Hon. H.	Kirby, B. V.	Reeves, J.
Davies, Edward (Burslem)	Kirkwood, D.	Reid, T. (Swindon)
Davies, Ernest (Enfield)	Lang, G.	Rhodes, H.
Davies, Harold (Leek)	Lavers, S.	Richards, R.
Davies, R. J. (Westhoughton)	Lee, F. (Hulme)	Ridealgh, Mrs. M.
Davies, S O. (Merthyr)	Lee, Miss J. (Cannock)	Robens, A.
Deer, G.	Leonard, W.	Roberts, Goronwy (Caernarvonshire)
de Freitas, Geoffrey	Leslie, J. R	Robertson, J. J. (Berwick)
Delargy, Captain H. J	Levy, B. W.	Rogers, G. H. R.
Diamond, J.	Lewis, A W. J. (Upton)	Royle, C.
Dobbie, W.	Lewis, T. (Southampton)	Sargood, R.
Dodds, N. N.	Lindgren, G. S.	Scott-Elliot, W.
Donovan, T.	Lipson, D. L.	Segal, Sq.-Ldr. S.
Douglas, F. C. R.	Lipton, Lt.-Col. M.	Shackleton, Wing-Cdr. E. A. A.
Driberg, T. E. N.	Longden, F.	Sharp, Lt.-Col. G. M.
Dugdale, J. (W. Bromwich)	Lyne, A. W.	Shawcross, C. N. (Widnes)
Dumpleton, C. W.	McAdam, W.	Shawcross, Sir H. (St. Helens)
Durbin, E. F. M.	McAllister, G.	Shinwell, Rt. Hon. E.
Dye, S.	McEntee, V. La T.	Shurmer, P.
Ede, Rt. Hon. J. C.	McGhee, H. G.	Silkin, Rt Hon. L.
Edelman, M.	McGovern, J.	Silverman, J. (Erdington)
Edwards, John (Blackburn)	Mack, J. D.	Simmons, C. J.
Edwards, N. (Caerphilly)	McKay, J. (Wallsend)	Skeffington, A. M.
Edwards, W. J. (Whitechapel)	Mackay, R. W. G. (Hull, N.W.)	Skeffington-Lodge, T. C.
Evans, S. N. (Wednesbury)	McKinlay, A. S.	Skinnard, F. W.
Fairhurst, F.	Maclean, N. (Govan)	Smith, Capt. C. (Colchester)
Farthing, W. J.	McLeavy, F.	Smith, Ellis (Stoke)
Fletcher, E. G. M. (Islington, E.)	MacMillan, M. K.	Smith, H N. (Nottingham, S.)
Follick, M.	McNeil, H.	Smith, T. (Normanton)
Foster, W. (Wigan)	Macpherson, T. (Romford)	Snow, Capt. J. W.

Solley, L. J.	Thurtle, E.	Wigg, Col. G. E.
Sorensen, R. W.	Tiffany, S.	Wilcock, Group Capt. C A. B.
Soskice, Maj. Sir F.	Timmons, J.	Wilkes, Maj. L.
Sparks, J. A.	Titterington, M. F.	Wilkins, W. A.
Stamford, W.	Tolley, L.	Wilkinson, Rt. Hon. Ellen
Steele, T.	Tomlinson, Rt. Hon. G.	Willey, F. T. (Sunderland)
Stephen, C.	Turner-Samuels, M	Willey, O. G. (Cleveland)
Strachey, J.	Ungoed-Thomas, L.	Williams, D. J. (Neath)
Strauss, G. R.	Usborne, Henry	Williams, J. L. (Kelvingrove)
Stress, Dr. B.	Vernon, Maj. W. F,	Williams, Rt. Hon. T. (Don Valley)
Stubbs, A. E.	Viant, S P.	Williams, W. R. (Heston)
Summerskill, Dr. Edith	Walkden, E.	Williamson, T
Swingler, Capt. S.	Walker, G. H.	Willis, E.
Symonds, Maj. A. L.	Wallace, G. D. (Chislehurst)	Wilmot, Rt. Hon. J
Taylor, H. B. (Mansfield)	Wallace, H. W. (Walthamstow, E.)	Wise, Major F. J
Taylor, R. J. (Morpeth)	Warbey, W. N,	Woods, G. S.
Taylor, Dr. S. (Barnet)	Watkins, T. E.	Yates, V. F.
Thomas, Ivor (Keighley)	Watson, W. M.	Young, Sir R. (Newton)
Thomas, I. O. (Wrekin)	Webb, M. (Bradford, C.)	Younger, Hon. Kenneth
Thomas, John R. (Dover)	Weitzman, D	Zilliacus, K.
Thomas, George (Cardiff)	Wells, P. L. (Faversham)
Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)	Westwood, Rt. Hon. J.	TELLERS FOR THE NOES
Thorneycroft, H.	Whiteley, Rt. Hon. W.	Mr. Joseph Henderson and
		Capt. Michael Stewart.

Question put, and agreed to.