HC Deb 02 March 1948 vol 448 cc218-345

3.36 p.m.

Mr. Oliver Lyttelton (Aldershot)

The Opposition have chosen this early opportunity of raising the general subject of trade, because in these times of economic crisis it is clearly a subject of vital importance. However, the field is so wide that this afternoon I propose to address myself to only three subjects which require very early ventilation. The first of the three subjects is the Russian Trade Agreement, which it is important to discuss now because, according to the White Paper, further discussions are to take place no later than next_May, with a view to a further extension of this Agreement and to embracing further materials and commodities. The second subject is the general one of bulk purchase, about which I shall have something to say of a not wholly favourable character. Thirdly, come price controls, some of the orders for which the President of the Board of Trade has signed during the week-end.

I turn first to the Russian Trade Agreement. It must be confessed that in any discussion of long-term agreement with Russia, clauses laying down, for example, the repayment of moneys over 15 years, and clauses covering regular meetings sound a little curiously in our ears today. The mere use of all the normal phraseology—and some of the phraseology is more than normally obscure, especially at page 5—gives one an almost nostalgic feeling for the world as it is not. These agreements give the sort of feeling of the passengers of a liner going to the purser's office for their disembarkation tickets and Customs declarations when the liner is sinking in mid-Atlantic—or perhaps I should say in mid-Baltic. If the agreements looked rather curious at the end of last year, they look almost bizarre today.

At the time, I found it rather hard to read the eulogies which lapped round the right hon. Gentleman when he returned from Moscow with a bad bargain and a balalaika. I do not think it is a jaundiced view to say that what the right hon. Gentleman has done, in effect, is to have sold to Russia in return for grain, a large range of manufactured goods—and those goods are about the hardest currency we have at our disposal in the whole of the sterling area. To be fair, I concede our crying need for these course grains for animal feedingstuffs. When I say that, in effect, the right hon. Gentleman has sold these goods, I am oversimplifying the transaction, for, in fact, no or very few contracts of which I am aware have been placed with the suppliers for the goods which are specified in the schedules. On page 3 of the White Paper, in paragraph A of Article III, these words are used: For this purpose"— that is for the purpose of delivering the goods— the Government of the United Kingdom will as necessary use any of the powers exercised by it in such matters, in particular with regard to the giving of permission to the supplying firms to acquire the materials necessary for the orders. I would draw particular attention to these words. They will be construed by the Soviet Government as meaning that these supplies to Soviet Russia are to enjoy priority over what is now known as the "Prime Minister's List," or if not priority over it, priority which is at least equal. As many of the goods specified in the Schedule are already in the Prime Minister's List, is it intended to instruct manufacturers to defer deliveries, either to home or foreign customers, in order that these supplies for Russia shall take a higher place in the List? The Government of the United Kingdom have under- taken to use any of the powers they have in such matters, and the Soviet Government will, I think, rightly expect, if there is any shortage of materials holding up the delivery of the goods, that these materials will be taken from other industries and made available for these orders. If there is any shortage of labour, whether skilled or unskilled, holding up the production of these orders, the Soviet Government will, I think, expect His Majesty's Government to exercise their rights in regard to the direction of labour, and to order the necessary workers into those industries which are to produce the goods.

In return for these sales we are to receive 750,000 tons of barley, maize and oats, of which we are admittedly in great need. I am not, of course, arguing against the purchase of these coarse grains, but I am expressing concern about the terms on which they have been bought. When we consider later what has been sacrificed to bring off this deal, it will be clearly seen that the congratulations to the right hon. Gentleman have at least to be tempered with some regret. Let me turn to the list of manufactured goods which we are to sell. They are set out in the schedule on page 7. The first item is for 1,100 narrow-gauge locomotives and 2,400 narrow-gauge flat-trucks. I am not suggesting that these narrow-gauge loco-matives and trucks are in themselves as difficult to manufacture and deliver as would be broad-gauge locomotives and trucks.

On this item, as on all the others, I wish to emphasise that it is broadly true that they are a call upon materials or capacity of a high priority—for example, in this case, steel, and steel wheels, and that this capacity and these materials can be used to help the production of machinery and equipment of which we stand in urgent, I might almost say desperate, need. Every locomotive means a disproportionate reduction in our own capacity, because most of our works are equipped to make 150-ton locomotives, whereas I understand that these locomotives are to weigh 15 tons. It means a general dislocation will take place, which will be very serious, in order to fit in these orders. Even those who are aware of the acute shortage of power in this country may not think that 150 50-k.w. mobile Diesel - electric generators, 24 steam-power turbine stations of 500-k.w., or 300 100-k.w. electric motors are a matter of great concern, but they are in a field where the strain on our manufacturing capacity is already very great in trying to make up the gap in our power supplies to meet our needs.

Among the goods we are selling are five dredgers. There are four under Schedule I, and one so-called electro-dredger under Schedule II. There is a dire shortage of dredger equipment in Malaya, which is the greatest dollar-earning country in the sterling area, as is well known to all hon. Members who have been in touch with that country, or who know about the tin-mining industry. The four dredgers are for dredging harbours, and the electro-dredger is a gold-mining dredger. Whether these dredgers are to win alluvial minerals or not, they are nevertheless a demand upon the capacity of our dredger-making industry, so vitally needed for the re-establishment of production in Malaya. The right hon. Gentleman need not take advice on this point, because I would not put him wrong.

In short, all the goods we are selling to Russia are the equivalent of payments in the hardest of hard currency, and the list represents the sale of vital capacity and of raw materials. It is also notable that the sales are all of essential capital equipment, and there are no consumption goods mixed up in this deal, as was the case, for instance, with the Argentine. This brings me to ask: At what price have we bought the coarse grains, that is, the barley, maize and oats? I suspect that the price for the grains has been fixed and that the price for the manufactured goods has been left open. This is the kind of thing we expect when the Government enter the trading market; what we have to pay out is fixed, and what we are to receive is left to hope. For some reason which is not apparent to me, the Government have always refused to give the actual prices at which they acquire these or similar supplies, but this time it cannot be in order to conceal the price from the Russians. I have a suspicion that I know what the reason is, but I am not going to give voice to it today.

To start with, I am going to put a number of more limited questions on which I particularly ask the President of the Board of Trade to give a reply. First of all, has the price of the grain been fixed, or is the price to fluctuate with world prices? If it is a fixed price, upon what has it been fixed? Was it by any chance fixed upon the price of grain in Chicago in that wicked capitalist country with a free market? Perhaps we shall have an answer to that later on. If so, it is a curious commentary upon the transaction which took place between two Governments, both of whom are wedded to the principle of State trading and bulk purchasing.

If the price was fixed according to Chicago prices, it is a confession that these two State trading concerns, His Majesty's Government and the Government of the Union of Soviet Socialist Republics, have to look to a free market to judge the price or value of the goods which they are buying or selling. If it was not based upon Chicago prices, then upon what was it based? If these prices were fixed according to this, how do they compare with today's market prices? If they are fluctuating prices, it is a still more curious comment on the merits of bulk buying and State trading. I assert that this House has an absolute right to know this much at least, and I personally shall require a great deal of convincing that it is against the public interest to disclose the actual prices. I can conceive of no reason why they should not be disclosed.

In order to sell these highly saleable goods, the Government have made a number of major concessions to the Soviet Government. It is impossible for the ordinary reader to glean from the White Paper exactly what these concessions have been. I should not like to say with any certainty what they are, although I have had as much experience as most of reading official language. I think that the Chancellor of the Exchequer said that no capital sum due by Russia to this country had been written off during the course of these negotiations. I wish, therefore, to ask whether any capital sum has been written off Russian indebtedness to us since 1945, and, if so, what sum?

Secondly, if I read page 5 of the White Paper correctly, what has happened is that the balance in the account established under the 1941 Agreement is to be repaid by means of advances from His Majesty's Government in sterling to Russia. This advance is to be repaid in its turn by 12 annual instalments, the first of which is to be payable at the end of the fourth year after 1st August, 1947, and the last 15 years after 1947. That would mean over 50 per cent. of the indebtedness to Russia existing in this account. The account, the House will remember, is that established in the name of the State bank of the U.S.S.R. in the books of the Bank of England. Reduced to simple terms, that means that we are lending Russia money to pay off 50 per cent of its indebtedness. The transaction is just a "washed" transaction, and we are in turn to be paid back over the 15 years.

Under Article 5 (d), it appears that on other advances, including those advances made available in connection with the future instalments of the account in the 1941 Agreement, are also to be repayable in 12 yearly instalments. I think that the President of the Board of Trade should explain in clearer language what is the particular significance of the 50 per cent. repayment under Article 5 (c), and how Article 5 (c) and Article 5 (d) are to be read; what relations they bear to one another, and to what actual sums they apply. The significance of all these arrangements will only be apparent if the Government will give to us—and I think we have every right to ask for it—the answer to these questions: What total sum has been written off the Russian indebtedness to Great Britain since 1945; to what sums do the long-term credit arrangements on page 5 of the White Paper apply? Then I come to interest on the bonus. The Chancellor of the Exchequer admitted the other day that the total loss of interest involved in all these arrangements to us would be £4 million—a very substantial sum.

These arrangements have all the appearance to me of a leisurely and liberal trade agreement made by a country which has no particular anxieties about its international balance of payments and which wishes to promote its trade by lending certain of its surpluses abroad. How painfully far from our true situation all that is. I also understand that £27 million has been written off the so-called Lend-Lease account between the two countries. That is certainly a generous gesture. I think that we can all agree about that. I hope that I may have the attention of the hon. Member for West Fife (Mr. Gallacher) at this moment. I said that the writing off of £27 million to Russia is a generous gesture, and I imagine that due tribute has been paid on the Russian radio recently when the gesture was made.

It I may sum up, the agreement appears to me to be this: We have bought some coarse grains from Russia, and we are paying for them in the hardest of hard currencies, namely, vital items of machinery and equipment. The price paid for these coarse grains is not specified, and I understand that it will not be, although I have asked questions about the prices fixed. We have made a concession in interest amounting to some £4 million. All obligations outstanding under the 1941 Agreement and others in that agreement not yet matured are to be settled by 12 annual equal instalments beginning in four years after 1st August, 1947. How fortunate would any negotiator be who went to any part of the world armed with authority to buy three-quarters of a million tons of grain, armed with authority to pay for it in the equivalent of gold bullion, armed with authority not to give the price which he paid, armed with authority to give the seller the advantage of £4 million in interest, armed with authority that all indebtedness existing under the 1941 Agreement should be liquidated over 15 years, and armed with authority not to disclose in very clear terms how much capital indebtedness had already been written off.

In all these matters, I am reminded of the story of the Irish priest who preached a sermon about the loaves and fishes, and who, by a slip of the tongue, got it wrong. He said that seven men were fed with 4,000 loaves and in the middle of the sermon one of the congregation said, "We could all do that your honour." The priest was so disconcerted that he sat down, and the sermon was unfinished. The next Sunday, he preached the sermon again, and got it right. Having described how 4,000 men were fed with five loaves, he said, "You couldn't do that, Pat." Patrick replied, "I could, your honour." The priest asked, "How?" Patrick said, "From the leavings of last Sunday." I think that there are many negotiators who could make a fairly good arrangement in almost any part of the world with the leavings that the President of the Board of Trade has given away in the deal disclosed in the White Paper.

I now turn to the subject of bulk buying. This specimen of bulk purchases is like many of the other unhappy and costly deals in which His Majesty's Government have entered of recent date. I point out again the disastrous results on the country of this system of bulk buying. I do not want to go over the arguments I have used on many occasions. I want only to draw attention to one part—one of the most vicious parts of this system. Under the normal system of buying each industry covers, and covers individually, its requirements of raw materials, and the covering, that is, the buying, goes on from day to day. It goes on in accordance with the requirements of a number of individual firms engaged in the industry. The covering on cotton on the Liverpool Cotton Exchange, when it existed, went on from 1st January to 31st December.

Let me take a less familiar example. The covering of copper by those who use it and manufacture it into finished goods took place continuously from 1st January to 31st December. The same applied to the sellers who mined and smelted the copper. This process of either selling the daily production of a mine, or, on the other hand, of covering the requirements of the works who used it, was smooth and continuous throughout the year. The seller of the metal and the buyer were only concerned to see that over the year they bought or sold at the average world price. The ordinary user of copper covered himself by some hundreds of transactions, and was very often in the market on more than a hundred days in the year.

From the very nature of things, bulk buying proceeds by a series of governmental hiccoughs—jerks; a series of bulk transactions executed by some official whom everyone sees coming with his black, shiny satchel with the Royal Arms on it.

Mr. Scollan (Renfrew, Western)

Is the right hon. Gentleman suggesting that the President of the Board, of Trade should have gone with his satchel and bought these coarse grains day by day?

Mr. Lyttelton

I have left that subject. The hon. Member for Western Renfrew knows well that now I am dealing with another subject. We are not dealing with Russian coarse grains, but bulk purchase.

Mr. Scollan

It is the same subject.

Mr. Lyttelton

The general answer to the question—and I shall deal with it a little later—is that it is far better to cover from day to day through individual industries than cover by a series of individual transactions upon forecasts made by the statistical bureau of the Cabinet.

Another result of these isolated but very large transactions is that all kind, of matters which are extraneous to the deal in question are brought into account. For instance, it is politically desirable that a certain section of the Labour Party should see that even the present Government can deal with the Soviet Government, so by paying a higher price for this or that it may be hoped that political pressure in another direction may be reduced. All these things——

Mr. Harold Davies (Leek) rose——

Mr. Lyttelton

No, I have a lot of ground to cover. All these things are disastrous to the proper conduct of the pedestrian activities of commerce and trade. Many of the things which people believe to be scarce are not really scarce at all, or would not be scarce if economic forces were allowed more play. I will tell the House what in my opinion are the two great scarcities. The first scarcity is good government and the second scarcity is foreign exchange. The second scarcity would be much less prevalent if there was not such a great scarcity of the first. It is impossible to calculate what this system of bulk purchase has cost us up to date, but what it has cost us up to date on a rising commodity market, due to inflation, is a fraction of what it will cost us when those markets start to decline and His Majesty's Government will be left in all these commodities with large, unhedged stocks. They will say, "Oh, well, what does it matter, it all goes down to the taxpayer."

I turn now to the only other subject with which I have got time to deal, and that is the matter of price controls. I would remind the hon. Member for Western Renfrew that I am not referring directly to the Russian Trade Agreement or to bulk purchase, but I am on my third subject. It is very confusing, but there I am. One of the signs of acute financial crisis in any country in the world is when the Government endeavour to put a ceiling on all prices. In every quarter of the House we should welcome measures which had a steadying affect upon the spiral of wages, prices and profits, but what we have to ask ourselves this afternoon over these price controls is whether the present measures will succeed. I believe it is possible to devise a system of price control which applies to goods which are rationed, and price control in those circumstances will work, although it will creak a great deal.

Rationing, which is an evil and which is a child of scarcity, is a thing we would like to avoid if we could, but it can only be applied to a small part of the total field of commodities. The first reason is that there are very few things for which the demand is sufficiently uniform to make the system of rationing equitable. It is a necessary but undesirable piece of machinery to ration food. Nevertheless, there is something common in the number of calories we all have to eat—too common from my point of view—in order to sustain energy. The same applies more or less to clothes. If we tried rationing something like coal we would find that the wide range of demand for coal would make any system of rationing inequitable as between one part of the population and the other. We can only ration a fairly small part of the field, because of the variety of demand. The second reason is that if we carry rationing beyond a small number of commodities the administrative burden of doing so is altogether insupportable. I implore the Government not to place too much reliance upon this system of price control, which they have now extended over a very wide field. I will talk about that field in a moment.

The next thing is that no system of price control will work unless there are effective measures to reduce the pressure of purchasing power, and in war and at all times much the best way of doing this is by increasing the savings of the people. That is easier to do in war-time than in peace-time. Then there is high taxation. That is an effective weapon in war-time, because the incentive which is cancelled by high taxation in war-time is replaced by the still higher incentive which is the incentive to survive as a free nation. High taxation reducing incentive is much less serious in war-time than in peace. I draw the conclusion that it is much harder to reduce the pressure of purchasing power in peace-time than in war.

As I said, it is quite impossible to ration more than a very few commodities. To put a price ceiling upon goods which cannot be rationed owing to the variety of the demand and because of administrative difficulties being too great, is to court certain failure. Once again I implore this Government not to place much reliance on this rather pathetic gesture in face of the economic blizzard. We are trying to achieve far too much by controls. We have already tried to spread a false and artificial stability over many things, which, by their very nature, must be unstable and fluctuating. I agree it is easy to make fun of price ceilings when applied to perambulators, glass tumblers, umbrellas, ink, drawing pins, darts, "shove ha'penny" boards, and trombones. I am not inventing. All these are covered by Orders 348, 356 and 361, as well as many other things besides. I particularly commend to the attention of hon. Members opposite the price control for the dartboard group. There are some interesting omissions, but still more interesting inclusions.

Many of these things are laughable examples of the length to which an economy is driven when we start experimenting with this sort of Socialist, hybrid system. However, we should not allow our sense of ridicule to get too far away from us, and both the Government and the critics should turn their attention from the causes which have led us to this pass. I am not going to deny myself the belief that one of the antidotes to Socialism is ridicule. I believe we are rapidly approaching a condition when many Socialist doctrines will be laughed out of court by the hard-headed British people when they see the crazy gang methods it is necessary to employ in order to carry them out.

Price control over any unrationed goods while inflation, even if controlled inflation, is rampant, will certainly fail. These ceiling prices have been tried in many countries and I say always with failure. The success which has attended price control has always been limited and has attended only a small specialised group of commodities which have been rationed. Price ceilings over wider fields have nearly always broken down. I will only quote one historical example, M. Blum's experiment at the turn of the year 1946–47. In January, 1947, the Index of wholesale prices in France was 836—that is the price expressed as a percentage of January to June, 1939. The figure rose to 851 in February, and then, probably as a result of the price ceilings, it dropped in March and April to 821, and then to 808. Then the inevitable came. In May, they were 903, dropped back to 841 in June, and then continued to rise at 957, 1,045, 1070 and 1,148 in the following months.

Mr. Scollan

What range of commodities did that cover?

Mr. Lyttelton

This is an index of wholesale prices published by the London and Cambridge Economic Service.

Mr. Scollan

Would the right hon. Gentleman tell us what range of commodities that covers?

Mr. Lyttelton

It gives the wholesale prices; I really cannot go into all the commodities. I shall certainly be pleased to show the hon. Gentleman this publication afterwards. The wholesale prices cover a very wide range, and I think it may be taken to be a genuine instance.

Why is this phenomenon always seen? If the House will bear with me for a moment or two longer I will examine it. In the main it is due to two reasons. The first is that the description of goods when not rationed and not easily identifiable will always defeat price control. Even with rationed goods the difficulties of description are very great. It sounds very easy, when we have to give up coupons for shoes, to put a price control on ladies' walking shoes. But, as soon as that is done, we find that there is a new group of ladies' sandals to which we have to extend the price control. Having done that, we then find that there are cloth-topped ladies' shoes, and then, again, artificial cloth-topped ladies' shoes, and even artificial cloth tops and wooden soles. Before we know where we are we have something like a small telephone book to control ladies' shoes.

Then there is the overriding question, the matter of quality. It is administratively impossible for any Government—and, of course, administratively unthinkable for the present Government—to control the qualities of these goods which are price controlled, and under the pressure of a very inflated purchasing power, there is no doubt that price control will lower quality because the demand is so strong, and because the public require the goods so much that, all the time, they themselves are seeking ways of defeating the price control which is nominally put there in order to protect them. The last thing, and perhaps the most important, is that, as price control is placed upon one group of commodities, the demand is transferred to another group which is not controlled. In other words, the price of articles outside these controls will continue to go up all the faster, and will attract labour into the industries which produce them.

I suppose that these price ceilings represent—I was going to say a confession by the Government—a tentative retreat from the Government's previous policy. The present Government have continued, and greatly increased, the system of Purchase Taxes on what were described—and sometimes wholly wrongly—as luxuries. The idea underlying this policy was to make things which people ought not to want, in the opinion of the present Chancellor of the Exchequer, so expensive that they would not buy them. Frankly, it takes a Socialist Government to devise a scheme by which prices are controlled in order not to make things too dear for the public on the one hand, and, at the same time, to pursue a policy, in other directions, of making them so dear that they cannot afford to buy them.

Are the Government believers in preventing demand by raising prices, or by keeping them down? At the present moment, they are riding two horses, and are looking extremely uncomfortable as jockeys do in that equivocal position. Purchase Tax should not be maintained, at least on articles which are rationed. I cannot see the use of putting high Purchase Tax on commodities already controlled by coupons. It is truly out of consonance, in my submission, to have a great jumble of ceiling prices for all kinds of things that are not rationed at all.

However that may be, I conclude by begging the Government to direct their attention to trying to cure the causes of our economic diseases, rather than to run round in this rather pathetic, and sometimes slightly ridiculous, way of dealing with the symptoms by a number of empirical methods, all of which have failed in other countries. I know the expression is now becoming rather trite, but, however one likes to express it, I believe this is a Canute-like policy which tells prices to retreat from the chair of the President of the Board of Trade. I say to him, with all solemnity, that he is going to get his feet wet, and very wet—and before long.

4.16 p.m.

Mr. Bottomley (Secretary for Overseas Trade)

I am sure the right hon. Member for Aldershot (Mr. Lyttelton) and the House will understand when I say that I am not going to follow precisely the line of thought already expressed. I am not going to do so for two reasons. The first is that the right hon. Gentleman, who has great economic knowledge, has decided this afternoon to push that aside in order to indulge in political rhetoric. The second is that I would rather be factual in what I am going to say, and, being factual, necessarily means that I must relate my talk to that part of the work of the Board of Trade for which I am responsible—bilateral agreements. I propose to relate those agreements to our present difficulties.

The House will recall that the provisional figures for our balance of payments in 1947 showed that we had a favourable balance of £80 million in the sterling area; an unfavourable balance of £680 million in the Western Hemisphere; and an unfavourable balance of £75 million in the rest of the world. It will thus be seen that there was an overall deficit of £675 million for the year, mainly in hard currency. This deficit, of course, together with the other drains on our reserves, lost us £1,023 million. This frightening figure is well known to all of us. That is our present position.

What is the prospect? Sir Hubert Henderson recently pointed out that the terms of trade may worsen against us as bulk purchase terminates. With less favourable ones coming along, we may find ourselves paying even more for our food and raw materials than we are at present. This may happen. On the other hand, it is just as likely that the break in the United States grain market may be a good sign. I do not venture to be a prophet, and I am not claiming to know which of these two things is more likely to happen. At the present moment, we are faced with a very difficult position, and we have to deal with it.

We have the choice of a bilateral or a multilateral world. There are some hon. Members in this House who would wish to push us one way or the other. Some say that multilateral agreements are an illusion and that multilateral trade is an out-of-date principle. Others say that the bilateral agreements we are making may make it impossible for us to return to multilateral trade. To the first critics, I would point out that we could never, by ourselves, earn enough dollars to trade direct with the United States, and that, therefore, eventually, the multilateral solution to our difficulties and to those of Europe is the only one. To the other critics, I can only say that it is vital to us to secure our essential supplies from those countries whom we can pay in goods. In other words, I am not ashamed to say that we must make the best of both worlds. As far as the projected world trade charter is concerned, I think we must say that, although we may not yet be ready to play the multilateral game, we must make sure, when we are ready, to play it, first that there are rules—which there were not before; and secondly, that the great trading countries of the world agree with the rules and are prepared to abide by them.

Since, then, we have admitted that we have to use the bilateral system to a large extent, what are its advantages to us in present circumstances? The first, as I see it, is that it gives us a chance of getting our essential supplies—raw materials, such as food, timber, pulp and grain—from countries who will take in return from us the things we have to supply, so that we are not forced thereby to give or ask for credit. Secondly, it ensures that when we send valuable goods of this kind abroad we get an adequate return for them. Simply to export our costly machinery into the blue and hope that it went to the right place, would be madness. Therefore the system of trade pacts makes sure that the stuff goes to the right place.

A third advantage is that the bilateral system, contrary to what the critics of our policy often suggest, enables trade to expand. It is not necessarily restrictive. Let me give some examples. When the Argentine became short of foreign currency in June last year, she had to clamp down heavily on consumer goods from all countries. We, as the House knows, were specially affected by these restrictions. As a result of the recent deal with the Argentine, they have agreed to take £10 million worth of our consumer goods.

Mr. Lyttelton

May I interrupt the hon. Gentleman for a moment? Is the argument that bilateral agreements are less restrictive than multilateral, or not any more restrictive? If so, may I ask him why the Government have recently signed so many declarations with other people in accordance with the multilateral policy?

Mr. Bottomley

What I was trying to explain is that we are endeavouring to get the best of both worlds, and the argument that the bilateral system restricts trade is being answered in the way I am indicating, namely, that the Argentine Agreement has expanded trade. In the case of Sweden something similar has happened, while our recent agreement with Italy has had the same effect. Hon. Members will know also, by the reports in the Press, that by the agreement just signed with Holland the total trade between the two countries will go up from £59 million to £70 million. Therefore I must reject the suggestion that bilateral trade, used in the right way, is necessarily restrictive. A fourth and obvious advantage of our present way of working is that we thereby largely eliminate unrequited exports. We cannot, in our present state, afford to give too much credit, and we are making sure that the goods go where they can be paid for, and that the efforts of our workers and our exporters bear fruit quickly.

If I may say a word or two about so-called unrequited exports, they are not by any means all bad, and they are, to a great extent, the necessary result of the existing pattern of trade. Exports do not move hither and thither whenever the Government breathes approval or disapproval; they have to be built up from innumerable bargains between traders, who are influenced by many considerations, not least the future of their trade connections; and to establish a trade connection may be a costly and prolonged affair.

Therefore, our policy must, outside our bilateral agreements, be to build up importing power on a durable basis by indicating broadly commodities and markets to which we attach the most importance; in other words, it may be necessary at various times for us to grant a certain amount of credit although, as I say, we cannot afford to grant too much. Since, then, in the absence of bilateral agreements a balanced trade would be difficult to attain, it is inevitable that we may export more to certain destinations than we get from them.

The sterling area is a special case where unrequited exports are concerned. There has been a deal of criticism, particularly in the financial Press, of the policy by which we have built up a favourable balance of trade with the sterling area and also, to some extent, necessarily covered their trading deficit out of our gold and dollar reserve. I should like to put this problem to the House in this way: since our hopes of ending one day the chronic shortage of dollars, which is so embarrassing us are largely centred on the sterling area, which is a potential dollar earner, it would be completely selfish and wrong of us to expect to pocket the dollar earnings of the outer sterling area now and in the future, while at the same time refusing to foot their dollar bill at the present time. The critics who complain that we are giving too much gold and dollars away to the sterling area are the same critics who are apt to take us to task for neglecting our Commonwealth trade connections at this moment in order to seek more advantageous customers elsewhere. So I would like to make it quite clear that we do not begrudge the unrequited exports—so-called—which at present go to certain countries in the Commonwealth.

Perhaps I ought to say a word more about the position of the Commonwealth and the Colonies in our present pattern of trade. In the first place, I think they understand that we must, for our common benefit, divert many goods to hard currency destinations which might otherwise have gone to the Commonwealth or to the Colonies. This is not a selfish decision on our part. It is evident that the dollars earned by so doing go into the sterling area pool and will eventually be used for the benefit of the whole Commonwealth. There has been, also, some ill-informed criticism about the restrictions which we have caused to be placed on imports into the Colonies.

Perhaps I ought to give an explanation of this. As I see it, it would not be right for us to allow the Colonies to run down their sterling balances too fast, or to live on credit from us, with the possible result of an eventual running down of the sterling area reserve, on which we all depend. On the other hand, I assure the House that it is not our intention in any way to push aside orders from the Commonwealth for the benefit of our new trade connections overseas, nor do we intend to leave traditional markets in the Commonwealth to seek other markets outside it. I can assure the House that in making bilateral agreements, we never forget that our commercial ties with the Commonwealth are long-standing and deserve first consideration.

I think I ought to give to the House details of some of the negotiations that have been going on. In the case of Canada, we are concerned to save dollars, and to make sure of our food supplies. Canada is accustomed to import large amounts from the United States and to finance the deficit from a large export surplus to us. We no longer have the dollars available to pay the United States, so Canada, like ourselves, faces a serious dollar shortage. She must either get dollars by exporting goods to the United States instead of to us, or else get her imports from us rather than from the United States, and neither way is altogether easy. We have fixed up an interim arrangement, which lasts until April, that enables our contracts for foodstuffs to remain in force while we hope that exports to Canada will increase. But, for the time being, we have had to agree to meet a large proportion of our deficit in United States dollars and, at the same time, we have been drawing upon the Canadian credit.

We must do all we can to take advantage of the opportunities open to us, particularly in the field of textiles and engineering products. The whole range of our traditional exports to Canada is important—items such as spirits, glassware, pottery and earthenware—and there are many new exports we must build up. Cotton textiles should show the largest expansion in 1949. We are planning to boost the present rate of about 10 million yards to 100 million yards by the end of that year. This will allow Canada to cut her purchases from the United States, to save dollars, and to restore Britain to her pre-war position as the main supplier of the Canadian market. We have recently sent the Chairman of the Cotton Board, Sir Raymond Streat, out there, and it is in connection with his visit and on what he has been able to advise that we have been able to form our conclusions.

Mr. Stanley Prescott (Darwen)

Did the hon. Gentleman say that it had risen from 10 million to 100 million?

Mr. Bottomley

From 10 million to 100 million.

Mr. Brenden Bracken (Bournemouth)

That is a big difference.

Mr. Bottomley

It is, and in this connection there is a disposition on the part of some exporters to regard the Canadian imports from the United Kingdom as temporary and artificial. We do not take that view. Canada is likely to remain short of American dollars for a considerable time, and from our point of view she is a most desirable export market. British exporters should not hesitate to lay their plans on the basis of sound long-term exports to Canada.

We had discussions last autumn with Eire with the intention of increasing the mutual exchange of goods and the exchange of goods with the sterling area as a whole. Increased supplies to Eire of United Kingdom machinery, particularly agricultural machinery and raw materials, especially coal, will serve this double purpose. On the other hand, we can look forward to getting more foodstuffs from Eire, and we hope to broaden the basis of our trading relations to the mutual advantage of both countries. We have been talking with India and Pakistan chiefly in connection with finance. The talks did not amount to bilateral trade negotiations, but the United Kingdom Mission raised with the Indian delegation the question whether India would be willing to adopt a rather more liberal import licence policy towards the United Kingdom consumer goods which are in easy supply. The Indian delegation said that the Government in India intend to relax to some extent the control of imports on certain classes of goods of this type from the United Kingdom. Hon. Members will know that in the case of Pakistan the restrictions are much lighter.

Mr. Prescott

In regard to Canada, it is desired to increase exports from 10 million to 100 million?

Mr. Bottomley

I was talking about textile goods.

Mr. Prescott

There is no agreement; that is just a hope?

Mr. Bottomley

That is what we are hoping, and what exporters are aiming at. Every facility will be afforded to encourage them to achieve that. It is important that we should build up the export trade with Canada.

Mr. Prescott

But it is still a hope?

Mr. Bottomley

Well, everything is a hope until it is achieved. It is up to every hon. Member to see that this aim is achieved and to do all in his power, in speeches in his constituency or elsewhere, to see that we get to that target.

Sweden is another country with whom we have been negotiating, and a satisfactory agreement was reached towards the end of last year. We shall receive essential goods in the form of pulp and timber, and in return we are sending coal and steel, which are equally valuable commodities. At the same time, the Swedes have agreed to an appreciable relaxation in import restrictions on some other goods. Earlier I mentioned that we have concluded an agreement with Holland. In connection with the talks there we shall be able to obtain substantial quantities of dairy produce and also strawboard. In that case again we are supplying substantial quantities of coal, and the Dutch have agreed to relax the import licensing restrictions on our goods. The House has been informed of the trade agreement concluded with Denmark. It will be recalled that in that agreement provision was made for a considerable supply of Danish butter, bacon and eggs, and we on our side have been able to promise coal and an allocation of steel. Again, the Danes have agreed to follow, in their import licensing policy, the normal pattern of our trade with Denmark.

We have been carrying on talks with Italy and in that connection both delegations expressed the desire that trade between Italy and the United Kingdom should be maintained at the highest possible level. If imports into the United Kingdom from Italy in 1948 were, however, to be permitted on anything like the 1947 level, it would be necessary for Italy substantially to increase her imports from the United Kingdom. The Italian Government have therefore agreed to allow the import from the United Kingdom not only of materials she regards as first priority requirements, but also of a wide range of manufactured goods which hitherto have been excluded from, the Italian market. The United Kingdom will import from Italy certain types of fruit and vegetables and raw materials and certain essential manufactured products. In addition, we have agreed to import certain quantities of manufactured goods which cannot be regarded as so essential from our point of view, but which are essential exports from the point of view of Italian economy.

The House will be aware of the Argentine Agreement, and it will suffice to say that, in view of the discussions which have taken place, we were anxious to secure an agreement which would ensure through the remainder of 1948 and the early part of 1949 essential foodstuffs, in particular meat and animal feeding-stuffs, to the total value of £110 million. We wanted to get that without having to pay out dollars. In this we succeeded and the agreement provides that all payments between the Argentine and the sterling area shall continue to be settled in sterling. We are at the final stage of negotiation with Finland and our purpose is to obtain an adequate supply of timber and pulp. We are able now to offer considerable quantities of coal, in addition to an allocation of steel. On our side we are ready to take certain quantities of manufactured goods from Finland. I hope that in the next day or two we shall be able to announce a satisfactory agreement.

With Belgium we have not yet secured an agreement, but we are hoping to do so soon. In our case the object of the negotiations is to obtain substantial quantities of steel, flax, and other goods, but, of course, it is necessary to arrange an import programme which will include some of their less essential staple products. At the same time, we want negotiations to cover trade with the Belgian Congo which, as the House knows, is an important source of many essential raw materials. A settlement of all these trade questions depends primarily on getting over financial difficulties, and these are under active discussion. There has been a steady and considerable drain of gold to Belgium, and satisfactory arrangements must be made to deal with this first.

I am sure the right hon. Member for Aldershot (Mr. Lyttelton) will understand if I refer but briefly to the Russian Agreement, because my right hon. Friend, who has had a closer connection with the negotiations, will deal with it more fully when winding up the Debate. The two chief provisions of that agreement of 27th December, published in Command Paper 7297, are those in which the U.S.S.R. undertake to sell 750,000 tons of coarse grains out of the 1947 harvest, and we have undertaken to assist them to place orders in the United Kingdom for certain specific equipment. If orders for half the equipment have not been placed by May, the Russians have the right to reconsider their part of the undertaking in respect of the last 200,000 tons of grain. The Ministry of Supply are in close touch with the firms who propose to tender for these orders, and are doing what they can to assist them. We hope that the necessary contracts will be signed by May. The grain is now arriving and the first shipment on our side—of light rails—was made last week. We look forward to continued discussions which will take place in May, and we hope to develop further exchanges under this agreement.

Switzerland is one of the last countries with which we have been negotiating, and the House will know that we were endeavouring to get a settlement of sterling balances. Under the terms of the Anglo-Swiss monetary Agreement of 12th March, 1946, which remains in force until the 12th of this month, the Swiss Government agreed to hold up sterling to the limit of £15 million. This credit limit was reached some time ago; indeed, last year we passed the gold point several times. As a result of present discussions it has been agreed that while the Swiss cannot let us have a further margin of credit, no attempt will be made to draw down this sterling balance if United Kingdom receipts should exceed United Kingdom payments in 1948. In other words, the balance will in practice be blocked. To make this possible, Switzerland will increase its imports from the sterling area, and the Swiss authorities are prepared to authorise the importation of all classes of goods of sterling area origin. The Swiss Government will, however, control the volume of exports to the sterling area in such a way as to keep within the limits necessary to maintain the balance of payments. If, however, our exports to Switzerland show better results than are now expected, the United Kingdom will be able to accumulate Swiss francs.

We also have talks going on at the moment with the Poles, and it may be possible for my right hon. Friend to make some pronouncement about them later. We are hoping for a satisfactory agreement. In the case of Yugoslavia the House will know that last week I answered a Question put by the hon. Member for Maldon (Mr. Driberg), and I can only say that late yesterday I was with the leader of their delegation, and I hope in due course that we can give a satisfactory answer to the House.

Finally, I think it is true to say that if we follow the strategy which has been dictated to us—[HON. MEMBERS: "Dictated by whom?"]—by the Government, by the nation, by the circumstances arising from the Tory administration in the past. If we strike the right balance between opposing policies—if, for example, we pursue the bilateral policy to which I have referred, without forgetting our ideal of multilateral trade—if we can try to preserve our trade connections with the Commonwealth, while at the same time not forgetting our close connections with and our obligations to Europe, and if we continue to use democratic means to ensure that industry as a whole—by which I mean workers and manufacturers alike—accept the guidance which we give them, we shall be able eventually to overcome our present serious difficulties and to stand on bur own feet once more.

4.43 p.m.

Mr. Stanley Prescott (Darwen)

I listened with very great interest to the speech of the Secretary for Overseas Trade. If I may, I would like to congratulate him. I do not wish to be offensive, but I thought he read his speech very well—indeed, so rapidly that I could hardly understand what he said. I think I shall have agreement from most hon. Members.

Mr. Frederick Lee (Manchester, Hulme)


Mr. Prescott

I think that was a fair comment. I wish to deal with an industry which is of the greatest importance to this country's export drive, and that is the textile industry of Lancashire. I think the President of the Board of Trade will agree with me when I say that the textile industry is the spearhead of our export drive. I think I shall be in Order and that I shall have the sympathy of the House if I address one or two observations on the textile industry. In the past many hard things have been said about Lancashire and the Lancashire textile industry. Indeed, I well remember that in the last Parliament I made a most bitter speech attacking the management of that industry in Lancashire, and I was called to task in Manchester. However, I survived the ordeal and I am still here. I have no regrets, and I stand by everything I said then. While I quite agree that improvements can be made, we should pay tribute to the great achievements which Lancashire has effected in the export trade, and I hope the President of the Board of Trade will agree with me. The goods produced in Lancashire are second to none in the world. I also think—and in this I have a personal interest in so far as I am a descendant of a weaver—that the Lancashire operative is par excellence and the best operative there is in existence.

The Government exhort the Lancashire textile industry to produce more goods, and in that exhortation I am fully with them. The Secretary for Overseas Trade said that everyone should support the Government in their desire to increase the export production and the export drive.

Mr. Bottomley

The hon. Gentleman heard that much, then.

Mr. Prescott

Yes, I heard that much because it was not in the hon. Gentleman's brief. It was an interpolation. I support him in that desire. Having anticipated his interpolation, and not his reading of the brief, I would like to refer him to column 1550 of the OFFICIAL REPORT, dated 3rd July, 1947. That was the occasion of a Debate on manpower. I said then, and I repeat now, that we shall not increase production in the textile industry merely by Government exhortation. I am not in favour of a Coalition, but I think it would be desirable that hon. Members, to whatever party they belong, should tour Lancashire and talk to the workers and do all they can to increase production. I made that offer. The Minister of Labour did not even refer to it in replying to the Debate, which I think was very discourteous. I am prepared to support the Government as fully as possible in their desire to increase the export drive, and I am prepared to appear on a joint platform—non political—with hon. Members opposite, including the hon. Member for Clitheroe (Mr. Randall) and others, to try to instil into the workers of Lancashire the necessity for increasing production.

I wish to make this comment before I come to the main part of my speech. We want to increase production; I want to increase production. I am not being sentimental or maudlin; what I am about to say is relevant to my remarks. My father worked in a mill as a half-timer at 10 years of age; I was brought up on the knocker-up and all the rest of it, and the early hours when people had to go to the mills. I know something about them.

Mr. Walker (Rossendale)

And the hon. Gentleman is a Tory.

Mr. Prescott

I am a Tory, and very proud of it. I shall always be a Tory, and never shall I sit on the benches opposite. When I remember the speeches, of hon. Members opposite in the last election; when I remember the promises they made and how they deluded the electorate, I am more that ever proud to be a Tory. I am more than ever proud that at the last election I was returned with the greatest majority in the history of my constituency. If there are any more interventions I shall be very glad to deal with them. I was introducing this personal note to show that I know something about the Lancashire textile industry in which my forbears worked for many years. I do not wish Lancashire operatives to work longer hours than necessary. I confess that I am rather lazy by nature. The less work I can do and the more money I can get, the happier I am.

Mr. Sydney Silverman (Nelson and Colne)

The hon. Gentleman is a Tory.

Mr. Prescott

Yes, I am a Tory. I am not like the hon. Member for Nelson and Colne (Mr. S. Silverman), and I am very glad that I am not.

Mr. Silverman

So am I.

Mr. Prescott

We have that in common, then. I appreciate the ardours that the Lancashire operative has to undertake. This Government reduced the working hours of the Lancashire textile industry to a five-day week.

Mr. Silverman

When did they do that?

Mr. Prescott

As far as I am aware, and to the best of my recollection, they did it last year, or it may have been the year before.

Mr. Silverman

They have not done it yet.

Mr. Prescott

Am I to understand that Lancashire operatives are working a five and a half day week?

Mr. Silverman

I did not say that.

Mr. Prescott

Very well. The Lancashire operatives are working a five-day week.

Mr. Walker

For how long did they work under a Tory Government?

Mr. Prescott

Never mind that; they are working a five-day week. The hon. Member for Nelson and Colne (Mr. S. Silverman) has just intervened. Will he intervene again, and say when the five-day week was introduced, or would he rather be quiet? It seems that he would rather be quiet. I did not intend to make a party speech until Members opposite intervened, but I do not mind; if they intervene they can have their answers. I am saying that we have a five-day week in the Lancashire textile industry.

The Government are now exhorting operatives in Lancashire to work longer hours. I want to support the President of the Board of Trade and the Government in every way I can to increase production; but anyone who knows anything at all about Lancashire knows that many operatives are, to say the least, middle aged. That being so, I do not think it is fair to ask them to work longer hours. They have to send their children or grandchildren to school, get the "old man's" breakfast, and do this, that and the other. The hours they were working were long enough, and it is not fair to ask them to work longer. I do not think that they can reasonably be expected to do it. I do not like the five-and-a-half-day week, and I am all for a five-day week if it can be obtained. I do not think there is a great deal of agitation among the trade union movement for a five-day week. I think the five-and-a-half-day week could have been retained, and should have been retained. The first mistake the Government made was to reduce working hours to a five-day week.

With great respect, I cannot support the Government in their plea for longer hours in the textile industry. I have been talking about the industry in this country, but my chief purpose in rising——

Mr. S. Silverman

I would like to get this point clear, in case I have the opportunity to speak later. I understand that the hon. Member is against a longer working day. Do I gather that he is in favour of working on Saturday mornings, so that the complete week-end off which people have now shall be broken into? Is he in favour of that as an alternative to the longer working day?

Mr. Prescott

That is a fair question, and my answer is that in ordinary circumstances I would like the five-day week for Lancashire operatives. But now we are making demands for increased production, which I am sure the hon. Gentleman supports. If we are to have that increased production, as we must, it means working longer hours, and I believe that from the point of view of the workpeople themselves it would be preferable to work the five and a half rather than the five-day week.

Mr. Silverman


Mr. Prescott

The hon. Gentleman may not think so.

Mr. Silverman

Do not misrepresent what I said.

Mr. Prescott

From what people in my constituency and elsewhere have told me, I think a five-and-a-half day week would be preferable.

Mr. Silverman

Will the hon. Gentleman allow me——

Mr. Prescott


Mr. Silverman

On a point of Order. I think I am right in saying, Mr. Deputy-Speaker, that if he has been misrepresented an hon. Member is entitled to correct that misrepresentation. I did not say anything about my own opinion; I said that the workers in Lancashire would prefer to work a longer day, rather than work at the week-end.

Mr. Prescott

I do not think the hon. Gentleman said that at all, but HANSARD will show what he said tomorrow.

Mr. Silverman

It will show it now, at any rate.

Mr. Prescott

I had no intention of wilfully misrepresenting the hon. Gentleman. He ought to know that, and if he does not perhaps he will learn it now.

My object today was not to talk about the textile industry in this country, but to try to discuss the potentiality of our trade overseas. I am glad that the hon. Member for Nelson and Colne is here, because I shall have to refer to some of his past observations. As the House may know, I recently had the privilege of being a member of a delegation which went to Japan. While there, we were received with the greatest courtesy and kindness by General MacArthur and all the members of his staff. We had the opportunity of visiting many spinning and weaving mills in Japan, and investigating, as far as possible, present working conditions in the Japanese textile industry. I wish to draw the attention of the Committee to the present position in Japan, and to the potentialities of the Japanese textile industry. I have a reputation in this House for brief speeches, and if I am slightly longer than usual today I hope hon. Members will forgive me. Having travelled thousands of miles, and having seen what members of the delegation did see, I think it right to put my views before the House because they are of importance to Lancashire.

I have already paid a tribute to General MacArthur and to all the members of his staff, who received us with great courtesy, and I would mention, in particular, General Marquet, head of the Economic and Scientific Section of Headquarters there, and General Tate, who is the most important member of the textile section under S.C.A.P. We were afforded the greatest possible facilities for viewing the textile industry in Japan, and I came back with a feeling that Lancashire will have to look to its laurels. Before the war, the Japanese swept us from the markets of the world, and did it for several reasons: first, because of cheap labour; second, because of longer working hours; third, because of the vertical structure of their industry; fourth, because of the manipulation of the yen; and, finally, because the whole Japanese textile industry was coordinated with the aggressive policy of the then rulers of Japan. Those were the reasons why the Japanese captured many of our markets.

I ask myself whether that position has altered today? There is a totally different set-up of labour in Japan from that which appertains in Lancashire and England generally. Before the war, the agents of Japanese mills used to go into country districts, interview farmers, and get hold of young girls and take them to Tokyo, Yokohama and Nagoya. There, they entered into contracts for three or four years, lived in dormitories, and worked long hours for very low rates of pay. It was on that basis that Lancashire had to compete with Japan. Has the position altered today? The first thing General MacArthur tried to do was to introduce democracy into Japan. The first element of that is to try to introduce effective trade unionism, and in that I support General MacArthur 100 per cent. But trade unionism cannot be given to a country; it has to grow. The scaffolding has been erected by General MacArthur, but the building must be erected by the Japanese themselves. That is not something which can be accomplished overnight.

Before the war, in the Japanese textile mills there was a surplus of child labour. Now, General MacArthur has decreed that no one under 15 shall work in a Japanese factory. When a child is born in Japan, however, it is said to be one year old, and that has to be borne in mind. Going round many mills it is evident that in Japan today there are many girls and boys working in them, mainly girls, who are 12, 13 or 14 years of age. We should not blame General MacArthur because that position obtained. With his limited staff he does his best to regulate and to control the position in Japan, but he cannot supervise the whole of the textile industry in Japan. That would be an impossibility. Today, child labour as we understand it still exists in Japanese textile mills.

It is impossible to express an opinion about rates of pay in the Japanese textile industry. What is the value of the yen? I know not, but I would hazard a guess that the rates of pay there are very mach lower than anything which exists in Lancashire. The Japanese textile workers work very long hours. Here I come to something which was said by the right hon. Member for Nelson and Colne (Mr. S. Silverman), who is so friendly to me tonight, and whose presence I welcome in this Debate. He asked a supplementary question to a Question which I asked on 26th February, about the level of the Japanese textile industry. The right hon. Gentleman asked: Will my right hon. Friend bear in mind that Lancashire does not require to be protected against Japanese competition by imposing a ceiling on that production, but only by seeing that Japanese production is on a good labour standard so that we are not undercut?"—[OFFICIAL REPORT, 26th February, 1948; Vol. 447, c. 2104.] That is a very laudable ideal but I want to tell the right hon. Gentleman—I keep on calling him "the right hon. Gentleman." I do not know why.

Mr. Stokes (Ipswich)

He is "hon. and learned."

Mr. Prescott

Is he "learned"? I do not think he is. He is not a member of the Bar. I want to assure the hon. Gentleman that labour standards in Japan at the present time are in no way comparable with those of Lancashire. I equally want to assure him—and I would impress the matter upon the President of the Board of Trade—that so far as I can see there is no possibility in the immediate future or in the next five, 10 or 20 years, of those standards approaching the labour standards which we know in Lancashire.

I now come to the answer which the President of the Board of Trade gave on the occasion to which I have referred. I hope that the right hon. Gentleman is listening. I asked a supplementary question, following upon the supplementary question of the hon. Member for Nelson and Colne. It was: Is the right hon. Gentleman aware that at the moment in Japan standards of labour are not such as will ensure that in the future Lancashire will be able to compete on a reasonable basis? To that question, the President of the Board of Trade replied: Yes, Sir, we have the point very much in mind about the quality of labour standards and the best safeguard against Japanese competition is to increase the level of efficiency of production here."—[OFFICIAL REPORT, 26th February, 1948; Vol. 447, c. 2104.] I want to disabuse the mind of the right hon. Gentleman right away. Many hard things are said about the Lancashire textile industry, but we can have all the automatics we like and whatever else we like but, from the point of view of living standards, there is no immediate prospect of Japan being comparable with Lanca- shire. From the right hon. Gentleman's answer to my Question he appears to be under a complete misapprehension about the position as it is, and as it is likely to be. The right hon. Gentleman shakes his head. I have quoted him, and I say again that he is labouring under a delusion. Whatever we have attempted, whatever automatic machines we put in and whatever standards we enforce, there is no immediate likelihood of labour standards in Japan being comparable with those of Lancashire. That is my first point.

Mr. Scollan

Would the hon. Gentleman tell us whether he found out in Japan the productivity per man-hour or per worker-hour in the industry, as compared with that of Lancashire?

Mr. Prescott

Yes, I did find that out. I have the figures, and I will send them to the hon. Gentleman if he is interested. I am afraid I have not them here with me because I was not intending to refer to them. I appreciate the point which is in his mind. There are some mills in Japan which are absolutely excellent, and there are others which are absolutely vile. If we take the average I very much doubt whether the figure is to our detriment. I will send the hon. Gentleman the accurate figures.

My object in addressing the House is to get some policy from His Majesty's Government in relation to what is to happen about Japanese competition in the future. I agree that there is no very great immediate danger of competition between Japan and this country. Before the war, Japan had nine million effective spindles. Now they have fewer than three million; but the potentiality of the textile machinery industry in Japan is very great. Given raw materials, such as coal and iron ore, it can, if permitted, rebuild the textile industry effectively. The question is whether it is to be permitted to do so. I want the right hon. Gentleman to bear in mind that the Japanese can, if they are permitted, easily and rapidly rehabilitate their textile industry.

As to ourselves, what policy should we adopt? I hope that the President of the Board of Trade will have a war with his colleague the Foreign Secretary. In discussing the Lancashire textile industry with certain very high officials of the Foreign Office in order to ascertain their views, I was horrified. The policy of General MacArthur rightly is to introduce democracy in Japan. He takes the view that there must be a reasonable standard of life in Japan. To that policy I fully accede. He takes the view that he must obtain revenue for some reimbursement of the vast expenditure which the United States of America are incurring in maintaining a reasonable standard of life in Japan. All that I can understand.

The President of the Board of Trade will appreciate that the interests of America in Japan are very different from those of this country. There are the cotton interests of the South, and there are many other interests whose influence makes itself felt in Tokyo. Do we make ourselves equally effective in voicing our views in Tokyo? I very much doubt it. If that be incorrect, will the right hon. Gentleman tell me what steps he is taking through our Far Eastern Commission or otherwise to ensure that our views and our apprehension as to future competition from Japan will be voiced? That is a very serious matter.

Now I revert to what I was told by those very senior officers in the Foreign Office, and I repeat it here. I was told quite bluntly—I cannot remember whether it was before I went to Japan or after I came back—that the major issue, the democratisation of Japan, was a matter of our foreign policy. They said, "As far as Lancashire is concerned, you are absolutely second-rate." I was told that at the Foreign Office. If that be a correct statement of opinion at the Foreign Office, I would ask the President of the Board of Trade what he is going to do about it. This is a Debate on trade. We live by trade, and our greatest trade and greatest export, apart from coal, is textiles. Will the right hon. Gentleman fight the Foreign Office on this matter? Will he do something about it? It is a matter which must be fought, and must be attended to. We must have a policy with regard to Japan.

I saw the right hon. Gentleman on the day after he took office. I was with the hon. Member for Ashton-under-Lyme (Mr. Rhodes), who has now gone to South Africa, lucky man. I wish I were there. It is very pleasant being there, except that I should not be able to see the President of the Board of Trade. We both saw the right hon. Gentleman and we discussed this very important matter. The right hon. Gentleman said to us, "I haven't got a clue as to what our policy is." That was quite understandable, as the right hon. Gentleman had only taken office the day before. Has he a clue now? If he has, will he tell us what our policy is? Raising labour standards in Japan up to the standards in Lancashire cannot be achieved within my lifetime. Therefore, is it proposed that there shall be a limit to the level of the textile industry in Japan? I suggest that that is the proper course to pursue.

I apologise for taking so long. I would finish by saying that I took the view before the war that Japan's economy was over-weighted in favour of textiles. There was too much textile. There were historical reasons why that position arose, but the economy was nevertheless over-weighted. I see no reason, either in our interest or in the interests of Japan, why that situation should be allowed to rise again. We should give great consideration to the future economy of Japan so as to achieve it on a more equitable basis and with less reliance on textiles in the future. If that were done it would be to our advantage, and also to the advantage of Japan.

May I also put this idea to the right hon. Gentleman? Some very important people in Tokyo have the idea—the wrong idea—that Lancashire is down and out; that we are thoroughly inefficient, that we have "had it." That is wrong, as I know, and as the right hon. Gentleman knows, arid I hope that he will correct this view, and bring his powers to bear, in the Far Eastern Commission and otherwise, so that our views in regard to textiles receive in future greater consideration in Tokyo than they have done in the past. A very important person in Japan, when discussing with me the importance of the Japanese textile industry in the Far East, told me that we could not possibly compete there; but quite apart from the Far East he told me that we could not compete in Africa. I would ask the President of the Board of Trade whether he will consider the Congo Basin Treaties? I wonder if he has done so; if he has not, will he do so? I could let him have copies if he wishes, and I would willingly come to the Board of Trade and explain them. They are the basis of the Lancashire textile industry's position in Africa. I hope he will give consideration to that aspect.

I have paid my general tribute to General MacArthur and his Staff, who afforded us the greatest possible facilities for ascertaining facts and seeing all that we wanted to see. If I have information which the right hon. Gentleman has not got, it is at his disposal. I would like to say how helpful was the head of the United Kingdom liaison Sir Alvery Gascoigne and General Gairdewer, the personal representative of the Prime Minister. I would reiterate that the Americans in Japan, from General MacArthur downwards, afforded us the fullest possible facilities for seeing what we wanted to see and gave us all the figures we wanted.

I am very apprehensive about Lancashire in relation to the future of the Japanese textile industry. The hon. Member for Ashton-under-Lyne said that we had a five-year period. I doubt whether he is correct. I do not think he is. I believe that we have to get down to it and I say plainly, not to the right hon. Gentleman but to Lancashire, to managements, to trade unions, that we have to face the future, not in the sense of the stupid pamphlet which was based on false premises, but in the sense of what I have said, which is that it is a fact that we have to face the future. We have to realise what we are up against. Let us get together. I say that trade unions in Lancashire have in some respects been reactionary. In some respects managements have been reactionary too. We must have a new conception, the Government must have a policy, and if my lengthy speech has in any way contributed towards achieving a statement of policy from the Government, my time will have been well spent.

5.14 p.m.

Mr. Parkin (Stroud)

The hon. Member for Darwen (Mr. Prescott) will not expect me to follow him in discussing the economic future of Japan, upon which he has so much special knowledge. As regards his tribute to the Lancashire cotton operative, I should protest that in my constituency there are textile operatives who have inherited a tradition much older even than the tradition of Lancashire, and that the woollen textile industry of the West of England is playing its part in earning dollars. I think that puts me right with my local paper.

I came to the House this afternoon, encouraged by rumour to expect a full-blooded onslaught from the Opposition, a three-fold attack on the Government's policy. I was more than disappointed, after listening most carefully to the right hon. Member for Aldershot (Mr. Lyttelton), to detect nothing in his speech which has not already been most effectively put in supplementary questions by the hon. Member for Orpington (Sir W. Smithers) over a period of months. I feel that the Opposition have rather let the House down by not producing more arguments against trade with the Soviet Union or against bulk purchase. I feel that the Conservative Party hardly t deserve that continued position of one-third of the seats in this House which the Lord President of the Council has promised to secure for them in future years. It looks as though such future opposition as can be found for the Government's policy will have to come from these benches. I must try this afternoon to stimulate, in one or two respects, some feeling that there is more to be criticised than has been indicated by the right hon. Member for Aldershot.

It is convenient to know that the Conservative Party are officially opposed co the Anglo-Soviet trade agreement. We have been rather misled by one or two organs of the Conservative Press, which spoke enthusiastically at the time. The "Daily Express" was most excited at the end of December, when it said: From the harbours of Odessa and Novorossisk the grain ships will soon be leaving for Britain. Big cargoes are on the way—twice as much barley, oats and maize as Britain was able to import from all sources in 1946. A splendid first result of Anglo-Soviet trade accord. Here at last is the flying start that Britain needs for the expansion of her quick producing food industries, poultry and pigs. Important results can be achieved long before the end of 1948. Now, I suppose, we are to understand that that is finally repudiated by the Conservative Party. What was interesting about the right hon. Gentleman's speech was that only the political prejudice and only the extreme satisfaction with which he announced that not one single order had yet been placed to implement the Soviet Trade Treaty gave any indication of the country of which he was speaking. If he had not shown, that prejudice and satisfaction he might just as well have been talking about any other trade agreement which had been entered into by this country.

It is a big mistake for the Conservative Party to press too strongly upon the Government not to develop trade with Eastern Europe. They may in the end find themselves doing a disservice to this country by getting out of touch with developments in America. It is important to warn the Government that, in spite of all the extraordinary noises being made in the world at the present time, there is a pretty fair chance that either through the adoption of the policy of Henry Wallace or the adoption of a sensible business men's policy such as was shown by America towards the first Five-Year Plan of the Soviet Union, America may make it up with Eastern Europe before we do, leaving us holding the baby and having made all the awkward noises and kept men in uniform and not having integrated our industry with the obvious parts of the world where most use could have been made of it.

In support of that suggestion I would point out that the American politicians have left the door open. President Truman, in his message to Congress on the European Recovery Plan, on 19th December last, in speaking of the fact that the Governments of Eastern Europe had not attended the Conference in Paris, said: This should not, however, prevent the restoration of trade between Eastern and Western Europe to the mutual advantage of both areas. Both the report of the 16 nations and the programme now submitted to the Congress are based on the belief that over the next few years the normal pattern of trade between Eastern and Western Europe will be gradually restored. As this restoration of trade is achieved, the abnormal demands on the Western Hemisphere, particularly for food and fuel, should diminish. Senator Vandenberg, opening a debate in the Senate a little earlier, had said: There is grievous need for the restoration of east-west trade. We have not heard any strong pressure from the Opposition upon the Government to restore trade with other countries of Eastern Europe. In the last few days we have heard some remarks about Czechoslovakia, which is a far-off country about which hon. Gentlemen opposite know little. But we had not heard, before this afternoon, any high praise of the new Czechoslovakia, no suggestion of integrating our economy with that of Czechoslovakia. Too late again. More- over we have not heard any strong criticism of the Government for not having reached a trade agreement with Yugoslavia. May I ask that we may now be informed if we have got trade moving? Last year we strongly pressed Yugoslavia to raise the amount of maize that they were able to offer. I think it seems extreme likely that we shall end up by not buying any maize at all. It is not a very satisfactory state of things, that negotiations should be going on all these months, and should be tailing off at this point. Some stimulus is needed, not because we have plenty to sell them, but because we need the stimulus here at home to carry out the expansion of our own industry.

The right hon. Member for Aldershot suggested that we cannot afford to buy this grain from the Soviet knowing that we have not the goods to pay. That is precisely so, and that applies to every bilateral agreement we are entering into at the present time. I am anxious that the Government should prepare and submit to the country, and the trade unions in the industries, a statement of what are our total commitments at the present time over all our bilateral agreements, all the 1,200 Colonial development schemes which have been initialled and agreed, and every capital requirement of our industry at home that will be a capital equipment cost.

I think that we should have a statement of what we are expected to produce, side by side with the present productive capacity, and what the output has been for some convenient recent period. Then I think we shall see a deficit. We generally do see a deficit when we look at figures presented by the Government at the present time.

Mr. S. Silverman

Except on Budget Day, of course.

Mr. Parkin

Except in the Budget, of course. Only if we get that statement can we decide whether we can continue to maintain the present standard of living. Only if we get that statement can we clearly understand how much expansion of our basic industries is required. The right hon. Member for Aldershot implied—and indeed it is almost an instinctive attitude of his party—that there must be restriction. They are afraid of expansion and abundance.

There is no reason to be afraid of either, but we are committed to the point when we are going to be desperately short of steel. That needs to be stated most emphatically to those in America who wish to help us. It is no use our friends in America thinking that they are going to help Europe to recover if they send only food and fuel handouts, and withhold the support in steel. If we cannot get it from America, will the President of the Board of Trade tell us what schemes we have for the greater expansion of the steel industry here at home and in the Dominions? Could we know more about the schemes for producing steel in Rhodesia? It there, a scheme for steel production in North and South Rhodesia by agreement with the Colonies and Dominions—a sort of super Pittsburgh—Zaporozhe — Magnitogorsk — Sheffield rolled into one which would, of course, take years to develop, but would offer us, in the end, the solution of this basic shortage in our industries at home and in the Empire.

Can we be told what is the system that is going to be carried out for using the steel we have got, divided between these different commitments, the bilateral treaties, the Colonial development and the requirements here at home? What are the plans of the Government for organising the engineering industry to cope with this material shortage? It is not only the engineering industry that needs reorganisation to make use of the supply of raw material available at the present time. In this connection I hope the President of the Board of Trade will be able to tell us how much progress he has made in getting development councils formed and in getting implemented the Industrial Organisation Act, passed last year, and so half heartedly supported from the other side of the House. We know there has been considerable opposition in various parts of the country to the implementation of that Act.

Whatever industry has been examined by a working party since the end of the war we have had, with monotonous regularity, from the different independently working parties the same conclusion. They report that, so far as the top 25 per cent. of British industry is concerned, we have a standard of craftsmanship and technical achievement with which we can look the whole world in the face. I think that every hon. Member in the House will agree with that. It is.not a question of local pride. That goes for industry after industry. The trouble is that the bottom threequarters needs to be brought up to date.

I would mention one working party which reported on the cutlery industry. I am not concerned with that industry and I do not know much about it, but I do know that that industry has contributed very much in the last couple of years to the export trade of this country. It has doubled its exports in a year, and the value of its exports are four times those of the last year before the war. Obviously there is nothing to criticise in the actual industry and the efforts which have been made by the people in it. The report of the working party said of the 313 factories in which the 500 firms were working that only 36 were satisfactory. It stated that 233 required alteration or reconstruction, and 44 were incapable of being made fit for use. Those are the circumstances in which we are asking British workers and industries to make this superhuman effort at the present time.

Mr. Jennings (Sheffield, Hallam)

Does the hon. Gentleman realise that the report of the cutlery working party is under consideration by the Sheffield Cutlery Manufacturers' Association? They have passed no comment whatever on this report, and it is quite likely that they will disagree entirely with the report.

Mr. Parkin

I was not commenting on the report, but on the figures produced by the factory inspectors. I do not think it is likely that those figures will be challenged. I was not commenting on the measures proposed, or criticising individuals in the industry. I was pointing out the state of the equipment with which people have to work, according to those figures, and I am inquiring from the President of the Board of Trade what steps are being taken to make it possible for those people, who are already doing magnificently in the existing circumstances, to do even better.

The same thing applies in many other industries. We have a report on the boot and shoe industry. There is an industry which depends on imported raw material. I would ask the President whether it is true that every boot and shoe factory in the country is working at the present time and whether it is not also true that many of the best factories are working at less than full pressure. If that is so what steps are being taken to see that the best equipment in the best factories is used on the available raw material? The same thing applies in the woollen textile industry.

That brings me to the question of the other subject on which the Opposition criticise the Government, namely, the question of prices. I suggest that when the President of the Board of Trade replies, if he is able to tell us something about the implementation of the working party reports and the form of development councils, he should also tell us something about prices. Workers in the industries should know something about the costing of the factories in which they are working. This is a most important subject. The right hon. Member for Aldershot was pleased to make fun of certain price control regulations. In view of the Government's difficulties in explaining its White Paper on prices and wages, I think there could hardly have been a more cynical attempt to undermine them than this attack upon price controls.

It is perfectly clear that the Conservative Party is prepared to accept and applaud what their own Press interpreted the day after the White Paper was issued; that is to say, that the White Paper must apply to wages but not apply to prices. By way of being funny, the right hon. Gentleman quoted dartboards. I propose to take him seriously. This is exactly the sort of thing which happened in Czechoslovakia. If his party knew more about that country, they might have paid attention to it. If we have the most essential industries in the country under control, whether under national ownership, price control, or management of some kind, we are left with a sector of non-essential industries outside control. One inevitably creates there a black market in labour, because the prices for those non-essential goods go up. If we allow the prices of dartboards to go up and if we peg the prices of essentials, then a lot of people will want to make dartboards with unsuitable labour and materials. I am sorry to be so elementary about that. I apologise to my colleagues on this side of the House, but it does not yet seem to be understood by hon. Members opposite.

Mr. Orr-Ewing (Weston-super-Mare)

Has the hon. Member forgotten the institution called the Ministry of Labour and National Service and does he not know that there are places called employment exchanges? He seems to have overlooked them.

Mr. F. Lee

Three million workers remember them.

Mr. Parkin

I think that most hon. Members on this side of the House have heard about them. If we are to have a wages policy, we must give freedom to the workers to attack prices and to attack costs. The incentive to the worker, if it is not to be in money payments, must be in real wages. We must give him the means to know, the means to get at these costings, the means to put some teeth into the joint production committees and the workers' representation on development councils and so on. The trouble with the price pegging system is that it pegs prices at a level which keeps the least efficient factory going. That leaves the most efficient factory comfortably making a profit, I will not say against its will, but without any special effort.

The real problem, therefore, is once more the wide range of costs between one factory and another. Here we are back to the working party reports, the development councils and the other problems. We must reduce this wide range of costs between one factory and another. As long as it is necessary to keep inefficient factories in operation to get the output, on prices which keep them in the market, then we are making a present to whit are usually the larger and, in any case, better equipped factories, of a large profit margin which they can employ n keeping an unnecesary large number of people employed—in hoarding labour, in fact. That is one of the big problems which we must face. We must make sure that labour is not hoarded by large firms who are not particularly worried, because their profit margin is quite high, so that the concentration at which we ought to be aiming is not even attempted. There is a self-interested inertia about the thing. I do not say that from malice; naturally, there is a self-interested inertia. They hope to keep their teams together.

Unless we can get at the facts, unless we can really hope to explain to people in all sections of industry what the costing system is, I do not see that we shall effect very much by merely issuing schedules of prices which are to be pegged at present levels. We want to know what attempt will be made to bring the prices of the produce in the best run factories somewhere nearer to the cost, and what attempt will be made to eliminate the inefficient factory when the work can be done by a better equipped alternative factory so as to reduce the cost and make it possible, therefore, to reduce the price for the whole range of industry.

5.35 p.m.

Sir David Robertson (Streatham)

The hon. Member for Stroud (Mr. Parkin) opened his speech by finding fault with the lack of criticism from the Conservative benches in regard to the policy of the Government. I will try to oblige him in that regard. He referred to steel and appealed to the President of the Board of Trade to tell him what he intended to do in order to produce more steel. I do not think that that is a matter entirely within the control of the President of the Board of Trade. I believe that largely lies in the hands of the magnificent companies and men who are creating an all-time record which I regard as the outstanding feature of the postwar industrial era. Steel production figures are running at the rate of 15 million tons per annum, which is right up to the highest hope of the Chancellor of the Exchequer. I assure the hon. Member for Stroud that if he wants more steel he had better ask the steel industry, because they are the only people who can get it.

The hon. Member also warned the Government about the necessity of trading with Eastern Europe. I am sure that Members in all parts of the House fervently want to bring that about; but we must take a realistic view today. That is the main reason why I attempted to take part in this Debate. I see that in this Trade Agreement with Soviet Russia we are to get 750,000 tons of coarse grain. For many years we have had to do without food from Russia. If it comes to the point, I think we will be able to do without it in future, though I would much prefer that we should be able to trade freely with Russia and Russia with us. I am, however, very alarmed to see details of the capital goods which we are giving to Russia in exchange for these coarse grains. The price is far too high to pay at this grave hour. The hon. Member for Stroud quoted from the "Daily Express." I wish to quote something from the "Daily Express" which appeared in today's issue. It is a statement by that great world statesman, Field-Marshall Smuts, which he made in Cape Town last night. This is what the report says: General Smuts said tonight, 'Czechoslovakia fell a day or two ago. We must say now 'thus far and no farther.' Mankind is at the most momentous hour in a thousand years'. I share those views. Like so many other thousands of our fellow countrymen, I was a soldier in the first world war. I remember the light railways and locomotives, and the use to which they were put. Every one of these capital goods, with the exception of plywoods, has a high war potential. I ask the Government with very great sincerity and seriousness to reconsider what they promised to do under this agreement, to use all their resources to have these contracts with the suppliers carried out. The situation has changed greatly since the right hon. Gentleman went on his courageous mission to Moscow and, at that time, apparently did so well. Then I think that our hopes were much higher than they are tonight. I earnestly suggest that trading these weapons of war, because that is what they are, for cattle feeding-stuffs is too high a price.

Mr. Parkin

Would the hon. Gentleman agree that the reason why the Soviet Union is at present short of light locomotives and light rails is that they tore them up from the timber cutting areas in order to be able to fight the war, in order to be able to save us and themselves, and to enable us to be here discussing this matter today? Does he not agree that when they were doing that, meetings in favour of co-operation with the Soviet Union were so crowded that one could not get on the platform because of Tory fur coats?

Sir D. Robertson

In answer to the hon. Member, I had the honour to represent the Conservative Party at the all-party meetings called by British Communists which took place in Trafalgar Square, London, the Hibernian football ground in Edinburgh and on Glasgow Green in 1942. It may be recalled that Russia had been attacked by Germany. The Communists, whose outstanding contribution to the war had been sabotage up to that moment, had become patriotic overnight. I hoped and believed that, when Russia was attacked, these all-party meetings, at which Liberals, Conservatives and Socialists were present, would do great good. We were a united nation, fighting a common cause, and it gave me great pleasure indeed to speak for my party at these meetings. I think that some of the things I said were probably pure poison to the Communist organisers, but they were all-party meetings. That is the most effective reply I could make to the hon. Member, and I can assure him and every hon. Member here today that what I am saying about this war potential I am saying with great deliberation and with great regret.

It would grieve me greatly, and I am sure it would grieve everyone, not only in this House but throughout the country, and our American friends and the people in our own Dominions and Colonies, if they felt that we were supplying war potential to a nation which is behaving just short of war. As General Smuts said, this can go no farther. For that reason, I say—and this is not a party issue, but something that affects the whole of this country and the whole of civilisation—the time has come to call off this deal. It is still open to the Government, as these supplier contracts need not be fulfilled until March, and I am certain that we could call it off with honour. I ask the Government seriously to consider that.

5.42 p.m.

Mr. Stokes (Ipswich)

I appreciate, of course, the sincerity with which the last speaker has made his point, but it does seem to me that we are in some difficulty on this question of international trade when we get on to the subject of a war potential A number of things concerned in this trade agreement may be referred to as a peace potential, and thus the whole question arises what is a war potential? In these days it comes down to the fact that practically everything is war potential.

I object to the Russian Trade Agreement, but for entirely different reasons from those given by the hon. Member for Streatham (Sir D. Robertson). I object to them keeping between 17 and 22 million slaves in concentration camps, but that is not a good reason for attacking the Government. The right hon. Member for Aldershot (Mr. Lyttelton) complained with exceptional severity about the fact that we are getting 750,000 tons of grain in exchange for the kind of goods mentioned in the White Paper, and he asks why we did not exclude the things most necessary to ourselves. These are the things the Russians want, and what we wanted was grain, and so I suppose that Russia said, "You do not get the grain unless you give us the things we want." That, surely was the reason? I am sorry the right hon. Gentleman is not in his place, as I had several other things to say to him.

The hon. Member for Darwen (Mr. Prescott) joined issue with my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman), on the Lancashire cotton trade. I do not propose to go into that in any detail, and all I can say to the hon Member is that, if the cotton operatives prefer a longer working day to a longer working week, why should they not have it? For myself, I do not find that it works out in the industry with which I am associated. I find that a shorter working week produces as much as, if not more than, the five-and-a-half day week, and I take off my hat to my own men for all that they have achieved. I do not say that, at the moment, we ire getting quite as much owing to the staggered week, but when we get back to normal working, we shall increase production to the five-and-a-half-day week level. Now that the right hon. Gentleman the Member for Aldershot has returned, I will not repeat what I said about Russia, as he can read it in HANSARD, but he made other points.

One of the points made by the right hon. Gentleman concerned the bulk buying which the Government have indulged in and which he says was disastrous. I have a long enough experience of that kind of thing to be able to say that, from what Colonial Governors tell me, if bulk buying stops, the whole of their economy in these Colonial parts of the world will collapse. Bulk purchasing does assure their future. What the right hon. Gentleman opposite would really like is the dear old Tory restrictive policy of dear scarcity. I remember during the war the difficulty over the supply of tin, and the action that was taken in the Malayan Peninsula in order to keep up the price of tin. The right hon. Gentleman knows all this, as he was on the Board, and that is precisely what he likes.

Mr. Lyttelton

As the hon. Gentleman has challenged me on this point, may I say that it is quite true that I was on the International Tin Committee and that I represented the Government of Nigeria?

Mr. Stokes

I withdraw, of course, if the right hon. Gentleman says he was not actually on the Board, but there was one of these rackets with this Committee which I pursued through this House with completely unsatisfactory results from the Tory Government in my efforts to get the restrictions removed, when all the tin producers in Malaya were restricted to a production of 70 per cent. of capacity in order to keep up the price.

Then the right hon. Gentleman went on to complain about price control. He said that if we do control the price of dartboards it would lead to an artificial demand for other goods. Is he really, then, advocating greater rationing? It is one thing or the other. If, in fact, you ask people to produce more goods for export and to have less for themselves, either you have got to control the price or ration a far wider range of goods. I do not wish to go into that point although my own preference is for greater price control. I see difficulties about wider rationing of goods, because that means more and more officials, and what we must do is to control a wider range of goods so far as price goes. I do not see how we could deal with that position at the present time except by the action which the Government have taken.

The Secretary for Overseas Trade, when replying to the right hon. Gentleman emphasised the importance of bilateral and multilateral trade agreements, and he said that multilateral trade agreements were essential in order to get dollars back or a sufficient number of dollars which we want for our trade. I do not deny that. I think I am interpreting the views of those who object to bilateral and multilateral trade agreements by saying that what we feel about it is that they may prove completely restrictive and useless, and show a lack of realisation of the problem with which we are confronted. What we are confronted with is a huge market in U.S.S.R. for the benefit of the Russian Government and another huge market in America which is controlled by the United States, and what we have to do, if we are to survive, is to organise a wide market in Europe.

It is all very well for the hon. Gentleman to say that we have come to a bilateral arrangement with Holland whereby we have raised our exports from £59 million to £71 million, but that is only a miserable 15 per cent. in export trade, which is nothing at all. If as a result of making agreements of that kind, we find ourselves precluded from making a much more important and wider agreement with a larger number of countries, surely these agreements are idiotic. It is a lack of appreciation of the problem on the part of the Chancellor of the Exchequer, which is likely to get us in a very bad mess in a short time.

Mr. Scollan

While we are waiting on this organised Western Europe market, what is going to feed this country?

Mr. Stokes

That is a totally fair question. I appreciate that we have to have some sort of arrangement in the meantime, but for heaven's sake let us show an appreciation and an understanding of the problem. I do not see any signs that the Government understand it. It may be a Cabinet secret, but I see no evidence of it. I write to Ministers, and I get silly answers; I make speeches in this House and they are not often replied to—I do not often speak because I am not often fortunate in catching the Speaker's eye; I write letters to the newspapers and nobody ever replies. I would have expected that somebody, who knew better than I, would trample me down. Of course, I appreciate the hon. Member's point.

I come back to what the Secretary for the Department of Overseas Trade said about goods going to the right place. I quite agree with that and I also say this—it is very important that goods should go to the right place at the right time——

Mr. Harold Davies

And at the right price.

Mr. Stokes

Of course, at the right price. I speak particularly on the export of capital goods. I do not know enough about the export of raw materials, but I know a little about capital goods. We must remember that manufacturers of capital goods in this country, before the war, owing to the intense competition abroad, largely regarded their export market as a dumping market, and they were quite prepared to accept lower prices than they could get in the home market. I think that is fair. The situation is entirely different today. I would not dream of selling my goods abroad at a lower price than they are sold at home, but at the same time I am terrified of getting too much. One must not get too much because of the odium attached to making profits, which I perfectly understand. It is absurd at the present moment to ask people to peg wages, and still to see manufacturers selling exports at enormous prices, paying large bonuses and making large profits. I do not want this.

The engineering companies of this country, from the bottom to the complete, manufactured article, exported £500 to £600 millions worth of goods in 1947. I quite sincerely believe that, on the vast majority of that material, we could have got 15 to 20 per cent. more without any difficulty at all, and without prejudicing our future market. Of course, one would make enormous profits. I want the Government to deal with that matter by insisting upon a standstill of dividend and having a dividend limitation Bill to prevent people declaring bonus shares or increasing dividends in any way. Let them plough the money back into the business, as far as they can, and spend on improvements, instead of dividends, with what material and labour is available.

Mr. Follick (Loughborough)

Even if we do export these goods cheaper to these countries and make less profits, we are handing over much bigger profits to the importer in other countries; they will make the profits, anyhow.

Mr. Stokes

I really cannot look after everybody else's business. I am struggling my best to help the Chancellor. I agree that I criticise him a good deal sometimes, but that is the way our system works. He is faced with this yawning gap, and I am suggesting something as a result of which we might be getting 15 per cent. more for our goods I should have thought it would have entirely the opposite effect to what the hon. Member suggested. So far as we are concerned, the effect would be a tendency towards closing this gap. We know perfectly well that in 1947 our exports were 10 per cent. above the 1938 volume, but the value was only 226 per cent. higher than in 1938. Our imports however, still only 10 per cent. in volume above 1938, had a value of 267 per cent. above 1938. What does that mean? In order to balance, we have to increase the value of our exports by 40 per cent.

I come to the next point, which is that there is no sense whatever in trying to export the wrong goods, and that is where I see one of the big blocks in front of us. The Chancellor of the Exchequer, when he was Minister for Economic Affairs, told us that we had to double cur exports in manufactured goods. I believe that to be an impossibility for this reason—that before the war we had 20 per cent. of the manufactured export trade of the world, and to double that means we should have 40 per cent., which means everybody else must drop their exports by 25 per cent. We are not going to do that at a time when America has increased her potential export enormously and when countries are much more self-sufficient than they were. Even those who argue that Japan and Germany are now off the market, should remember that they accounted for only 10 per cent. between them, and if we took the lot—which we do not want to do, unless we are to keep pouring food into their mouths and leave them doing nothing—it would not be enough.

The long and short of it is this. The market for motor cars and cheap consumer goods is rapidly closing up all over the world. Out of all the markets I have been to—about 42–41 of them want capital goods. The only one that does not is the Faroe Islands, or someone like that, who do not matter. I am not talking about the United States of America, of course, and I will leave out a number of the American countries, but the ordinary consumer countries, with one exception, want capital goods. Of 51 countries, 31 want coal. But we must remember that, by this time next year, Germany will be exporting 20 million tons of coal, and Poland is quite confidently preparing to export 30 million tons, and unless we look to it and get our coal export back, we are going to be tagging along behind them and not getting the proportion we ought to have; and it is my conviction we want at least 35 million tons. But the whole European market is only 100 million tons. The same thing applies to steel; in the 41 countries, 23 of them are making an ever-increasing demand for more steel, and only 18 of them are closed. Therefore, it is not only a question of selling goods in the right place, but of selling the right goods in the right place at the right time and at the right price, and I am not sure we have that combination set up.

In this analysis of what we can do in the way of export, there arises the question of manpower. It would be out of Order to go deeply into the question of what the Armed Forces are taking, but I do suggest the moment for selling goods is now—it is no use dawdling and seeing if we can do something next year or in the future; we shall find ourselves too late. I believe the Government should scrap the Conscription Bill. We heard yesterday the impression of some ex-Service officers of what is happening in the Navy and the Air Force.

Mr. Deputy-Speaker (Mr. Herbert Beaumont)

The hon. Member cannot go back to yesterday's Debate.

Mr. Stokes

Well, I heard it said outside the House what is happening to the Navy and the Air Force.

Mr. Deputy-Speaker

The hon. Member may have heard many things outside the House, but he can only make reference to what is related to the Debate today.

Mr. Stokes

I do not understand that Ruling, Mr. Deputy-Speaker. Why is it out of Order?

Mr. Deputy-Speaker

Because it is irrelevant.

Mr. Stokes

With great respect. I am developing my argument that I want some more manpower. What I am told is that I am not going to have any food next winter unless I get more exports. I say I cannot get more exports unless I get more men. I am suggesting to the right hon. Gentleman that they could give me some more men by letting me keep my young men. Just as my young men are beginning to be useful they are taken away to a perfectly useless occupation. I speak as a person with some experience of the Army. Imagine having a man to train for one year! What is the use of it when he has finished it? It is no use to him. That year ruins him and I have to begin training him all over again—if I get the body back. We should immediately get an addition of 100,000 people, which would ease our sorely strained manpower position, if those people were now kept in industry and not removed at a vital moment. If we must have them trained as soldiers, we should insist on an immediately comprehensive Territorial training.

As for foreign labour, about which I have a little experience—[Laughter.] I am not joking about this. The business which is going on is very unfortunate. It seems to me perfectly insane that we have here people into whose mouths we pour food, whom we have carefully transported to this country with promises of British nationality and so on, and yet I do not know how many—it must be over 100,000—are sitting down on their hunkers doing nothing. Some are working, and it is true that some do not want to work. I am not sure that I want to. Very few do. Only really mad people are mad about work. [Interruption.] No doubt the cap fits the hon. Member for Rochdale (Dr. Morgan); I do not take any exception to his putting it on. My view is that it is perfectly normal for a man to Want to do as little as possible for as much as possible, and if he is mad enough to work himself to death, good luck to him—he ought to do it without any pay at all as it becomes his recreation.

That is a little irrelevant. I apologise for having taken so long, but having got up, I do not always want to sit down too quickly. I believe that all Governments today, and most people, have an entirely wrong conception of how to do trade. Lend-lease was a marvellous idea. We ought to have continued something like that for years after the war. It is perfectly obvious that what one ought to do with one's surplus is to give it away. The Christian teaching is to give away what one wants if the other man wants it. We ought not to burn or destroy or restrict what we do not use because the other man will not pay for it in dollars.

I commend to the Government a complete change in the method of international payments. It is perfect madness at present. If I want to buy 4,000 dollars worth of goods from America I have to pay 4,000 dollars. However, the American in effect, says to me that he will prevent me getting the dollars. The only way I can get them is to sell goods to America, but the American puts up his tariffs so that I cannot get the dollars which I require. If I do not pay in dollars for the goods I order I shall be in the police court. It is a perfectly asinine way to go on. The consequence is that as nobody has dollars, everybody on this side of the Atlantic is ruined and the Americans are rapidly going into ruin.

The sensible thing would be to change the system and for the exporting country to be paid in the currency of the importing country. Why should we not do that? Who would be worse off? If I bought 4,000 dollars worth of goods from America and gave £1,000 for them, would the American manufacturer be worse off? No, he would take his £1,000 cheque to the central authority and get 4,000 dollars and it would go into the central coffer. The worker would not be worse off. He would get his pay and would be able to use the goods the other people manufactured there for him. I would not be worse off because I was doing a transaction, and hon. Gentlemen opposite would not be worse off because I should be selling the goods to them. Everybody would be better off, except the people who make money out of making money, and they are the people who have unfortunately got us by the throat.

It is time we changed the whole system round—[Laughter]. An hon. Gentleman laughs, but that is what must happen. That is what will happen in effect under the Marshall Plan. That must come if trade is to increase, if ruined countries are to get on their feet again and if backward countries are to become forward——

Mr. Scollan

Will the hon. Gentleman give way?

Mr. Stokes

Yes, but I was trying to make a peroration.

Mr. Scollan

I say this respectfully to the hon. Gentleman. I was laughing because I thought it was rather ludicrous that a captain of industry who is very highly respected should get up and advertise the fact that he does not know the first thing about the monetary system of this country, nor about the dollar exchange.

Mr. Stokes

That must be a matter of opinion——

Mr. Scollan

No, it is a fact.

Mr. Stokes

Certainly it must. I have just accused the Government of not understanding. If the hon. Gentleman wants to put the cap on, I do not mind. He will learn one day that he is wrong. The people who insist that we must have monetary symbols for everything are just as crazy as the organisation I quoted before, which decided to run a comprehensive bus service and before determining how many buses they should have, where they should run and how many people would travel, argued about how many tickets they should print. That is what happens in the international monetary system. If I want to do wonderful things and am told that there is no money, it is as if I went to Euston and asked for a ticket to Scotland and was told, "Mr. Stokes, the Flying Scot is half empty"—it never is, but suppose it was—"There are plenty of seats but we have no tickets and therefore you cannot go." That is crazy. That is precisely what is happening in the world today. You think it is right, and you are all crazy.

Mr. Deputy-Speaker

I hope that is not intended to be a reflection on the Chair.

Mr. Stokes

No, Mr. Deputy-Speaker, I naturally except the Chair. I ask the House not to laugh at this because it is a most vital issue. Our trade will never get right, backward nations will never become forward and the ruined countries will never get up again until we really appreciate not only the importance of an immediate exchange of goods for goods but our own responsibility to the world for making available to the backward people the surpluses which we who are more advanced than the rest of them can produce in larger quantities than we can ourselves consume.

6.9 p.m.

Sir William Darling (Edinburgh, South)

I cannot hope to follow the robustious eloquence of the hon. Member for Ipswich (Mr. Stokes).

Mr. Stokes

Why not?

Sir W. Darling

I have not the necessary experience in this House, nor do I hold such heterodox views. It must be impressive for the Government to hear one of their supporters so clearly enunciating how false and foolish their policy is. I am in such ready agreement with the hon. Member for Ipswich that I doubt whether I could follow him. I was less attracted and more stimulated by the Secretary for Overseas Trade. I find that I am more easily stimulated by those people with whom I disagree, than by those with whom I agree. An agreeable man is one who agrees with one, and to that extent I am in agreement with the hon. Member for Ipswich and not with the Secretary for Overseas Trade, who gave us such a pleasing, smooth, rapidly enunciated harangue dealing with important matters of trade in our country. It had many merits, but its reiterated theme was the pattern of trade.

In this survey of the pattern of trade, he took us over those parts of the world which are still tolerably free. I noted, for example, that, although he told us of a number of countries—Denmark, Holland, and the like—he did not mention the possibility of trade with Spain, for example, or with Portugal. Nor did he refer to the possibilities of trade with Czechoslovakia, where we have been doing some not inconsiderable measure of business. It is unfortunate that he did not do so. His range, if it had been in the proper pattern, should have covered the whole world, and I should have been more satisfied had he done so. Instead, he left in my mind the uneasiness in which I live these days because of such a pattern of trade. His pattern is of a very repulsive character.

My pattern is one in which the peoples of the world trade tolerably freely, in which there is a steadily rising standard of welfare throughout the whole world, in which communications between the manufacturers in one country and those in others serve the whole community for their mutual advantage. The pattern of trade of the Secretary for Overseas Trade is not that pattern at all. It is, apparently, of a number of committees, which meet from time to time in the recently enlarged and extended Government offices. I do not like that pattern because I was brought up to look for fruits. One does not get figs from thorns, nor grapes from thistles, neither does one get very much fruit from this pattern of trade, which is conducted by public officials usually on the basis of quotas, bulk buying and other restrictions.

In the old fashioned pattern tens of thousands of merchants sought their own private advantage, higgled in the markets of the nations, and found the goods wherever they wanted to buy, and sold wherever they wanted to sell. That pattern of trade had prosperity for its other name. The pattern we know today is not one of prosperity, but of dwindling advantage, which becomes less and less with the more officials we get. The offices which once made the City of London the centre of the world's commerce are now either empty, or occupied toy persons engaged in protecting trades and making as much money as ever they did, for much less work. That is the new pattern which has been imposed upon us. We shall not get back to that prosperity which the country so dearly needs until we return to that pattern of trade. It is an inconvenient one, in that it does not supply the opportunities for intellectual amateurs who have no knowledge of the real practice of business, and it does not give opportunities for a planned society But it does give the cheaper food and abundance of every commodity that are wanted. This thing now exposed to our gaze is an outcrop of the necessities of war, in which restriction is inevitable. To continue it in this country is, inevitably and apparently, disastrous. I would like to know what measures have been taken to permit of a return to a free economy, and what steps have been taken to end this practice of bulk buying which has not produced the desired advantages.

It was apparent to anyone that this was not a pattern exclusive to the British. If we could keep bulk buying to ourselves and allow no one else to engage in it, things might go well. Instead, we have apparently converted other people to the same methods of restriction and control, and a diminution of goods is the result. There is an ever-growing practice of Government-to-Government trade. When a Government makes a contract with another Government and it is a good contract, the Governments should be pleased. It may be a bad contract, however, and when Governments quarrel over trade, the result may well be war. The alternative is not fraught with such danger. When I make a contract in the United States, I seek my profit and the American seeks his. It may be a good contract or it may be a bad one. If we fall out, the bargain is an ill one, but our nations do not go to war—the quarrel is between one person and another.

Mr. Harold Davies

I have followed the Victorian argument of the hon. Gentleman and what he has said about the question of markets. Surely the major wars of the past were solely over the question of markets?

Sir W. Darling

It is conceivable that the hon. Member has lived through two wars without knowing what they were about. There is an official view, which is shared by his friends, why the last two wars were fought. He is welcome to that view, but I do not share it. I do not believe that they were caused by a demand for markets. It was not for this reason that Germany took over the Sudeten Germans. That, I understand, was one of the causes of the war. This is a frequent fiction, enjoyed by those who like fictional matter, but it has no serious relevance to fact. Trade has been, by and large, a method by which friendliness and good relations have been promoted between people. One does not trade with enemies, but with friends. The more one trades, the more friendly do relations become. The less, or more governmentally, one trades, the more difficult these relations become. There may be a quarrel with a trader in another land and of another language, but that is a personal quarrel. I could not persuade His Majesty's Government to fight over my disappointment at not making a profit. There may well be quarrels arising——

Mr. Harold Davies

What about the oil combines? What about the struggle for oil?

Sir W. Darling

There well may be a quarrel between ourselves and, say, the Argentine over contracts. That is, unhappily, the case. We must be perfectly clear that individualism, like Socialism, is a philosophy, and it has risks, dangers and cruelties, but individualism docs not promote international war or conflict. Quarrels between persons may be settled by the police, and we do not require machine guns, bombing or atom bombs. The pattern of trade which the Parlia- mentary Secretary has outlined is pretty and shapely. Yet this sort of trade carries the seeds of more international grievances and disturbances than the old system of free and independent trading.

I am concerned with the general attitude of the Board of Trade, not only in its foreign and overseas relations, but towards many other affairs. I do not think the Board of Trade recognises the genius and ability of the talented skill of tens of thousands of men and women who have been brought up in competitive commerce. Those merits are now sterile and frustrated, and this is true in the highest as well as in the humblest levels of industry. Such an attitude affects the small shopkeeper as well as the great merchant, and this is unhappily the case, at a time when all the skill which the country can mobilise is required. Instead, we push it all to one side and say, "We have no use for that."

What we have in its place is an intricate and complicated system of trade. We cannot afford at this time of crisis to throw away the traditional methods of business. We came to be a great people. Our people lived by their wits, by their skill and talent. How can we account for the fact that this sterile, fog-laden and barren small island off the northwest coast of Europe, with no wealth except coal and fish, has come, over the course of many years, to dominate the whole of the world? It is because it followed a particular pattern of commerce and trade, which has enabled us to raise our population from a meagre 10 or 15 million to nearly 50 million today. We have followed a particular pattern, type, and way of living, and have not been afraid of competition and enterprise, or of venturing overseas to seek for advantage. It now seems that we are to change that pattern.

I have been comparing this country with Madagascar, which is the same size as this island. It has a population of five million and enjoys an ideal climate with all the natural riches which a good country could have. How is it that Madagascar has no influence in world affairs, or has not created an Australia, New Zealand or Canada? How is it that it has not been able to found a system out of which could grow such a great union as the United States of America? How is it that it has not been able to found freedoms al over the world? It is because Madagascar has not followed the pattern and way of life of the British people. I say to the President of the Board of Trade that if he throws away the means by which Britain grew great, if he throws away this pattern and way of life, and substitutes for it a bureaucratic pattern—which, looking at it on paper, may appear to be a more orderly thing, though it has no existence but on paper—there will be a falling standard of living here and the decline of the once great British Empire.

6.20 p.m.

Mr. Piratin (Mile End)

I am at a loss whether I should attempt to follow the hon. Gentleman the Member for South Edinburgh (Sir W. Darling), and whether I should even comment upon what he said, because I am certain he was only following the example set by the hon. Member for Ipswich (Mr. Stokes) on this side of the House, as one clown follows another. I say that with respect, because he was having a good time, and having it at the expense of this House. What the hon. Member said had no bearing on current problems. The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) said he wanted to deal with three aspects. I propose to take up merely one of the three.

Mr. Blackburn (Birmingham, King's Norton)

On a point of Order. Is it in Order for the hon. Member, in the absence of the hon. Member for Ipswich (Mr. Stokes), to describe him as a clown, particularly in view of the wide business experience of the hon. Member for Ipswich?

Mr. Deputy-Speaker

It may be an undesirable expression, but it is not out of Order.

Dr. Morgan (Rochdale)

It is an ordinary Parliamentary exchange. The hon. Member for King's Norton (Mr. Blackburn) will learn that when he has been here a little longer.

Mr. Piratin

One of the three questions which the right hon. Gentleman the Member for Aldershot raised was that of price controls. He did not leave himself much time to speak on that question, for which I do not blame him, because he did not have much to say about it. All he did was to condemn them. I want to make my contribution on that particular subject. First, however, let me say a few words on one matter which the right hon. Gentleman raised, and which other hon. Members have discussed, particularly the hon. Member for Streatham (Sir D. Robertson) and that is the Trade Agreement with the Soviet Union. According to the agreement the 750,000 tons of coarse grain which the Soviet Union is to send to this country is to be delivered during the period from 1st February to 30th September this year. Hence three-quarters of one million tons of coarse grain is to be delivered in eight months. As we all know, shiploads have already reached this country. Yet I read in the papers last week that two Russian ships returned to Russia in ballast because they could not load the steel rails which they were expecting to take back with them.

The President of the Board of Trade (Mr. Harold Wilson)

Would the hon. Member allow me? I should not like that statement to go out uncontradicted. We offered the steel rails for loading to either or both of the Soviet ships which have just brought grain to this country. The Russians said that there was no point in picking them up without the nuts and bolts to go with them, and which the Soviet Government know, and well understood, could not be manufactured for some three or four months. The Russians knew that very well.

Mr. Piratin

I thank the right hon. Gentleman for his intervention. It does not detract from my point, which is to expose the arguments of hon. Members opposite that this agreement is a terrible bargain for this country. On the contrary, I think the President of the Board of Trade is to be congratulated on the bargain, as far as we are concerned. In Article 2 and subsequent articles of the agreement, and in the schedules there are references to other deliveries. I congratulate the right hon. Gentleman on the very fine agreement he pulled off in this respect. I do not think that hon. Members on the opposite side of the House or in any part of the House should grumble about this particular arrangement that has been made. Had the right hon. Gentleman the Member for Aldershot given more attention to the details of the first schedule he might not have been so flamboyant about this agreement, and he would have worried less about his alliteration and more about the facts.

Under the first schedule, 75 narrow gauge locomotives are to be delivered in the first two years from the placing of the order, which is to total 1,100; there are to be 350 per annum thereafter. That is a good deal. The number of narrow gauge locomotives we have to deliver in the first year is about 37; not very much. The second item is flat trucks, of which 2,400 are to be ordered, but of which delivery is not to commence before 18 months. That is not so bad. Long before that all our oats and barley and maize which we are to receive from Russia will have been consumed by the cattle of this country. Then there are the dredgers, about which the right hon. Gentleman the Member for Aldershot made such a to-do, working out what kind they were likely to be. Item 8 concerns four dredgers, and the first are to be delivered 24 months after the placing of the order.

Those are the facts. Therefore, I must assume—and assume only too rightly, I am afraid—that the reason why the right hon. Gentleman spoke as he did was not because the agreement is a bad agreement, but because he hates the Soviet Union; because he does not want to deal with the Soviet Union; because he would prefer this country to starve, and suffer chaos and misery, rather than deal with the Soviet Union. He would prefer that, rather than do this deal and in return for the grain produce these goods, long after we have had the grain. I think the agreement is exceedingly in our favour.

Sir W. Darling

Is not the hon. Member aware that, in the case of dredgers, for instance, and machinery of that kind, the best delivery date one can get just now in this country is from 18 months to two years? Postponement of the date of delivery has nothing to do with the agreement. It is because delivery could not be made before that time.

Mr. Piratin

That may be very true, but the hon. Member for South Edinburgh cannot deny that we are to get 750,000 tons of grain long before we make our reciprocal deliveries. That is the essence of my argument. In that sense, the agreement is favourable to us. That is all I am saying. I realise the problems.

Let us now come to the question of price control, about which I chiefly want to speak. The Chancellor of the Exchequer in his statement of 12th February said that he was hoping to hear from the Federation of British Industries that they would take steps to reduce, or to stabilise prices; and he indicated on that occasion that he hoped to see profits come down as a result. We are still waiting for the Federation of British Industries and other associations to make their statement. I want to deal with this problem because I believe that it is one of the most important at this stage, if the Government are really to make a serious attempt to overcome the crisis. The Government want wages to be pegged. They have taken steps to see that they will be. The Government have said that, likewise, prices will be stabilised. I believe that reduction of prices would help enormously to get stabilisation in industry. It would enable the lower paid working class to buy the food and other things which they need. Further, it would mean, in the long run, less profits and hence less inflation through the profiteers. Further, it would act as an incentive to efficiency. Lastly, it would solve the problem about which a number of Ministers have expressed concern—the problem of our exports when the sellers' market is ending.

What have the Government done? They have issued a number of Orders controlling a small number of articles. I agree with that, but I believe that they have not taken a big enough step for the purpose. In addition, as was put so ably by the hon. Member for Stroud (Mr. Parkin) earlier today, such controls as exist are based on the lowest common denominator of efficiency. Somehow or another the Government have been very diligent in ensuring that profits shall always be guaranteed, and the most inefficient firm putting in its particular moan that it cannot make a profit at a certain rate is ensured such prices that it can make a profit at a rate of production which may be at the lowest rate of efficiency in the industry. As a result, the more efficient enterprises are not to be blamed for making exhorbitant profits, as I shall show later.

The Government have taken no steps to reduce the costs of distribution. Last week a Question about coal was asked of the Minister of Fuel and Power, and the hon. Member for Burslem (Mr. Edward Davies) asked a supplementary question on distribution costs. Hon. Members opposite continually ask Questions about the price of coal, which went up half-a-crown a ton a little while ago; but it is well known that the main reason for the high price of coal to the consumer does not come from the pithead—the men producing at the pits are working hard enough for it—but from the distributing agencies, after it has left the pitheads and reached the coalcellars. These are facts to which the Government have not given sufficient attention.

Mr. John R. Thomas (Dover)

The hon. Member should not make a statement of that kind without producing the facts. I happen to know something about distributive costs. Before making that statement the hon. Member should provide us with the facts of both that industry and others.

Mr. Harold Davies

There are plenty of facts.

Mr. Piratin

At the moment I am giving a résumé of the matters on which I wish to comment. In a moment I shall give facts, quoting the best authorities. I am not sure whether I shall provide all the facts for my hon. Friend, but I think that those I do provide, will be adequate for the purpose.

In the course of my speech I propose to show what the comparative figures have been recently, and how there is ample scope for prices to come down through all these channels. First, let me give some aspects of the rate of profit. I shall quote from authentic statements made in Government papers, and by other authorities. In 1947, the output of cotton was a little over 50 per cent. more than in 1938. That is all: a little over half of the 1938 figure. The hon. Member for Darwen (Mr. Prescott), who referred to the textile industry, would be interested in this, and I am sorry he is not here; but I hope his hon. Friends will bring his attention to these figures. According to Mr. Tattersall's review——

Mr. Walter Fletcher (Bury)

Is that the betting body?

Mr. Piratin

I would not know; I am not acquainted with gambling. According to Mr. Tattersall's review, the profits from 73 mills in 1947 was the highest since 1920. In 1946, the profit per mill was £9,812; in 1947, the profit per mill was £14,058.

Mr. Spence (Aberdeen and Kincardine, Central)

Could the hon. Member give the turnover as well?

Mr. Piratin

I shall give the dividends as well.

Mr. Spence

No, the turnover.

Mr. Piratin

I shall give what I want to give—the dividends. After all, this is a Debate. The hon. Member can make his own speech, and I will make mine; and let me hear him answer these arguments if he can. In 1946, in mills whose output is now one half the 1938 output, the dividend was 12 per cent.; in 1947, the dividend was 14.7 per cent.—and on a lower output.

Mr. W. Fletcher

In that fairness for which the hon. Member and his party are so known, perhaps he would allow me to put this question to him?——

Mr. Piratin

No. I shall continue my speech.

Mr. Fletcher

The hon. Member did give way.

Mr. Piratin

If the hon. Gentleman wants a fair reply he should ask the question courteously. If he does it discourteously he will not get a fair reply.

The Oldham Twist Company, which is a cotton spinning enterprise, in 1947 made £93 net profit on each operative. The question of tanners was raised earlier in the Debate. A firm of tanners, Messrs. Barrow, Hepburn and Gale, in 1945 made a net profit of £38,000, in 1946 a net profit of £56,000, and in 1947 a net profit of £101,000; their dividends increase in those two years from 6 per cent. to 20 per cent. It is on clothing, including shoes, that today the people of our country are finding it hard to meet the cost of living, quite apart from the question of food, vet here are some typical firms who are making these exorbitant profits.

With regard to food, I could give a list of 20 firms, but I have extracted two. In 1946, the United Dairies combine made a net profit of £587,000, in 1947 of £884,000; in 1946 they paid a dividend of 37 per cent., and in 1947 of 46 per cent. Now, I hope the mothers of the country will listen to what Glaxo made last year. In 1946, Glaxo made £528,000, and paid a dividend of a mere 20 per cent.; but in 1947 they made a profit of £1,591,000, and paid a dividend of 125 per cent. These are some of the profits which the clothing, shoemaking and food firms are making.

Sir W. Darling

Who are the shoemakers?

Mr. Piratin

I should have said the tanners.

Mr. Odey (Howdenshire)

The hon. Member has mentioned the firm of Barrow, Hepburn and Gale, of which I happen to be chairman and managing director——

Mr. Piratin

I congratulate the hon. Member.

Mr. Odey

He did not mention the fact that the ordinary shareholding of that company was written down between the two wars from £1 to 5s., so the dividend of 20 per cent. which he mentioned is literally only 5 per cent. of the original capital. In addition, in the inter-war years no dividend whatever was received on ordinary shares.

Mr. Piratin

The hon. Member complains that I did not mention these things. He has now mentioned them himself. I am sorry to see the hon. Member in such distress and poverty as a result of not having any dividends during the inter-war years. He seems to have done very well in spite of it.

Mr. Drayson (Skipton)

He paid a lot of wages.

Mr. Piratin

I have dealt with profits, and I am glad to see that hon. Members opposite do not like the facts. I only hope that the President of the Board of Trade and his colleagues in the Government will note that the Opposition do not like these facts and will act accordingly.

I now turn to the question of distribution costs. Here also one or two facts are important, but I will try to make my argument as shortly as I can. First let me take cotton again, but cotton made up. I quote the figures from page 95 of the Cotton Working Party Report on the cost of a girl's dress: The total cost is 12s. 5½d. sold retail; of that 12s. 5½d., 5s. 3¼d. is for wholesale and retail charges. If anyone can justify a 5s. wholesale retail distribution charge on an original 7s. cost, then he cannot be concerned with the welfare of this country, or with putting our economy on a sound basis. The country cannot afford these parasitical distribution costs.

During the war years this particular form of control, which still operates, was introduced. Manufacturers were told that retail prices in the textile industry would include a charge on behalf of the wholesaler. A manufacturer who made up garments could sell them to a retail shop, and he was allowed a 5 per cent. wholesale profit, irrespective of his manufacturing charges and profits. But he was not the wholesaler. The Board of Trade told the manufacturer that he must find a wholesaler through which to pass his goods. Many of the manufacturers set up a nominal office to represent a wholesale firm through which, by means of a bookkeeping transaction, their goods could be passed on to the retail firm. The result was that this office received the 5 per cent., which the Board of Trade permitted to tie wholesaler. I am certain that the right hon. Gentleman knows of these cases. It is very difficult to do anything about them, because these firms safeguarded their position by forming independent firms which they could control.

We are all acquainted with these facts, and many other examples could be given from other trades. This is what I had in mind when I referred to distribution costs being absolutely excessive. I will quote another example, this time of furniture. In this case 50 per cent. is added to the cost, and sometimes it is 150 per cent. for the retail sale. While it is true that I cannot give all the details in regard to coal, it is a fact that 80 per cent. is added to the pithead costs before the coal reaches the consumer. The hon. Member for Dover (Mr. J. R. Thomas) may be able to explain the reasons, and to say whether he is satisfied with these costs. I would point out that there are 25,000 distribution agencies in the country, and no one can say that that makes for efficiency. These are matters which need to be overhauled.

Mr. J. R. Thomas

I am trying to follow my hon. Friend's argument and the case he is making out, and I find myself in a certain amount of sympathy with what he is saying. It is no use, however, quoting what is the percentage increase on the costs, unless the hon. Member also quotes the costs of distribution borne by the distributors. I can assure him that these costs in the large majority of cases will bear the strictest investigation.

Mr. Piratin

In that case, the best way of finding out the position is for the President of the Board of Trade to set up as quickly as possible a working party on coal distribution. Perhaps we may then be able to get to the bottom of this. It appears that there is not always agreement by those in the trade in regard to the findings of a working party committee, and so I would suggest an independent committee, which I am sure would get to the bottom of this affair.

The President of the Board of Trade should not waste his time in appealing to manufacturers and industrialists. Last year, the Chancellor of the Exchequer made an appeal to industrialists not to declare large dividends. He did not take appropriate measures to ensure that they did not declare large dividends, but merely appealed to them not to declare these large dividends because it might irritate the workers. The fact is that the industrialists did not heed his appeal, because the dividends have been higher than ever. The present Chancellor of the Exchequer has not learnt his lesson from his predecessor, because he is now appealing to industrialists to reduce prices. I am afraid that he will be as unsuccessful in his appeal as his predecessor was in asking for reduced dividends. I ask the President of the Board of Trade to take note of this, and to take appropriate steps.

I cannot say much about profits, because that is a matter for the Chancellor of the Exchequer, which I hope will be adequately dealt with in the Budget. On the question of distribution costs, however, I ask the President of the Board of Trade to undertake a thorough investigation, so that the House may be satisfied that the Government are taking adequate measures to reduce these costs in every field. Secondly, I ask that wherever price controls are instituted, they shall not be on the basis of the most inefficient firms, but on the basis of the most efficient firms. It might be asked what will happen then to the others. My answer is clear. It will be the best incentive for them to become efficient and to produce more cheaply. If they cannot do that, then they can go to the wall; and there will be many firms going to the wall sooner or later unless the whole economy of the country is overhauled—at least in this case, any drastic steps will be in the interests of the nation. I also ask the President of the Board of Trade to carry out an investigation in regard to prices and profits. Such an investigation was held soon after the 1914–18 war, and as that was instigated by a Conservative Government, I do not think I am going beyond the bounds of reasonableness in asking this Government to do likewise—a step which could well have been taken a year or two earlier. Those are some of the steps which take us some of the way towards solving the economic crisis.

6.47 p.m.

Mr. William Shepherd (Bucklow)

It is not my intention tonight to follow the hon Member for Mile End (Mr. Piratin), who has indulged in a tirade against profits, traders and industrialists, with which very few Members will be in sympathy. I have sympathy, however, for the hon. Member, because he fails to realise that all these evils about which he complains are the necessary outcome of an inflated economy. I also have sympathy to some extent with the President of the Board of Trade who has been landed in such an awful mess. If, two and a half years ago, some reasonable attempt to plan our economy had been made, we should not be rushing around like maniacs trying to stop up little holes as they occur. If the hon. Member will go into these matters a little more carefully, he will realise that his arguments are really superficial.

My reason for addressing the House tonight is that I wish to impress upon Members the desperate position in which the cotton industry stands, and to point out how the Government have failed to get this industry going. I am sure that very few Members are really aware of the desperate position on the industry, and of its failure to play its part in the export drive. We are often bemused by statements about the relative activities of our export trade. Let me quote to the House two figures I have just looked up in the Library. In 1947, the total amount of cotton yarn and manufactures exported was £77 million. In 1921, during the period which is regarded by the party opposite as a period of Tory misrule, we exported £178 million.

Mr. Wilson

At what price?

Mr. Shepherd

The right hon. Gentleman, who is an economist, should surely know. There is little difference between the general price level now and that in 1921. If we were to make comparisons between the price level of the cotton textiles now and the price level in 1921, we should find that the level in 1921 was lower than it is today. As the right hon. Gentleman ought to know, and, I am sure, does know, the price level for the cotton textiles at the moment is 315—very much ahead of the general price level for exported manufactured goods. If anyone should say that this was a transitory phase, let us look at the year 1925, where we had £200 million worth actually exported from this country.

I want to make a comparison between the prewar years and now. It is true to say that if we weighted the volume figures in relation to foreign accounts, the total of the cotton textiles being exported today is hardly 25 percent. of the prewar total. That means that we are losing an enormous amount of potential exports. It is true to say that if we had in 1947 the same amount, in terms of volume, of cotton exports and textiles generally as in 1937, we should have had another £300 million worth of exports. These are startling figures of which, I am afraid, very few people are aware. We could almost have closed this year the export-import gap, so far as visible account is concerned, by getting a reasonable level of exports in textiles. The fact that we have not been able to do this is disastrous to our economy and means that we shall not be able to meet the export drive.

What does Lancashire need in order to get going? It needs men, women and machines. Little indeed has been done by the present Government to get these men, women and machines. What are we doing in relation to machines? Although our cotton textile exports are 25 per cent. in volume of what they were in 1937, we find that the cotton textile machinery exports are at least 50 per cent. above the volume for 1937. In other words, we are export- ing the machines with which we ought to be making the goods. We shall find, in a short time, when the sellers' market disappears, as it is rapidly disappearing, that we are landed with all the old machinery and our competitors will be well equipped with the machinery we have ourselves made.

Mr. John R. Thomas

Will the hon. Gentleman tell the House who has been responsible for the present state of affairs in the Lancashire cotton industry, and will he agree that those who own and control the industry at the present time resent, and have resented, any interference from outside?

Mr. Shepherd

I am coming to that point. I wish that hon. Members opposite would not always look behind. It is the habit of progressive-minded men to look at the present and at the future. We are now exporting under licence more machinery than we have ever exported before. We have to distinguish, as I have said, between good exports and bad. I hope that the President of the Board of Trade will look at that matter. What will happen is that we shall be exporting machinery and when the sellers' market comes to an end, we shall find that our capacity to produce has been severely handicapped by our lack of suitable machinery. I suggest that action in the Lancashire textile industry must be taken right away. We have had far too much talk about what to do; far too many committees running about the industry finding out what every one else already knew.

What has happened now more than 2½ years after the end of the war? We are now discussing the working party's report. The other day in this House we had a meeting composed of experts from the Lancashire textile industry to discuss means by which production could be increased. We are told that time and motion study alone could improve production by 30 per cent. and had in fact increased production by 30 per cent. without the use of any new machinery At the end of the discussion, I asked how long it would be before the whole of the Lancashire cotton industry is dealt with in a similar way. The expert who replied said. "I think about 20 years." I could not refrain from asking him whether he thought that there would be a Lancashire cotton industry in 20 years' time if that was to be the tempo. Since the end of the war, there has been no real time to get down to the job. There have been far too many committees running about finding things out and reporting what they think should be done, but nothing really has been done.

Mr. Thomas

Before the hon. Gentleman leaves that point will he answer this question. He says that output can be increased by 30 per cent. by the introduction of time and motion study. I think that he should tell the House whether he means the Government or the Board of Trade to introduce these methods, or does he accept the fact that they are and should be the responsibility of the owners?

Mr. Shepherd

The hon. Gentleman is away ahead of me at the moment. I was coming to that. I realise the nicety of the point he raises. I am saying that cotton exports are, with us, a traditional export. It is a market to which we have a right. We now find that we are not getting the exports and not getting the necessary production. There is a prospect, I feel, of a very good textile market in the future. After all, the primary producers, who are very large buyers of cotton textiles, are on the whole doing fairly well. The prospects are that they will do very well for a long time ahead. Now, at a time when we should be getting the markets, we are doing nothing at all. I believe that the predecessor of the right hon. Gentleman, the present Chancellor of the Exchequer, inherited a short-term plan when he went to the Board of Trade for dealing with the cotton industry. I believe that the present Chancellor of the Exchequer shelved that plan and went over to this long rigmarole of inquiries and working parties in preference to putting into operation a short-term plan which would have assured us of some results in a very short time. The hon. Member for Dover (Mr. J. R. Thomas), who is a most moderate and restrained member of his own party, asked me what should be done.

Mr. Thomas

I did not ask the hon. Gentleman what should be done. I asked him whether he thought that it was the responsibility of the owners to put into administration time and motion study, or whether he wanted a Government Department to put it in for them.

Mr. Shepherd

I am prepared to deal with that point, but I say, first, that in dealing with this problem we need action and imaginative handling, and we have had neither of those things from the Government up to the present. We have had no real drive.

Mr. Thomas

A few minutes ago, I put two questions to the hon. Member, and his only reply was "I am coming to that." Would he not answer my question by saying "Yes" or "No"?

Mr. Shepherd

Perhaps the hon. Gentleman will allow me to come to that point in proper sequence. I say it should be the duty of the Government to act with originality and imagination on this issue. There has been nothing but dillying and dallying with a great problem, and I suggest that the time has come for the Minister to get hold of the problem and get down to the job.

So far as the relations between the unions and the employers and the employers and the Government are concerned. I agree that it is a difficult position. There is in Lancashire a good deal of obstinacy on both sides. The Lancashire cotton industry has many methods. It is perfectly true to say that both operatives and employers are apt to think on the basis of a cycle, which once brought them prosperity, then a slump, then prosperity, and that it will turn again. It will obviously not turn without someone turning it and I suggest that here the Government are responsible. If the Government had seized that responsibility, and if the President of the Board of Trade had got going on this job, the Lancashire cotton industry would have been moving at a much quicker rate than at the present time.

I am convinced that a real effort on the part of the Government would have succeeded in overriding the objections of the unions, and for that matter the objections of the employers. The duty of the Government in a situation such as this is to lead, and the Government have given no lead at all to the Lancashire cotton industry. It is true that Lancashire is a compact area. It has a sound and patriotic people within it. I am certain that the Lancashire people would have responded to a real lead by the Government, and that a Minister who was capable of inspiring that effort would have got magnificent results. But because we prefer to put issues like these to working parties and commissions we have no results today, and we find that the industry has made little progress in the last two years. The failure of the Lancashire cotton industry to reach even one-third of the export volume of 1937 is the biggest indictment of the present administration.

I hope when the President of the Board of Trade replies he will tell us what he is going to do about it, because we must have that £300 million of exports which lie in the textiles, for that may well represent all the difference between our survival and the collapse of our balance of payments. I hope the President will tell us that this dilly-dallying and shilly-shallying over the cotton industry is going to stop and that he will give the House a clear picture of the Government's proposals. I hope he will be able to tell us mat both sides of the industry have been persuaded to abandon their misconceptions, and realise that they have got to live in the future and not in the past. If he can do that, then he will do something of great merit. If, on the other hand, he allows the industry to go on for another two years without making any progress at all, but slipping back instead, then we shall find that after another two years we shall be in such a bad competitive position that the Lancashire cotton industry will be finished for ever.

7.3 p.m.

Mr. Fairhurst (Oldham)

I had not intended taking any part in this Debate so that what I am going to say will be impromptu. Nevertheless, the speech of the hon. Member for Bucklow (Mr. Shepherd) has urged me to say one or two things. I remember very well the present Chancellor of the Exchequer when President of the Board of Trade coming to my constituency early in 1945. On that occasion he told us that it was a challenge and he was asking both sides of the industry, employers and trade unionists alike, to get down to the job of rehabilitating the cotton industry. On that occasion he also told them that the Government had no intention of nationalising the cotton industry, and that if the trade would make known their requests, the Government would listen to them and help them in every possible way. I well remember the occasion, because frankly at that time I felt in my mind that the only way to straighten out the cotton industry was to nationalise it, but I also realised how difficult it would be to put such a scheme into operation.

Anyone who knows the Lancashire textile industry and the people who are engaged in it, both employers and employees, will have realised that they are a difficult class of people with whom to deal. They are stubborn and very difficult to move. What I should like to ask the President is how much progress has the trade made in the period between 1945 to 1948 in trying to straighten out the industry? It is quite all right at certain times appealing to the emotions and urging the people to greater effort. Let me say first that I do not think that the industry will ever go back to working on Saturdays. It will take a lot of trouble to persuade the cotton industry to do that, as it will to persuade them to work longer hours from Monday to Friday. There are many difficulties in the way. The hon. Member for Darwen (Mr. Prescott) mentioned the fact that the average age limit in the cotton industry at the present time is fairly high. It is much too high. It is somewhere about 37 years of age, but this is what has happened—from 1938 to 1945 the trade was concentrated, and much of the younger labour went into munition works where they found more attractive jobs.

Mr. Prescott

The hon. Gentleman said 1938. Surely he meant 1939?

Mr. Fairhurst

I meant 1938 to 1939. They found much more attractive jobs, better wages and happier conditions in which to work. It is only natural that when one comes into contact with a different way of working, which provides better wages and better working conditions, one wants to stick to it. Those people who sampled such conditions have resented going back to the cotton industry. The Lancashire cotton industry mainly uses female labour, and there are no better skilled workers in the world than the Lancashire female workers. We have lost quite a lot, running into thousands of them, and the question is whether we shall ever get them back. Is it possible at the present time to persuade large numbers of our people to go back to the mills and to adapt themselves to the new conditions, new outlook and new machines, as they must do in the future, without convincing them that all the bad conditions that obtained in other days are going to be changed?

The trouble lies now in the mills themselves. I could take hon. Members to some of our mills and they would come back and say: "I am not surprised at our young people not wanting to go back to those places." That is one of the chief reasons why our people have forsaken the mills. The conditions in those mills must be improved before the people will go back into them. It used to be a case of a husband and wife setting off in the morning to work together. Lancashire has been brought up on that practice of the husband and wife working in the mills not just for five years, 10 years, or 15 years, but for practically the whole of their married life. It was a common thing to see children being taken in shawls to somebody else's home. Those conditions have changed and the young people today will not go back to them, and we must recognise that fact.

As the hon. Member said, cotton is a vital industry today, and we can materially help to bridge the gap between imports and exports if we bring into the mills once more the necessary labour power required. But it is not just a question of saying this or that will do it. No blueprint is going to do this thing; it requires something more than blueprints. If we can instil into the Lancashire people something like a pride of job, we shall go a long way towards bringing the necessary labour force into the industry once more.

Mr. Prescott

I wish to help the hon. Gentleman on this matter. Is it not a fact that there is a very great difference between working in a weaving shed and working in a munitions factory? Is it not a fact that it is impossible to reconcile the two, because the working conditions are totally different. While wishing to help the hon. Gentleman, I ask him to explain how it is possible to meet the point of the different working conditions necessary in the cotton industry compared with those in the munitions factories?

Mr. Fairhurst

I think the answer is that employers generally should do what some of our modern employers have done. They have re-equipped their mills, and today they have premises that can compare with any in the world. That is the answer. Those who are lagging behind, and either will not, or do not choose to try to straighten out their mills ought to be told in no uncertain language that if they will not do it, somebody else will.

Mr. Prescott

While appreciating all that the hon. Gentleman says, and while agreeing with his proposition to the House, is it not also a fact that, however modern may be the working conditions in the weaving shed, the conditions in mills are automatically far less satisfactory than the conditions, for example, in an ordinary munitions factory?

Mr. Fairhurst

That is quite true, and we can never bring about conditions in a mill or weaving shed similar to those in a munitions factory. We can say, however, that, today, there are modern appliances available which can materially help to make mills cleaner, brighter, and healthier places than they have ever been before.

Mr. Prescott

I agree.

Mr. Fairhurst

In the past, they have been nothing but stink holes, places into which no one here would care to send their own daughters, no matter what the wages might be. It must be remembered that, nowadays, people react to brighter conditions and happier surroundings. It is not altogether a question of wages, although, there again, if we were to take comparative wages, we should find that the textile industry today is not very favourably placed. If textiles are next in importance to coal, and if we can give the collier a decent wage and try materially to improve his conditions, why cannot we do the same for the textile worker?

I do not agree with the hon. Member who said that trade unionists and employers are very stubborn and difficult people, and do not easily change their views in this way. Let me inform him that, during the last two or three years, both sides of the industry have been collaborating better than ever before with the specific object of trying to straighten out the difficulties existing in it at the present time. Even now, with all the work, and with all the energy which some of our modern employers and trade union officials have put into the industry, I believe there are something like 160,000 or 180,000 looms still idle. That is a shocking position when those looms could be producing materials that would help to bridge the gap between our exports and our imports. We have thousands of spindles and hundreds of cards standing idle at the present moment. In other words, there is a great chance to build up the great export trade of our cotton industry without imposing longer hours on its workers.

This House and the Government must face up to the fact that we must go to Lancashire and talk to the people there,—not only the trade, because, if the trade cannot do it, other people must be brought in to try to do it. I believe that the textile industry can, and will, play a tremendous part in helping to straighten out the difficult economic circumstances with which we are faced at the moment. The hon. Member for Bucklow (Mr. Shepherd) gave some staggering figures of what we did in 1938 compared with what we are doing now. The figures of what we were doing in 1913 were more staggering still. That was the time when we had 700,000 employed in the industry. From 1904 to 1939—I do not know what the figures are after 1939—we sent 2½ million tons of textile machinery to foreign countries. No voice was raised against doing that in those days.

I have great sympathy with the point that we are sending modern machinery out of this country at the present time, that ought to be going into our own mills. The only thing I can say is that some of our buildings are not fit to take modern machinery; I do not think it could be put into them. Why cannot we build new mills, or make use of some of our modern munitions factories, which are ideally suited to the job? Why do not the Government consider that possibility? I am sure that some of the employers in Lancashire would jump at the chance of taking over a modern building which could be adapted to spinning and weaving. If the proposition were put to them, I have no doubt that they would seriously consider it. That is one way in which we could make provision for a rapid increase in our textile output. There are other points which I could discuss tonight, but as, in the very near future, there will be a chance to discuss them more fully when the cotton industry is under review again, I propose to leave them until that time.

7.17 p.m.

Mr. David Eccles (Chippenham)

I am sure the House is grateful to the hon. Gentleman the senior Member for Oldham (Mr. Fairhurst) who speaks with such knowledge of his own industry. I know very little about the cotton industry, but I was talking recently to a mill owner about the difficulty of getting women back into the mills, and the House may be interested to know that he thought there were three main obstacles in the way. The first was that there is now more money coming into the homes, and, therefore, it is not so necessary for the wife to go into the mill. He had found that a considerable deterrent, although that is a good thing in itself. The second obstacle was that hairdressing styles have changed, and that the young women today are very anxious that their hair should be permanently waved every so often and should look nice. They are afraid that, in the mills, their hair will not be kept attractive so easily as in some other jobs. My friend's third reason was the shortage of fish and chips, which meant that the women had to cook an extra meal. If the fish and chip supplies could be increased in the cotton towns it would be easier to get more married women into the mills.

I only wish to make a short intervention about the paper industry—the manufacture and supply of paper. I think the House will agree that paper is the most important raw material of democracy. Without paper we cannot spread our ideas. Anyone who has been to Europe recently knows how serious a handicap is the shortage of paper to those who light for freedom. I consider the manufacturing position in this country to be much worse than it need be, and to have been made worse by the action of the Board of Trade. To take newsprint only, before the war we manufactured 800,000 tons a year; at present, in the next licensing period which starts on 7th March, only 24 per cent. of that capacity may be used. The quality of the small amount of paper we are now permitted to make in this country is gravely affected by the proportion of waste paper and bad material which has to be put in it, and the price is appallingly high, £48 7s. 6d. a ton, and that shows a loss, as was stated the other day by the leading paper manufacturers. That enormous price, twice the Canadian price, is due to the very low percentage of capacity which concentrates the overheads on a very small through-put.

The newsprint budget for this year is highly unsatisfactory. The consumption has been fixed in order to carry on with the small newspapers we have, and yet we are to draw 50,000 tons from stock. Furthermore, there is not enough raw material in the country to make it certain that we can meet the very small commitments of the British paper making industry. The raw material is bought by the Board of Trade through their controller. They have got themselves into such a muddle with bulk buying that they have recently instructed their control to buy waste paper in Sweden. I ask the President to pay attention to this: they have had to buy waste paper in Sweden at £24 15s. a ton. When that paper is brought here, broken down, and the bits of leather and old shoes and other dirt taken out of it, and when its sulphite content is raised so that newsprint can be manufactured from it, the price must be higher than if the Board of Trade had authorised the importation of straight pulp. I ask the President of the Board of Trade to inquire what is the channel through which his control has bought this waste paper, and to discover precisely how it is that this transaction which uses up Swedish exchange, has taken place.

Not only are we buying waste paper from Sweden, but we are also buying newsprint. The Newsprint Association has just been authorised to buy 20,000 tons of finished paper from Sweden. Why do we not buy the pulp instead? We could save £15 a ton on the conversion. The choice is before the President of the Board of Trade: he can either save our foreign exchange by buying pulp instead of paper or get more pulp and make more paper in this country for the present outlay in krone. The whole of pulp buying is bulk buying by the Board of Trade. Its buyer will not bid the world price for pulp in the main market, Norway. He has been paying £27 10s. a ton, and that is too low to call forth the supply because the Norwegian pulp manufacturers can get a better price in other markets. The result of that is exactly what we saw in the case of food from Denmark—we do not get the stuff because we do not pay the price which would bring it to this country.

Pulp prices are about to be fixed for next year. The Board of Trade should make up its mind as to the quantity of pulp which it is in the interests of this country we should import for conversion into paper. It is not only absolutely essential to maintain the present size of our newspapers; it is also a question of exports because, if we are not able from Great Britain to export newsprint to Australia and to other countries in the sterling area, they must ask for dollars and get their newsprint from North America. They may be able to get some from Sweden but, in bulk, they must get it from North America. Therefore, in order to save dollars and in order to increase the efficiency of our industry, the President of the Board of Trade should look at this again to see whether we cannot now get from Scandinavia and the Baltic more pulp so that our mills can run at a more economical rate of production, and he will find that that is a dollar saving policy. The right hon. Gentleman may say that the reason why we cut down the manufacture of paper so low in this country was that it takes one ton of coal to one ton of pulp to turn out a ton of newsprint, but I think the coal situation today would permit us to disregard that obstacle. I suggest that we ought to put paper very high on the list of goods which this country should make for itself and export to the sterling area where a ready market exists.

I want to ask the right hon. Gentleman why, when he sent Sir Oliver Franks and the other experts to Paris to work out the requirements of the United Kingdom under the Marshall Plan, we did not ask for any paper. That is a mystery to the Americans because they, in their turn, undertook two studies by committees appointed by the President to investigate the availability of goods in America for export. Both those committees reported that there was a certain quantity of paper available for export from the United States. None of the 16 nations of the Marshall group asked for one ton of paper of any grade from America. That does not make sense, because one of the great objects of the Marshall Plan is to defeat Communism, and we shall not defeat Communism unless there are newspapers, books and pamphlets circulating in Western Europe.

Dr. Morgan

Which newspapers?

Mr. Eccles

Newspapers which represent all the different currents of thought in the free world. The point is that we should show the people on the other side of the iron curtain that we print all sorts of opinions.

Mr. Walker

Why did not the newspapers defeat Communism when there was plenty of paper?

Mr. Eccles

I hardly think that is relevant to the present situation.

Mr. Walker

Was not the hon. Gentleman using the argument that newspapers could defeat Communism? Then why did they not do it?

Mr. Eccles

If the hon. Gentleman will go to Europe now, he will find everywhere a tremendous shortage of paper for newspapers, and immense difficulty in getting books published. Here is America, with the Marshall Plan designed to reinforce and buttress the free way of life, with the paper to export but not asked for it. I am asking that the President of the Board of Trade should tell the House why no paper was put into the Marshall list of requirements. I hope we shall find that some decision is taken to reverse that, and I hope that energetic action will be taken to buy pulp from Scandinavia in order that our own mills may resume production on a reasonable scale.

7.30 p.m.

Mr. Harold Davies (Leek)

The House always listens with respect to the hon. Member for Chippenham (Mr. Eccles) and we have had the benefit of his expert knowledge on the issue of pulp and the paper industry. I would, however, like to take up his first remarks about the attraction of women to the cotton industry. We have exactly the same problem in North Staffordshire in the pottery industry which, like the textile industries, had a huge percentage of women in it. This is not so much a problem for the Government, or for Government interference, but one for the manufacturers to investigate. To be fair to them, we know that investigations are now taking place.

I wish to take up another point with the hon. Member. The issue of food from Denmark and the issue of pulp from Sweden are not exactly the same. Hon. Members must remember that we are no longer on a gold standard as such, but on a coal standard. The basic factor of British civilisation is that we have three assets, coal, agriculture and the skill, integrity, and engineering brilliance of the British people. Out of those three things we must hammer our existence and try to build up our economy. A fact to remember about Denmark is that in 1938 the Dane could get 96 kilogrammes of coal for 1 lb. of butter. That is a simple fact and we can forget the pound notes. In 1948 the Dane can get only 46 kilogrammes of coal for 1 lb. of butter, and the mechanics of our problem is how to give more than 46 kilogrammes of coal for 1 lb. of Danish butter in 1948. I think the hon. Member for Chippenham will agree with that very rough analysis.

We must therefore look to our mining industry. During the past week some of us have asked questions about coal exports. This is a serious problem and is not stated with any carping party criticism, because, whatever happens to this country, it is important. Is the industrial momentum of the British machine being retarded because of the delays of decisions over the Marshall Plan? Let me clarify that. I am asking if we are finding difficulty in getting coal exports because the Western group of nations are waiting to see how much coal, freightage free, they will get under the Marshall Plan.

In answer to a question put by my hon. Friend the Member for Stoke (Mr. Ellis Smith), it was stated that 9 million tons of coal were delivered to France in the first quarter of 1948. We do not know what will be delivered in the second quarter. With this suspension of decision in the United States of America, where party politics are being played while the world is burning—[HON. MEMBERS: "No."] Oh yes, that is quite true; the United States of America are playing party politics while the world is burning, and through the suspension of decision, the industrial momentum of British economy is being retarded. I appeal to the American people to realise that they not only have a duty to themselves, but that in their present unique position they have a duty to the world.

I wish to emphasise an appeal which has been made to the President of the Board of Trade and his colleagues from these benches. I believe that a working party should investigate the present costs of coal distribution. The information is confidential, and it is very difficult to find out how much wholesale costs are adding to the costs of our exports. I was talking to an exporter last week in this House. I will not mention the material he exports, nor the costs; I merely say that he illustrated this point by pointing out that the article he was exporting, after passing through four different hands, was costing 400 per cent. more at the end of the pipeline than when it was originally made, and it went abroad at that cost. That kind of thing is not enabling us to export 96 kilogrammes of coal——

Sir W. Darling

Will the hon. Member name the article which carries 400 per cent. cost from manufacture to delivery?

Mr. Davies

No, Sir. I am glad that the hon. Member for South Edinburgh (Sir W. Darling) interrupted me, because in the course of a cut and thrust Debate earlier, he said that wars were not caused by the exchange and buying and selling of goods. I agree; I did not say that they were. One of the main troubles of the world is the intense search for markets and I said that that search for and investment in those markets were behind the wars.

Sir W. Darling

Is not that search going on now?

Mr. Davies

I say it is going on now. I said that we have the outstanding example, which will set the world on fire, of the struggle for markets and oil in the Middle East and South-East Asia. We were lucky in the industrial revolution. We had 289 steam engines before the rest of the world had any. But why is it that Mexico, with seven oil wells which could pay the National Debt of the British Empire, sits like a beggar on a tin of petrol? Why does the Middle East, which is producing more barrels of oil a day than the United States of America, exist in poverty? These are questions which denounce the present organisation of society in the twentieth century world.

I claim that this Government have steered us through the aftermath of war better than any other belligerent country has been steered. We are trying to organise our trade on multilateral and bilateral agreements to suit our present economy. The right hon. Member for Aldershot (Mr. Lyttelton) in opening the Debate, suggested that some hon. Members opposite were not prepared to take the delivery of thousands of tons of Russian grain as a fact. I wish to point out that the grain is being brought here before the goods are going to the U.S.S.R. If we read the figures from January to September m regard to American trade with Russia, we find that the United States sold the Russians 114 million dollars worth of goods, and for that they were paid in manganese, chrome and 63 million dollars in gold. If the world wants to play the gold game, apparently Russia is able to play it at the moment. We are not concerned with the gold game, but we want to put another one million pigs on their legs by next winter in order to feed the housewives and workers of Great Britain.

I congratulate the Government on their intense efforts to get these markets. To those who are afraid that the U.S.S.R. may become too powerful industrially or strategically, I say: What about the agreement under the Marshall Plan, by which United States will obtain bauxite from British Guiana, chromite and mica from Southern Rhodesia, cadmium, cobalt, copper and zinc from Northern Rhodesia, corundum from Nyasaland, industrial diamonds from South Africa, manganese from West Africa—and it is impossible to get the right kind of steel without it—graphite from Ceylon, and tin from Malaya? Do the United States of America need all these raw materials? She is short of only two of them—cobalt and chromite. She is building up her stock piles. All this tends to intensify the suspicion of the 20th century world. Within the Marshall Plan we are trying to build up trade with South-East Europe because we believe that along the lines of trade and the bringing together of the peoples of different parts of the world lies the best hope of achieving the peace of the world.

There are four fundamental assumptions of the Marshall Plan, none of which may come about, and therefore Britain will have to look to her own devices. The first assumption for the success of the Marshall Plan is that prices in the United States will fall. The second assumption is that the United States must import goods from Europe. If we consider the Geneva trade conferences, it will be remembered that America applied a 50 per cent. tariff wall which upset the Australian wool market. Look at the agreements which we made in relation to rubber, and the consequent difficulty into which we are getting. We are not getting the pool of dollars in that great dollar-earning area, Malaya, because of the restrictive trade practices of the United States. The difference between the British and the Americans is that the Americans have good businessmen and bad politicians, and we have good politicians and bad businessmen.

The third assumption for the Marshall Plan to succeed is that Eastern Europe must increase its timber and grain supplies to the rest of Europe. Therefore, in this trade agreement with Soviet Russia the Minister is only following the policy of intensifying and increasing the economic and industrial potential of the whole of Europe. The fourth assumption is that we shall increase trade with South East Asia. I have asked questions in this House about allowing businessmen into Japan. My hon. Friend the Member for Burslem (Mr. Edward Davies) and others, including myself, who represent the potteries in North Staffordshire and the textile industries in the Leek area, are worried about the possibility of Japanese competition. Are the United States going to export unemployment via Japan to the rest of the world? Is she going to export it in textiles and pottery? Whatever improvements there may be in the standard of life in Japan, the Japanese will be able to compete with us. Therefore, when we ask South-East Asia to build up her supplies, we must remember that intense physical difficulties exist in that part of the world.

When the Minister of Food was at Dundee, members of the Housewives' League said that the object of this Government was to undernourish the housewives of Britain so that they would not know what they did. I suppose they imagined that people would stagger into the polling booths and put their X against the name which looked Red. Irrespective of that, we have had the opinions of men like Sir John Boyd Orr, once a Member of this House, who said that the world today is 30 per cent. worse off for food, and that 200 million more people need food. That is the kind of world in which we are trying to build up these trade agreements.

We have been told that the textile industry in Lancashire will have difficulty in competing with America. In the next five years America is spending £250 million on textile machinery. What is the answer of this House, of Lancashire and of the British businessmen to that? We are told that we should have started planning two and a half years ago. The right hon. Member for Woodford (Mr. Churchill) should remember that one of his own party said we should have started planning two and a half years ago, when the right hon. Gentleman himself decried planning and every effort to organise the life of this country. We are getting no concrete suggestions from hon. Members opposite—only this cheap criticism. One minute they say, "Away with controls, no planning." The next day, when they have forgotten what they said, they say the Government have started planning two and a half years too late.

The productivity of Britain looks poverty-stricken compared with that of the United States and the U.S.S.R. We cannot blame this Government for that state of affairs. There has been an 18 per cent. increase in the American cement industry during the past year; 17 per cent. in the fertiliser industry; canned fish, 9 per cent.; beet sugar, 8 per cent. We are facing terrific productivity factors like that, and yet we in this country are forced to tone down the industrial trade momentum, because the United States are playing party politics around the Marshall Plan, and are holding up the recovery programme in Europe.

Mr. Jennings

If that is the case, surely that is a grave indictment against the present Government?

Sir W. Darling

If the American economy is expanding so rapidly without controls, would not the hon. Gentleman agree that the presence of controls in this country is a retarding factor?

Mr. Harold Davies

I do not think it is an indictment against the Government. We are now reaping the benefit of 30 years of an unplanned and decadent economic system in this country, and we took over the government of this country at a most difficult period. Despite that, we have 1,400 per cent. less industrial strife in this country than there has been under any Government since the first world war.

I do not wish to be dogmatic about my next, and final, point. I may be wrong, but I think there is a danger here. If we refuse to build up these bilateral agreements and refuse to abide by these trading agreements with the U.S.S.R. and Eastern Europe, we are not hurting those countries; we are destroying our own standards of life. Secondly, may not the "cold war" atmosphere, which was illustrated by Wallace's election at the Bronx, begin to tone down in the United States, and may there not be a possibility that the American businessmen will decide that they must have business with Russia, with the result that we shall be pushed out of the Asiatic markets because of the dodo idea which existed under Conservatism? When President Truman made the following statement he was right. He said that the annual national output of America was still increasing. It had increased by 50 per cent. since 1939; a further increase in output of 3 per cent. was called for in 1940, and already it appeared that in order to dispose of this output exports have exceeded imports by £2,750 million, or by £750 million more than in 1946.

We shall meet with intense competition in the future, and we can only guard ourselves against the shock of that competition if we now, as an entire nation, make a united appeal, irrespective of the cheap party approach, to all people to save this country from the dangers which lie ahead. Too many people think that because their pockets have money in them there is no crisis; a fundamental crisis is facing us today, and the only way to overcome it is by wholehearted effort. [HON. MEMBERS: "Hear, hear."] If Members opposite cheer me, why do they decry the bilateral pacts which the Government are making? I have great pleasure in supporting my right hon. Friend the President of the Board of Trade, and in urging him to find, wherever he can, bilateral, trilateral, or multilateral agreements so that the people of Britain can once more take their place in the comity of nations.

7.52 p.m.

Mr. E. L. Gandar Dower (Caithness and Sutherland)

I shall, at least, be brief. We have heard a lot today about the textile trade, which is the most important industry, outside agriculture, that we can consider in this House. I should like to support wholeheartedly the hon. Member for Leek (Mr. Harold Davies) in what he said about the economic storm which is coming, despite everything which is published in the papers, because people who have fairly plump wage packets have not yet faced up to the realities of the situation.

I wish to deal with overseas trade, and to refer to only two countries—Switzerland, and, by contrast, Spain. In the one case we are dealing with a well-developed democracy, and, in the other, with a feudal country. I was glad to hear the Secretary for Overseas Trade say that Switzerland was welcoming all the exports that we can send her and, in passing, I would like to congratulate the hon. Gentleman on his patience in sitting here for so long and listening to so many speeches with such attention. Switzerland badly needs machinery, cars and aircraft in exchange for our holiday tourists. Are we doing all we can to send her that machinery and those cars and aircraft? Shortly, I hope to see for myself the position with regard to aircraft.

I spent a most interesting six weeks in Spain in the spring of 1946. I believe I was the first Member of this House to go through Spain after the war. It is fashionable to run Spain down, but I was treated with every courtesy and was much impressed by her desire to trade with this country. If we can trade with Russia, I hope we shall do all we can to trade with Spain. I welcome, with others, the grain which is being sent by Russia to help us to overcome our problems of food supplies, but I hope that the machinery we are exporting against that grain has no war potential. Too often have we seen in history that we have armed another nation. The industrial development of Spain is slow. I hope I shall not offend any member of that country if I say that Spain's present position represents what Britain had arrived at by the 1850's and the 1860's. That development cannot be pushed along faster than it will go itself.

I can assure the House that there is a genuine desire in Spain to trade with Britain. America is trading with Spain to a vast extent, and we must not be left behind. What does Spain require? [An HON. MEMBER: "Democracy."] I know, but I am talking in terms of trade. Russia also requires a democracy. Spain needs agricultural machinery to develop her land in an effort to prevent hunger. Her own agricultural machinery is entirely primitive. She needs tractors and machinery for her factories. Spain has very poor road and railway systems, and there is an open market there for rolling stock, locomotives, tractors and aircraft. We have substantial British Chambers of Commerce in Barcelona and Madrid, and I hope the Secretary for Overseas Trade is making certain that any advice he receives from those Chambers gets the attention it deserves.

7.57 p.m.

Mr. A. Edward Davies (Burslem)

I listened with great attention to the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), but I was rather surprised that he devoted so much of his speech to decrying the efforts of my right hon. Friend the President of the Board of Trade in bringing about the trade agreement with the U.S.S.R. The right hon. Gentleman sought to show that it was a bad commercial bargain, and said he thought there were some political implications behind it. I do not know whether that is so or not, but I believe that any serious attempt to build up good relations between our two countries, which would serve the peace of the world, has some real value. I am as anxious as most ordinary men and women in this country that there shall be no more war; I want to see a successful outcome of the trade agreement with Russia, and I hope it will be the prelude to many other such agreements between our two countries. The more the ordinary people of this country and Russia get together in trade and day to day relations, the greater will be the confidence and understanding between them.

I was interested in what my hon. Friend the Secretary for Overseas Trade said about Colonial and Dominion commerce. He said that he hoped for some easement of imports from this country to India. I am concerned with other aspects of our trade, but tonight I particularly want to deal with the pottery industry, with which I am connected as a Member for a North Staffordshire constituency. I think there is complete stoppage on the importation of china and earthenware into India for the first six months of this year. Although, from my knowledge, I do not believe that his trade has been very considerable it was, nevertheless, valuable, and there is great need for this kind of exchange to our mutual advantage. It was because of that that I was glad to hear that some easement of the position may be expected.

The President of the Board of Trade will know that the pottery industry in the Five Towns has made great efforts to help the country by exporting as much as possible. It will reach out to the £16 million target which has been set to it for the end of 1948, and will do so with great courage, skill and pertinacity. We must take account, however, of the difficulties with which the industry is confronted. It is all very well for the Government to say that we should concentrate on the hard currency areas, but we must recognise that there are longstanding markets and old customers in some of the Dominions and Colonies. It is not easy to switch over that trade into the hard currency countries. For example, in America and Canada, a different type of earthenware and china is required from that which is usually exported to some of our Dominions and Colonies. The whole set-up in the factories is laid out accordingly.

Under directions from the Government, and possibly from the Colonial Department and the Department of Overseas Trade, some kind of recommendation has been made to the Colonies not to take in more of these exports than they were taking some time ago, or perhaps to put a complete restriction upon pottery. We recognise the immediate need for dollars, but we must have an eye upon our long-term interests. We have set a target of 56 per cent. over 1946 as the figure up to the end of 1948, but I should like to bring to the Minister's attention some of the difficulties involved. There is a great shortage of decorators to make this beautiful china and earthenware. I understand we could do with 5,000 more workers in the industry. We need to be assured that fuel and gas supplies are available without fail, in order to make the continuance of the industry possible at that high level.

We are exercised that cups, which are made in the potteries at 4s. 8d. a dozen, should cost 9s. per dozen by the time they reach the consumer. Where does the difference of 4s. 4d. go? This fact underlies the necessity for an inquiry into the distributive side of the industry. Another matter which has been referred to by previous speakers is Japanese competition. The hon. Member for Darwen (Mr. Prescott) has recently had the honour and privilege of visiting the Far East. He was at pains to tell us something of the impending danger. What he said about the textile industry is apposite to the pottery industry. I do not want to go over some of the difficulties that we encountered before the war. I believe they are well known to the President of the Board of Trade and to the Government.

In this direction we are faced with a very serious problem and I hope that vigorous and continued attention will be paid to it. We had experience of all kinds of exploitation of labour without proper trade union standards, the use of trade names and the names of famous firms in this country, and even of place names which represented the homes of some of the best china and pottery. Products so misnamed have been dumped into our own markets. These were matters of very serious concern, and I think that the President of the Board of Trade is aware of them. Here is a proposal to write something into the peace treaties to ensure that labour conditions shall be observed in the future, but this is not enough.

We are also exercised that Japanese pottery of this kind is now appearing in countries like America and Canada. It is in a very attractive form. I am advised that the best of it is very attractive, let us make no mistake about that. There is a sellers' market and we could sell many times the amount of English bone china in America and Canada than we have today, so there is no difficulty of disposing of that pottery. The danger is not in the immediate moment, but in the future, if developments get out of hand. Production in Japan has not reached very great dimensions as yet. We want also to be sure that we are not encouraging the dumping of china, earthenware, textiles or other goods from Japan or elsewhere upon our markets, when those goods are made under conditions which compare unfavourably with the labour conditions and trade standards which are observed in the best countries.

We recognise that in this imperfect world it is neither possible to follow a policy of absolute multilateral trade, while is the ideal to which attention was directed at Geneva, nor, on the other hand, to wed ourselves absolutely to bilateral trade. When half the world is divided and shut off, so to speak, with Germany not yet set on her feet and with so many parts of the world which are not established in the sense that they can look after themselves and still less are able to trade with other nations, we have to do the best we can. I hope that we will bring up our own industries as time permits, to the highest level of efficiency. In that connection I would remind the Secretary for Overseas Trade that some industries, and particularly pottery, are still waiting for the institution of the development councils. We know that such new and progressive ideas may not be welcomed among old-fashioned industrialists and commercial leaders, but if our industry is to maintain its place in this hard field of competition we have to bring our standard of production to a better level in the pottery and cotton industries.

In the pottery industry, the workers' side are exercised in their minds because there has been so much delay about the findings of the working party and about the promises that have been given about the setting up of development councils. There are many pottery matters of mutual advantage to the workers and to the employers and to the country generally, in terms of production, which could be discussed at such a development council. Progressive men in the industry would welcome development councils, but as I say, there are some old diehards who are not interested and who would possibly be glad to do without them. I hope that before long we may hear some of the news which we have been promised about these matters.

8.11 p.m.

Colonel Crosthwaite-Eyre (New Forest and Christchurch)

I hope that the House will excuse me if I do not follow the hon. Member for Burslem (Mr. Edward Davies) into the ramifications of the pottery industry. I would, however, take him up on one point he made in his opening remarks, when he said that the Anglo-Russian Trade Agreement was in his view a good thing because it brought the two countries closer together. If any agreement is to bring peoples together, it must be on a fair basis, and so far, we have had no indication from His Majesty's Government as to the price that has been paid for the implementation of this agreement. I thought that the Secretary for Overseas Trade was more than ingenuous. He reached this point, which was rather like Becher's Brook in the brief he was reading; he jibbed twice and was then ruled out of Order. All he uttered was two sentences, neither of which added anything to the knowledge of this House. He said that someone would try to jump this hurdle later, and justify it to most of us on both sides of the House who have in this Debate made complaint about the terms of the agreement.

I hope that as the hon. Gentleman is sitting on the Government Front Bench at the moment on behalf of the President of the Board of Trade, who is to answer this Debate, he will try to emphasise to the right hon. Gentleman that it is necessary to make a concrete case for this agreement. It is no good saying in broad terms that it brings the nations together or that it does this, that and the other. What we are concerned with is what we have paid to make this agreement possible. That is the one thing which so far the Members of the Government have refused to say. I want, in particular, to ask the right hon. Gentleman, how the Government construe Part C, Article V of the Agreement. If hon. Members will look at it, they will see that under subparagraph (I, a) the interest on outstanding debts is reduced to one half per cent. as from 1st May, 1947. That is a considerable sacrifice on our part, a sacrifice which has been admitted by the Chancellor of the Exchequer in this House.

If Members will look at sub-paragraph (I, b) they will see that the account is further to be balanced at 31st July. Whatever contracts may then be outstanding, we have to place them under the terms of existing contracts. We cannot take advantage of the present agreement which the Government have made in order to make the terms less onerous to ourselves. If Members will look at sub-paragraph (I, c) they will then see that as from 1st May, 1947, 50 per cent. of the outstanding balance is repayable to us over 15 years, and in sub-paragraph (I, d) that the balance, plus what- ever may be payable to the Soviet Union under the Agreement of 1941, is equally repayable over 15 years.

I must admit that when the House debated this particular Clause a few nights ago, certain assumptions were made by myself and my hon. Friends. We stated, for instance, that £187 million had been granted by the Government in order to enter into this contract. The Economic Secretary to the Treasury repudiated this by a shake of his head. He did not challenge it when he spoke at the Box; he merely shook his head to indicate dissent. The first question I want to ask is, What is the capital sum which has been waived by the Government in order to enter into this contract? Is it, in fact, half the sum which was outstanding at 31st May last, together with what was waived under Part C, paragraph II, in the way of Lend-Lease. If it was not, what do sub-paragraphs (I, c) and (I, d) mean? I feel that the Government are called upon to give a firm answer about this. So far, in the words of the Secretary for Overseas Trade, they have merely said that someone is to answer it some time. That seems to me to be more than highly unsatisfactory to the honour of this House.

We have taken part today in another of these Debates which have become rather common, in which Members on both sides have criticised the Government, some of them in all respects, some of them merely for certain things they put forward in their programme. I have yet to hear today a single speech from either side of the House which would indicate to me that the policy of the Government was acceptable to the House as a whole. The reason is clear. We have today a fundamental divergence between the policy of the Government in pursuing multilateral trade and yet at the same time entering into bilateral agreements. The Secretary for Overseas Trade today, when he could spare his eyes from the brief he was reading so carefully, looked forward to some promised land in which multilateral trade would be possible. If that is true, and if he really believes in it, he or the President of the Board of Trade must be able to state at what period he envisages our being able to abandon bilateral agreements in order to undertake this new era of multilateral trade.

All that is happening at the moment is that the right hon. Gentleman's representatives at Havana are supporting multilateral trade while his executives in current negotiations are concluding bilateral pacts. What is worse is that, if Press reports are to be believed, he is at the moment supporting multilateral trade at Havana, contrary to the wishes of our partners in the sterling area, and that at least on two occasions the representatives of His Majesty's Government have deliberately advocated multilateral trade against the wishes of our partners in the sterling area, in particular against the wishes of Australia.

I would ask the President of the Board of Trade to make it quite clear whether we have in fact anything of value which makes multilateral trading an objective, when so far as our partners in the sterling area are concerned, it is a major objective, compared with this Jack-o'-Lantern of bilateralism which they are chasing across the marshes of Socialist economy. The Government say that bilateralism is the answer. If bilateralism means anything, it can only mean that each of the parties to the bilateral pact is left, at the end of the agreement, in exactly the same position, vis-a-vis the balance of trade, as they were when they entered into it. That is the essential part of bilateral trading and I do not know why His Majesty's Government think that this great statement of bilateralism is something that can save us. No statement has been advanced by hon. Members opposite to show the saving grace of this thing. If bilateralism means anything, it means that the two partners concerned, by the time they have finished the agreement, are in exactly the same ratio of trade as they were in when they started.

The Government have gone further in proclaiming bilateralism. They have, in fact, paid heavy premiums in order to be included in these agreements. Not only have they made agreements with Russia, the Argentine, Uruguay or whatever agreement one likes to mention, but they are ready to pay heavy premiums to enter into those agreements. To Russia they have given away £187 millions of the money of this country in order to be able to enter into that pact. To the Argentine they have paid £110 million in advance, in order to get the benefit of bilateralism. In regard to Egypt, there is the International Monetary Fund and Service Bonds. Therefore, the Government, far from achieving any of the benefits which bilateralism normally gives, have taken it as a means of refuge because they know their economic policy cannot sustain investigation on what is normally meant by either multilateralism or bilateralism.

We are faced, at the moment, with the position that every single contract of trade entered into by the Government is entered into at a colossal penalty for this country. In every way we are being penalised for the future in order to enable the Government to carry on in the immediate year that is coming under review. We are selling capital in order to buy current requirements. We have no regard to the future, because the Government disregard that, if they can only provide enough food or other materials that we require for immediate consumption. That is the greatest indictment that any Member of any House in the present century can make against the policy of this Government.

If the Government are sincere in the policy of trade which they have put forward for this country, they must maintain one thing, and that is that any contract entered into will provide a future equivalent to the sacrifices made. The President of the Board of Trade has been singularly unable to make any such statement, be it on the Russian Agreement, the Argentine Agreement or whichever other agreement we care to take. We have been told by him and his colleagues that they are perfectly prepared to accept the sale of capital, for relinquishment to current account; or the freeing of sterling balances, and all other things which affect our future account simply if they can keep the immediate requirements under control.

Our greatest accusation against the Government is that they have no regard to the future, and are merely regarding the immediate present.

Mr. Walker

The hon. and gallant Member is talking rubbish.

Colonel Crosthwaite-Eyre

I am told that I am talking rubbish. Would the hon. Member for Rossendale (Mr. Walker) say it is rubbish when in the present year the Government have relin- quished from block sterling balances to pay for imports, a sum representing one-sixth of the total exports of the United Kingdom?

Mr. Walker

What would you have done?

Colonel Crosthwaite-Eyre

The hon. Member, if he wishes to interrupt me, might at least do me the honour of standing up. All I am saying is that the Chancellor of the Exchequer has admitted that one-sixth of our total exports, because of the policy of the Government, go as unrequited exports. They are something for which we receive nothing in return. If he would like to think of that seriously in the light of the morning tomorrow, and then repeat the remarks he has made tonight, I would be the first to accept his challenge.

We ask the Government, if they have that which we believe any Government should possess, the courage to strive to give a lead. Instead of giving a lead they have avoided doing that on every occasion. They have retreated, as did the Secretary for Overseas Trade today, behind a barrage of immaterial comment none of which affected the basis of that which we want to discuss today. We strove to analyse the Anglo-Russian Trade Agreement: we got two sentences in reply. We have striven to find out the dangers of unrequited exports: we have had no reply. We have striven time and again to try to bring home to this House that if any Government are to be worthy of the confidence of this country, they must tell the truth. Of all the things of which this Government stand convicted, it is that they have never dared to tell the truth.

We on this side of the House know full well how black is the horizon. We know fell well what measures any Government will have to take. All we ask is that those measures should be taken, in the full knowledge that they can call on the help of all those on this side of the House who wish well of their country, and not merely that they make those statements which the President of the Board of Trade and his colleagues on the Front Bench think will be acceptable to hon Members behind them. If they will only tell the truth and place the position clearly before the country, they will receive the help of all. If they remain, as at the moment, purely dependent upon those things which they think will appeal to hon. Members behind them, they will satisfy neither those hon. Members nor the country as a whole.

8.28 p.m.

Mr. Sydney Silverman (Nelson and Colne)

I hope that the hon. and gallant Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre) will forgive me if I do not devote more than one minute to the rather windy jeremiad to which he has treated us. I should have thought that the very last thing of which a Member of the Conservative Party in this House would have accused the Government was of always going for the popular thing. I have been a Member of this House for nearly 13 years, and I have seen a number of Governments. I have known no Government which has shown greater courage and honesty in doing the unpopular thing when it was necessary, and doing things which everybody thought would have lost it support and votes, because it regarded that as the necessary way of dealing with an immediate difficulty in order to secure the future. I did not observe that on those occasions the Government got any of the support which the hon. and gallant Member promised them if they did those unpopular things.

What support did hon. Members give them about bread rationing? What support are they giving them now about basic petrol? What support did they give them about the rationing of potatoes, apart from carrying a decorated one through the backstreets of Gravesend with the obvious result? I thought that the hon. and gallant Gentleman did himself great injustice. Usually he delivers a thoughtful and sincere speech. On this occasion, he wasted an opportunity, from which we might have benefited from his thoughtfulness and sincerity, in order to take part in a little party backchat which, I hope he will allow me to say with the greatest respect, he really does not do very effectively. He ought to leave it to the right hon. Member for Bournemouth (Mr. Bracken), who will do it later on as if he believed it; and we will enjoy his performance very much, knowing perfectly well that he does not mean a word of it anyhow.

The only reason why I wanted to intervene in the Debate was the speech made a little while ago by the hon. Mem- ber for Darwen (Mr. Prescott). He made a speech about the cotton industry in Lancashire with some of which I agree, but with most of which I disagree so very much that I thought I ought to devote a minute or two to it. The hon. Gentleman said that we ought to face the future. Well, that is exactly what this party invited the people to do in July, 1945, and they did it, and the Tories have been taunting us with it ever since. Facing the future means turning our backs upon the past, and, for a moment, I would like to look at the state of the cotton industry—the state in which Tory misgovernment for so many years has left it. I am sorry the hon. Member for Darwen is not here. We are in agreement that cotton textiles and coal between them have always formed the basis of our export trade. We are agreed that we are in a situation today in which our export trade is more important to the future of this country than at any other time in its existence. We are dependent now upon the cotton trade even more than upon the coal trade to restore, so far as it may be restored, the adverse balance of trade.

In what situation do we find things? Completely out of date, neglected, bankrupt of equipment, 40 or 50 years behind the technical requirements of the day and the technical achievements of other countries. For half a century or more, this trade, on which we depend so much, has been in the hands of people who thought nothing in the world about the cotton industry except what quick and immediate profits they could take out of it, none of which have been ploughed back in the way of capital reinvestment or capital equipment. We have to meet competition in the world today for cotton goods in an industry very ill-equipped by reason of two centuries of neglect. We have had to submit recently to a very substantial cut in capital investment. How far is that going to effect our mills? We would have needed more and more capital investment and capital re-equipment in the mills even if it fair proportion of the profits of the past had been ploughed back into the mills, but we need even more by reason of the fact that the industry has been neglected so badly.

Mr. Spearman (Scarborough and Whitby)

Would the hon. Gentleman agree that one reason why improvements in machinery have not taken place is that the workers have opposed the installation of the automatic loom?

Mr. Silverman

I have never known in the cotton industry that the workers have ever been asked by the employers what machinery they should use in the mills, and that is a very poor alibi. Certainly, the workers have been reluctant to go in for a three-shift system and a number of other things, because of the redeployment of their lives that might be the necessary consequence of a new kind of equipment. That might well be so. What I am saying is that nobody in the industry, when it was in their power, did anything at all about re-equipping the industry. I was coming to the point about labour. In this situation, in which we depend so fundamentally upon the cotton trade, we find it in that condition, so far as equipment is concerned.

How do we find it so far as the labour force is concerned? How did they treat their labour force? They treated it as they treated the labour force in the mines, with the same result: just as every miner says, "My boys shall not go down the pit if I can help it," so every weaver and every spinner says "My boys shall not go into the mills if I can help it." We must overcome that, because we cannot get on without the textile industry. What is the reason for it? Their conditions of work have been so bad, and their standard of life has been so low, with themselves working and their wives working and for long years their children working, for pitiful returns. The half-time system in the cotton mills was not abolished until the middle twenties. It is no wonder that labour in the cotton industry has to be carefully coaxed and lured back into the mills.

What is the remedy for all this? The hon. Member for Darwen talked about Japanese competition. He said it was useless to depend on any effort to raise the rewards of labour and the conditions of work in Japan, even to our low levels in Lancashire. We could not wait for that. The Washington Convention on hours was adopted somewhere about 1920, and every successive Tory Government for 20 years refused to ratify it. In that generation vast strides could have been made towards removing the unfair competition of sweated slave labour, but Tory administration in successive years, over 20 years, refused to do it. What is suggested now? The hon. Member says the only way in which we can protect the Lancashire cotton industry is by having some restrictionist policy in Japan. I heard him say he was the child or the grandchild of a weaver. He probably knows that has never been the Lancashire view. It has never been the view of the Lancashire weaver that his safety, his security and his livelihood, depend on restrictionist policies somewhere else; he has never thought that. When he was suffering the bitterest evils in the American Civil War he was still on the side of the abolition of slave labour in America.

There is no need for restrictionist policies of that kind. All India and all China and all the Far East are crying out for the kind of textiles Japan can weave and can export. We do not want that kind of protection in Lancashire. We see no benefit to be derived from it. If we want to secure the place of the Lancashire cotton industry in the world we must set to work to re-equip its mills, give it proper equipment, bring it up to date, satisfy its labour, and its young labour, and give labour the prospect of reasonable conditions in the mills, comparable to those which every skilled craftsman has rightly demanded and is now beginning to get.

We must give security in the mills and make the people no longer afraid that their children shall embark on this highly skilled occupation. In that way we shall improve its productivity; if we re-equip, and give the industry the proper labour force, I say that the Lancashire cotton industry will hold its place in the world and will increase its place in the world. We shall see what the nation requires of it in the way of exportable surplus, not by way of restriction elsewhere, but by way of expansion elsewhere and at home. The safety of the Lancashire cotton industry, as well as the safety of the prosperity of this country, and of the world, depends not on restrictionist economics, but expansionist economics, raising the standard of life everywhere.

8.40 p.m.

Mr. Brendan Bracken (Bournemouth)

The hon. Member for Nelson and Colne (Mr. S. Silverman) referred to me tonight. He is, of course, a great scold. It is, fortunate on this occasion, that his scolding is directed more at the Opposition than at his own Front Bench. He has given my hon. and gallant Friend the Member for the New Forest and Christ-church (Colonel Crosthwaite-Eyre) a lecture on moderation. The hon. Gentleman giving anyone a lecture on moderation is indeed a strange event. I wish he could learn from his own copybook platitudes.

Some hon. Members opposite have tonight accused my right hon. Friend the Member for Aldershot (Mr. Lyttelton) of despising Russian coarse grain. My right hon. Friend welcomes, like all who sit on this side of the House, as much coarse grain as Russia is willing to sell to this country at fair prices. He criticised prices, not grain deliveries. I cannot add much to my right hon. Friend's devastating analysis of the Russian agreement. The public have been deluged in publicity about the success of the Board of Trade negotiators. The President's public relations officers were kept well up to the mark. They could talk at length about their master's gifts as a negotiator, but they were silenced about prices. The President of the Board of Trade still obstinately refuses to disclose the price he paid for Russian coarse grain.

I know not how much coarse grain we shall receive from Russia, but we have certainly imported some of their iron curtains. This silly secrecy about prices is an insult to Parliament. The Russians know what they have paid. What has the President to hide? If, as he boasts, he has made a good bargain, publicity about prices will help him in negotiating with other countries. The Government may think themselves clever by keeping the public in blinkers. It is an utterly unsound policy, and is the main cause of their failure to convince the people of the economic and financial crisis into which we are rushing.

The sifting hand in providing information from Government Departments creates more doubt than crude censorship. I speak with a little authority on that matter; I have occupied the post of Minister of Information longer than any other living British citizen. [An HON. MEMBER: "What about the Board of Admiralty?"] They never received the full benefits of my possible services. After the signature of the Anglo-Soviet Trade and Financial Agreement, the President of the Board of Trade declared his hope that it would be one of a long series of agreements. I hope I am not misquoting the right hon. Gentleman. Having listened to my right hon. Friend the Member for Aldershot, I can only express the hope that future agreements will be more just to Britain. We must not forget that last July, negotiations for a trade agreement with Russia were broken off by His Majesty's Government because of the unreasonable financial demands made by Mr. Stalin's Government. A few months later, this Government swallowed most of those demands. The President's performance in Moscow reminds me of the story of the hunter who shouted to his companion, "I've captured a bear, but he won't let me go."

Foreigners who read the right hon. Gentleman's agreement with Russia can be forgiven for describing us sarcastically as "bountiful" Britain. Is it really necessary to show such quixotic qualities in dealing with a country like Russia? No day passes without Russian boasts of the generous help she is giving to all countries who refuse to be touched by the pitch of the Marshall Plan. If Russia can afford to be so lavishly generous, why should she not pay her debts to Britain immediately, and in full? Why should she ask this debt-burdened country to accept payment over a period of 15 years? Russia has plenty of gold and other resources to expend on liquidating democracies. That is all I have to say about this curious financial and trade agreement.

I should like now to deal with other things done, or left undone, by the Board of Trade. Parliament should seek more opportunities of debating this ancient and important Department. I am sure that its President would welcome more frequent Debates. Before the war the Board of Trade was regarded as being far too large for any Minister to supervise effectively. Later on, two large Ministries were carved out of it—the Ministry of Fuel and Power and the Ministry of Supply—and its shipping functions were handed over to the Ministry of Transport. After these hefty amputations it was hoped that the Board of Trade would become a more manageable Department—a vain hope indeed. In April, 1939, the Board of Trade had a staff of 4,248; in April, 1947, it employed a staff of no less than 15,164.

This fantastic increase took place after the Board of Trade had shed many of its functions to old established Departments and to new Ministries. How odd, indeed, that the Government should wail about the shortage of manpower. Alas, the Board of Trade has not become a more manageable Department. Many admirable officials direct its old-established divisions. It has vitally important responsibilities at home and abroad. They are, I am afraid, discharged through mid-Victorian machinery that ought long since to have been modernised. In this respect, I think we could learn a lot from the Department of Commerce in the U.S.A. Whatever people may say about Mr. Hoover's attitude to Britain, there is no doubt that he did a most splendid job of work in completely modernising that Department.

The need for modernisation is thoroughly understood by the higher civil servants in the Board of Trade, but they can do little or nothing to fulfil that need. They must now cast anxious eyes on the crazy contraptions that are being constantly rolled into the Board of Trade by squads of price-fixers, profit-fixers, industrial allocators and bulk buyers who overcrowd the Department. An impossible burden has been cast upon the higher civil servants of the Board of Trade. The President is fortunate to have such colleagues. In ability and public spirit they have no superiors, but today—and tonight—they have little time to give to policy. They are engaged in the utterly hopeless task of exercising detailed control over numberless trades and industries. They must also supervise the amateurish activities of mobs of snoopers, or, if the right hon. Gentleman prefers the word, "fixers," for whom they must reluctantly accept responsibility. I stress "reluctantly" because the higher civil servants have no desire whatever to add to the staff of the Board of Trade. On the contrary, I feel sure they would wish to cut it down. However, being conscientious men, they are forced to keep an eye on the doings of the vast mob of inspectors and fixers now employed by the right hon. Gentleman.

The consequence of the acceptance by the Board of Trade of so many ill-assorted responsibilities is that this ancient De- partment, once the Board of Trade and Plantations, is now a sprawling bureaucracy. In fact, I will go further, and I will say that it is no exaggeration to maintain that the Board of Trade is now a boa constrictor squeezing the life out of British industry. The hoardings of Britain are covered by an appeal by the Prime Minister, asking for a 10 per cent. increase in production. A thorough pruning of the controls of the Board of Trade would have achieved a far larger increase. I commend that fact to the attention of the President of the Board of Trade. If he could but reduce the number of controllers and fixers and allocators employed by his Department a very great increase would occur in British production.

This fact encourages me to say a word to the President of the Board of Trade. To placate many critics—and the right hon. Gentleman has many critics—he has recently employed a gentleman named Mr. Merriam, Chairman of B.X. Plastics, to inquire into the vast assortment of controls exercised by the Board of Trade. The critics have not been impressed by that appointment. This is the old, old method of throwing a tub to divert the whale.

Mr. Stokes

A tub?

Mr. Bracken

A tub, yes. The hon. Gentleman had better read the "Tale of a Tub" to understand that point. Mr. Merriam, who, I am sure, is a business man of very great ability, is undertaking a post in which he cannot possibly succeed, for his powers are sharply limited. Matters of policy are firmly excluded from his inquiry. Does the President of the Board of Trade agree with that?

Mr. Wilson indicated assent.

Mr. Bracken

He is not allowed to touch policy. Let me tell the President of the Board of Trade that the only man with adequate power to cut through the jungle of Board of Trade controls is the President himself. It may be objected that the President has no time to give to this onerous task. Well, I noticed that the President has recently appointed himself to be chairman of a National Joint Production Council for a section of the film industry. This is an addition to other Board of Trade committees delving into the film industry. I think there are two or three committees of the Board of Trade inquiring into the film industry. The film industry is, doubtless, fascinating to amateurs, but the President of the Board of Trade has far more important duties. He should attend to them. Let me quote Sir Walter Scott to him: His ready speech flowed fair and free. When one turns to read the right hon. Gentleman's speeches one may be forgiven for believing that the right hon. Gentleman's office is a sinecure. He has the misfortune to be perpetually orating, which is an injury to the public service. I say to the President, I hope without offence: "Why not concentrate on the task of reducing and simplifying controls yourself?" No one can properly supervise the manifold responsibilities of the Board of Trade if he is making many speeches or tinkering with the film industry. The simplification and reduction of controls is of vital importance to British production, and I am glad to note that both the President of the Board of Trade and the Chancellor of the Exchequer agree with that observation. It is highly necessary to simplify and reduce controls in Britain. No less important is the duty of the President to control his own controllers.

I should like the President, in his reply tonight, to give us his comments on the admissions of the secretary of the Board of Trade Price Regulation Committee in his evidence in a London court on Friday last. The secretary admitted that the Board of Trade had issued to boot traders an Order which would have made them work at a loss. The Board of Trade brushed aside all the representations of experienced men in the National Federation of Boot Trades that the price was wrongly calculated——

Mr. H. Wilson


Mr. Bracken

The President says it is nonsense.

Mr. Wilson

So it is.

Mr. Bracken

I hope that in his reply, instead of merely saying "Nonsense," the right hon. Gentleman will give us a full answer, not to the charges I make, but to the comments made by the magistrate who heard this case. The Board of Trade, despite the protest of the National Federation of Boot Trades insisted that its Order must stand: Bureaucrats, however wrong, will not brook contradiction. The ignorant, not to say cocksure, price-fixers in the Board of Trade were determined to have their way, but the National Federation of Boot Trades stood up to them and were prosecuted. Fortunately, the magistrate who heard the case was a gentleman of great force of character. He is the chief magistrate designate of London, and I shall read some of his comments. When the President of the Board of Trade uses the epithet "nonsense" about this case, I hope that he will reply to these comments from the fund of knowledge he obviously possesses, which apparently was not available to the magistrate. In his judgment the magistrate said: An attempt was made by an official of the Price Control Committee to get the Federation to agree to figures which are now admitted to be bad figures, and to get the Federation to say that they were good and reasonable figures; and if they did not agree a prosecution would follow. Mr. May (the secretary of the Board of Trade Price Regulation Committee) has had to admit reluctantly that the Order was a bad Order. If that Order had been enforced the effects might have been these: Boot repairers would have to work at a loss; it was extremely unlikely that they would work at a loss; and the public's shoes would not have been repaired. But these courts exist not only to enforce the law, but to stand between the citizen and the effect of the law where to enforce the law would be unjust. The nastiest part of this squalid case was the Board of Trade threat to the Federation that, unless they agreed to publish a statement that the Board's figures were good and reasonable a prosecution must follow. I could use an ugly word to describe this threat. I shall content myself by saying that fortunately we have no People's Court to back up the totalitarian methods of the Board of Trade controllers. I am glad that the boot trades Federation refused to be browbeaten into misleading the public and the Press.

I could give the right hon. Gentleman many other instances of the errors of his controllers, but I have to touch on other points concerning his Department, and so I shall give him only one other example of their folly. Prosecutions have been launched against clothing manufacturers in Yorkshire who, by their sheer efficiency, are able to make and sell their goods at prices far below the Board of Trade's ceiling prices. Their efficiency should delight the Chancellor of the Exchequer, the President of the Board of Trade and the price controllers in the Board of Trade, but, alas, these manufacturers have enraged the profit controllers of the Board of Trade. The price controllers hatch in a different department from the profit controllers. The blessed word "co-ordination." is unknown to them. Through their efficiency, the Yorkshire manufacturers have sinned by earning profits beyond the profit margin, though their prices are often nearly 40 per cent. below the official price margin. If these Yorkshire manufacturers had paid themselves inordinate salaries and had been careless of production costs, they could have shown a diminished profit, which would not lay them open to prosecution.

Thus, the Board of Trade's controllers discourage manufacturers from reducing their prices. When goods are sold at the lowest possible price, the public interest is well served. The Board of Trade's maximum prices are not always the lowest possible prices, because they are based on the less efficient firms. I know of one West Riding firm that has been able to sell suits for £2 16s. as against the Board of Trade's official ceiling price of £4, and to sell men's overcoats at £1 19s. 0d. as against the official ceiling price of £3 is. 2d.

Mr. Longden (Birmingham, Deritend)

Where is this?

Mr. Bracken

At Wakefield. A prosecution has been launched against this firm because, through good management, it has made a profit on cut prices greater than the ceiling fixed by the Board of Trade profit controllers. What a nonsensical situation. This firm, now harassed by the Board of Trade profit controllers—I am using that as a general term for the gentlemen who supervise profits—is also in trouble with the wholesalers who distribute its products. When a manufacturer sells to the wholesaler, the latter adds an additional percentage charge of what, I believe, is called in the trade a "mark-up," and so the lower the selling price charged by the manufacturer, the less inducement for the wholesaler to buy, with the result that the wholesalers purchase from the manufacturers who charge the highest prices. This is a wonderful example of the contriving genius of our planners.

Mr. Keenan (Liverpool, Kirkdale)

Of private enterprise.

Mr. Bracken

It is not private enterprise, but Board of Trade regulation. Instead of cleaning up the controls exercised by his Department, the President of the Board of Trade, is busily adding to them. Only last week, he issued an enormous number of new price standstill orders. They affect articles such as sunshades, bagatelle boards, greeting cards, hat boxes, opera glasses and roulette boards.

How naughty of the President of the Board of Trade. He may easily get into trouble with our magisterial Home Secretary for encouraging the sale of roulette boards. In reading out this list, I am not quoting from Tommy Handley. I am quoting from the President of the Board of Trade's own Order. If these new and ludicrous price Orders are to be enforced, the Board of Trade must recruit a great number of new inspectors and snoopers. Hon. Gentlemen need not say, "No." I maintain that they must, for the black marketeers will welcome this addition to their stock in ramp. It is all very well for the President of the Board of Trade to say that no increased staff is necessary, but there must be new inspectors to see whether these lists are obeyed or not, and the oversight of these new bureaucrats will add to the strain on the higher Civil Service; and, in the end, the Government will find that these petty regulations are largely unforceable, thus increasing contempt for law.

The Board of Trade has been cluttered up in all these petty and irritating administrative tasks at a time when the Government are prophesying the worst of all financial and raw material crises. The Chancellor of the Exchequer declares that the terms of trade are changing to our disadvantage. I take it that the right hon. Gentleman the President of the Board of Trade agrees with him. They certainly are. Restrictions of all kinds are being placed on British exporters by foreign countries. There are significant signs that many of our traditional exports are diminishing in demand owing to the increasing industrialisation of the raw material countries, and, perhaps, through changes in taste and fashion. The very busy controllers of the Board of Trade cannot answer the question, "Are we making the right sort of goods for our export markets in which conditions have completely changed since 1939?" It is a question that needs answering, and I hope that the President of the Board of Trade and his higher officials will concentrate on that task. We on this side of the House share the Chancellor of the Exchequer's view that Britain is in danger of pricing herself out of many markets. Alas, the Government seem to be blissfully unaware of their part in this development. Higher prices for coal, transport and other industrial essentials, the cost of bulk purchasing, all enter into the cost of our exports. The President of the Board of Trade would be much better occupied in trying to reduce these costs rather than in fixing price ceilings on "shove-ha'penny" boards and table skittles.

I want to say a word about the worst of all the Board of Trade's omissions since the war ended. That is the failure to tackle the restrictive practices rampant in Britain. They are the greatest of all brakes on production. In Britain's present plight we cannot afford to tolerate any form of restrictionism. This must be made clear to employers and trade unions. Before the war, there had been an unholy alliance between some employers and trade unions to maintain restrictive practices. That alliance must be broken up without delay. Restrictive practices are so inimical to production that no time should be lost in rooting them out.

A few weeks ago, the Parliamentary Secretary to the Board of Trade stated that the Government hoped to introduce a Bill this Session to deal with trusts and combines which pursue anti-social practices. I suppose that is considered the appropriate Parliamentary language to describe restrictionism. We shall look forward to the Bill. We shall try to strengthen it. May it be a real blast against restrictionism whether practised by employers or trade unions, for these restrictions are death in life. Though the Chancellor of the Exchequer seems to have joined the Archbishop of Canterbury at the Board of Trade, the responsibility for reorganising that Department and shedding many of its endless controls still rests upon the President. We hope that the right hon. Gentleman will concentrate upon that task. Today the Board of Trade is so immersed in detailed supervision of thousands of trades and indus- tries that decisions on high policy are made in bits and pieces or postponed, generally postponed. This is wholly harmful to the Civil Service, commerce and industry. It is because the Board of Trade can contribute greatly to Britain's recovery that I have made these suggestions and criticisms but in no unfriendly spirit.

9.12 p.m.

The President of the Board of Trade (Mr. Harold Wilson)

The right hon. Member for Bournemouth (Mr. Bracken) has obviously enjoyed himself. He has had his usual fun, and it is my duty to bring the House back to deal with the facts of the situation. The right hon. Gentleman said a few things about price controls. The only thing he did not say, nor did it even emerge in any of the remarks he made, serious or flippant, was whether the Tory Party would abolish price controls if they were in power today.

Mr. Bracken

The right hon. Gentleman must be fair. I quoted for his benefit remarks made by the Chief Magistrate of London, which were severely critical about the right hon. Gentleman's controls. Has the right hon. Gentleman no answer to make to the Chief Magistrate?

Mr. Wilson

In due course I am going to deal with the case to which the right hon. Gentleman has referred. I would not be drawn by him—I do not know if he intended to draw me—into something that is quite out of Order, and that is to make remarks on the learned Chief Magistrate who presided at this inquiry.

Mr. Bracken

I hope the right hon. Gentleman would not.

Mr. Wilson

I still will give way to him if he will get up and answer the question which I put to him, which was, would the Tory Party abolish price controls if they were in power today or would they not?

Mr. Bracken

The Conservative Party would do what Mr. Merriam is being asked to do by the right hon. Gentleman—[Interruption.] I have been asked to answer a question put by the President of the Board of Trade, and if hon. Gentlemen opposite would cease interrupting me and allow me to give an answer, I shall not hold up the President in his reply. The Conservative Party would do exactly the same as Mr. Merriam is supposed to do for the President of the Board of Trade, and that is they would cut out a large number of unnecessary and wasteful controls.

Mr. Wilson

I have only three-quarters of an hour and obviously it would take much longer to get an answer out of the right hon. Gentleman. Whether he would or would not abolish price control is what I asked him. I did not ask him about Mr. Merriam or anything else. On the subject of price controls, I would agree with the right hon. Member for Aldershot (Mr. Lyttelton) that we should not, of course, place undue reliance ort them in dealing with the rise in prices or the danger of inflation. We say, as the Chancellor of the Exchequer has said, that that is one weapon in our armoury for dealing with this problem. I quite agree with something else that the right hon. Gentleman said, that it is quite easy to make funny remarks about particular items in the Price Control Orders. But I would remind him, as has been said already by my hon. Friend the Member for Stroud (Mr. Parkin), that if you did not control the prices of non-essential goods—including the trombones to which the first right hon. Gentleman referred, and the roulette boards to which the other right hon. Gentleman referred—you would be in danger of getting an undue movement of resources whether of manpower or of materials, away from essential to non-essential production.

I do not propose to follow the right hon. Member for Bournemouth either out—I see he has just left the Chamber—or into what he has just said. I see, however, that the right hon. Gentleman is returning, so on the subject of controls I will refer to what he has just said. I have appointed Mr. Merriam to exercise the functions of an Inspector-General of Controls. I agree that the only person with powers in this matter is myself, and Mr. Merriam will be reporting directly to the senior officials and to myself on these various matters.

However, when the right hon. Gentleman complains about the very wide range of functions exercised by the Board of Trade, I would ask him to spend a little time studying what they are. We have more civil servants, but then there are very many things we are having to do that ought to have been done long ago. I would be glad to show him round the Board of Trade, and have him look at our section dealing with the development areas, building factories where they were never built before. Is that a "swollen army of bureaucrats"? He referred to films, and I agree with him. I grudge the time I have to spend on the film industry, but at the present time it is facing a crisis in production and I would not be doing my duty, either to this House or to the country, if I did not satisfy myself personally that both sides of that industry are pulling their full weight at this time. He referred also to restrictive practices. I am delighted to know that we have his support in that matter and, when the Bill is introduced, we shall look to him for his support in speeches and votes, because I am not all that certain he will like the Bill quite as much as he thinks he will.

I turn now to a point on which he and the right hon. Member for Aldershot spent some time—the Russian Trade Agreement. I will try to answer their questions, some now and some when I deal, with more general points in a moment. I would like to answer the right hon. Member for Aldershot first by saying that there is no P.M.L. priority given to the Russian orders. We made that clear throughout the negotiations. We resisted the suggestion of a special priority to be given to these orders, or for a right of interference with other important orders, whether for home or overseas. But then the right hon. Gentleman seemed to think it was extraordinary that we fixed the prices we are to pay for the Soviet grain and did not fix the prices which we are to receive for the capital equipment for which orders are yet to be placed. Of course, the right hon. Gentleman will be the first to realise, seeing that the Russian shipments are now on the way and that some of them have arrived, that we could not expect that trade to start without fixing prices——

Mr. Bracken

What is the price?

Mr. Wilson

I will come to that in a moment. The right hon. Gentleman is dying to know, and I will satisfy him. In any case, unless we fixed the price there could have been no guarantee that we would have got the supplies if we had left so important a question open for later settlement. So, obviously, he cannot complain that we fixed the prices of the goods we were buying. Is he, then, complaining that we failed to fix the prices of the goods we are selling? Did he want the Government to fix the prices of this wide range of capital equipment on behalf of the engineering industries? Does he want the Government to undertake State selling? If so we would like to know. Or does he want the Government to undertake direct obligations on manufacturers' account? If he brings such weighty authority as he possesses to that proposal, we should have to consider it rather more seriously than we have so far.

Mr. Lyttelton

The right hon. Gentleman has not quite understood. I was merely stating the fact that the Government have fixed the price of what we buy, while the price of what we sell remains for private negotiation. That is the-fact from which he can derive what comfort he likes.

Mr. Wilson

Well, that is a fact; there is no doubt about the fact, but I thought the right hon. Gentleman sounded, not only a little sorrowful, but even critical about the matter in his speech this afternoon.

Mr. Lyttelton

Bulk purchase on one side, free enterprise on the other.

Mr. Wilson

The right hon. Gentleman need have no fear that this puts us in an unfair position, because if fair prices are not negotiated for capital equipment, that capital equipment will never be shipped, and we shall have got the grain first.

Mr. Lyttelton

Is that the right hon. Gentleman's idea of commercial standards?

Mr. Wilson

The answer to that quite plainly is that fair prices will be fixed and the goods will be shipped. Reference has been made to the question of prices paid for the grain. Right hon. Gentlemen opposite know perfectly well that we do not publish the price paid for particular purchases, nor indeed would any provident trader do so.

Mr. Bracken

The right hon. Gentleman said that he would give me the price.

Mr. Wilson

I said I was going to satisfy the right hon. Gentleman on the point. I will give him this information, and this is the first time it has been given in this, or any other House. The prices we paid for Soviet barley, maize and oats were, on a conservative calculation, about one-half the price which hon. Members opposite would have had to pay if trading on world markets.

Mr. Bracken

What was paid?

Mr. Wilson

If the right hon. Gentleman wants a little more detail than that, I will give it. The prices are considerably below the highest world prices at the present time, including the price for grain in certain Commonwealth markets. The right hon. Gentleman referred, not unnaturally, to the relation between these prices and Chicago prices. I know he was not trying to suggest that we fixed these prices in relation to Chicago because he knows that barley is not dealt with on the Chicago market.

Mr. Lyttelton

Maize is.

Mr. Wilson

Maize is, but, as the right hon. Gentleman knows, it is a very much smaller figure. I wonder if the right hon. Gentleman has considered the effect of this Russian grain agreement on the Chicago market and the extent to which this trade agreement has helped to play a part in bringing prices down.

Mr. Bracken

Six months afterwards, that is very good.

Mr. Wilson

I do not know about six months afterwards, seeing that the trade agreement was signed on 27th December, and we are not six months from 27th December, on my calculation.

The right hon. Gentleman further suggested that we were lending money to the U.S.S.R., to be repaid over a period of 15 years. As I have already made clear, that is not so. We are not lending the U.S.S.R. any money at all. In fact, in so far as shipments are made to us first, they are lending us money—the value of the grain until it is paid for by our goods. We have the hon. and gallant Member for New Forest and Christchurch (Colonel Crosthwaite-Eyre) to thank for this fallacy that in the Russian Trade Agreement we are going to pay for the shipments in other currencies and they will then pay for the goods from as on credit which we will specially advance for the purpose. I think he made two speeches on the subject in the Debate on a Prayer recently, and hinted that probably it would be spent elsewhere. Perhaps he meant in the Argentine, buying coarse grain. I do not know what he thought they would be spending it on. As for the suggestion that we were advancing credit for the purpose——

Mr. Lyttelton

The right hon. Gentleman really must not indulge in these imaginative nights. What I said was that indebtedness incurred to this country was to be repaid over 15 years. Although I have read the document, I never suggested that this related to the transfer of capital equipment against grain. I hope he is going to deal with the amount which has been cancelled and the credits we are opening on past indebtedness. He must not misrepresent me.

Mr. Wilson

I am sorry to upset the right hon. Gentleman but if he had followed me carefully he would realise that I switched from him five minutes ago and was addressing my remarks to the hon. and gallant Member for the New Forest. I do not think that there was any misrepresentation at all. As I have said, the statement made by the hon. and gallant Gentleman is misleading. The payment, to which reference has been made, was not in the current trade agreement at all but in an agreement concluded by the last Government but one in 1941——

Colonel Crosthwaite-Eyre

May I refer the right hon. Gentleman to Article 6 (b) of the 1941 Agreement as implemented by paragraph (d) of Article 5 of the present Agreement?

Mr. Wilson

I know all about Article 6 (b) and (d) and all the rest of it. The construction I put on it is the construction put on it by the Foreign Office treaty experts, the Bank of England, the Foreign Exchange experts and by the Soviet Government themselves. If the hon. and gallant Gentleman and his advisers want to put a different construction on it I cannot spend time on that now. Nor is it correct to say that we are paying £167 million for this agreement. The only direct loss on the 1941 agreement derives from a reduction in the interest charge. The writing off in a similar agreement of an amount coming at most to about £27 million represented a purely war-time claim to civil supplies which I do not think we could have established. The right hon. Gentleman asked what reduction has been made in the capital involved, which was a fair question. The capital involved was never ascertained because under the 1941 Agreement the then Chancellor allowed goods out of the country without ever settling the price——

Lieut.-Colonel Elliot (Scottish Universities)

In the war; surely that is different.

Mr. Wilson

—and the Soviet Union could have postponed the payment indefinitely. As these prices were not fixed, I do not think it is possible to answer the question as to the total volume of capital involved.

Mr. Lyttelton

May I ask the right hon. Gentleman to give us the percentage. Is the meaning of that particular clause that 50 per cent. has been written off?

Mr. Wilson

No, there has been no writing off of capital at all.

Mr. Lyttelton


Mr. Wilson

I am speaking from memory. I would prefer that a Question should be put down. There was a deduction from prices not yet fixed of 13 per cent.——

Mr. Lyttelton

How do you fix a percentage on prices not yet fixed?

Mr. Wilson

I will give the right hon. Gentleman all the details on this when a Question is asked. He himself said that we broke off negotiations last July, because of the Soviet financial terms; and then we swallowed the whole in December. To have accepted those terms in July would have involved a great loss of dollars, because we should have had to pay for the grain in convertible sterling. By December the trade between the two countries was balanced and payment was on a sterling basis.

I would say a few words about the general overseas trade position, against which these agreements must be set. Hon. Members in all parts of the House have agreed that the problem of export trade is a matter of life and death for this country. It is a problem which has changed its size and nature since before the war. I am not suggesting that before the war the export trade was not important. It was highly important. If we managed to secure another export market, or open up an overseas market which was closed to us, it meant making a small dent in the mass of unemployment in the development areas.

That was well worth doing, but today, of course, it is far more vital. It is absolutely vital today as a means of paying our way abroad and enabling us to stand on our own feet. Even in 1938, as the House well knows, we were not paying our way. For one thing, no one could pretend to have been satisfied with the volume of imports we had in that year. With one-third of the people below the poverty line, a large part of the population could not afford to pay for many of the things that we were importing, particularly food. If there had been full employment, decent wages and adequate social services, we should have needed far more food than actually we had in 1938. If we had had full employment, we should have needed far more imported raw materials. Therefore, the actual imports in that period were very much less than the country really needed. Even so, with an economic policy which was based on scarcity in the middle of the world of plenty, we still had difficulty in paying our way abroad.

Even though one-fifth of our total imports were paid for by the process of sitting back and living on investments accumulated in a bygone age, we were still, in 1938, "in the red," to the tune of some £70 million. That is to say, that about one-twelfth of our total imports were paid for in that year by living on capital, a thing which hon. Gentlemen opposite will be the first to agree is not in accordance with the best business practice. Our staple export industries were running into worse and worse difficulties just before the war, coal exports having fallen from 44 per cent. of world shipments to only 37 per cent. in four years. In 1938 cotton exports were the lowest for 90 years. With these things happening, we were in 1938, under vastly easier conditions, running into a very severe balance of payments crisis.

Mr. Prescott

Would the right hon. Gentleman cease reading his brief for a moment——

Mr. Wilson rose——

Hon. Members


Mr. Speaker

The right hon. Gentleman does not give way now.

Mr. Quintin Hogg (Oxford)

On a point of Order. I saw the right hon. Gentleman give way. I always understood that where a right hon. Gentleman had in fact given way, the person who then had, for the time being, possession of the House, had the right to put his Question.

Mr. Speaker

The right hon. Gentleman was in possession of tti2 House.

Earl Winterton (Horsham)

No He gave way.

Mr. Speaker

He gave way, and then he refused to give way. That is his right.

Earl Winterton

This Ruling raises a matter of the greatest importance. Is it your Ruling, Sir, that when an hon. or right hon. Gentleman has given way and has deliberately resumed his seat, he has a right to get up to interrupt the person to whom he has given way?

Mr. Speaker

It must be remembered that the hon. Gentleman to whom he gave way opened his comment with a rather offensive remark.

Mr. Hogg

Further to that, in my submission we are entitled to a Ruling on this point. My noble Friend put a very serious point of Order as to whether, when a right hon. Gentleman had in fact given way, he had a right to interrupt the Question that was being put. Do we now understand that the answer to that Question depends on the nature of the Question which is in course of being put?

Mr. Speaker

I think that the hon. Member for Oxford (Mr. Hogg) said that the right hon. Gentleman was interrupting a Question which was being put. The right hon. Gentleman was not interrupting any Question. An assertion was made which the right hon. Gentleman resented, and he refused to give way.

Mr. Prescott

May I say with the greatest diffidence that I interrupted the right hon. Gentleman? It may well be that my interruption was not expressed very well but, even so, Sir, I respectfully submit that I did make an intervention and that the right hon. Gentleman very courteously and kindly gave way. Surely it cannot be right that in the middle of my intervention, which may have been unhappily phrased—I know not—the right hon. Gentleman can get up and by standing on his feet put me down? Surely, that cannot be right?

Mr. Speaker

It would have been much better if the hon. Gentleman had not made the assertion when he asked his Question. Then, there would have been no trouble.

Mr. Prescott

It may well be——

Mr. S. Silverman

Does not the hon. Gentleman want to hear the Minister's answer?

Mr. Prescott

It may well be that I should not have made that assertion, and——

Mr. Gallacher


Mr. Prescott

I will gladly withdraw my assertion, although I do not see that it was very insolent. I will withdraw it, though I wish to pursue the matter on the question of principle. I think I am entitled to ask for your Ruling, Mr. Speaker, on the question whether, if I rise to intervene and if I have your ear, the right hon. Gentleman can put me down merely by rising to his feet. It may well be that my assertion——

Mr. Speaker

I think the hon. Gentleman is now rather labouring in a difficulty, and that the whole matter was rather one of courtesy, which upset, and not unnaturally, the President of the Board of Trade, of whom he asked the Question. I dare say that, if the question is put courteously, the President will answer.

Mr. Prescott

I will bow to your Ruling, Mr. Speaker. May I now ask, quite seriously and kindly, if the President of the Board of Trade will answer my Question?

Mr. Wilson

The reason for my getting up was a long period of silence which followed the hon. Gentleman's remark about my reading from a brief. There was no other Question put, so I find it very difficult to give an answer.

Now I turn for a moment to remind the House of the vast changes in the balance of payments position created by the war—changes reflected in every line of the White Paper published a few weeks ago. The loss of overseas investments amounting to £1,100 million, the results of the devastation and the postwar recovery plans of the world outside the Western hemisphere, the continuing high level of Government expenditure abroad, and finally, the high price paid for essential food and raw materials. Our food prices in 1947 were nearly 2½ times as great as before the war. Timber, wood pulp, cotton, wool and all other essential materials were taken in all nearly three times the price which ruled before the war. This has been the setting against which our overseas trade has had to be built up since the war. We have had to build up our exports from a very low figure at which it was found as a result of combined allied planning which designated this island as an advanced fighting base and an arsenal for the Allied Forces.

In July, 1945, our exports were no more than one-third of the total before the war, and, if we are to pay our way, we have to build up these exports ultimately to a figure of 75 per cent. above 1938, and we have to do that with an industrial system which not only suffered from war damage but from seven years' inability to replace obsolete or worn-out plant and machinery and in industries whose workers made an all-out war effort. We had to face this aspect of our trade with industry starved of manpower and materials and with all the disturbances, hold-ups and dislocations which resulted. We also had to try to recapture old markets which had been lost to us during the war and capture new ones. We have had to face the fact that many markets were now closed to us, because many countries could not or would not allocate foreign exchange to pay for relatively inessential goods which should be a high proportion of our export trade to provide for further food shipments.

Again—though this has not deterred us—in this period of building up our export trade, we have had to build it up in face of ignorant and ill-informed criticism from Opposition Members, who have never failed to try to make party capital out of the country's need to increase its exports.

Hon. Members


Mr. Lyttelton

Might I ask that the right hon. Gentleman should put himself in possession of the facts about what Members of his own Front Bench said about the export trade in the past? I recommend him to do so before throwing utterly unfounded allegations against the Opposition.

Mr. Wilson

I will prove it. When the Chancellor of the Exchequer told the country within a few weeks of this Government being formed that it was necessary to divert textiles from the home market to the export trade in order to pay for our material and necessary supplies, he was immediately subject to ignorant accusations that he was seeking austerity for its own sake. When the Government, in 1945, told the motorcar industry that, for balance of payments reasons, it must export half the motorcars produced, there were violent outcries from the Opposition. When we stepped up our exports of capital equipment, which was needed for restoration of production in our traditional supplying areas, or for the development of overseas territories in Africa, or for the maintenance of overseas territories, there were Questions, Debates, and speeches of all kinds against the need for exporting abroad—[An HON. MEMBER: "This is a free country."]—it is free enough to have the right to reply—textile machinery, farm machinery, generating equipment, mining machinery, locomotives, wagons, which it was quite rightly stated were urgently needed by our own industry and which ought to have been put into British industry long before the war.

Mr. Lyttelton

I must intervene again. The right hon. Gentleman made the allegation that the Opposition has been trying to prevent the expansion of our exports, whereas every speech from these Benches has always been in favour of trying to expand our exports and he should acknowledge that.

Mr. Wilson

I do not think Opposition speakers are powerful enough to prevent it. I will say, however, that a lot of capital has been made out of this, and I will make one point in reply. The Tory "Weekly News Letter" of the middle of July, 1947, said: Look too, at the sort of thing we hive been exporting — printing and textile machinery, electrical generators, locomotives and railway wagons, agricultural machinery, those are all the very things we needed at home to raise our level of production. Real planning would have avoided these mistakes. We have had to build up our production, as coal and textiles the staples of our exports, have played only a small part, a relatively small part, in our export trade. There should be no doubt in any part of the House where the responsibility for that lies. If the British coal industry, under private ownership, had increased its efficiency in the 10 years before the war at the same rate as their European rivals, we could have had 100 million tons of coal for export, and enough to provide for all our needs.

Mr. Prescott

What about the textile industry?

Mr. Wilson

There is plenty I shall say on that in a moment.

Mr. Bracken

What about the Chief Magistrate's comments?

Mr. Wilson

There is a Question down on Thursday. The right hon. Gentleman should not worry too much about it.

Mr. Bracken

He promised it tonight.

Mr. Wilson

It will be given, if I do not get too many interruptions. On 29th January 1 told the House that, since last August, we had concluded trade and payments agreements with 22 countries. Since that time negotiations have been concluded with the Netherlands—that was announced yesterday—Denmark, the Argentine, and primarily financial agreements with India, Pakistan and Uruguay. This afternoon, we signed a further trade agreement with Poland. This evening we signed a trade agreement with Finland providing for wood pulp. We are sending them coal in return for the wood pulp, about which the hon. Member for Chippenham (Mr. Eccles) is so rightly anxious—[An HON. MEMBER: "How much?"]—230,000 tons.

I want to say a word about some of the difficulties in these bilateral agreements. They are full of difficulties; I admit that right away. In every case, we have to try to get agreements which will ensure for this country essential supplies of food and raw materials, and, as far as possible—though I agree that failed with Russia—to open overseas markets to our export trade, particularly for consumer goods, and to do all this without the imposition of monetary conditions which would involve an undue burden on this country in the form of the loss of gold. In return we have, in every case, with only one exception, provided for a balanced trade between Great Britain and the countries involved, with no net payment either way of dollars, and with every hope that the balanced trade provided for, will lead to no movements of gold. The one exception is Canada, and I need not underline the fundamental importance to the trade of this country, to our imports, and to our standard of living of the resumed negotiations soon to be held with Canada—negotiations in extremely difficult circumstances—about the dollar payments involved.

I would like to say a few words about our general position in these negotiations. The essence of a successful deal at the present time is a provision for the importation of food or raw materials which we would have had little hope of getting unless we were prepared to offer something of value in return. Against the timber, wood pulp, grain, hides and meat for which we are negotiating, we have to offer quantities of goods which the other country needs—coal, steel, and often cotton yarn, wool tops, certain basic chemicals, such as soda ash, and, generally, though not always, contracts with our heavy engineering industries to send electrical plant, locomotives, excavators, machine tools, and so on.

Whereas our import needs are almost entirely for essential goods, the exports we can offer of essential goods are relatively limited. There are, of course, those I have mentioned, coal and steel—very small quantities of steel—and there are certain sterling area productions, such as wool and rubber. These usually play a balancing part in the trade negotiations. For the rest, a large proportion of our exports must naturally follow the traditional pattern of our trade, and must be made up of consumer goods which other countries may not regard as highly essential. Unless we are going to pay the difference in gold or dollars, or ask the other countries to hold large quantities of sterling, we have to press, in these negotiations, for the removal of import restrictions on British goods, a very difficult thing with countries which are in balance-of-payment difficulties themselves.

I admit right away that we have not succeeded anything like so far in that, although we have had some success in Sweden, the Netherlands, the Argentine, and, I hope, when the agreement is consummated, in Belgium, and in the two agreements to which I have referred, and which were signed today. Hon. Members on both sides of the House would, I am sure, say that our way would be far easier if we could offer a larger proportion of essential goods. But our export trade, in common with every other advanced industrial country, must cover a wide range of commodities, including many secondary and non-essential goods. It is perfectly plain that one cannot turn over the productive capacity of many of our industries from making non-essential goods to the manufacture of essential goods. Obviously, we cannot make excavators in lipstick factories, or locomotives in clothing factories. There are, indeed, limits and delays to the extent to which one can make tractors in a motor car factory.

When we ask other countries to take a larger proportion of our non-essentials, we are very often faced with the demand that we take from those countries nonessentials together with the goods we most urgently need. There was the classic case of Belgium insisting on our taking grapes and azaleas with our steel. There are very few negotiations in which we do not find as a condition of sale goods that we could well do without. Although this may provide criticism—and I admit that it does—I do not think that anyone could seriously maintain for a moment that if, in present circumstances, we were to revert to completely free trade for importers and exporters with all countries, we should do any better or, indeed, do anything like as well as at present. What would happen is that the other countries would certainly not sell us these scarce goods unless we were able to supply some of their essential ones also. Our grain and timber importers would not be in a position to arrange for the importation of non-essentials. Certainly they would not be in a position to offer in return some of our scarce commodities which, although we may be in a position to supply them, we have to ration very carefully among our overseas markets. As illustrations of these scarce commodities I would mention steel and certain basic chemicals.

Our biggest difficulty in the way of overseas trade negotiations is not a lack of production on the part of effort; it is the lack of capacity to produce many of the things urgently needed. Our industrial system in the past has simply been laid out to provide for the needs of a country working in conditions of full employment. Our production of steel, of soda ash, of sulphuric acid, and of very many other products which I could name, which are today running at record levels, are still far too small to meet even our internal needs, quite apart from the needs of the countries with whom we are negotiating and the needs of our traditional customers in the Commonwealth and elsewhere. If we had had plenty of steel we could very often have been able to secure earlier agreements with many countries and, perhaps, also on more advantageous terms. Our steel capacity is just not big enough. In any case, it is overstrained by the needs of our home industries and export requirements, which are themselves somewhat crippled by a shortage of steel, as many hon. Members have said. The same is true of such things as soda ash, where there is simply not enough to fulfil the needs of our own glass-making and other industries. In addition there are, of course, the heavy demands of the Commonwealth and other countries with whom we are in negotiation.

I cannot think of any better example to illustrate the fallacy of economic policies such as those laid down recently by such people as the right hon. Member for Woodford (Mr. Churchill) in a number of speeches in which he said that our export policy should be based on the overspill of home trade. Two years ago he said that we were told that everything must be centred on our export trade, but whoever, outside an infants' school or a lunatic asylum, would suggest that our exports were more than an overspill of a successful home trade? He also asked whoever thought of taking the home trade for export until the home market was satisfied. More recently, he said: Exports are only the steam over the boiling water in the kettle. They are only that part of the iceberg that glitters above the surface of the ocean."—[OFFICIAL REPORT, 28th October, 1947; Vol. 443, c. 703.] If we were to meet all the unrestricted home requirements of soda ash, basic chemicals generally, and of steel, there would never be as much as a trickle available for export. We should never get anywhere in meeting even our own requirements because of the absolute limits imposed by the capacity available in the country. The right hon. Gentleman's kettle simply is not big enough.

Mr. Bracken

The right hon. Gentleman promised, before he sat down, to give his comments on the statement made by the Chief Magistrate in London. I am sure he will like to fulfil that promise.

Mr. Wilson

I am very aware of that and will certainly deal with it if I am allowed to continue without any further interruptions. If not, I will certainly give the right hon. Gentleman my comments on any convenient occasion. I am not running away and I have plenty to say on this subject which I want him to hear. I have also promised to answer remarks about bulk purchase, and would like to know for instance where the Opposition stands on this question—are they for or against it? [An HON. MEMBER: "Against."] The right hon. Member for Southport (Mr. R. S. Hudson) has said that he has never personally held the view that long-term bulk purchase arrangements are in themselves bad. Other hon. Members have given a similar impression and we have a right to know where we stand.

Mr. Bracken

We have told you.

Mr. Wilson

A number of hon Gentlemen have criticised the Canadian grain contract of 1946 and said that we were throwing away the nation's money because of the high price we were paying. Would they, with their great knowledge of the commodity markets, say today that that was a waste of public money? I could give plenty of similar examples in other commodities. Surely, hon. Gentlemen opposite must realise that if we had private traders dealing in these markets, bidding up prices against one another in a period of shortage, none of them able to make offers in scarce goods which other countries want, we should have to pay far higher prices than we are actually paying. But, then, maybe the party opposite do not want us to get our food cheaply. That is a conceivable policy.

Hon. Members


Mr. Bracken

Let the right hon. Gentleman try to be a statesman and not a "smart Alec."

Mr. Wilson

But that is a conceivable policy. I must tell the retired statesmen about this point. There are one or two things I would point out. It is a conceivable policy not to want cheap food. But if it is their policy, let them not attack bulk purchases on the ground that the price is too high, because that argument knocks the whole bottom out of their case. They have said they do not want cheap food imports.

Air-Commodore Harvey (Macclesfield)

Get on with it.

Mr. Wilson

Perhaps the best way to get on with it would be to quote some words from one of the policy publications of the party opposite, a publication recently issued, and issued, presumably, with all the authority of the noble Lord, Lord Woolton. It says: A Conservative Government would have made it quite clear that there would be no policy of cheap food imports such as we are trying to get from the Danes to undermine home agriculture. Do they want cheap food imports, or do they not? Because if their policy is not one of cheap food imports, then why do they come to attack this Government for paying too high prices on the conditions of bulk purchase?

There are many other questions to which I should have liked to reply.

Hon. Members

Get on.

Mr. Bracken

There is the question of the magistrate.

Mr. Wilson

I am not going to refer to that. I shall refer to what the right hon. Gentleman said on that subject instead. In spite of the very great difficulties we have had of production, and of opening up markets abroad, we have made very great progress with our export drive and it is quite wrong to depreciate what has been done in that direction. Our actual exports have increased, in spite of the fuel crisis, in spite of the steel shortage, in spite of the shortage of imported——

Mr. Bracken

In spite of the Government.

Mr. Wilson

Because of the Government, and in spite of the Opposition. Had this been done in 1938 and set against the conditions of 1938 we could have produced a far better balance of payments than was achieved in 1938. It is not the want of any effort, it is simply that the problem has now become so very much greater. It is that problem that in 1948 we and the whole country are determined to tackle.

I want to say one word about the magistrate. I have already said I shall not allow the right hon. Gentleman to draw me into criticism of the learned magistrate. I will, however, say a word or two about those orders. I shall make a fuller statement later to the House. Following the removal of the leather subsidy the market was allowed to resume some degree of freedom. We made our calculations, in consultation with all the trades concerned, as to what the rise in price would be, and fixed our shoe repair charges accordingly. In fact the result of temporarily removing controls of leather prices was such that the price rose far higher than had been expected. We set the people free, and the price of leather shot up. That put our calculations wrong, but we made it clear to the shoe repairers that we would make an order as soon as the facts became clearer and the prices settled down. We gave that assurance in advance, and that assurance was given before there was any attempt on the part of the federation to influence its members to disobey the order.

Mr. Bracken

Tell that to the magistrate

Mr. Wilson

There are many other things I could say on this. I shall be making a statement later in the week and I do not want to leave the right hon. Gentleman with the feeling that we are afraid to answer the things that have been said tonight.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

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