HC Deb 12 May 1948 vol 450 cc2235-52

Motion made, and Question proposed, "That this House do now adjourn." — (Mr. Popplewell.)

9.26 p.m.

Mr. Harrison (Nottingham, East)

It is my desire to draw the attention of the House tonight to the widespread concern caused in the cotton spinning industry and in the cotton consuming industries by the increasing prices of cotton fibre. There are quite a number of internal and external prices that are governed almost completely by the prices of raw cotton fibre. The most disconcerting feature of the whole position is the terrific rise that has taken place this year since January. We find that since January the price of raw cotton fibre, particularly staple varieties of Egyptian type has risen 4s. 6d. a pound. Had it been the case that the price of cotton fibre before the war had risen to the extent of a halfpenny we should have had loud complaints in the trade, saying they could not possibly manage under the increased price. Here, however, we have since January an increase in the price of cotton fibre to the extent of 4s. 6d., and this price increase is still going on. I hope that when the President of the Board of Trade replies he will be able to reassure the people concerned with the trade, not only in cotton spinning but also in the yarn consuming industries, of which there are so many in and around Nottingham.

There are important aspects of the position caused by this phenomenal rise which I wish to emphasise. Nottingham is one of the greatest yarn consuming parts of the country. We have concentrated there quite a number of industries that depend solely on the consumption of cotton yarn. I refer to industries such as the lace industry, the clothing industry, and the hosiery industry. I ought to say first that, from the information I have sought, the facts do not support the contention that the continuance of the Liverpool Cotton Exchange could have materially altered the position. No amount of price straddling by the Liverpool brokers would have enabled us to-avert the present position. They could not have stretched so far. No doubt, individual brokers would have profited considerably from the rising market to the disadvantage of the trade in general.

Another general complaint I do not feel inclined to support is that about the incidence of bulk buying—that this bulk buying is the substance of the trouble. I have examined that position, and from what I can see of the matter, over-all bulk buying in cotton has resulted in the purchase of the fibre as cheaply as demand and supply and the availability of dollar currency would permit. There are matters, apart from these generalisations, of detail connected with the Cotton Commission treatment of transactions which I should like the Minister to examine. It is only by the examination of the details of this crisis that the cotton consuming trade can overcome its present difficulties. I say the cotton consuming trade because that it is these trades which come directly in touch with the individual consumers whether at home or abroad, and it is in that particular trade that we see the phenomenal rise in the price of cotton reflected in the price of made-up articles.

I will take the Nottingham lace trade as an example. The export target side for this particular trade is £12 million, this being double the 1946 figure. It means that nearly every bit of cotton or lace produced will be earmarked for export. This particular industry uses almost entirely Egyptian types of yarn. The machinery operating in the finer counts cannot possibly use the American types of yarn. There are no prospects whatever, so far as we can see, of Egyptian cotton being substituted by cotton from other countries, even of the Egyptian type. That means that we must face in that particular trade the increased prices which are considerable and, to some extent, alarming unless the Minister can assist us.

Speaking of the spinning industry for a moment, they were encouraged to use soft currency area cotton, especially Ashmunei and Zagora types which were substitutes for the American, and this change-over was operationally simple. In February, the Ashmunei type was 22.25 pence per pound and American 23 pence per pound. With prices approximating, the change-over was a comparatively simple matter. Today, the position is considerably different, and if we could change over now it would mean that the price ranges would be, Ashmunei 44.75 pence against American 26 pence. That grave disparity of prices makes the change-over a very serious matter indeed. This trade is told that it can substitute Egyptian grown cotton by Egyptian types, but it is difficult to see from where four or five million spindles that can use both types, can be supplied. I would like the Minister to give some information on that particularly grave position so far as the spinning trade is concerned.

There are today certain types of American fibres of fine quality that could be bought at reasonable prices if only we could use the necessary dollars. It seems to us that it would be a good investment on this occasion to invest in this alternative supply of fine fibres. By so doing we could hold off the Egyptian market for some time and they would face the possibility of losing one of their biggest customers for fine Egyptian cotton, which is, of course, this country. Those are matters of great importance which affect a considerable portion of our national trade. Our ability to sell abroad is affected considerably by these rising prices, and also the stability of our prices at home for thousands of commodities are affected because of this rise in the price of cotton fibre.

In addition to the difficulties of the rising price of cotton yarn, we have another difficulty which I hope the Minister will take into consideration when con- sidering the position generally. That is the effect of the devaluation of the franc. This position can best be illustrated from the following extracts from letters from our agents in Venezuela who deal with cotton laces. The first is dated 31st March, 1948: We regret to inform you that the possibilities of selling British laces seems to be definitely over, due to the very active French competition. There is already sold a very large quantity of their fine and well known quality at prices far below the British. This situation has come to a point when importers do not show any more interest in Nottingham lace. The second letter, dated 2nd May, 1948, included this particular reference to our products in that country: Deliveries from France are quick, and prices cheaper than the English. I would not suggest for a minute that those two letters indicate the general position in all markets, but I suggest that they indicate another difficulty from which we are suffering in the cotton yarn industry in our endeavour to sell not only at home but abroad.

I asked the Minister on 4th May this year if he would peg the price of our cotton, utilising for that purpose some of the trading reserves or profits which the Cotton Commission have made during its period of operation. He refused to peg those prices and utilise those resources. I now ask him, as an alternative, to agree to the removal of the 12½ per cent, spinners' surcharge for export industries. I also want to ask him a series of questions which I hope he will do his best to-answer when he replies to the Debate, because these things are extremely important to us. Is he aware of the fact, or is it a fact, that the raw cotton commission prices for Egyptian cotton are in some cases higher than the Egyptian new crop prices?

Secondly, are the reports true that the Cotton Commission have bought Sudan Sakel yarn fibre at an average of 38 pence, and are they selling it at 48 pence, that is at an increase of 10d. per lb. on each lb. that they sell in this country? Those reports appeared in the Sudanese Press, and such reports should be corrected at the earliest opportunity because they are an encouragement to the Sudanese and the Egyptian dealers to' raise the price of this important commodity still further. Thirdly, is he aware that in advancing all Egyptian prices to the level of the Alexandria prices, the Cotton Commission have put the Egyptians in a position to dictate world prices for such fibres, and increase thereby the difficulties of the Cotton Commissions over any future purchases they wish to make.

Then I suggest that in all these matters we have to take into consideration the possibility of reducing considerably in, some cases, and in other cases we have to take into consideration the possibility of stabilising the prices of our exports. Unless the Minister can assist us at this juncture, any substantial contribution that we can make towards the national exports of this country will be jeopardised seriously. I want the Minister to bear in mind that in the Government's policy of stabilisation of prices and wages the factor of this continuously rising price of cotton not by 1d. or 2d. but by a 1s. will seriously affect the price of every commodity into which cotton enters, and those commodities number thousands and thousands and are used in this country by ordinary people. I have put my case as briefly as I can. There has been some substance in the questions I have put to the President of the Board of Trade, and I am sure he can assist us at this particular stage, for which we shall be grateful, especially if that assistance will contribute still more to our prosperity and to our national recovery for which we are all working so earnestly.

9.41 p.m.

Mr. Edgar Granville (Eye)

I do not intend to stand between the hon. Member for East Nottingham (Mr. Harrison), who has made a very able case, and the reply which he is to receive from the President of the Board of Trade, but I should like to support what he said about the spinner's surcharge. I have no intention of following into all the arguments with regard to the Liverpool Cotton Exchange which may be somewhat irrelevant to this question. I should, however, like to support him on this factor of rising prices, which has been felt already in this industry both at home and abroad. The right hon. Gentleman has made various pleas to increase exports to the dollar area. With a reasonable knowledge of the dollar area, I can tell him that in that market the most important thing of all is to maintain a steady service. Any fluctuations caused are going to impair the orders coming from the particular area.

The general tendency of the importers there is that they like to be assured that the price will be a stable price and without constant fluctuations. I warned the President of the Board of Trade before about this, and I believe it is going to be a vital factor in the dollar market. I know from experience that the increase in price has already hit the home market, and it is endangering our prospects in the dollar market. I hope the right hon. Gentleman will be able to give us some assurance that these high prices are not going to continue, and that the exporters from this country are going to be able to plan their course for some months ahead with the knowledge that there is going to be some stability in the existing market.

9.43 p.m.

Mr. Sparks (Acton)

There is one point I would like to add to what my hon. Friend the Member for East Nottingham (Mr. Harrison) said in opening the Debate, and that is in regard to the international aspect of this question, particularly as to the supply of raw cotton in various parts of the world and of our export trade in cotton and cotton piece goods. I am wondering to what extent the International Trade Organisation has given consideration to this matter, because it seems rather clear to me that if we are to have a stabilised price level for raw cotton we can only hope to achieve it by international agreement. Therefore, I feel that the International Trade Organisation has a special responsibility to ourselves and to other countries concerned in the production and marketing of raw cotton, which is the raw material with which we are concerned at the present time.

I am surprised to learn that there is difficulty with the export of cotton piece goods. International trade organisation has an important part to play in this respect. Why should there be difficulty in our supplying the world with cotton piece goods? There are large concentrated areas of population—particularly in India and China, for example—where many millions of people have very little clothing to wear. We need to organise the vast potential market which exists in the world for the products of our factories in Nottingham and elsewhere. I can see no adequate method of organisation except by international action through the appropriate trade organisation. That we should be lamenting the difficulty of stabilising the price of our raw material, and the difficulty of securing markets abroad for one of our main essential industries, brings home the fact that we have not yet organised the international development of the raw material of this industry and the export of its finished goods.

A number of questions has been put to the President of the Board of Trade which he will need to answer with as much detail as he can. It would help considerably if he could touch upon the international aspect. We have been working hard through the International Trade Organisation which has recently concluded a number of its findings, particularly in regard to the tariff question and reciprocal trade agreements between the various countries. It would be useful to know to what extent the difficulties that have been voiced tonight have been dealt with in the international field. The solution to many of these problems must lie in international agreement between all the countries concerned to maintain a stable price level for both our raw materials and our finished goods.

Mr. Granville

The hon. Member referred to certain markets. Does he realise that the vital policy of the Government is to export to countries which will supply us with food and raw materials?

Mr. Sparks

I am in agreement on that point. I want to emphasise the vast potential market which exists in all parts of the world. Whilst we may have to divert our exports to the areas from which we can get food and other vital necessities, we should bear in mind the wider picture and realise that there is a vast potential market for everything we can produce. We must ask ourselves, therefore, why there should be any difficulty in exporting. It is not easy to solve the problem within a short time; taking the long view, our main hope lies in developing our policy through international trade organisation to maintain stable world prices for raw materials and finished articles.

9.49 p.m.

Mr. Champion (Derby, Southern)

I am grateful to my hon. Friend the Member for East Nottingham (Mr. Harrison) for rais- ing this important matter. It is important also to my own constituency where there is a large lace manufacturing industry which, I fear, is likely to be gravely affected by the rise in cotton prices. It is scarcely necessary to stress here the value of that industry to our export trade. The President of the Board of Trade must consider the effect upon this industry, particularly as lace is one of those exports which we have managed to get to a very large extent into the dollar countries, something so vital to our economy. It also happens to be one of these exports which are of high value because the amount of raw material purchased from abroad which goes into the final product is so comparatively small.

Undoubtedly this price rise of raw cotton will have a bad effect. My hon. Friend the Member for East Nottingham (Mr. Harrison) has already told us how this will affect our competitive selling of lace, and particularly our competition with the great French lace exporting industries. For these reasons, I strongly support the plea of my hon. Friends that the President of the Board of Trade should give careful consideration to this recent rise in the price of the raw material and do everything in his power to secure a reduction. If he does that, he will not only help the industry in my constituency but considerably assist the country in the export drive.

9.51 p.m.

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

I agree with my hon. Friends that this matter is one which must cause us all very considerable concern. The effect of the rise in cotton prices, chiefly the Egyptian prices, on for instance our cotton exports, particularly exports of the finer types of cottons, on lace, which has been referred to, on hosiery and one or two other industries such as rubber tyres, has undoubtedly been serious and we are at present encountering a very strong buyers' resistance abroad to paying the prices which our industries must charge owing to the prices they must pay in their turn for the Egyptian cotton.

There are one or two things I would like to say about the way the Raw Cotton Commission operates in its price policy. The price at which raw cotton is sold to the spinners is not fixed by the Government; it is not a question of assurances on my part, but it is the Raw Cotton Commission which has the duty under the Act of selling its cotton at such prices as seem to it best calculated to further the public interest in all respects and, so far as it is compatible with that, to sell as cheaply as possible consistent with securing that their revenues are sufficient to meet their expenditure on an average over a period of good and bad years together.

The Commission, throughout the period of their existence—it was also true of the Control—have been selling Egyptian cotton below replacement cost, and even after the recent changes in price in the last few weeks, it is still true that the selling price is substantially below the market replacement price. The Commission have so far been able to sell below cost because they have had very large stocks of cotton bought at a period when the price was considerably lower than in the last year or so. It would be most unreasonable to ask the Cotton Commission—I could, of course; I have the powers but I do not intend to use them—to incur heavy trading losses for the sake of subsidising the industries using raw cotton. That would cut both ways.

As soon as world prices fall—we must all hope that world prices will take a turn down in the near future—obviously the selling policy of the Commission must be to follow them very quickly, otherwise the Commission and I will be attacked on the ground that our export trade efforts will be made abortive by the fact that the Commission will be charging a higher price than the replacement price which other countries are paying in world markets. Unless we are prepared to have the cotton sold below the world market price we must face the point at which the Commission must follow the market upward. That is their recently announced policy and it provides the answer to one of the questions which my hon. Friend the Member for East Nottingham asked. The answer to his question is undoubtedly "Yes." The Commission are selling at the replacement price and not at the price when it got in before the market rose last autumn.

Mr. Selwyn Lloyd

Is the Commission hedging on any of its purchases?

Mr. Wilson

I will give an answer to that question in a moment. Egyptian prices have doubled in the last few months. I will take the example of Ashmouni type 4, which is a representa- tive grade to take as an example. It stood at is. 10¼d. last July, but it is 3s. 8¾d. today. The present replacement cost of getting the cotton into the warehouse is 3s. 10.6d. I think my hon. Friend will agree that the Commission are today selling even slightly below replacement cost. Another striking example is Karnak type 155. The price charged has increased from 2s. I¼d. to 4s. 9¼d. since last July. There again the price of supplies into the warehouse runs out at the rate of about 5s. 3.14d.

My hon. Friends are anxious to know why the price increases have occurred. There are various reasons. It is not true that bulk buying is one of them. If the Liverpool Cotton Market had been operating on the pre-war model it would have had all the difficulties which the Commission have had to face.

Mr. Selwyn Lloyd

And it would have earned a good many dollars.

Mr. Wilson

I do not know what the hon. and learned Member is talking about. We could not get any more dollars by the free market than by the Cotton Commission.

Mr. Selwyn Lloyd

Does the right hon. Gentleman deny that if the market had been opened it would have earned a good many dollars?

Mr. Wilson

I do deny it. We debated that matter fully in the House. I do not accept that there would be any difference in the amount of dollars available to the Liverpool private cotton merchant than could have been made available—

Mr. Selwyn Lloyd

Is the President of the Board of Trade really suggesting that if the Liverpool Market had been open there would be no earnings by way of arbitrations?

Mr. Wilson

The earnings would have been negligible. The hon. and learned Member will realise that very great troubles have been run into in getting qualified arbitrators. The biggest problem the Cotton Commission have today is to train new arbitrators.

Mr. Selwyn Lloyd

Does the right hon. Gentleman dispute the estimate which the late Chancellor of the Exchequer gave of earnings equivalent to £1 million a year.

Mr. Wilson

Perhaps the hon. and learned Gentleman will put a question down, and I will go into the matter. I have not the exact statement by me made by my right hon. Friend, and I am not going to be drawn into any argument on the subject tonight.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made and Question proposed, "That this House do now adjourn." — [Mr. Pearson.]

Mr. Wilson

It is very arguable indeed as to what earnings might have been gained in a free market under present conditions, and possibly it might have operated in the opposite direction so that without a close control over dollar expenditure by Liverpool merchants we might have lost a great deal of dollars in a free market.

I was dealing with the reasons for the rise in price of Egyptian cotton. I said it was not due to bulk buying because in point of fact we were not in the market at the time. Much of the buying had been done at a period before the actual increase referred to. There were a number of reasons for this. One was that the exportable surplus from Egypt, in spite of the increased demands, was only two-thirds of pre-war figures. In addition there are certain new countries which have come into the Egyptian market in the course of the past few weeks. For instance, the Soviet Union have made heavy purchases of cotton in Egypt thus helping further to push up the price. Certain European countries, starved of cotton, have tried to meet their needs in Egypt and have also pushed up the price. Another reason was that the Egyptians have themselves switched over from the longer staple grades to shorter staple grades and that has accentuated the shortage.

Yet another reason is the fact that most of the Karnak supplies are held by the Egyptian Government who have been feeding supplies into the market during this period in extremely small quantities. We have not in this country, although paying these high prices, been at a disadvantage as compared with other countries which are paying the same price for Egyptian cotton as the price now being charged by our Cotton Commission. In fact they are paying slightly higher. I admit that is not true of the American cotton and certainly the point made by the hon. Member for Eye (Mr. Granville) about the difficulty this is causing in exports to our dollar markets is a very real one in so far as in the conditions we have to meet in the Canadian market we are competing with an industry which can get its cotton at a lower price.

Mr. Harrison

When the President of the Board of Trade speaks of the price we are paying as compared with other countries could he take note of this particular and supposed fact? Is he aware that Switzerland has been buying pieces of Lima Peruvian at 30d. a pound while our Commission quotes 51d. per pound. There is a difference of 21d. per pound of Egyptian type cotton which is being bought by Switzerland, and Russia has entered the market now.

Mr. Wilson

I think that one of the most helpful factors is that considerable Peruvian supplies will be arriving in this country in the course of the summer which will not only help us but ease the world pressure on cotton from Egypt. This will help to bring prices down considerably. We have had to reach agreement in Peru on the difficult problem of the method of payment.

The hon. Member for Acton (Mr. Sparks) raised the question of the International Trade Organisation and asked what that might do in dealing with this problem. I need not remind him that the International Trade Organisation is not yet established. A charter is now being drawn up, but the I.T.O. is not in operation. I agree with him that it will have a most important part to play in preventing fluctuation in prices of cotton and many commodities, including foodstuffs and raw materials. We hope that the violent fluctuations we have seen recently, and the equally violent fluctuations between the two wars, will come under some measure of international control. I agree with him entirely, also, when he points to the importance of developing markets for cotton goods in undeveloped countries such as India, China and Africa. There again the International Trade Organisation and the Food and Agriculture Organisation have an important part to play in the immediate future. As the hon. Member for Eye (Mr. Granville) said in an interjection, the problem is to push our exports to those countries from which we buy the larger part of our food and raw materials.

I entirely agree that the problems with which the cotton export industry are faced, and with which other industries are faced, are greatly accentuated by the rise in the price of Egyptian cotton. My hon. Friend mentioned the hosiery industry which has become one of our major exporting industries. Before the war exports were negligible, but recently they have increased from £2,500,000 in 1945 to more than £14,000,000 in 1947. That is a very big increase, and we have a bigger target for them this year. I agree that the industry is faced with great difficulties owing to price of yarns following the rise in the price of Egyptian cotton.

On the question of lace my hon. Friend mentioned French competition, and we have been well aware of that following the devaluation of the franc. I have been asked what are the prospects about the future of Egyptian cotton prices, because it is certainly a fact that at present some of our exporting industries are faced with a halt in buying. I think that may be only temporary. It has always been a natural reaction whenever our prices have increased for buyers overseas to stop their purchases, at least for a time, but, when they see, as they now see, our competitors, with the exception of the United States, also having to raise prices because of the increase of Egyptian cotton prices, the halt in buying may be only temporary. The position might improve in the Summer, when Peruvian supplies become available, but I cannot express anything except the concern that the Government feel at present on the subject of Egyptian cotton prices.

Mr. Granville

The right hon. Gentleman said that the Commission are not passing on the new price to the industry at the present time. The time will come when they will have to pass on the buying price to the industry, the alternative being that the Government will have to subsidise it. I realise that the right hon. Gentleman cannot give a reply tonight, but perhaps he will consider doing so in the near future.

Mr. Wilson

I think the hon. Member could not have understood what I said. Recently, for the last two months or so, it has been the policy of the Cotton Commission to charge according to replacement price. In other words, if they bought cotton at a certain price and the price has risen in the market since that time, they base on the new price and not on the original buying price. Therefore the question does not arise. Although that is the declared policy of the Commission, they are selling a little below market price, although considerably over the price at which they bought.

I should like to deal with the point raised by my hon. Friend. I cannot give him a satisfactory assurance now, but I will look into it. He raised the question of the 12½ per cent, surcharge. The diversion between the price charged to the industry for the home market and that for exports is, I believe, a very serious problem for the industry, far more serious than it is for the cotton manufacturing industry. I recently gave the industry when I met its representatives an assurance that I would go carefully into the question of this diversion between home and export prices. I think the recent action of the Hosiery Control in equalising prices of hosiery supplies will help, but, on the general question of the surcharge, there is very little I can say at the present time, apart from what I have said to the industry.

Before I close, I want to say—and I am quite sure hon. Members will support me—that we must give a quite clear warning to Egypt and other countries which, not to put too fine a point on it, are exploiting the world shortage with the prices charged at present. There will be a day of reckoning; there is bound to be, and I think that the sooner it is realised in one or two of these countries in which the price policy has gone on these lines, the better it will be.

Mr. Sparks

Could my right hon. Friend say anything about the production of raw cotton substitutes? I read the other day of a wood fibre with which experiments are being made. Has anything been done in the field of research to find substitutes?

Mr. Wilson

There is nothing better than high prices to develop the use of substitutes, and there are new fibres being produced, to one of which some publicity has been given in the last few days, by one of the major industries in this country, which is using as the raw material some waste products from groundnuts. Apart from that, we have the rayon industry, which is most important in this connection. The effect on the amount of cotton bought and the increase in Egyptian cotton is bound to be considerable, and is bound to drive the consumer away from cotton and into rayon. The demand for cotton is not so fixed and inelastic as all that. Our rayon industry is expanding just as fast as increased capacity can come into operation. It is bound to help the cotton industry which has been using Egyptian cotton, and our production of rayon is away up above the pre-war figure. In fact, with some of the basic fibres, production is up to 74 per cent, above that of the pre-war peak year.

Now that many of the countries of the world, as a result of the European Recovery Programme, will be in a position to buy American cotton again, the pressure on Egyptian supplies will be falling away considerably. Since the new Egyptian cotton prices hit Lancashire, our Cotton Commission immediately announced its readiness, so far as practicable, to supply American cotton in place of Egyptian to all the British industries dependent on this cotton, though I know that the limits to which they can replace it are much more circumscribed in certain industries than others. I want to say, I am sure with the support of the House, the industry and consumers in all parts of the world, that, if the Egyptians think that they are assured for ever of a market for all their cotton at present prices, sooner or later they are going to have a rude awakening.

10.15 p.m.

Mr. Selwyn Lloyd (Wirral)

I must apologise for the fact that I was not here when the hon. Member for Nottingham, East (Mr. Harrison), who raised this matter on the Adjournment, made his speech. I was unable to be present because I was taking part in the previous Debate on the Prayer. I think the hon. Member has raised a matter of extreme importance in which we must all be vitally concerned, irrespective of party. We are all very much concerned to see that the export drive, particularly in connection with textiles, is a real success.

I feel it would be inappropriate to turn this Adjournment Debate into a consideration of the merits and demerits of the Liverpool Cotton Market. I suspect I might have difficulty, Sir, in going very far along those lines, but I may in passing —because it was mentioned by the Minister—register my astonishment at the Minister's apparent ignorance of the dollar earning capacity of the Liverpool market, and the foreign currency earnings of the Liverpool market, in the days before the war. I admit that the right hon. Gentleman did not occupy the position he now occupies at the time when this House was concerned in that matter, but even the former Chancellor of the Exchequer, the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), admitted that owing to the operation of the Liverpool cotton market—which was the only world market through which we had, say, an Indian spinner buying Egyptian cotton on the Liverpool Market—it thereby brought to this country a great deal of foreign currency earnings, which he estimated then at the equivalent of about £1 million, which would be a very substantial assistance today to our balance of payments.

Mr. Wilson

I did not admit to any ignorance about this at all, except the ignorance which is shared by the citizens of this country who, in this connection as in other connections, are faced with a complete absence of statistics relating to the period before the war. There were no reliable figures to give the exchange earnings in the period before the war. It is true that the former Chancellor of the Exchequer went so far as to commit himself to an estimate which many other people have since contested, and when he made the estimate to which the hon. and learned Member has referred, he was referring to earnings from all sources and not only dollars. What I was asked and what I could not answer—and I do not think any one could answer it—was what would have been the dollar earnings of the Liverpool Market if it had been in operation today, not in operation in 1937 or 1938 or at any other time. It is impossible to say that, and it is even more impossible to say how many of those additional dollars, if any, we could have allocated for the purchase of American cotton and the effect that would have had in enabling the cotton buyers of this country to keep out of Egypt and get into the American market. It is not a question of ignorance. Had I tried to enter into it, it would have been pure speculation and imagination.

Mr. Selwyn Lloyd

The right hon. Gentleman conducts his withdrawal with great skill. I adhere to my point that had the Liverpool Market been operating there would have been substantial dollar earnings, but that is not a point I was deliberately wishing to make, but a point to which I was drawn by the right hon. Gentleman's statement. My first point is a question of the use of the merchants in Liverpool. In that connection-I notice that the hon. Member for Ashton-under-Lyne (Mr. Rhodes) is sitting in a significant position in relation to the right hon. Gentleman. The hon. Member in the former Debates differed from the majority of the members of his party in conceding the useful service performed by the Liverpool merchants. The point I wish to make is the use that has been made of those who have grown up in this business. I hope that the right hon. Gentleman is using every endeavour to see that the maximum possible use is made of these people who have had long experience. As the right hon. Gentleman is well aware, these gentlemen have a substantial function to perform in connection with the purchase of American cotton. I ask the right hon. Gentleman to consider their position in connection with Egyptian cotton.

Mr. Wilson

I take it that the hon. and learned Member is referring to the C.I.F. agents as well as the functions of the L.C.A. merchants on arbitration. If he is referring to them, I can tell him—I am sure he knows—that of course very full use is being made of them at the present time.

Mr. Selwyn Lloyd

With regard to American cotton, I agree. I am suggesting that that example should be followed with regard to the Egyptian market. I am not making a party point on this.

Mr. Wilson

I quite understand.

Mr. Selwyn Lloyd

I have not tried to argue this on the merits of bulk purchase, the policy having been decided; but I say that a great deal of use could be made of the merchants formerly on the Liverpool market to the great advantage of this country. I am not in the least surprised that this Debate should be taking place, because the great reason given for the abolition of the Liverpool market was that bulk purchase was to result in the stabilisation of prices. That was the theme song of those who, including the late Chancellor of the Exchequer, urged this as a great progressive step for the House and the country. Now we are seeing that, in fact, stabilisation does not exist, and that fluctuations are just as wide as they used to be, and, though they may not be just as frequent, are very much more violent than they used to be under the old system.

I do not expect that the right hon. Gentleman will agree with me on this at all, but I believe that until we get free operation of the price mechanism in regard to the supply of raw cotton we shall not have the cotton industry exporting successfully. I know that I am speaking to a closed mind on this matter, and that what I say will not have the slightest effect on those who sit at the present time on the benches opposite, but it is my firm belief that the condition precedent to the real and permanent success of the cotton trade of this country is the restoration of the free market in raw cotton and the free operation of the Liverpool cotton market; because only in those circumstances shall we be able to protect ourselves, and to insure against the fluctuations which are bound to occur in the production of a commodity which depends on nature, which depends upon insects, disease, the weather, and so on. There must be a system of insurance against variations in supply, an insurance which can be provided only by the free operation of a market such as the Liverpool market.

Mr. Tiffany (Peterborough)

Would the hon. and learned Gentleman say there is a free operation of the price mechanism in Egypt at present to cause fluctuations?

Mr. Lloyd

I apologise to the hon. Gentleman if I have not made myself clear, but my point was that the whole value of the Liverpool market was that it was a world market, and that these various fluctuations in the various countries could be dealt with by a mechanism registering world opinion, world supply and demand. That is what we are missing, and until we get back to that quite unique barometer with regard to the supply of raw cotton, this country will suffer.

Question put, and agreed to.

Adjourned accordingly at Twenty-four Minutes past Ten o'Clock.