§ 11.9 a.m.
§ Mr. Russell (Wembley, South)
I beg to move:That, in view of the growing shortage of many vital raw materials and its effect on the cost of living, employment, re-armament and the export drive, this House regrets that steps were not taken earlier to build up substantial reserve stocks, and that more use is not made of private traders in ensuring continuity of supplies.Although I know that hon. Members opposite will disagree with the substance of my Motion, I hope that the hon. and learned Member for Hornchurch (Mr. Bing), who has another Motion on the Paper, will not mind if I say that at least it has one merit, which is that it occupies only six lines on the Order Paper. I am conscious of my good fortune in being successful in the Ballot and being able to choose this subject. There could hardly be a more topical one, nor one of more vital importance, particularly in view of the urgent need for re-armament. May I say that, although I am not directly connected with industry, I have investigated, not only the problem of the commodity shortages, but also the intricate problem of Government bulk buying 2517 and State trading several times since the war? I can, therefore, claim to have at least a broad knowledge of the subject.
This Motion "regrets that steps were not taken earlier to build up substantial reserve stocks" of raw materials. The Government take pride in the fact that during 1950 gold and dollar reserves increased by no less than £575 million, but the tragedy is that, during the same period, our stocks of vital raw materials not merely did not increase, but actually declined. The Financial Secretary of the Treasury, in answer to a Question put by my hon. Friend the Member for Barnet (Mr. Maudling), a short time ago, made the statement that the value, at constant prices, of stocks of all imported raw materials except petroleum decreased during 1950 by more than 15 per cent.
Another striking indication of the decline is provided by the figures of our trade with Canada, which is a great supplier of raw materials and foodstuffs. While imports from the world as a whole were 14 per cent. greater in value in 1950, as compared with 1949, our imports from Canada were no less than 20 per cent. lower; in fact, they decreased in value from £225 million to less than £180 million. May I now deal with a few of the raw materials from a shortage of which we are suffering at the moment?
Let me take the case of zinc. According to the Monthly Digest of Statistics and figures which the Parliamentary Secretary to the Ministry of Supply gave in a Written Answer to a Question of mine yesterday, we have now got, roughly speaking, two tons of zinc for every three tons that we had a year ago. I do not want to weary the House with too many figures, and I therefore put it in that way. Early last year, the Government abandoned a long-term contract with Canada for supplies of zinc, although I believe the Canadians were willing to continue, and the result was that we imported from Canada during 1950 only 32,000 tons of unwrought zinc, compared with 47,000 tons in the previous year. I believe that a delegation has now been sent to Canada to negotiate another long-term contract, and I hope it will be successful. We could also have got more zinc from Belgium last autumn if we had been a little quicker in deciding to buy it. I understand that it was available, but that somebody else jumped in and 2518 bought it while we were considering the matter.
A similar position exists regarding copper. Our stocks of virgin copper have gone down from 130,000 tons a year ago to 101,000 tons, which was the figure given yesterday. Imports of special shapes of copper from Canada have fallen off during the past year. I think that was due to the fact that the Canadians were given to understand that, owing to the dollar shortage, we would try to get more special shapes from sterling copper sources in Northern Rhodesia. Naturally, as a result, the Canadians sought alternative markets, but, later, supplies from Northern Rhodesia were not available in such large quantities as expected. Perhaps that was largely owing to the coal shortage, and, once again, we went back to Canada for more.
Last summer, the Government wanted to cut down imports of aluminium from Canada, and I understand that it was pointed out that the United States demand was beginning to increase, so that a shortage might result and the price would probably go up. Finally, after some delay, we agreed to make purchases, but, as a result of that delay, we imported last year only three tons for every four which we imported in 1949. I believe we were rather lucky to get even that amount, and we were able partly to offset the drop from Canada by some increased imports from foreign countries. Fortunately, another long-term contract has been completed with Canada for further supplies.
Then there is the vexed question of iron ore. I know full well that it is imported on private account under exchange allocation, and that it is not bought in bulk by the Government. This situation rather puzzles me, because in the Trade and Navigation Accounts for December our imports of iron ore from Newfoundland in 1950 totalled only 123,000 tons, which was about one-sixth of the quantity imported in 1949. I am wondering why this drop occurred, and if the Government reduced the number of dollars available. I would also like to know if they intend this year to import iron ore at the same rate as in 1949 and previous years, or whether they are only expecting to bring in the reduced amount of last year.
2519 Another striking example of the reduction in stocks concerns tin, of which our stocks have gone down from nearly 16,000 tons in January, 1950, to 9,300 tons in January of this year, but perhaps the most shattering example of the fall in stocks is provided by wood pulp and other forms of paper-making material. If hon. Members will turn to Tables 59 and 60 of the Monthly Digest of Statistics for January they will find very substantial drops in the stocks of that type of materials. The total stocks of paper-making materials fell from 165,000 tons in November, 1949, to 83,000 tons in November; 1950. I am sorry that I have not got later figures than November.
I am sure that every hon. Member will be glad to see, from the January trade statistics, that more raw materials are now being imported, compared with the same period of last year. At any rate, I am speaking of the month of January, and, in that month, the value of imported raw materials rose by about £80 million, as compared with the same month of last year, but, unfortunately, that only means that we are paying the price for not beginning our stockpiling programme very much earlier.
For example, we bought 28 million pounds more raw cotton last January than in January of the previous year, but we paid nearly £15 million sterling for it, and the Chancellor of the Exchequer said recently that we might have to pay this year £400 million more for the same volume of imports as in 1950. An appreciable amount of that will clearly be due to raw materials, and that is possibly a measure of the price we shall have to pay for the delay. I believe that this is really due to a wrong financial policy during the past five years, and it shows how much economic forecasts and attempts to plan our whole economy have gone wrong. In fact, I think it is quite impossible to try to plan on such a large scale and in such detail as has been done.
Up to 1949, we were incurring enormous expenditure on foreign exchange which, as everybody knows, ran down our gold and dollar reserves to a dangerously low level. Since devaluation, we have tried to build up those reserves, and have succeeded beyond the expectations of even the Economic Survey for 1950. I am sorry that State trading in metals was not abandoned last year when 2520 the time was more ripe than at present, because I believe that if the trade were free, private traders would scour the world for small lots of metal—200 tons here, 500 tons there. They would know where to find it and would get it, whereas State trading and bulk buying is unable to do that.
Another great disadvantage of State trading is that there are, I believe, 600 different consumers of zinc in this country who would, in normal times, do their own buying, and no fewer than 2,000 consumers of copper. It is unthinkable that all those consumers would be wrong if they decided to buy or not to buy, and, in cases like that, an error made by one buyer would probably be cancelled out by that of another. But if the Government make a mistake there is no compensating advantage and everybody suffers. That is the cardinal disadvantage of State trading. When mistakes are made by the Government, either the taxpayer or the consumer has to pay for the loss.
Another great disadvantage is that when the commodity markets are open and future markets are in existence, traders insure against price fluctuations. But the Government cannot do so, and again we suffer from that defect. One point which I think we are inclined to lose sight of is that it has been estimated that the commodity markets before the war earned very valuable foreign exchange to the total of £400 million a year, which we are not getting at the present time because the markets are not open, and because the track, is being dealt with elsewhere.
I think I am right in saying that we shall not feel the full effect of the shortage of materials and the increase in price for another three months. The copper shortage and the increase in price are bound to affect the cost of living very substantially, because copper enters into the manufacture of so many different articles. There is a serious shortage of nickel which is bound to affect re-armament because nickel is used not only in gun-barrels, but also in radar valves and jet engines. There is an appalling shortage of packaging material, which I know has already been dealt with in the House, of paper board for cartons and tinplate. In one salt manufacturing firm which I know the shortage recently caused 2,000 employees to be put on to other work in order to keep them busy.
2521 Then there is the shortage of shipping, with which I know other hon. Members will deal in much greater detail, due to the fact that these three Government Departments were competing with one another for space last autumn in order to bring in supplies of wheat, timber and coal. That all helps to send up costs which is bound to be reflected in the cost of living. There are many other examples which could be given, and which I know will be given by my hon. Friends.
In conclusion, I would say that I am sure every hon. Member in the House hopes that whatever Government is in power for the remainder of this year, this appalling problem of shortages will be overcome. If the worst comes to the worst, and we are again involved in war, it is absolutely vital that we should start with substantial reserve stocks of essential raw materials.
§ 11.25 a.m.
§ Wing Commander Bullus (Wembley, North)
I beg to second the Motion.
In doing so, I am conscious of the privilege and I wish to acknowledge the generosity of my hon. Friend the Member for Wembley, South (Mr. Russell), my co-representative for the Borough of Wembley, in affording me this opportunity. I think the House will agree that he has put forward a strong case in a reasonable manner, and without seeking to score cheap party points, because in this debate we seek information from the Government.
Many hon. Members especially on the Government side, will, I think, divide the Motion into two parts the present position of our stocks of raw materials and remedies which might be taken; and the Government's responsibility for the present position. I confess at once that I do not find it easy to separate these two parts, for almost invariably the Government must accept responsibility and blame for our shortage of many vital raw materials. The one possible exception is sulphur. All hon. Members will agree that the position regarding that commodity is grave. We are running dangerously short of sulphur. Perhaps the Government spokesman will tell us what the Government intend to do to increase our supplies of sulphur.
2522 In other cases, however, as my hon. Friend has pointed out, the Government must accept responsibility for allowing our stocks in 1950 to fall instead of taking steps to increase those stocks. In almost all raw materials—copper, tin, zinc, paper-making materials, soft wood, cotton and sulphur—Government stocks declined heavily in 1950. The Government's attitude to our great partner in the Commonwealth, Canada, has been unbelievably strange, and is open, I think, to much criticism.
I will recount briefly the position in the case of some of the raw materials. The Government did not take up the copper available to us from Canada, and the United States stepped in and took the supplies. The Government's hesitancy in dealing with Canada was also responsible for our losing 40,000 tons of aluminium. State trading, as my hon. Friend pointed out, ought to have been abandoned last year. He made a strong point when he said that our merchants could then, thoroughly have scoured the world for small lots often missed by the bulk buyer.
There is a real shortage of zinc, and yet a year ago the Government abandoned a contract with Canada for the supply of 47,000 tons a year, and during 1950 we received only about half that amount from Canada. The Government had the opportunity to buy from America in 1949, but were afraid to purchase on a falling market. When prices hardened, the opportunity was lost. This is one of the several instances of failure by the bulk-buying planners. The Government completely misjudged the relative importance of saving dollars and obtaining zinc. They held off purchasing on a falling market and missed the opportunity. Now we have to pay more dollars, even if we can get the zinc. Similarly, the Government held off the purchase of other raw materials to conserve dollars.
The Government may try to shield themselves behind the fact that there has been a raw materials scramble since the outbreak of war in Korea, but, even before that war broke' out in June, there was evidence of the conflict between bridging the dollar gap and bridging the raw materials gap. The Government have given much more attention to the dollar gap and far too little attention to the raw materials gap, and now, when there, must be some transfer 2523 of emphasis, prices are higher and materials are more scarce. The Government must accept responsibility for their own financial policy.
When devaluation was accepted in the full knowledge that, later, long-term plan prices would be against us, the Government ought to have bought while prices were depressed and while America was in recession. The United States recovered and stockpiled. The Government should then have made effective arrangements with the United States for the co-ordination of stockpiling programmes. We now have not only competition from America but competition from Germany, Portugal and Russia.
The shortage of copper, zinc and other non-ferrous metals is having an effect on the fabricating industry. The great importance of this industry may be assessed by its annual turn-over of £125 million. The industry is in a good healthy condition, but without scrap, without raw material and without fresh scientific or physical discovery in the near future there may be a real metal famine. The importance of scrap metal as a raw material has never stood higher than it does today. We do not get the same amount as we did from Germany in the immediate post-war years. I do not think that we have collected all the available scrap in this country, and I would advocate another general appeal in the same way as we have encouraged local authorities to salvage waste paper. America sent scrap to Europe before the war, but she now imports from Europe, and she is also taking three times the amount of iron ore from Europe that she took pre-war.
We have lost several hundred thousand tons of imported iron ore because ships were diverted by the Government to bring coal into this country. In turn that has affected freight rates. Coal and coke are in short supply, and the production of pig iron has been adversely affected by the labour shortage. The steel industry is bound to suffer unless the coal position improves. Cotton has suffered because of the poor American crop, but the United Kingdom has done very badly in the allocation, and the Government cannot escape blame for the way in which they conducted their negotiations in Washington. Undoubtedly America reacted 2524 unfavourably to bulk purchase by the Government agency.
I would say a word about newsprint because this is of particular importance, especially in the event of war. I make no excuse for drawing the attention of Members to a statement by Mr. Cranston Williams, the general manager of the American Newspaper Publishers' Association on the. 22nd February. He said:The modern technique of dictator Governments is to control the newsprint supply.He pointed to the situation in the Argentine when he said that the Government had seized the newsprint supply of several newspapers, including "La Prensa" and "La Nacion" and had distributed it to newspapers more friendly to the Government. This is the point of his remarks. Of Britain's small newspapers he said:It is not a matter of record that the present Government in Great Britain has been aggressively interested in increasing the newsprint supply for that country over several years.Indeed it is almost the reverse, because Government interference and bungling have cost us contracts with Canada and decreased our supply of newsprint.
In January, 1950, the Government stopped a long-term contract with Canada under which we should now be receiving 300,000 tons of newsprint per annum. If the advice of those who know the trade had been followed at the Board of Trade, the further 5 per cent. cut applied to all newspapers recently might have been avoided. It is probably true to say that the newsprint position is worse today than at any time in the history of the modern newspaper, and that is over the last 100 years. In addition, the position regarding the general categories of printing paper is acute. Government offices and nationalised boards must economise in the use of paper in their Departments and must set an example to private industry.
Even as our position in regard to newsprint got worse, the Parliamentary Secretary to the Board of Trade informed me in this House in answer to a Question on 23rd January that the position was better than three months earlier. When the President of the Board of Trade defended that answer last month, he sought to blame the Newsprint Company for giving him a wrong picture of the actual position.
§ The President of the Board of Trade (Mr. Harold Wilson)
§ Wing Commander Bullus
I am sorry if the right hon. Gentleman disagrees. That is the impression he gave me. He said that he had been advised by the Newsprint Company that stocks had not come in that had been expected. Is not the time long overdue for building up newsprint supplies, and if necessary to stop some of the supplies at present being exported from this country? It is possible that the President of the Board of Trade may reply that he has now firm export contracts with Australia. But these contracts were not sealed when he was urged to make some of these stocks available for home newspapers. Is the President of the Board of Trade prepared to review that position and review his policy on exports? If we have to face any further decrease in the supply of newsprint it would be a big blow to the morale of this country and much unemployment would result.
It is a fallacious idea that small newspapers mean big profits. In this connection I do not declare any interest, but I do declare an experience of 23 years with a great newspaper, the "Yorkshire Post," and I know some of the difficulties which they have experienced through the shortage of newsprint. Despite the loss in advertising revenue, which is very large and the overhead charges which are still going on, the staff is the same size. Such loss is reflected by some northern newspapers, including the "Yorkshire Post." In the last few weeks they have been compelled to increase their charge for their papers for the first time since the war.
Most newspapers retain their staffs, but it may not be possible to continue such an uneconomic proposition indefinitely, and in that case the unemployment registers will be swollen with the names of excellent men, who may experience difficulty in fitting themselves immediately to work in industry.
§ Mr. Moody (Gateshead, East)
Why do they not make better use of the space in the newspapers already available?
§ Wing Commander Bullus
That is another point and a matter of opinion. Some 2526 hon. Gentlemen opposite may think that this Government should set up a censorship on what newspapers should publish. If newspaper staffs have to be cut to reduce costs, it is more than probable that the unfortunates would be those in the higher income groups, many of them past middle age. For them, the question of this raw material, newsprint, is a vital and imperative one.
The normal intake of young staff—many straight from school—is already affected by the absolute scarcity of newsprint. All these shortages are bound to have an ultimate affect on employment, and even if many men are kept on, or it is possible to transfer some of them to industry, increased prices must follow. There is some evidence of this in the nationalised undertakings, when the Minister of Labour admitted that although 1,000 trains had been taken off there was no redundant staff on the railways. I suggest that as raw materials continue in short supply, we shall have more added to the unemployment registers. My hon. Friend, in moving this Motion, demonstrated, I think effectively, how the continued shortage of all these vital raw materials will have far-reaching effects on industry and employment.
In looking to the future and the effects of any continued shortage of raw materials, one can best bring the picture into closer focus if one adopts for a moment a parochial or constituency view. In my division of Wembley, North, there are several manufacturing firms which would be affected, with resulting unemployment, if the supply of raw materials were to dry up or to be reduced to any considerable extent.
For instance, the Zenith Carburetter Works has a total labour force of about 1,400 who would be affected, and its embarrassment would be reflected in our national economy in more ways than one. This firm at present manages on about 80 per cent. of its. 1950 quota of raw materials. If this supply were much lessened not only would unemployment be local, but a consequential chain would be set in motion. A shortage of carburetters would mean fewer cars and more unemployment in the motor industry. The lack of a £5 carburetter would hold up the completion of a £600 car, which would mean the loss of valuable exports and a subsequent loss to the 2527 Treasury. It means that local employment is at once of national concern.
Some firms without allocations may be driven out of existence. This means further unemployment. Have the Government visualised this possibility? if so, have they a remedy and what is it? In dealing with possible smaller allocations, is it the Government's intention to reduce allocations generally, or to dispense with the making of certain goods? Are we to have more Orders like Statutory Instruments 275 and 277? In the event of a general reduction, how do the Government intend to find the inefficient firms that do not use the precious raw materials allocated to them as carefully and economically as the long-established and efficient firms?
§ Mr. Hector Hughes (Aberdeen, North)
The hon. and gallant Member is painting a very melancholy picture. Before he sits down, can he say a word about the remarkable industrial successes and records that have been achieved, and also about fuller employment?
§ Wing Commander Bullus
I acknowledge that industry has made a wonderful recovery, but I am very concerned for the future because of the drying up of raw materials. The Government must accept responsibility and blame because these raw materials are at present in short supply, and the prospect is that they will be in even worse supply.
The answer to this problem of waste and efficiency surely lies in a return to competitive industry, where our raw materials and labour would be automatically diverted to the most efficient producers and the inefficient would go to the wall, as they have always done. With such competition there would be strong financial reasons for not carrying excessive stocks or holding unneeded labour. In some industries where there is already a shortage of specific raw materials research has been carried out to find suitable substitutes. This research is costing money, and there is in consequence an increase in price for an admittedly inferior article. During these changes, and while waiting on occasions for allocations or deliveries, men have been idle, though remaining on the pay roll, which also means increased costs. Is this sort of thing likely to get worse? What is the 2528 Government's attitude and have they a remedy?
I make no excuse for referring briefly to agriculture, although in no critical spirit. In the event of war it will be agreed that wheat will be a very vital raw material. I am concerned about the amount of land that has gone out of production since 1927. It is estimated that between 1927 and the present day 1,800,000 acres of land have been lost to agriculture. That is not a total loss, because some land has been reclaimed, but there is no question about it, that since 1927 we have lost a great deal of agricultural land, while during the same time the population has increased by 4 million. Experience shows that there is no decrease in the birth-rate in the war years; indeed, in the later years of the war the birth-rate was increased.
I have always advocated the stockpiling of wheat. I think we should aim at a minimum of six months supply, because of the six million tons we use annually four million are imported. We can visualise the position in the event of war if there is a stranglehold by submarines on our shipping. We can visualise the dire straits to which we may be reduced. I have spoken to the Minister of Agriculture about it, and I am hoping that a reserve will be built up.
I think that the necessity to stockpile vital raw materials, if we can get them, will be accepted by the House, although the Government may feel disposed to contest the latter part of the Motion. Therefore, in my concluding remarks, may I quote occasions when during the past eight or nine months warnings have been given from this side of the House and when complacency or over-confidence has been in evidence on the Government benches. The Prime Minister, speaking in the defence debate when Parliament was recalled in the summer, stated:As to raw materials, it is not considered that there should be any shortages, but I would make a special appeal to all concerned in industry not to increase their stocks beyond their actual needs."—[OFFICIAL REPORT, 12th September, 1950; Vol. 478, c. 966.]On the following day, the Chancellor of the Exchequer also showed complacency or over-confidence when he said:Now I come to materials. We do not think that this programme is likely to give rise to new and serious difficulties in raw material supplies.2529 In fairness to the Chancellor, he continued:though there were, of course, some problems in existence even before it was put into operation.He was referring, of course, to the rearmament programme. But he did recognise that there were no serious problems. He went on to say:Coal output should be sufficient for the increased industrial output envisaged.… Electricity shortages should not interfere with the rise of output.… Sheet steel should cause no difficulty.… We shall have to pay very special attention to the timber position.The Chancellor then said:In other materials we do not at present foresee any special difficulties, though, obviously, in a matter of this kind, with rearmament activity going on throughout the world and driving up demand everywhere, it is very unwise to speak without great caution.We can only assume that the Chancellor himself was speaking with great caution when he said:we do not at present foresee special difficulties."—[OFFICIAL REPORT, 13th September, 1950; Vol. 478, c. 1137–8.]Warnings have been repeatedly given from this side of the House. On 26th July, my hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher) stated:I am forced to the conclusion that our position is incomparably worse today than it was in 1939. We are consuming almost double the raw materials that we consumed in 1939, and yet our stocks of at least a considerable number of these raw materials are not equal to those of 1939.My hon. Friend continued:I want to be re-assured that some plan is being worked out so that we can obtain and deny to others, if that can be done without going too far with sanctions, those raw materials without which in wartime armies sooner or later come to a stop."—[OFFICIAL REPORT, 26th July, 1950; Vol. 478. c. 605–6.]My right hon. Friend the Member for Aldershot (Mr. Lyttelton) stated on 18th September:The time seems long overdue in many cases when we should set up some kind of clearing house or combined resources board amongst the re-arming countries to prevent a scramble for scarce supplies."—[OFFICIAL REPORT, 18th September, 1950; Vol. 478, c. 1560.]Finally, in a short debate on 15th December before the House rose for the Christmas Recess, my hon. Friend the 2530 Member for Aylesbury (Mr. Summers) repeated this warning, and added:I beg the Government to look at this problem as one of the utmost urgency on an international plane. I beg them to treat the matter as one of the highest urgency and importance. If they fall down again on this responsibility, no efforts from industry and no sacrifices from civilians will make good the damage they will thereby do to the safety and well-being of the people of this country."—[OFFICIAL REPORT, 15th December, 1950; Vol. 482, c. 1481.]We on this side re-echo that expression.
The Government will no doubt stress the prevailing difficulties and indicate the amount of money they are prepared to spend to stockpile the necessary raw materials if they can get them. But we require evidence of action and evidence of acquirement. We shall support them in vigorous action, and we hope that such efforts will meet with success and will contribute to the maintenance of peace. But there will be no excuse for further procrastination and the exercise of doubtful dogma.
§ 11.50 a.m.
§ Mr. Edelman (Coventry, North)
, I beg to move, to leave out from "House," to the end of the Question, and to add instead thereof:endorses the action taken by His Majesty's Government in the face of world shortages to maintain the supply of materials; welcomes the Government's intention in seeking to regulate world supplies of raw materials by international agreement and trusts that the Government will control distribution where-ever necessary to ensure that essential needs have first call on our supplies of materials.I think there will be general agreement on both sides of the House on one point and that is, that since the Korean war and the darkening of the international skies, prices have bounded upwards and supplies of raw materials have become more scarce. I therefore find a certain audaciousness in the Motion put forward by hon. Members opposite when they suggest that, in order to improve the supply position, we should revert to a greater buying activity of certain materials by private enterprise. If there is one thing that is clear it is that it is precisely the uncontrolled activities of private enterprise during the last year, since the Korean war broke out, which have resulted in the extraordinary advance of prices and the scarcity of raw materials.
We only have to consider what prices this country is being forced to pay at 2531 these most critical times for certain essential commodities to realise that those prices bear absolutely no relationship to the actual cost of production. In fact, the prices which are being demanded are merely the prices which the market can pay. At this time, when our policy of full employment is being threatened because of material shortages, when our standard of living is endangered because prices are rising to such rapid heights, it behoves us all to make sure that the purchasing policy of this country is associated with public policy and not with private interests of enrichment.
I want to give just a few comparative examples, which show how the policy which the Government have embarked upon and consistently carried out has been a policy in the interests of the country, whereas in certain cases, where procurement of raw materials has been left entirely to private enterprise, the result has been a great advance in the prices and the scarceness and availability of these raw materials. The hon. and gallant Member for Wembley, North (Wing Commander Bullus) referred to coal. I have looked up the wholesale price index showing the advance in the price of coal, a commodity for which we are often attacked both for our policy of pricing and in actually procuring the material. When we look at the wholesale price index of coal we find that it has gone up from 100 points in December, 1946, to 135 points in January, 1951, but if we compare this advance in the price of coal with the advance in the price of free or so-called free materials like rubber and wool we find a very powerful difference.
For example, rubber has advanced from 100 points in December, 1946, to 368 in January, 1951, and wool went from 100 in December, 1946, to 687 in January, 1951. That establishes, quite clearly, that if we compare these representative commodities produced within the Commonwealth—commodities which are absolutely essential not only to our current production for civil purposes but also for our defence programme—we find that the commodity which we have controlled, and for which we have been abused, has only risen 35 points, whereas in the case of other free commodities the advance has been very much greater.
§ Colonel J. R. H. Hutchison (Glasgow, Scotstoun)
Would the hon. Gentleman introduce steel into his considerations as well as rubber and wool?
§ Mr. Edelman
I welcome the point made by the hon. and gallant Member. I agree that steel advanced by only a few points. I have the prices here, but I will not weary the House by producing them. The fact remains that steel has advanced by only that small amount because its price is controlled in this country, and it is produced in the public interest and not for the private shareholder.
§ Mr. Walter Fletcher (Bury and Radcliffe)
If the hon. Member wishes to present his case quite clearly he ought to compare like with like. Coal is produced in this country and its price can, therefore, be controlled at any point by the Government, whereas rubber is purchased throughout the world chiefly by the American Government, and, therefore, comes under different influences. I suggest to the hon. Gentleman that he should make comparison of like with like.
§ Mr. Edelman
The hon. Gentleman misunderstands the point I am making, which is that the price of coal has a direct relationship to cost. If, in fact, the wholesale price index of coal has advanced by only 35 points it is because the benefits of that advance go to the miners and to mining welfare, and the advance is only passed on to the consumer because the beneficiary of that advance is the man who is actually producing the coal.
§ Mr. Fort (Clitheroe)
Would the hon. Gentleman agree that one of the reasons why the domestic price of coal has risen to the amount which he has mentioned is because we have been able to mulct the foreigner in our exports of coal in exactly the same way as has been done with other commodities in short supply?
§ Mr. Speaker
These questions had better be answered in debate, because my experience is that every interruption probably adds three or four minutes to a speech, and we are getting far too few speeches on a Friday. Our experience of last Friday was disastrous.
§ Mr. Edelman
I will proceed to develop the point I am making. I will take the example of rubber, not because I have a personal interest in it, but because it is a commodity which is essential for our 2533 re-armament programme and for our general production. It is a commodity of particular concern to my own constituency, because recently tractor tyres have advanced in price from £30 to £47 a set. Because of that I wish to take rubber as an example of a commodity which is on a free market and purchased freely, and the purchase of which, by the methods advanced by hon. Gentlemen opposite, has been of the greatest disadvantage to this country.
In the case of rubber the actual estate production costs are only of the nature of 81d. a pound, and we all know that today the quotation for rubber in the commodity market is something in the nature of 6s. per pound. I suggest that that shows that the selling policy of the private interests concerned with rubber has no relationship whatsoever to national needs, but that they are exploiting the difficulties of the country and taking advantage of the economic position throughout the world. If we extended the principle of private sale and private procurement to other commodities we would find that we would be in exactly the same situation as we are in the case of that most valuable material—rubber.
It may be thought that the argument I am advancing in the case of rubber is a political argument. The Opposition may suggest that in taking the case of rubber I am, perhaps, blinded by a partisan approach. But I have endeavoured to acquaint myself somewhat more deeply with the subject by studying some of the rubber technological journals. I came across one most interesting journal called "The Rubber Age and Synthetics," which may be known by some hon. Gentlemen opposite. In the issue of February, 1951. I found the following, in an editorial:This journal has never hidden its opinion that it was the maladroit policies of, and handling by, a small handful of professional men in London of the production and marketing of rubber that led to the present state of affairs, whereby rubber has become scarce and its price exorbitant. It has become obvious that these men have lost control of the commodity, and are becoming seriously frightened at the pass to which they have brought rubber, and thereby the rubber manufacturing industry.That quotation is not from a political journal and it is not from the "New Statesman and Nation" it is from a journal which represents the interests of the rubber industry. Therefore, I say 2534 that, taking the illustration of rubber, it is perfectly clear that what is required in the case of rubber is not an extension of private enterprise and private trading but, as rapidly as possible, an attempt by the Government to bring measures of control into the industry in order to see that available supplies are allocated fairly and that nobody takes advantage of the country's difficulty in the matter.
I turn from that to the more general question of the procurement of materials and the method of that procurement. It is clear that if we look over the whole range of raw material purchases we shall find that those which have been centrally purchased, those which have come under some measure of Government control, although they have risen—because the Government has had to go out and buy in the commodity markets of the world —have risen by far less than those which have been purchased on the so-called free markets.
I will give only two examples to the House. The Ministry of Supply buys rubber. In June, 1950, the wholesale price index of rubber was 187 and in January, 1951, it had risen to 206. In the case of aluminium, in June, 1950, the index was 153 and in January, 1951, it had risen to 170. On the other hand, if we take commodities which are bought in, it is true, by the capitalist market, but are, none the less, bought by the Ministry of Supply by the method of central purchase, and compare them with commodities which are available in the free market, we find—just to give two representative examples—that in the case of tin, for which there is a free market, in June, 1950, the index was 160, and in January, 151, the index had risen to 324. In the case of hides, we find that in December, 1949, the index was 211, and that by January, 1951, in the free market, no sooner had the market been decontrolled and liberated, the index rose to 451.
I feel that it is not necessary to elaborate these statistics. It is quite clear that in the case of all these markets which have been thrown open to private enterprise and to the private trader operating not in accordance with any general public policy but, quite properly according to his own lights, in his own private interest, the result has been that 2535 shortages and rises in prices have gone hand in hand, to the country's detriment.
I fear I must revert again to the question of rubber, but this time in relation to availability of supplies. I have raised the matter in the House before, but I make no apology for raising it again, because it is of vital concern to this country. I want to raise the subject of the exports of rubber to Russia and to her satellites and to China. These have proceeded at a pace which, despite all the appearances to the contrary, has certainly enlarged Russia's war pile of rubber.
The reason is that, although from time to time it has been said that the purchases by Russia of raw rubber have remained fairly constant at approximately 100,000 tons a year, we know that, despite that, the Russians have since the war, got hold of the synthetic rubber producing plants of Eastern Germany and have raised their own domestic production to something like 350,000 tons a year. Therefore, although their purchases of raw rubber from Malaya have remained fairly constant, the fact that they have increased their synthetic production means that the rubber which they have bought from Malaya has been used to build up their stockpile. Only recently we have seen how China's purchases have greatly increased.
It is useless for the Opposition to say that it is the responsibility of the Government. It has nothing whatsoever to do with the Government. This is a case where the material is within the competence of the rubber growers, their merchants and their agents. It is they who can decide where their rubber should go, and the fact that the supply of rubber to Russia and China and the satellite countries has continued in such large quantities in the last year is entirely the responsibility of the private trader. I would only say that if the Rubber Growers' Association had tried as hard to control exports of rubber to Russia and her satellites as they fought to bring about a reduction in the rubber export duty, in which they were successful, we should not have that problem today.
§ Mr. Hugh Fraser (Stafford and Stone)
I am sorry to interrupt the hon. Gentleman, but is he in favour of sanctions against China?
§ Mr. Edelman
I am in favour of a concerted policy of restricting rubber to Russia and her satellites at a period of international tension.
§ Mr. Edelman
I believe those restrictions could take place in two ways. I believe they could take place either by international agreement—I will develop that point in a few moments—or by the goodwill of the interests who are directly concerned with the commodity. If the Rubber Growers' Association could get together to force up the price of rubber, there is no reason why they should not get together to keep down the price of rubber and to restrict the direction in which the rubber is sent.
It would be very easy to go into far greater detail about the disadvantages of turning over the raw material markets to private trade. I will only mention one concluding matter in this part of my speech and that relates to steel, which we have been buying from America. Sheet steel directly affects my own constituency. The sudden breach of contract by the Americans in deciding arbitrarily no longer to send sheet steel to this country not only caused grave disturbance to our production of vehicles but was in itself, in addition, a damaging example of how the private seller is concerned at any given moment only with his own particular interest when it does not suit him to deliver the goods.
Last year some of my hon. Friends and I, at Strasbourg, moved a motion advocating consultations with the United States in order to set up some kind of combined resources board to bring about a fairer allocation of raw materials and with a view also to controlling the price of the materials. I was interested to hear the hon. and gallant Gentleman the Member for Wembley, North, refer to one of his hon. Friends who, he said, had advocated a combined resources board. I have no doubt that is the truth. Characteristically, the Opposition on that point speaks with two voices. At Strasbourg, when this proposal for a combined resources board was put forward by myself and some of my hon. Friends, the right hon. Member for Bromley (Mr. H. Macmillan) described it as bigger and better bulk buying. He' put that forward as a most damaging: 2537 attack on the principles which were advocated in the motion.
I am glad to say that my right hon. Friend and the Prime Minister have both taken energetic steps in Washington to set up the International Materials Conference, and to organise commodity committees which will be responsible for ensuring that whatever materials are available are fairly distributed amongst the Allied Powers in conformity not only with their essential civilian needs but also with the strategy of the North Atlantic Treaty Organisation. It was, indeed, the initiative of my right hon. Friend in convening these conferences which has resulted in the prospect today that, despite the weight of shortages of certain commodities, we shall be able to bring some kind of order into the commodity markets of the world.
I would like to make one or two suggestions to my right hon. Friend. At present, the commodity committees are only loosely liked together through a central liaison or standing committee. What is required, and required urgently, is a strong central committee which will be able to relate the work of these independent commodity committees one to each other, so that prices will eventually bear a relation to each other, and so that the actual material policy of the various commodity groups will be directly related to the military strategy of the North Atlantic Treaty Organisation.
My second point is that instead of, as happened after the last war, disbanding the commodity groups immediately the crisis is over, my right hon. Friend should do what lies in his power to make the commodity groups and the co-ordinating committee permanent. It is quite obvious that because of the gigantic stock-piling which the Americans have undertaken in the last nine months or so, because of the great accumulation of raw materials—assuming that we arrive at a détente with the Soviet Union—if those materials were to be dumped on the market, the result would be chaos and it would be ruinous to industry throughout the world. Indeed, even if the Russians were not successful diplomatically, the effect of the unloading of all those raw materials which have been accumulating, and which are still accumulating, on to the markets of the Western world would certainly be economically disastrous.
I suggest to my right hon. Friend that when he has obtained, as he has already 2538 so successfully begun to do, an agreement with the United States and with the other countries associated with the Western group of nations; when he has obtained an agreement about raw materials which will ensure that we have a fair and a constant allocation in order to keep our industry going, I hope that he will quickly introduce measures of control at home to make sure that those materials which come to this country are used for essential purposes according to a due system of priority. It is only in that way that we can achieve a counterpart of domestic control to the international control which my right hon. Friend is seeking to achieve.
The Opposition today has already spoken, and will continue to speak, in the equivocal manner which has characterised it. The Opposition will, on the one hand, demand controls—as I see that the hon. Gentleman the Member for Solihull (Mr. M. Lindsay) is asking in a Question next week. On the other hand, it will demand an enlargement of private enterprise and private trade. It is by this equivocation—[An HON. MEMBER: "Flexibility."] The hon. Member for Kidderminster (Mr. Nabarro) calls it flexibility. I prefer to call it flexibility of morals. It is quite wrong, it is irresponsible, to address the country with two voices—
§ Mr. Nabarro
As the hon. Gentleman has referred to me, would he mind telling me when I used the term "flexibility"?
§ Mr. Edelman
I apologise to the hon. Gentleman. I believe it was the hon. Gentleman behind him, the hon. Member for Bebington (Mr. Oakshott) who should take the responsibility—
§ Mr. Edelman
At any rate, what is now clear is that hon. Gentlemen opposite are at one and the same time, demanding controls and chaos. I prefer to believe that what they really have in mind is the traditional chaos of unplanned, uncontrolled and unco-ordinated capitalism. We believe in a planned economy, both at home and abroad, organised in the public interest. That is the purpose of our Amendment.
§ 12.16 p.m.
§ Mr. Jenkins (Birmingham, Stechford)
I beg to second the Amendment.
2539 I am sure that we all welcome this debate today, even though we may not agree with the terms of the Motion on which it has taken place. I will come to those in a moment. This is the first time we have debated this extremely important subject except for a short adjournment debate just before the Christmas Recess, and I do not believe we can over estimate the importance of it. It is not just a question of the prosperity of a few firms, although one would not under estimate that, but the ability of our whole economy to bear this re-armament burden without being crushed beneath it.
A fortnight ago the Chancellor gave us some fairly optimistic estimates of the prospects but, of course, those prospects were geared rather closely to one of his premises, which was a 4 per cent. increase in production during this year. That perhaps is not so difficult to attain as might at first sight seem to be so. It is only half the rate of last year, and it only means throughout 1951 holding the rate which we attained at the end of 1950. It does not mean an actual increase in 1951 but, even so, with the present raw material difficulties, there may be uncertainties in the attainment of even this limited goal. I would like to ask my right hon. Friend if, when he intervenes in the debate, he can tell us whether it is still the view of the Government that in the absence of any dramatic change in the raw material position, we can still look forward to this 4 per cent. increase in 1951.
Bearing in mind the terms of the Motion, I had hoped we would hear something which we failed to hear in the Adjournment debate last December, namely, some evidence from the Opposition showing exactly how we would have been better off at the present time if these various raw materials, where they are bulk bought, had been procured by the normal pre-war methods of private trade.
§ Mr. Jenkins
We have a great deal of confident assertion from the other side on this subject. We had it last December. We have it from trade circles continuously. But the Opposition and trade circles are extremely loath to leave the fairly safe ground of confident assertion 2540 and to go on to the much more interesting ground of reasoned argument on this subject.
For instance, I would like to have heard something about nickel. After all, nickel is one of the scarce metals which is not procured by my right hon. Friend the Minister of Supply. It is procured under normal trading conditions. If the case which the Opposition is putting before us were a sound case, one would expect them to be able to say, "In the case of nickel, as opposed to zinc and copper, we are well off at present. There is no difficulty. Private trade has safeguarded us against the changes which it foresaw." But, of course, that is not the case at all. The nickel position is very difficult and I believe the radio industry, which is certainly a very important industry from the point of view of re-armament, would say that nickel is almost the most serious and crippling shortage.
§ Mr. Watkinson (Woking)
Would the hon. Gentleman make some reference to exchange control when he is mentioning nickel?
§ Mr. Jenkins
I am not sure exactly what the hon. Member has in mind, but I certainly do not believe that it is the policy of the Opposition to say that we should not have exchange control. Not only would we have liked to have heard something about a market like nickel, not subject to bulk buying and Ministry procurements, but we would also have liked to have examples from the many other countries in Europe which do not go in for bulk buying and, in our view, have suffered a great deal for it since the war. We would have expected at least the Opposition to say, "Now these other countries are very well off for raw materials because they trusted to private trading." That cannot be said, because one knows perfectly well that this raw material shortage is a world-wide problem which affects not only us but all Western Europe and even the United States to a large extent.
I should like to say three things about the Opposition case on this issue. First, in so far as it says we would have been much better off without bulk buying it is a question of asseveration and not of argument at all. It is very largely an ex post facto case. It is not the case, as the 2541 Opposition say, that they and the trade has really been warning us to any extent about this difficulty. I was amazed to hear the hon. and gallant Member for Wembley, North (Wing Commander Bullus), who seconded the Motion, say that in the summer of 1949 we ought to have been building up our supplies of raw material.
It is apparently his view that at that time when our gold reserves were perilously low and—because no one could foresee the situation in Korea—when world commodity prices were expected to fall, we ought to have reduced our gold reserves below the perilously low pre-devaluation level to buy raw materials which very probably would have fallen much lower. If that was the point of view of the hon. and gallant Member and his party they did not bring it to the open very clearly at that time.
Wing Commander Minus
I mentioned one commodity only which, as a result of not having been purchased, is now in dangerously short supply.
§ Mr. Jenkins
I did not suggest that the hon. and gallant Member went over the whole gamut of commodities and dealt with them all, but his point was that in the summer of 1949 we ought to have been doing that. He also suggested that his right hon. and hon. Friends had been continually warning us about that. In support of that view he made two quotations. I thought it unfortunate that the two quotations he chose were quotations previously given by an hon. Member on his side in a debate in December. It seems to me remarkable that only two quotations could possibly be found in two brief sentences in all the spate of oratory from the other side on this subject.
It is also suggested by many hon. Members opposite that the trade knew this policy was getting us into difficulties. I should like to give one quotation which appeared in the "Metal Bulletin," a trade paper, on 6th October just before we really had the shortage in its sharpest form but certainly when, if the Opposition is to be believed, these keen and prescient private enterprise people ought to have known it was just round the corner. It said:We have voiced many objections to the official policy of bulk-buying of metals since the war and in broad terms have still very little love for such a policy. Just at the moment, however, in what are admittedly 2542 rather abnormal circumstances, it appears to be operating to the benefit of this country's economy in general and to metal fabricators in particular … It is perhaps necessary to qualify this so far as zinc is concerned by pointing out that supplies from Empire sources alone would probably be insufficient to meet all Britain's substantial needs over the coming months; but even so, the solid basis which this Empire metal gives to the Ministry's buying programme cushions the impact of famine prices ruling in other directions —There is no indication there that on 6th October, 1950, the trade were warning the Ministry to turn their backs on bulk buying.
My hon. Friend the Member for Coventry, North, said the Opposition's case was equivocal—between control and chaos. It is equivocal in another sense in that they want to put all the blame they can for what happened in the past on the policy of bulk buying but I am not sure that they are equally confident about saying that the way to get out of the difficulty is to scrap all controls and get back to private trade.
§ Mr. Jenkins
That really was the hon. Member for Kidderminster this time.
There are many business people, now suffering from the acute raw material shortages, who have not much confidence in their own ability, without the help of the Government and of Government agencies, to get out of their difficulties. Everyone knows perfectly well the whole trend, not only in this country but in other countries in Europe and in America, and even though one is a bit nervous about saying anything about the Italians in this House, even in Italy, where the whole trend of economic thought is about as liberal as it possibly can be, the Government have been getting into trouble recently through not having enough planning in allocating raw materials. All over the world, Governments and businessmen are turning their backs on the ordinary methods of procurement and are pinning their hopes on the sort of scheme that my hon. Friend the Member for Coventry, North, discussed. Everybody knows that is the only way we can minimise our difficulties at the present time.
The Government have a difficult task in negotiating with the United States on these raw materials and that is apparently because—and I think that is a genuine 2543 difficulty—that great as is the re-armament programme we are about to undertake, it is a good deal less great absolutely and rather less great in proportion to the size of our respective economies than the rearmament programme of the United States.
We are to keep the civilian economy at rather a higher level than the Americans are to do in the coming years. Tied up with that is the fact that one of the difficulties for many small manufacturers in this country at present is that they have imposed upon them now restrictions of civilian manufacture much less severe than during the war, but possibly more worrying for them because those restrictions are not accompanied by the spate of re-armament orders that they had during the war and are having now in America.
I do not think anybody in America would criticise the scale of re-armament that we have proposed for the next three years, given the respective positions of our two economies. It is to be somewhat less than theirs, but that is inevitable, given our economies. We are to ask them to help us out with raw material difficulties while we keep civilian production at a somewhat higher level than they are doing themselves. That will mean a great deal of careful negotiation and will mean, too, an assurance that what we get from them is used in the best possible way, both from the point of view of meeting the needs of re-armament and from the point of view of keeping going our civilian economy and the strength of our economy generally.
So far as the industry of this country is concerned, I do not think we can possibly make complete re-armament omelettes without breaking a few eggs. That applies very much to industry in Birmingham, part of which city I represent. There is bound to be a certain amount of difficulty. The motor industry may expand its labour force, for instance, and that means that certain other trades will have to run down their labour force. There are bound to be certain restrictive measures such as those which have already been announced.
Clearly, the only prospect of getting through these difficulties without a crippling effect upon our economy is for 2544 us to have a close system of allocations at home, and the natural corollary is that we should also have a close system of international allocations abroad. I think the Government have, broadly, been doing that, and I hope they will continue that policy in trying to solve this extremely difficult problem.
§ 12.31 p.m.
§ Mr. Oakshott (Bebington)
On another occasion I followed the hon. Member for Coventry, North (Mr. Edelman) in debate in this House when he spoke about rubber. He has done the same thing today. As I said on that occasion, I cannot speak on the subject of rubber because I do not know much about it. Nevertheless, I must repeat that he is a little less than generous in the way in which he talks about the rubber industry. I think that at any rate on the Floor of the House he fails to recognise the tremendous contribution they are playing in our balance of payments, and he also appears to fail to recognise the extreme difficulty under which the rubber planters and growers in Malaya are living. If he does recognise those things, he does not mention them on the Floor of the House.
§ Mr. Edelman
The hon. Gentleman is mistaken. On previous occasions I have paid tribute to the actual growers, the men who are on the estates and who, under conditions of grave difficulty and danger, are showing the greatest courage and doing magnificent work. But they are not the people who are getting the difference between the price of eightpence and the price of 6s.
§ Mr. Oakshott
But the hon. Member said it was the Rubber Growers' Association who are ganging up and forcing up world prices of rubber.
I want to turn to a particular commodity. I cannot speak about nickel, but I can say that there is one commodity in which the private trader is trying to help in the present situation. I refer to softwood timber, and I must tell the House that I have an interest in this commodity myself. It is one of the most important of the raw materials which are in common use. First of all, it is important to this country because we have to import from abroad practically all we need. Secondly, it is important because its uses, as hon. Members know, are very wide and varied. They extend from 2545 house building and construction generally to packing—and, most important, packing for exports and for the home market—to ship building and ship repairing, to railways and to hundreds of other uses. In addition softwood timber will now be needed for the defence programme.
It is obvious that the questions of the supply and price of this commodity are of considerable significance in our economy, and I hope the House will forgive me if I detain them for a few minutes in trying to draw attention to these two problems. It is relevant to consider here what happened in 1950. We are still paying for the mistakes which were made then and we shall have to continue to pay for them. We were late all along the line in our buying programme through failing to recognise in time the exceptional demand from other consuming countries, who were buying from the producing countries, while we sat on the side lines. As a result, this country went short.
Turning to the question of prices, I must point out that the Government persistently refused to recognise the rising trend of world prices. The classic example was, of course, the one quoted by my hon. and gallant Friend the Member for Wembley, North (Wing Commander Bullus)—zinc from Belgium. The classic example in our case was the story of the negotiations between this country and Sweden. Every advice which the Government received from the traders, every indication, pointed to the fact that prices must inevitably rise because of the exceptional demand from other countries. The fact is that, whereas before the war what this country did determined in a large measure the world softwood market, that is no longer true today. That fact is not sufficiently appreciated. The result has been that instead of our receiving somewhere in the neighbourhood of 250,000 standards of softwood timber from Sweden in 1950, as we could have done, we received less than 30,000 standards.
I willingly and sincerely pay my tribute to the public spirited members of the timber trade who staff the right hon. Gentleman's Timber Control Department. They are men who very often have sacrificed their private interests, many of them ever since the outbreak of war. They are thoroughly 2546 respected and widely experienced and I think that in one very important side of their duties—that of allocating this scarce raw material to the best use—they have done a very good service. I would not presume to criticise them unduly. So far as buying is concerned, however, they would not be human if they were always right, and they were certainly very wrong in 1950.
We did not import enough softwood—there is no doubt about that; and, in consequence, our position in softwood, both for commercial uses and for stockpiling, has been made very much more difficult than it ever need have been. In the circumstances which have made the re-armament defence programme necessary, that position might easily become very dangerous. That is no reflection on these men, but it is a reflection upon and a condemnation of a system which forces us to rely upon the market judgment of a few people who must, by the very nature of things, be fallible. That is all I want to say about the past.
§ Mr. John E. Haire (Wycombe)
Would the hon. Gentleman agree that in the last two years, 1949 and 1950, we obtained from Sweden a larger proportion, percentage-wise, of our pre-war imports of softwood than did any other country?
§ Mr. Oakshott
I agree. I remember the years before the war when we obtained many hundreds of thousands of standards of softwood from Russia, and very valuable they were, but I do not think the hon. Gentleman is right in his comparisons concerning Sweden. What happened in Sweden also happened elsewhere, and the result was that we imported in the whole of that year only something just over 820,000 standards, which is a desperately low figure.
May I turn to the present and the future? In considering the question of supply and prices we must think of stocks.
2547 both for commercial use and for stockpiling. Like my hon. Friend, I do not want to weary the House with a lot of figures, but there are a few which I think I must give, and if I am very wide of the mark I hope the President of the Board of Trade will correct me. At the end of November, 1950—the latest date for which I have figures—we had a stock of 235,000 standards of softwood. That is a dangerously low stock for November, because it is exactly at that time of the year, in November and December, that our stocks should be at their highest. As I say; the stock was desperately low.
I want to try to emphasise what the position is likely to be later this year. As the House knows, freedom to import in 1951 from soft currency countries on private account has been restored. Substantial quantities have already been bought. I expect the right hon. Gentleman could find the figures in his Department's records. I think it is probable that by now well over 300,000 standards of softwood have been, and there will be more later. That is a very fine achievement on the part of these private traders, because the House will remember that they have just gone back into the market for the first time since 1939. I am sure the right hon. Gentleman will recognise that, and will agree that in making these purchases they are greatly helping to secure supplies which we need very badly.
On the other side, the Government, in their turn, have also bought large quantities through the Timber Control, as I am relieved to learn. Here again I can only guess at the figure, but I should hope that the total bought by the Government and on private account for shipment this year will, together, amount to something over 1,200,000 standards. If that is about right, or anywhere near right, it is a much healthier state of affairs than we have seen for some time past, and is in no small part due to the partial re-entry into the market of the timber importer to perform his traditional function of buying from abroad.
I hope that all this will mean that we shall have an import this year of at least 1,500,000 standards of softwood. Perhaps the right hon. Gentleman will be able to tell us something about that, although I realise that he can only give 2548 an estimate. I hope that he can also give us his ideas about my second point, which is the estimated consumption of imported softwood this year. In 1950 it was slightly under 1,000,000 standards. I think the right hon. Gentleman will agree that that was a pretty austere level. What do the Government expect consumption to be this year? Both these questions are important because it is only by estimating those figures with some degree of accuracy that we can try to work out what the position is likely to be in regard to stocks for ordinary commercial purposes and for stockpiling.
If consumption this year is to be kept down to the austere level of 1950, and if our total imports this year are to be somewhere in the region of 1,500,000 standards we ought to have 500,000 standards left for these two purposes plus what is left over from 1950. That is about the best we can hope for if all goes well, and frankly I do not think that it is good enough because I very much question whether in view of the needs of the defence programme we can keep consumption down to the 1950 level. The Keith Price Committee, which so far as I know took no account of stockpiling, prescribed an import of 1,500,000 standards a year as the minimum for ordinary purposes.
The Government intend to stockpile, and I am glad of it. A figure of 200,000 standards has been mentioned. I hope that is only a start because 200,000 standards is just not enough. It represents at the present very low level of consumption rather less than three months' supply. My hon. and gallant Friend the Member for Wembley, North, recommended a stockpile of six months' supply for wheat. In the case of timber we should aim at a minimum stockpile of six months' supply.
Any hon. or right hon. Gentleman who was in office in the war years, and who had anything to do with shipping and handling timber, will remember vividly and I imagine not very happily, what a drain it was on our priceless shipping space, and how it was not one of the easiest war materials to handle. That consideration underlies the necessity of stockpiling a large quantity and the importance of building up as much as we can during this year stocks for general purposes. I greatly regret that stockpiling was not started much earlier, and that is why I have said that I think we shall 2549 have to go on paying for the mistakes made in 1950 and for the low imports of that year.
One word about prices. These have risen enormously, and the right hon. Gentleman has recognised on the Floor of this House, and in the statement he issued to the Press on Wednesday, that our 1951 purchases, whether on Government or on private account, will cost the consumer a good deal more than in 1950. The full weight of that increase has not yet been felt by any means because private imports were only permitted to be resold as from yesterday; and the Government who are, as the right hon. Gentleman indicated in a reply he gave yesterday, still by far the biggest importers of softwood into the country—are now just going to bring in the price-list at which they will sell their purchases to the trade.
§ Mr. Snow (Lichfield and Tamworth)
The hon. Member has spoken of the reentry of private trade in the industry. Will he say whether lie is of the opinion that the private trade will try to restrict entry into the trade or whether new entrants will be permitted?
§ Mr. Oakshott
I think they have permitted entry. There are in fact some 700 firms in the importing trade today. I believe that the right hon. Gentleman has had some discussions with the Timber Trade Federation about that matter, and I think that he has been satisfied with the arguments which they have put forward on the matter.
I think that a word of warning should be sounded about prices: it is no use believing as we have to import from abroad almost everything we require in the way of timber that we can insulate ourselves against world prices; nor can we expect to escape the effects of devaluation. Whether in the case of ordinary commercial requirements or defence programme requirements the price is equally important, and supplies are being bought for those two purposes. If we wish to steady the market and bring prices to a reasonable level we require a big cushion of stock behind us so as to strengthen our hand in bargaining. If the Government intend to stockpile, timber is one of the first commodities to which they must turn their attention, remembering the difficulties of shipping in an emergency. If the figures which I have given 2550 are anywhere nearly correct, I do not think that they have yet done anything like enough in that direction.
§ Mr. Speaker
Before calling the next speaker, may I make a suggestion to the House? There are always so many speakers on Friday that I wonder whether we cannot try to have 10-minute speeches after the first speaker on a Motion.
§ 12.48 p.m.
§ The President of the Board of Trade (Mr. Harold Wilson)
If I attempt to reply to the points raised and give a survey of some of the raw materials in which I know hon. Gentlemen are interested, I shall find it difficult, Mr. Speaker, to confine myself to anything like the length of speech which you suggested.
No one will have any ground for complaint that the hon. Member for Wembley, South (Mr. Russell), has turned his good fortune in the Ballot to account for the purpose of initiating a debate on the raw materials situation. As he said, and as we see in the Motion which the hon. Member has put down, the present raw materials situation is vital to the maintenance of full employment, to the cost of living in this country and to our ability to maintain the tasks we have set ourselves in connection with both rearmament and the export trade. There is no doubt that, as hon. Members in all parts of the House have said, the raw materials position is far and away the greatest of the many grave problems with which we are faced on the economic front in 1951.
I must certainly express my disagreement with the conclusions which the hon. Member drew from what I regarded as his extremely prejudiced and myopic account of the position. He tried to prove with illustrations from a very narrow range of materials—very narrow indeed first, that the shortages and the high costs were due to the shortcomings and lack of foresight on the part of those operating the bulk-buying programmes. Second, he suggested, and his Motion certainly says it, although he did not attempt to prove it very thoroughly, that we should have a better supply of raw materials now and that we should get 2551 cheaper and better supplies in the future if we were now to hand over the procurement of those materials from centralised to private buying.
I do not propose to enter into an argument with the hon. Member on the points which he attempted to prove. I should prefer to try to answer him by the one instrument to which he never thought of looking, namely, the facts about the individual material in question. I shall set out as briefly and frankly as I can the position of a few of the more important raw materials, both those which are bought on public account and those which are bought on private account. Perhaps I might start with cotton which has been the subject of much concern in this House.
Cotton is of course publicly purchased by the Raw Cotton Commission set up by this House. I do not intend to go into the history of the Raw Cotton Commission, but it took over at a most difficult time. As the House will know, its operations were inevitably hampered by the lack of dollars. It is perfectly clear that this would have been the position to exactly the same degree in private buying in these post-war years if we could in fact conceive of such a fair-weather ship being launched on those very stormy seas.
In 1949–50 following the dollar economies of 1949, the purchases of United States cotton were reduced to the bare minimum of Lancashire's requirements. In fact, many felt they were reduced below the bare minimum; that substitution had been pushed as far as it could be and perhaps farther than it should have been compatible with maintaining production, quality and our export drive. Even so there was a very sharp deterioration in the position after Korea. In the first place, there was a far bigger demand by many countries, and second, there was the sudden realisation that the American 1950 crop, on which the world depended, was a poor one.
The American crop accounts for between one-third and one-half of the total world supplies each year. Last year the American crop had threatened our American friends with conditions of embarrassing surplus and they imposed an 2552 acreage restriction on production. This restriction, in addition to natural conditions, resulted in 9.7 million bales against 15.9 million bales in the previous year. In those circumstances the United States Government, who have now of course removed the acreage restrictions in the hope of a much better crop this year, introduced a very severe export allocation system; the total so far is only 3½ million bales compared with the figure of 5¾ million bales of the previous year.
As the House knows, this is not all. The United States Government decided to allocate this total—and I must emphasise there has been no set international discussion of this allocation—on a basis which resulted in giving to us only 265,000 bales or little more than one-third of the imports in the previous year. I have already made clear that the imports in the previous year were reduced to the absolute minimum. As my hon. Friends who represent Lancashire constituencies will know, this bitter pill has not been made any sweeter for Lancashire by the fact that Japan has been allocated, not 66 per cent. below previous years, but actually 6 per cent. above the previous year's consumption.
§ Mr. W. Fletcher
Were there not direct discussions between His Majesty's Government and the United States?
§ Mr. Wilson
Yes, on very many occasions indeed, and at the highest possible level. We have, in fact, made strong representations to the American authorities continuously since the first allocation was made and this matter will now be considered by the newly established Cotton and Cotton Linters Commodity Committee which is meeting in Washington in a few days time.
With the serious situation of American cotton the Raw Cotton Commission have been very active in seeking supplies from elsewhere. In fact, they have been doing this for some years past because of the dollar shortage; and with the advantage of centralised buying and with appropriate long-term contracts they have been extremely successful in increasing supplies. They have done exactly what the hon. and gallant Member for Wembley, North (Wing Commander Bullus) was talking about. They have scoured the world. They have brought forth new supplies by the mechanism of long-term contracts and 2553 by bulk contracts with the Sudan, with British East Africa, with various countries in East Africa including long-term contracts with Nyasaland, and Nigeria. At the present time imports of raw cotton from the Colonies have increased to about 8 per cent. compared with the 3 per cent. of total imports in pre-war days.
I am sure that hon. Members, particularly those representing Lancashire constituencies, will realise the grave position with which we are faced in the consumption of American-type cotton, because of the United States allocation, despite all that has been done to bring in supplies from other countries, often at very high prices. Whereas last year American cotton represented 58 per cent. of the total usage of cotton of American types, this year under the present allocation it will be only 36 per cent.
If I could draw a conclusion from the case of cotton because it is relevant to the Motion of the hon. Member, our shortage here is due to the severely restricted allocation from North America, and, as I said in the House last week, the amount of cotton we get in this country is directly the result of the size of the allocation made by the United States Government. Private buying or centralised buying would make no difference to that. I am sure that hon. Members will not challenge that statement, although the right hon. Member for Southport (Mr. R. S. Hudson) did say —I thought rather churlishly—"We have only the right hon. Gentleman's word for that, and we do not accept it." If that is what the right hon. Gentleman really feels about this question, it is a most unwarrantable reflection on the United States administration to suggest that there would have been more available to us if we had bought cotton through private and not through public channels. In fact, I do not think that anyone would seriously maintain that view.
The "Manchester Guardian" whose trade notes I regard as providing a little more expert and practical experience on cotton questions even than the right hon. Gentleman, said last week:Mr. Wilson's statement that the size of the allocation would have been the same whether private buying or centralised buying was practised by this country, will be accepted more readily in Lancashire than it appears to have been in certain parts of the House.2554 As for my second conclusion, that the Raw Cotton Commission has in fact bought more from the rest of the world, outside the United States, than private buyers would have bought, the "Manchester Guardian" went on to say:It will no doubt also be agreed that, as Mr. Wilson said, in the purchase of cotton outside the United States the Raw Cotton Commission had secured amounts far above anything bought by private buying.So I would submit to the House that in my first case the Motion of the hon. Member cannot be substantiated and I notice he did not even attempt to argue it.
Let me turn to a second item, sulphur, about which we are extremely anxious although it is in fact on public purchase, the only change being that since 1940 the buyers have acted as purchasing agents for the Government instead of as principals. The National Sulphuric Acid Association buy the sulphur for the manufacture of sulphuric acid. Three firms purchase the sulphur used directly in industry. There has been no disagreement in the dollar programme between the trade buyers and the Government. In fact dollars were allocated to the purchase of the supplies available even during the worst period of the dollar crisis.
An account of the development of the sulphur position was given by the Chancellor of the Exchequer in his speech on 15th February. About two-and-a-half years ago, long before Korea, the American sulphur producers, who were kept fully informed of forward requirements, said they could not provide more sulphur than was needed for acid plants then in operation or being erected. This was because they were worried about mineral reserves, as a long-term problem and so the Government had to place a limit on further expansion of sulphur using capacity, and enforce a switch to pyrites or other alternatives.
We were informed last July that the supply for acid products in 1951 would be considerably less than expected and we had to make emergency arrangements to reduce fertiliser production and so on. In October reports reached us that the United States were contemplating export licences and strong representations were made to them about the allocation we should require—representations again at the very highest level. But when we received notice of the allocation at the—
2555 end of December we were in fact given 81,465 tons for the first quarter against a requirement even on the present restricted basis of something like 112,000 tons.
We therefore had to introduce immediately restrictions on supply both of sulphur and sulphuric acid. We have been working on a detailed allocation scheme for sulphur and for sulphuric acid. That allocation scheme is now ready for introduction. I am bound to tell the House that it presents a very grave picture indeed. With the amount of sulphur that appears to be in sight, unless the allocation is increased, the allocation means that, while we should maintain supplies at as high a level as possible for steel production, oil refining, tin plate, vegetable oils, metal extraction and refining, and essential food and health services, there would be a serious reduction in the general chemical industry and a very serious reduction indeed in the rayon industries and in many industries using both sulphur and sulphuric acid.
The effect on the rayon industry is one which it is most serious to contemplate, since it would involve a cut in production—which has already been affected by some 20 per cent.—as serious as 40 per cent. of the output of the industry. I am sure that I do not need to stress the seriousness of this to the House. It is not only a setback to the hopes that industry had, and that we all had, for this greatly expanding industry. It not only means a severe restriction in supplies to the home market if we are to maintain our eventual export targets. It would also have an extremely serious effect on employment, particularly in the textile industry, because, of course, the use of rayon is by no means confined to the rayon industry, and it would affect both Lancashire and Yorkshire.
Again, since rayon was providing us with a relatively cheap substitute for wool and cotton, particularly in mixtures, I do not need to stress the effect it would have on the cost of living. Nor do I need to stress the general effect of cuts of this kind on the whole industrial economy of the country, because sulphur enters into every phase of the national economy. The effect of reductions of this kind are not only grave: they are incalculable and immeasurable. One 2556 cannot say until months afterwards what will be the effect in detail.
It is certain that these cuts will profoundly affect our ability to maintain industrial production and to mount the defence effort which this House has approved. I trust that it will not be necessary to introduce the allocation scheme to which I have referred: but it is right that the House should be warned of the possibility. Representations are still being made to the United States administration. The Sulphur Commodity Committee is now sitting in Washington. The United States administration have been most helpful and understanding about our difficulties, and I trust that they will be able to increase the allocation to us, because I am sure they will realise the damaging effects on our production and on the defence effort in which they, as our partners, are as concerned as we are.
If our allocation is not increased by 30,000 tons, or so, a quarter, which we require—a figure which I should tell the House is only equal to about 3 per cent. of total United States consumption—
§ Mrs. Eirene White (Flint, East)
In view of the extremely serious statement which he has made—which will affect many of us in our constituencies and many thousands of workers—can my right hon. Friend indicate whether there are stocks in the United States from which, with the agreement of the United States Government, we could obtain a greater allocation?
§ Mr. Wilson
I am sorry. I cannot give my hon. Friend detailed figures, but I understand that stocks above ground held by the producers are something like between 2,500,000 and three million tons. We have stressed the need to increase the allocation and also the need to make allocations, not only for this quarter, but for the rest of 1951, so that industry can plan ahead. I am sure that the House will agree that it is absolutely impossible for industry to plan production for the later part of this year when the supply position of so essential a material is not clear either to industry or to the Government.
I have no doubt that the House will be aware of the efforts we are making, by encouraging the construction of plants, to use anhydrite and pyrites. Some of these plants are in course of construction by 2557 converting existing plants from the use of sulphur, to these other materials, by recovering sulphur from spent oxide from gas works and coke ovens, by recovery from oil refineries, and so on. But these measures essentially take time. They cannot be done in one or two years. They certainly cannot help us in 1951, or indeed for some time after that; but they represent an assurance to our American friends that the drain on their underground reserves of sulphur, about which they are rightly concerned, will be greatly reduced when in fact these measures which we are undertaking come into operation.
§ Colonel Crosthwaite-Eyre (New Forest)
The right hon. Gentleman said that there were between two and three million tons above ground in America. Can he say what is the average American consumption per month and how much their stocks represent?
§ Mr. Wilson
Speaking from memory, I think that the stocks they hold represent something under a year's requirements. I think it is seven or eight months' stock, but I should like to check that. If the hon. and gallant Gentleman puts a Question on the Order Paper, I shall try to get the exact figure.
The conclusion to be drawn from this very serious position in regard to sulphur—and this is a question which we all approach in a completely non-party way—must be that the position would not have been any better, and could not have been any better; the threat to our employment, to our production and our defence effort could not have been any less; and the American allocation would not have been any higher if the private sulphur importers were buying on their own account instead of acting as agents for the Government. Similarly with the restriction of supplies which have been going on for some time now because of fears about reserves, it is quite clear that we could not have been able to stockpile sulphur. There again, taking my second material, I submit that the hon. Gentleman's point in his Motion is completely unproved; in fact, rather the reverse.
I turn for a few moments to the question of non-ferrous metals which formed the main subject of the hon. Gentleman's speech. I do not propose to deal in detail with all the points he mentioned, especially as they were dealt with to a 2558 considerable extent by my hon. Friend the Member for Coventry, North (Mr. Edelman) and my hon. Friend the Member for Stechford (Mr. Jenkins). If there are further points on which the House wants an answer, my right hon. Friend the Minister of Supply will be here and he will be able to take up the detailed points raised. I want to deal with the general question.
The hon. Gentleman tried to generalise from non-ferrous metals to the whole field of metals. The suggestion is that the Government public purchasing agencies should have bought larger stocks last year and that, instead of allowing our gold and dollar reserves to mount at the pace that they have mounted, we should have stockpiled our dollars in the form to some extent of non-ferrous metals. I shall deal later with the general question of the gold reserve and whether we should have stockpiled materials.
I should like to say on the question of non-ferrous metals that it was, until the third quarter of last year, the policy of the Ministry of Supply to keep stocks of materials in which they trade up to a reasonable working level, but no more than that. This was the right policy. Before Korea I think that we should have been wrong to offer hostages to fortune by building up excessive stocks when prices might fall. Indeed, we had ample warnings from hon. and right hon. Gentlemen opposite against the folly of buying too much when, as they told us, prices were going to fall. I am talking about the days before Korea, of course.
Directly or indirectly, all these metals cost us dollars, and the Ministry of Supply had to work within the limited supply of dollars available. Indeed, the limited supply of dollars available would have been even more limited if we had listened to hon. Gentlemen opposite and spent more dollars on timber in Canada, as we should have liked to do; or more dollars on newsprint, as we should have liked to do; or on foodstuffs, as is so often suggested to us and as we should have liked to do.
§ Mr. W. Fletcher
It is most important to get this point clear. Has the right hon. Gentleman anything to say about the enormous quantities of ores and materials from the sterling countries which have nothing to do with dollars?
§ Mr. Harmar Nicholls (Peterborough)
Does the right hon. Gentleman say that the Government deliberately did not buy in the hope that prices would fall?
§ Mr. Wilson
I am suggesting that it was the policy of the Government to maintain a normal working level. In fact, they were much criticised in this House—my right hon. Friend the Minister of Supply was much criticised by right hon. Gentlemen opposite—for maintaining stocks at an excessive level at a time when it was said that we were in a period of falling prices. I shall give the hon. Gentleman the exact quotation in a few minutes' time.
Turning to the position of the dollar purchases, there was not, as I am sure the House will agree, a sufficient improvement in our gold and dollar reserves to justify transmuting them into baser metals. Until after Korea, our sterling area prices rose, and, at the same time, of course, and closely connected with that, there was a growing shortage of materials in the dollar area, as elsewhere. The improvement in dollar earnings, which might then have made it possible to buy more of materials which were of increasing scarcity, were different aspects of the same world movement. By that time, the third quarter of last year, although dollars were available, the raw materials were not. On the general points, perhaps I could deal with them a little later, as this is really a world question.
I want to turn now to one or two representative materials bought on private account, and I would start with wool, which, more than any other item, is causing deep concern because of its effect on the cost of living. The average price of wool is now something like 12½ times the 1934–38 average figure, and for the lowest qualities the price is about 15 times that average figure. Some types have, in fact, trebled since last June. There has been a shortage of production against consumption ever since the end of the war, and that shortage was masked by large stocks accumulated in the war and since disposed of—I think very efficiently—by the Joint Organisation over the past five years. The disposal is now virtually complete.
2560 Immediately following Korea, the world scramble for wool began, and prices rocketed in world markets. We had an international discussion here in London last autumn, followed by a special conference in Melbourne, particularly directed to the problem of meeting the greatly expanded United States military requirements. We examined the best means of meeting that situation with the minimum effect on the world wool market, such as by pre-emption schemes and so on, but it was not possible to find any agreed solution, and the situation was left to be dealt with by the auction system, while prices continued to rise.
I need not stress the effect of high wool prices on the cost of living. We are familiar with the very serious influence of the increased cost of blankets, a representative pair of which cost £5 a year ago, cost £6 12s. 6d. just before Korea and are now selling in the shops, under a strict price control at £10 10s. at the present time. A pair of blankets contain about 91 1bs. of wool at the September price of 130d. per lb. Manufacture costs 35s., and the cost of wholesale and retail distribution is 70s. I would put to the hon. Gentleman who moved this Motion a question on this subject. Hon. Members of his party go round the country seeking votes by promising to reduce the cost of living, but I would challenge their slogan that the high cost of living is the high cost of Socialism.
I ask the hon. Gentleman and Members of his party how they would reduce the price of a pair of wool blankets under present conditions, when they contain 91 1bs. of wool at 130d. per 1b., and how that wool could be bought cheaper on private purchase in the world markets? Do they suggest that they would reduce prices, or do they think that they could reduce factory production costs? Would they reduce manufacturers' profits? Would they reduce wholesalers' or retailers' profits, or would they reduce the cost of labour in the production of blankets? If they cannot tell us which of these items they would reduce, we are forced to the conclusion that their claims to be able to reduce the cost of living on these very items which have risen most are completely false and are based on no substantial plan or policy at all.
2561 If we take the example of a man's top grade utility suit, we find that the cost of the cloth going into the suit has risen by 53s. Have the Opposition any plan for reducing the price of cloth, which is based on private enterprise buying through world markets?
§ Mr. Wilson
The hon. Gentleman surely knows that there is no Purchase Tax on the suits to which I have referred. I see nothing in anything that has been said by the Opposition, apart from their platform slogan, that suggests their having any plans at all for dealing with the effects of the high cost of raw materials on the cost of living.
The hon. Gentleman who moved the Motion regretted that steps had not been taken earlier to build up substantial stocks, and that more use had not been made of private traders. Well, why did not these traders take steps to build up their stocks at an earlier time? There was nothing to stop them, and there was no question of dollar allocations. I am not blaming them: they use their judgment on the market, and no one is infallible, but it is not for hon. Gentlemen opposite to chide the Government for not doing what uncontrolled private enterprise failed to do for itself. The wool problem cannot be solved by actions taken by any single country. It is an international problem to be considered on an international basis by the Committee Meeting in Washington next month, and I am sure that the House would not expect me to anticipate the discussions of that Committee.
Perhaps I ought to refer to one other matter about which there have been disturbing reports. The suggestion has been made that the American Administration intend to build up a stockpile of 350 million lbs of raw wool. Hon. Members with knowledge of the wool trade will know what that figure means, because it represents about 35 per cent. of the entire annual exportable surplus of the five major exporting countries, and in the qualities likely to be bought about 65 per cent. of their annual exportable surplus. I do not want to anticipate international discussions, which I am sure the House will agree would be concerned 2562 with a very gave situation if this report turned out to be true.
§ Mr. Nabarro
Could the right hon. Gentleman answer a question on one point? I quite agree with him about the difficulties of international control of wool prices, but surely he should not neglect the home clip of wool, which is at present being bought at 30d. per 1b. from English farmers and auctioned at 150d. per 1b. That is largely the cause of the inflation.
§ Mr. Wilson
The hon. Gentleman is really talking utter rubbish when he suggests that the cause of inflation is the home wool price. He knows that the prices of home-produced wool, by arrrangements which we have had in force for some time, rise and fall in accordance with the selling price on the world market, and that was done so that farmers might be able to buy at fixed prices and sell at world prices. The hon. Gentleman has put the cart before the horse in suggesting that the domestic price is in any degree at all an influence on world wool prices.
§ Mr. Wilson
I do not wish here to deal with questions which are more appropriately dealt with in the international commodity discussions, but, certainly, the discussions we had before Christmas were related to purchases of wool for stockpiling in the form of cloth.
I have now no time to give details of the supply position concerning other raw materials, but I should like to refer to the supply of paper and pulp. As far as paper and pulp are concerned, they were debated on 24th November last, and I have little to add to what I then said. Certainly, prices have continued to increase all over the world. But here, again —and I am taking this point to deal with the hon. Gentleman's Motion—purchasing is and has been for some time on private account. There is no limitation on the amount that can be imported from soft currency sources. Since the dollar position eased, the Government have made dollars available to the fullest possible extent for pulp and board available in Canada.
2563 Stocks of paper-making materials have, as the hon. Gentleman rightly says, fallen, while the production of practically all types of paper except newsprint is running above pre-war levels. It is not disputed that there are shortages for industrial uses, but I am sure the hon. Gentleman would not suggest that the private buyers ought to be buying more pulp. I am sure he is not criticising them. If he is, then he should tell them where to find the pulp, because I think they would be grateful for that information. Here, again, as the House knows, the Government are supporting the idea of a pulp and paper commodity committee, and I am anxious, as I am sure is the hon. Member for Harrow, Central (Mr. Bishop), that this committee should devote its early attention to newsprint.
I do not want to follow the hon. and gallant Member for Wembley, North, in initiating another debate on newsprint in this House. We have had many of them. There are plenty of things I could say, but I do not think it would be appropriate to take up the time of the House in so doing. I think the House would agree that world discussions on all these problems of paper pulp and newsprint would be most valuable to us.
Hon. Members opposite have frequently drawn attention to the different scales of newsprint consumption in different countries, and it is a fact—or so I am told, and the hon. Gentleman will correct me if I am wrong—that a 1 per cent. reduction in the United States consumption of newsprint would enable us to restore all the recent cuts in supplies in this country, to get rid of tonnage rationing of newsprint, and to resume free circulation on a six-page basis.
Turning for a moment to hides, skins and leather, there is no shortage of them in the sense of any danger to production. The problem there is one of price, which has gone up more than 80 per cent. since the war in Korea. Here, again, I am dealing with commodities which are bought on private account. Perhaps I ought to say a word on timber as the hon. Gentleman dealt with in his speech. Like him, I shall not go too deeply into the past, although I could if there were more time. I was interested to hear his view—I hope I am not misrepresenting him—that, so far as he can see, the stock 2564 position for this year seems a good deal brighter than last year.
§ Mr. Oakshott
I am sure the right hon. Gentleman will agree that the question of stockpiling is another matter over and above that.
§ Mr. Wilson
I quite agree with the hon. Gentleman, and I am, as he knows, discussing that with the trade. As he also knows, the main factor in the improved situation is the fact that, with the improvement in the dollar position, our contracts in North America are now on a scale of something like four times the 1949 figure. The contracts placed last year were for 657,000 standards from North America, and with the contracts still to be placed for supplies from North America this year, we should get the highest ever recorded imports into this country, getting on for double the prewar figure of imports from North America. This should have a major effect on the timber situation. The hon. Gentleman also referred to the private purchase of timber. There we are finding, as we are finding in Timber Control purchases, that prices are a good deal higher. I, personally—and I think the hon. Gentleman will agree with me—do not blame that on to either the private buyer or on to Timber Control. They are both facing world conditions.
I have not been able to deal with anything like the number of materials I should have liked to deal with, but I hope I have said enough to dispose of the hon. Gentleman's argument and his Motion before the House. The general argument used by hon. Members who have so far spoken in this debate, with the exception of the hon. Member for Bebington (Mr. Oakshott) who did not generalise, has been that we ought, presumably by bulk purchase methods, to have stockpiled more before this world raw materials crisis came upon us. I congratulate the Opposition on giving us this view now. They may be masters of hindsight in this respect as in so many others, but the interesting question is what were they saying before.
The hon. Member for Wembley, North quoted two isolated examples suggesting that we ought to have been doing something which, in fact, we were doing, but could not announce at that time—the initiation of international discussions.
2565 But there was a debate on bulk buying in this House a year before Korea. At that time, the Opposition were seeking to prove that we had bought too much at excessively high prices, and that we were going into a period of falling prices. The right hon. Member for Aldershot (Mr. Lyttelton) said:The Nemesis which overtakes bulls who have not hedged their commitments will overtake His Majesty's Government. Perhaps we shall have an opportunity of debating that. When grain prices have fallen still further. I think this Nemesis will overtake His Majesty's Government, who in this, as in so many other things, are the largest uncovered bull that has ever been seen in history.He went on to say:Perhaps hon. Members would prefer the phrase: His Majesty's Government will he seen as stale bulls in a bear market"— [OFFICIAL REPORT, 26th May, 1949; Vol. 465. c. 1464.]Indeed, the hon. Member for Chippenham (Mr. Eccles) made it clear that he thought we were entering a period of falling prices. He said:I am certain, at any rate in times when world prices are declining, that it will be very much in the national interest to make arrangements to leave the procurement of all non-rationed commodities to private channels."—[OFFICIAL REPORT, 26th May, 1949; Vol. 465, c. 1501.]That is a perfectly clear argument to put forward, but the implication would seem to be that in a period- of rapidly rising prices the obvious thing would be public purchase.
§ Mr. Eccles (Chippenham)
I think the right hon. Gentleman will be fair and will admit that as soon as devaluation came about hon. Members on this side of the House, including myself, pointed out that Sir Stafford Cripps was completely wrong in saying that only the price of bread would go up. It was certain that, following devaluation, there would be a rise in sterling prices, and private traders such as I know immediately began to stock up. But the Government took the opposite view. Is it not a fact that the Government took the view that even after devaluation there would be a large fall in world prices, and that they failed to change their view in time, whereas other countries did?
§ Mr. Wilson
That is not a statement of the facts at all. In the first place, the hon. Gentleman misrepresents the statement made by Sir Stafford Cripps. In 2566 the second place, I think it is true to say that we tried in many cases, and not unsuccessfully, to hold prices down. There was the unfortunate experience in Sweden, I admit, where it did not succeed in the second year, but it was never stated to be the idea of the Government that world prices were likely to fall.
It is true to say, I think, that the hon. Member for Bury and Radcliffe (Mr. W. Fletcher) has been a lone voice on Opposition benches calling for strategic stockpiling for a long time. But even he before devaluation said that Sir Stafford Cripps knew quite well that we would have to pass through a period of rising prices. But the hon. Member for Bury and Radcliffe was quick to see the need for strategic stockpiling in the speeches he made. If, in fact, it was plain that world prices were rising, and if it was plain, as has been said, to the private traders, whom hon. Members now think could have saved the situation for us, why was it that in those sectors of the commodity field where the private buyers were in complete control and where there was no dollar problem, that they themselves were caught without supplies and why have their stocks fallen at least as seriously as those bought on public account? It is no good hon. Members opposite coming down to this House displaying this retrospective farsightedness, because the same farsightedness was not shown by them at the time, or by the private buyers. To use the right hon. Gentleman's zoological terminology they were in fact skinned bears in a bull market.
The real problem is a more serious one than can be dealt with by the hon. Gentleman's Motion or his speech. The problem is one of world shortage, and the main need is for the greatest possible international co-operation. The announcement on the International Commodity Committees on copper, zinc and lead, sulphur, cotton and cotton linters, tungsten and molybdenum, manganese, nickel and cobalt, and wool is, I think, of very great importance in the whole question of raw material shortages. Membership of these committees is such as to include the principal consumers and producers material by material, and we shall be represented on all of them. I am sure that the House will wish them all success in this difficult task.
2567 The problem is too serious to be made a source of partisan approach, as some hon. Members have attempted to make it. It is too grave and serious and complicated to be subjected to simple partisan attempts to ride off the whole raw materials position with a Motion suggesting a common solution to all the problems of all the raw materials. Our own re-armament programme is placing an additional strain on available supplies, but I think that the hon. Gentleman misrepresented the Chancellor of the Exchequer in the quotation of his speech. The real problem is not the additional rearmament, but world shortage of supplies of materials.
As the hon. Member for Coventry, North suggested, the internal problem, whatever can be done in the international field, is bound to take time, and is going to demand far more use of controls, including price controls whether on a statutory or voluntary basis, to ensure fair distribution and to guarantee, as far as possible, supplies for most essential industries and services, for re-armament and the export drive and to reduce the minimum effect of raw material shortages on full employment and on the cost of living. That is our policy, and we shall continue with it. I hope that it will receive the full support of the House, and that the House will join in rejecting the Motion before us.
§ 1.32 p.m.
§ Mr. Fort (Clitheroe)
The President of the Board of Trade has rightly stressed the effect of the present shortage of raw materials on our own economy and, of course, on economies outside this country. He has tried, like several hon. Gentlemen opposite, to ride off from the accusation made in my hon. Friend's Motion that the Government is in large part responsible for the situation in which we find it at the present time.
All of us are aware that the stocks of many raw materials in this country are now lower than they were a year or two ago, although we are now entering on a period of re-armament. There are discrepancies in the figures which I need not go into now, but it is no good saying that this business of falling stocks has only started since the Korean war, as I think the hon. Member for Coventry, North (Mr. Edelman) suggested. Stocks were 2568 falling in this country for a considerable time before the Korean war.
Indeed, even at the time of the American recession, in 1949, we were not taking advantage of the lower prices which were beginning to appear in trying to build up our stocks. Certainly, in one large industry, the buying of stocks at that time, and even earlier, started under private enterprise. That was in the chemical industry. Hon. Members will have noticed, if they have looked at the statistical abstract, that the stocks of phosphate rock are actually higher now than they were a year or two ago, when it could be bought, by those who knew the business, in a number of countries, and they took advantage of the opportunity to do so. This also applies to mercury, and I could go through a long list of raw materials in the chemical industry if I had more time.
Much of this debate has been directed by hon. Members opposite to special products and special statistics, either to prove that the Government has not fallen down on the job or to make their particular points. It is no good the President of the Board of Trade saying that there are examples of private enterprise not being able to do the job when it was given the opportunity.
§ Mr. Fort
There are also examples of centralised buying on which the Government have slipped up very badly. I must take the right hon. Gentleman to task about raw cotton. He rightly described the difficult situation in which we are placed. He said—if I remember his words correctly—that private enterprise could not have done any better during the present period or even in the recent past in the American market. But I suggest to him that instead of having to send in an organisation which, inevitably, had to buy, in large quantities—I know that the situation was complicated by the E.C.A. arrangement—cotton in America, as well as in other markets, and in contrast to the traditional methods of buying, we might have had private enterprise merchants buying 50 or 100 bales a day and thereby getting the qualities and quantities which we require. I am quite certain—and I think that many hon. Members feel the same way—that the situation has been aggravated by the 2569 operations of the Cotton Commission having to go in as a large organisation.
The right hon. Gentleman made a marked point about the virtues of longterm contracts with certain of the African producers in Nyasaland and Nigeria. These long-term contracts have their disadvantages. The unhappy producer in Nyasaland and Nigeria is being paid a price which has certainly set him complaining and certainly given him an incentive to buy cotton piece goods through our competitors in Japan, who can often sell to him at lower prices than we can.
§ Mr. Wilson
I thought that hon. Gentlemen opposite were always complaining that we paid far too much under bulk purchase contracts. Is the hon. Gentleman suggesting that bulk purchase is wrong because we are now paying too little?
§ Mr. Fort
I have never complained about the right hon. Gentleman buying too much Nigerian cotton. I have asked him Questions about prices paid to the African grower, which were scarcely attractive enough to induce him to come and buy goods in Lancashire. This is obviously a two-way trade. I think that Lancashire Members must realise that the news about the sulphuric acid situation is exceedingly grave. I will not enlarge on that, but I am sure it will be of some cheer to those who represent us it Washington, if we wish them, from this House, the best of good fortune in the difficult negotiations with which they are confronted.
That brings me to my last point—international co-operation. We have had a lot of talk about it today, but I think that we should have a clearer picture of the organisations that are being set up in Washington. We have heard a description of the way in which O.E.E.C. has been looking after the commodities under Marshall Aid heretofore, and how the new commodity committees are to be investigated by a Dutchman, M. Stikker, to see how they will work together with O.E.E.C. But we have no information as to how the O.E.E.C. and the commodity committees are to work together.
There is little doubt that as a result of this division in Washington, certain European countries are extremely sceptical as to how the commodity committees will act, in view of the fact that 2570 they have been carrying on their negotiations with the American and other countries through the O.E.E.C. committees. We should be given some more information about the organisation being set up in Washington. During the war there was the sanction of the resources board, but now we have to rely on persuasion, which means that these organisations become of very great importance.
Another matter which is even more important is getting enough people of the right type to work in Washington. The President of the Board of Trade referred to approaches on the highest level. From my experience there for some years during the war I would say that was a lot of help, but what was even more important was having enough people there who knew their opposite numbers in the American departments, with whom they could discuss matters before the papers were written and the decisions made. That is the sort of international co-operation I should like to see. I know that countries like France have people who really know the industries which come under review at Washington. Until we can have that feeling, I think that the word "intention" used in the Amendment is the right one.
Our complaint against the Government in regard to raw materials, as well as in other matters, is that while we cannot seriously quarrel with their policy, there is a general lack of action on their part. Unless we can have some answer to the sort of points I have raised, we shall feel that in this, as in so many other matters, the Government are merely slipping. I invite the House to support the Motion to make sure that some action is taken in urging them along.
§ Mr. Harold Davies (Leek)
The hon. Member has suggested that we should send people to Washington who understand these commodity problems. May I point out to him that everyone at the recent rubber conference was an expert on rubber problems, but that it did not prevent that conference from breaking down, due to the large amount of stockpiling that was going on.
§ 1.45 p.m.
§ Mr. Anthony Greenwood (Rossendale)
I wish to devote my remarks to the cotton industry. I know that the hon. Member for Clitheroe (Mr. Fort) will forgive me if I do not follow him in his remarks, because I want to work to a severe timetable, especially in view of the request that has been made by Mr. Speaker. Perhaps I may be allowed to venture two observations in this connection. The first is that perhaps on future Private Members' days it may be possible for a request to be made at the beginning of the debate by Mr. Speaker for Members to restrict their remarks more severely. Last Friday, for instance, one hon. Member spoke for as long as 35 minutes.
My second observation is that perhaps it would be possible on an occasion like this, which, after all, is a back benchers' day, to restrict ourselves to the luxury of having only one of my right hon. Friends taking part in the debate. Perhaps if we are to have as long and as informative statements as we have had from the President of the Board of Trade today, it might be advisable for them to come later in the debate and thereby save two Ministers from taking part in the discussion.
§ The Minister of Supply (Mr. G. R. Strauss)
Perhaps I can relieve the mind of my hon. Friend if I say that I do not intend taking part in this debate unless a special point is raised connected with the metals for which I am responsible.
§ Mr. Greenwood
I am grateful for that somewhat divergent remark.
I do not wish to seem ungrateful to the President of the Board of Trade, because he has made a very interesting, informative and very frank statement about the difficulties which Lancashire is having to face at the moment. When the shortage of cotton first began to make itself felt we hoped that it would be possible to combine the manufacture of rayon and cotton goods. Production of combined cotton and rayon yarn has, of course, been a record, but as it was getting into its stride we were faced with a shortage of sulphuric acid and the supply of rayon 2572 to the industry has also had to be curtailed.
People of Lancashire will be disturbed to realise the extent to which their economy seems to depend upon the good will of their traditional friends in the United States. There has, of course, been a long and happy association between the people of Lancashire and the people of the great American Republic. I was a little surprised to find that the President of the Board of Trade concentrated so much on the short-term question of supplies from the United States. That is an important aspect of the problem, to which I wish to return in more detail later, but it seems to me that it is only one aspect of a world situation, in which we have been faced with a general reduction in the amount of cotton being produced with a gradually increasing demand for such cotton as is available.
According to the report of the Commonwealth Economic Committee on Industrial Fibres, produced as recently as last month, the world area under cotton has declined from 91,600,000 acres in 1937–38 to 67,600,000 acres at the present time. That is a reduction of something between 25 and 30 per cent, in the world acreage devoted to the production of cotton. If we turn from the acreage to the amount that is produced, we find that the world production of cotton has fallen from 18,000 million pounds in 1937–38 to 14,500 million pounds in the year 1949–50. The main reduction both in acreage and production has been in India, Pakistan and the United States.
Against this, we have been faced with a rising demand. It is obvious that the textile industry will be in a difficult position. It is difficult to estimate what the increased demand has been, but I have noticed recently one or two pointers in this respect in the national Press. For example, I see that the American consumption of cotton in January was a high record and that it is expected that the annual total consumption also will be a new high record.
On 23rd February the "Manchester Guardian" referred to a report issued by the Cotton Mill Owners' Association in Bombay, in which they told us that the number of mills in India and Pakistan was 439 at the end of 1950 as against 430 at the end of 1949, and that there were another 25 mills in the course of con- 2573 struction. It is, of course, apparent that gradually we are to have less and less supplies of raw cotton both from India and from Pakistan. Then we have the completely imponderable factor—the potential demand for cotton piece goods from those countries of the world which hitherto have been undeveloped.
I agree with what my right hon. Friend said about the immediate causes of the present situation. It is true that the last American crop did not come up to expectations, but for that, of course, nobody is going to try to attribute blame. It is a little bit disturbing, however, to come to the second clause, which is the deliberate restriction placed by the American Government upon the production of raw cotton last year. "The Times," on 26th February, in a most valuable and informative article, made this observation on that aspect of the problem:World supplies of cotton are short because the last United States crop was severely limited for fear of a surplus.Further, it said:The United States Government enforced sharp curtailments of last season's agricultural crops, including cotton; and during both 1949 and 1950 fears of supposed surpluses caused more inter-Governmental discussions on international commodity regulation schemes than at any other time since the depression of 1932.When we have a rising demand for commodities throughout the world, it is a lamentable example of scarcity economics that we get countries of the world ganging up together to restrict supplies of goods which the peoples are crying out for.
§ Sir Herbert Williams (Croydon, East)
The hon. Gentleman means the Governments of the world, not the peoples.
§ Mr. Greenwood
Unfortunately, in some cases it is the Governments of the world which are ganging up in order to restrict the supply of things which people need. That is so in this case in the United States. I do not say this in any anti-American spirit, but I think that the least that the Americans could have done would have been to try their utmost to help us in the difficulties which have resulted from this scarcity of raw materials. After all, even putting it on the lowest terms, we are still their most important ally in the world, and it is in the interests of the American Government and their people to do everything to 2574 strengthen the Government of this country and the Governments of the Commonwealth rather than weaken them. It is not without significance to remember that when the damsel of democracy has been in distress anywhere it has always been Britain which has got in first in the rôle of St. George. Anything which the United States Government or people do to weaken the economic position of this country will be helping to open the door a little bit wider to the infiltration of Communism.
We hope that it will be possible for America to adopt a more generous attitude in this respect. I do not say this in any anti-American spirit, because we need the closest unity between the people of America and of this country, but I do not think that unity will be helped if the American Government continue to take the same cavalier and, in my respectful submission, selfish attitude which they have taken on this issue recently.
My right hon. Friend referred to the fact that Japan had been treated extremely generously by America, and perhaps it would be appropriate here if I quote the observations of a very reputable cotton textile paper, the "Cotton Recorder" in the current number for February:In Lancashire, great concern has been felt at the meagre quantity of cotton allocated to this country from the American export quota and hopes were centred on the receipt of a more generous portion from the 600,000 bales which remained to he allocated. It has now been reported that Britain's share of this quantity is to be 30,000 bales and thus her share of an export quota of the order of 3,500,000 bales is only 265,000 hales, or 7½ per cent. That there are grounds for dissatisfaction at the size of the allocation is evident when it is compared with far more generous quotas made available to Japan of 865,000, Italy of 523,000 hales, West Germany of 479,000 bales, and France of 411,000 bales.It is a little bit staggering for the people of Lancashire, who, after all, made a very valuable contribution to winning the last war, which was fought for democracy, to find that America is prepared to help Italy and Germany, despite the fact that we were fighting them until the time when the Americans came into the war, and, in addition, are prepared to make this generous gesture to the Government of Japan, which was responsible for the somewhat involuntary entry of our 2575 American Allies into the last war It is a serious state of affairs.
I agree with my right hon. Friend that the fault does not lie with bulk purchase, but I suspect that it may be due to the attitude of the American Government, which is bent upon strengthening Japan, because they believe that Japan is an essential bulwark against Communism in the Far East.
On 14th December, 1949, I initiated a debate on the Adjournment on the danger of Japanese competition to the cotton industry of Lancashire, and on that occasion I drew attention to the fact that there were many people in Lancashire who held the view that General MacArthur had been a little bit harsh with the light engineering industries of Japan, whose products competed with the exports of the American people, and that he had been extremely lenient and generous towards the Japanese textile industry, whose products competed with the products of the people of Lancashire. My hon. Friend the Secretary for Overseas Trade, in winding up the debate, said:But comment has been made that the MacArthur administration encourages the growth of the textile industry and not others, because the textile industry is one with which we, rather than the Americans, are concerned. It would he wrong if that impression were left in the minds of hon. Members."—[OFFICIAL REPORT, 14th December, 1949; Vol. 470; c. 2882.]I can only say that the American Government, in their attitude to the Lancashire cotton industry at the moment are not doing very much to dispel that impression, which was certainly in my mind at that time. I think the people of Lancashire will be very disturbed when they learn that the allocation of what must be regarded, reading between the lines, as the equivalent of a week or a fortnight's supply of sulphur, compared with American stocks of nine months' supply of sulphur, would save the situation if it were only possible to get it from the American Government.
Many of my hon. Friends on this side of the House, as well as some hon. Members on the other side, supported, with great reluctance, the Government's recent defence programme on the assumption that America would do everything possible to help us carry the burden, but many of us will find it difficult to justify 2576 it to our constituents if there is a danger of unemployment and redundancy, because the Americans are holding on to essential materials needed to keep our industries in full employment.
I agree with what my right hon. Friend said about the International Materials Conference in Washington. I believe the Prime Minister must take a great deal of the credit for the initiation of those discussions, which were a result of his recent visit to Washington. But that is a long-term solution. What we want to know is what the American Government are prepared to do in this immediate, urgent situation, because the future of the Lancashire cotton industry may be jeopardised unless these immediate difficulties are overcome.
§ 2.0 p.m.
§ Sir Herbert Williams (Croydon, East)
I listened with very great interest to the speech of the hon. Member for Rossendale (Mr. Anthony Greenwood), who seems to have made the most powerful speech so far against the Amendment. Like other hon. Members opposite, he is full of enthusiasm for the "New Deal" which is the American brand of the kind of thing that we denounce over here. The hon. Member asked what they were doing in the United States, and spoke about organising the scarcity of cotton. The American Government did that, and not private enterprise. If the abolished Liverpool Cotton Exchange were in existence nowadays it would be more valuable than it was in the old days. The Government which organised the scarcity of cotton also organised a glut of maize. Fantastic quantities were stored up in the United States last year when we were short of feedingstuffs. The other point which the hon. Member made was against the action of a Government—
§ Sir H. Williams
It does not matter what we call the Government. A Socialist act is the same evil thing whether done by a Liberal, Conservative or Socialist Government. It does not matter who commits the folly. Whether the Government be American, British or Canadian, any Government indulging in a Socialist act commits folly. That is why I am an anti-Socialist.
Mr. Malley (Sheffield, Park)
Would not the hon. Gentleman agree that the Government's attitude to restriction is more akin to the Conservative Government's attitude to agriculture between the wars?
§ Sir H. Williams
The hon. Gentleman must have been reading some of the little pamphlets called "Twenty Years of Tory Mis-rule." No policy of restriction was applied to British agriculture between the wars. What was done, despite the opposition of hon. Gentlemen opposite, was that the Sugar Beet Subsidy Act was passed, and, later, the Wheat Act, and later a series of protective duties were introduced, all of which vastly contributed to the increasing production of British agriculture. No one can deny that the present large production of milk could never have come about but for policies adopted as long ago as 1933. I do not want to be diverted by any interruptions because an appeal has been made for short speeches, but if hon. Members will indulge in totally uninformed interruptions, they must take the reply which is given to them.
The raw materials situation is a very strange one at the moment. All agree that the sulphur situation is very disturbing. There is a great shortage. I understand that it would take about two years to erect plants in this country to obtain sulphur, not as we get it from the United States, almost in a crude form but from pyrites. I am not an expert in this matter, but that is what I have been informed. Therefore, we are likely to be in difficulties about sulphur for a very long time. I doubt if any other substantial true shortage exists. Someone has introduced the dreadful word "stockpiling." "Stocking" is one word but "hoarding" is the more truthful word. A great deal of hoarding is going on, some by Governments and some by private persons following the example of Governments.
I do not see much evidence, up to now, of a very large increase in the production of those things in respect of which there are shortages of raw materials today. Certainly, there has been no vast increase in the production of munitions in this country up to now, judging by what I am told by friends of mine who are in the business and who might expect to receive orders.
2578 largely due to the orders placed by the Minister of Supply. Most people are waiting to know when they will receive orders. In the meantime their businesses are unsettled.
Part of our trouble has been the shock of devaluation. It was a piece of folly to fix a new value instead of allowing the pound to find its own level. We have had two important experiences in this matter. The first was on 19th August, 1949. It will be a liberal education for hon. Members to read the speech made by the then Prime Minister, Mr. Lloyd George, on 18th August, 1919, in the House on that subject. Most of our raw material problems vanished and the balance of trade was corrected automatically in about four months. The pound was allowed to go free. The same thing happened in September, 1931, when the adverse balance of trade was corrected quite automatically. If we had allowed the pound to go free on this last occasion it would now be exchanging at a very much higher level than 2.80 dollars. It is difficult to tell what might have happened, when we have black market quotations at the same time as a fixed rate of exchange.
There has obviously been a vast increase in our gold and dollar reserves. That has been due to something which has been denounced with every kind of vigour by hon. Gentlemen opposite today. They have talked about the high price of rubber, and allegations have been made about people in the rubber industry. I am impartial about this, for I have not a shilling invested in the rubber industry. These are the people the result of whose commercial transactions has completely saved the Government in respect of their supply of gold and dollars, yet they have been subjected to insults in the House today. It does not come well from those who say, in one speech, "We have solved the dollar problem," and, in the next speech, insult those who have solved it for them.
I have always been against bulk purchase, and I arrived at my conclusions on the matter long before there was any public controversy. In 1929, in conjunction with the late Lord Melchett, Mr. Amery, and others, I was studying the problem of Empire trade to see what methods should be adopted to steer trade in what I regarded as the right direction.
2579 We examined State bulk purchase, licensing systems and tariffs, and we came to the conclusion that a tariffs system had immense advantages over the others because it permitted freedom of trade.
We were convinced that State bulk purchase would lead to all kinds of problems, because one person or one group of persons would make the decisions. If the matter were left to private enterprise one had a varying selection of views from which could be obtained a good average conclusion. That has been our experience. We might get all the geniuses in industry and put them in a Government Department and the moment it became known that they were serving in a Government Department trouble would arise. People said that State bulk purchase was a marvellous system during the war, but we do not know that it was because the results were kept from us.
I was a member of the Select Committee on National Expenditure which investigated one of the substantial bulk purchases. We could not report publicly because too much information would have been disclosed to the enemy. The case concerned the purchase of Portuguese sardines, and I believe that private enterprise would have bought the sardines at a quarter of the price which was given for them. Most sadly, our Report could not be published, but was submitted in confidence to the War Cabinet. It could not become a Parliamentary document. When people say that bulk purchase was a good thing in war-time, I am rather inclined to doubt it. In 1916 or 1917 a fantastic mess was made over the purchase of sugar. We were saved from that sort of thing in the recent war by the Sugar Beet Subsidy Act.
§ Mr. Ivor Owen Thomas (The Wrekin)
Has the hon. Gentleman forgotten the private enterprise munitions scandal in the First World War?
§ Sir H. Williams
There was no private enterprise munitions scandal. When that war was started it was thought that the only people who could make shells were Woolwich Arsenal, Vickers and one or two other firms, and that if more and more orders were poured into these few production establishments the shells 2580 would be obtained. Of course, they were not. The bulk of the engineering industry was not permitted to take part in this work, because people at Woolwich Arsenal solemnly informed friends of mine that it was impossible for ordinary engineering firms to make a fuse. I know more about that than does the hon. Gentleman the Member for The Wrekin (Mr. I. O. Thomas). I was one of the first five people in the Ministry of Munitions. On another occasion I will give the hon. Member a long talk on that.
§ Sir H. Williams
I know what Lloyd George did, though not all.
May I quote one example of the kind of things which embarrass people today? There is a material called satinised aluminium, which is used for the dials of clocks and instruments. I happen to be a director of a firm which makes clocks. It is in Dundee, which will be of considerable interest to the Secretary of State for War. We were asked to go there by the Board of Trade, it being a distressed area. We want only one ton of this material to enable us to keep going for a long period. We cannot get it, and I am afraid that in a few weeks' time we shall have to dismiss a lot of workpeople and lose a substantial amount of export trade. It may be said that I am an interested person. That is not the reason why I mention it. It is just an example.
One trouble about this debate is that everyone has come with his own set of statistics and has thrown them about—my hon. Friend the Member for St. Albans (Mr. J. Grimston), who is sitting beside me, has 17 pages or more. The result is that nobody has been able to reply to anybody else. When the hon. Member for Coventry, North (Mr. Edelman) was speaking I heard him say one thing which I thought I could look up. He said that the Americans had cancelled supplies of steel sheets to this country.
I did not know whether they had or not, so I got the current number of the Board of Trade Returns and I found that in January, 1951, we imported plates and sheets of uncoated steel amounting 2581 to 2,603 tons and, last year, 908 tons, so we imported roughly three times as much this year as last year. Therefore, it looks probable that the statement made by the hon. Member was not accurate—I will not say untrue. In other words, he has been ill-informed. It very often happens to people who come from Coventry.
§ Mr. Haire
Surely the hon. Gentleman remembers the occasion—I think it was the second week in January—when we heard that certain orders for sheet steel from the United States had been cancelled or much delayed, that as a result unemployment would be caused in the Austin works, as, indeed, did happen?
§ Sir H. Williams
All I am saying is that the imports for January this year were three times as great as in January last year.
§ Sir H. Williams
Yes, but we might have had the whole story, not this expurgated edition which is characteristic of newspapers which are short of newsprint. The hon. Gentleman is not short of voice; therefore, he might have given us the whole story.
Then we heard a story about rubber prices in contrast with coal prices. It is rather unfortunate that we were not given a real comparison because the rubber prices were the prices for export and, in the case of coal prices, our exports are very small at present. As a matter of fact, a feature of the Festival of Britain will be the two new wharves which are being built at Battersea, at one of which they will be unloading American coal and at the other loading British coal for export. That will be a star feature because it is a new development in our system. When comparisons are made, they should be of like with like.
Whether it is desirable that rubber should be exported to Russia or not is a matter for debate, but we have to take our chance if we deliberately prohibit a large export. Another country may treat it as an act of war. We cannot say to a trader that he must not sell his product to a merchant and that that merchant, in turn, shall not be free to sell it to anybody else unless the State, as an act of statesmanship says, "Thou shalt not do it." It is no good blaming 2582 private traders if raw rubber is going to Russia. Therefore, there ought to be a little more careful examination of the ultimate consequences of what hon. Members say before they say it.
I have done my best, Mr. Deputy-Speaker, to keep within a reasonable limit. I should have taken five minutes fewer if there had been less interruption from the other side of the House.
§ 2.14 p.m.
§ Mr. Joseph Hale (Rochdale)
In listening to hon. Gentlemen opposite I formed the opinion that their principal complaint was, as the hon. Member for Croydon, East (Sir H. Williams) summarised it, that each hon. Member had brought here his own set of statistics and, like most people in public debate, each kept to the statistics he brought in with him. I have been saved that task because everybody in the House seems to have the same set of statistics as myself. Of course, it all depends on how one uses statistics, or what one quotes from them.
Mr. Dames (East Ham, North)
Figures do not lie.
§ Mr. Hale
We in this House at least agree on one thing, that raw materials are important in three fields: the maintenance of our standard of life largely by means of our exports, re-armament, and the development of the backward areas of the world. Those are tasks to which the Opposition are pledged as much as we are on this side of House. We would do well to examine the position more from that angle than from the angle recommended by the hon. Member for Clitheroe (Mr. Fort) who I regret is not in his place. Whether we like it or not, the world is more or less divided into two blocks, and whatever subject in the field of raw materials one considers, ultimately those considerations become economic rather than political.
The hon. Member for Croydon, East, drew our attention to the fact that were it not for the high 'prices paid for such commodities as rubber, the dollar gap, which, I agree, we on this side have boasted is closed, would not have been closed.
§ Mr. Hale
It may be true but in that case do I take it that the hon. Member 2583 and his supporters on the Opposition benches, if indeed he has any, suppose that it is a good thing for the rest of the economy? It is all very well for independent producer nations to say that it is a good thing that prices are high. It happens that we in this island, who are the largest importers of raw materials, have to take an entirely different view.
§ Sir H. Williams
If the hon. Gentleman is asking me a question, I follow the example of Ministers in saying that it is a very good thing that the dollar gap has been closed.
§ Mr. Hale
The mover of the Motion drew our attention to the fact that our stocks of zinc are only two-thirds of what they were 12 months ago. I am sure that no one in the House is surprised at that, least of all the hon. Member for Wembley, South (Mr. Russell), who said it. We in the West have experienced a longer period of full or near full employment than has been the lot of Western nations in their whole history. I am not speaking particularly of this country when I say that. Is it surprising, therefore, that the producers of the basic materials which we are discussing find it difficult to keep pace with the ever-increasing demands made upon them by industry?
We argue on this side that our policy is the right one. We know that our argument is not acceptable to hon. Members opposite, but we still stick to it because we believe it to be right even in relation to the one commodity of which this island has plenty—coal. The problems of the coal industry are known to hon. Gentlemen opposite, but they are incapable of providing any other solution than to create unemployment to make men glad to go in the mines. We might get nearer to the truth behind this Motion if we followed the example of the hon. Member for Croydon, East. Hon. Members opposite have little objection to high prices.
§ Mr. Hale
What they object to is not being able to "muscle in" on them. It annoys hon. Gentlemen opposite that the Board of Trade forbid them to indulge 2584 in the kind of speculation that has driven wool up to its present exorbitant prices. They have a double disadvantage. They are unable to take advantage of the markets in Australia and America where these prices have soared, and they are being called upon by the Board of Trade to pay high prices for the materials that the Board obtains on their behalf.
I wonder what the position would be if we were to take to heart what is contained in the Motion and return to free enterprise in the buying of the commodities which are the basis of our industries? Hon. Members opposite really do not believe we are entering upon a phase in our economy where internal controls will be relinquished. We all know that if we are to fulfil our commitments to our Allies by carrying out a degree of re-armament, we are to have more controls internally than we have at present. I do not believe hon. Gentlemen opposite when they put forward Motions of this kind, and say we can return to the pre-1939 picture. They do not believe it themselves, and would not put these things into practice if they occupied these benches.
Are we to have a situation in which private buyers roam the world for materials while the Government have the job of dishing them out? [An HON. MEMBER: "Priorities."] We are concerned with priorities. We know that when we talk of the industrial health of this country we are, in fact, discussing strategy. We all know, and it goes for hon. Members opposite just as much as for anybody on this side, that the standard of life of the people and the condition of employment in this country are as valuable to us in resisting what we believe to be an external menace as any amount of armaments that this country or our American Allies can produce.
I should like to devote what remains of the short time at my disposal to answering a few points made by the hon. and gallant Member for Wembley, North (Wing Commander Bullus) who seconded the Motion. He referred to shipments of rubber to the Soviet Union and her satellites. It is idle for anyone in the House to pretend that we could restrict importation of rubber by Russia and her satellites without running into very serious trouble in the international sphere. At the same time, let us not create the 2585 impression that we are at all happy that Russia and her Allies are getting rubber in the quantities they bought last year.
I have heard it suggested, and I think the hon. Member for Bury and Radcliffe (Mr. W. Fletcher), who has great knowledge of this rubber industry, agrees, that the rubber producers would be glad if the Government took steps to strengthen their hand, at least, in resisting the transportation of rubber to the Soviet Union. We come here to the question of morality. Private traders throughout the world can put into operation any kind of policy barring a moral one. I know that the hon. Member for Bury and Radcliffe and those who have knowledge of the rubber industry would be glad to have some guidance from the Government on this matter, but I know that he and his colleagues realise full well the Government's own difficulties. Therefore, it is idle for people to complain of the shipments of rubber to Russia unless they are prepared to face the consequences of ceasing the shipments, and I do not believe that any hon. Member opposite would be prepared to face what might be the consequences if we did so.
I hope that the House will reject this Motion and will take note of what the President of the Board of Trade said when he dealt with these problems. We, as an importing country, are not in a position to dictate or to attempt to dictate what shall be international policy on this matter. The only solution of shortage of materials and high prices is to be found in international co-operation, and international cooperation is more easily achieved between Governments than between private persons.
§ Mr. Hale
Or copper, let us remember that the last words on these matters are said by Governments. The last word on meat in the Argentine is being said by the Argentine Government and not by 2586 private traders in the Argentine. Committees set up in Washington are at this moment trying to solve these difficulties in so far as they affect people interested in the Western way of life, and we would be well advised to await the outcome of negotiations before deciding whether we can or cannot afford to allow the purchase of these materials to return in some measure to the previous buyers.
At this moment we should not give prior notice that we are prepared to allow the public to he at the mercy of people whose first thought is for profit. While it may be true that in the past those people have served this country well in an altogether different atmosphere in the international field, we have no guarantee that that will be the case today in an atmosphere which appears to me to be charged with as much inflammable material as the world is ever likely to have.
§ 2.30 p.m.
§ Mr. Watkinson (Woking)
I shall be brief and, therefore, I must apologise to the hon. Member for Rochdale (Mr. J. Hale) if I do not follow his argument. In fact, I found it difficult to make up my mind what he was trying to impart to the House.
I do not know whether we shall hear from the Minister of Supply before the debate is concluded, but there are certain matters which have not arisen in the debate and which are of grave concern to those in the engineering industry who rely on reasonably adequate supplies of raw material to enable them to do the work they are called upon to do. The Chancellor of the Exchequer made a very long speech yesterday at the Dollar Convention at Eastbourne, in which he made certain statements on the raw materials position —statements which, if I may say so, I think ought to have been made in this House. But even those statements did not satisfactorily clarify the position.
Let me take one example. In the two Orders—one is the 1951 Order, No. 277, and I shall not bother the House with the number of the other—certain types of manufacture are, in effect, prohibited. I am sure it will not be denied by anybody on the Government Benches that a proportion of those manufactures were exported, nor do I think it will be denied that in the past those of us in industry who 2587 have been exporting have been told that our supply of raw materials, particularly when they came from dollar sources, depended upon the volume of our exports.
There is a great deal of confusion in industry about where they stand today. First of all, what are the priorities? Is re-armament an over-riding priority or is it, as some industrialists have been told, a sort of equal priority with dollar exports? It is important that industry should know all these things if industry is to sort itself out and to get some clear picture of how it is to use these scarce raw materials as successfully as possible, whatever supplies may be obtained.
I thought the position might have been made clear on these two points in the debate. First, where we are dealing with a prohibited class of manufacture in which a substantial export trade exists, is industry to be given any chance of retaining that export trade or is it to be swept on one side? Secondly, has the idea that exports to hard currency countries justified a large allocation of raw materials gone by the board or have the Government a different method of dealing with that? How does industry stand in this matter? It is important that the position should be made more plain.
Hon. Gentlemen opposite have made a very good case for a complete and urgent overhaul of our entire system of purchases, whether they be bulk purchase or any other purchase. Many hon. Members who have spoken from the benches opposite appear either not to know or conveniently to have forgotten that, by the device of currency control, such a thing as private enterprise buying no longer exists and has not existed since before the war. There is no question of any trader going into the markets of the world and doing exactly what he likes, because the Bank of England would not allow him to do it.
The remarks that have been made by hon. Members opposite, including the President of the Board of Trade, have shown that at the moment the Government are proceeding on the good old principle laid down by Sir Stafford Cripps—that of going from one temporary expedient to another. I believe the general position calls for a complete re-examination of all our buying methods. 2588 What do some of these mysterious committees do? What about the Defence Production Board, which I understand is under North Atlantic Treaty Organisation, and what of the Raw Materials Sub-Committee, which I understand is a sub-committee of the Defence Production Board of N.A.T.O.? I have a shrewd suspicion that we have so multiplied the number of committees that the whole subject is dealt with on so high a level that it never gets down to practical facts at all. I am inclined to think that if the Government are vulnerable in anything they are vulnerable in having a machine which is so stiff in the joints and hard in the arteries that it cannot take a decision at all. That is why we have missed the boat, time and time again, when questions arose concerning scarce raw materials.
I do not wish to argue points about sulphur, cotton or anything else, but I suggest that the difficulties which the Government have had over scarce raw materials—difficulties which I am afraid cannot now be avoided—ought to have brought to their mind the necessity for overhauling this complicated structure of committees and advisory groups. Steering Groups, commodity groups and so on. Cannot we do something to get a simple and straightforward channel of approach between this country, the United States and our other suppliers of raw materials so that our legitimate demands can be quickly and clearly and factually made known to our suppliers, and so that we can put sufficient pressure upon them to see that we are given a fair allocation of what is available?
During the last week I have been trying to obtain a list of the various committees which exist at the moment, some apparently reporting to the Chancellor of the Exchequer, others tied to the Ministry of Supply and others tied to the Board of Trade. I have not even been able to obtain a complete list. If this debate has persuaded the Government to look again at these various channels of organisation it may have done a very good service, because in my view one of the most important reasons why we are now being starved of raw materials in this country is that even this Government of so-called planners have not produced the kind of plans which offer any hope of our obtaining them in a time of scarcity.
2589 Unless the present arrangements are altered, I am convinced that we shall constantly be faced with a new set of shortages and a new set of bottlenecks. I hope the Government will look at the matter again to see whether they cannot streamline the procedure a little more—in other words, make it a little more like private enterprise.
§ 2.37 p.m.
§ Mrs. Eirene White (Flint, East)
I intervene in the debate for a few minutes partly because of the very serious statement made by the President of the Board of Trade about the sulphur situation and its effect on the rayon industry. Hon. Members opposite may ask why I mention sulphur, because that is one of the very few commodities about which they have to admit that the Government are not entirely to blame. While hon. Members may admit that here, I have already observed in my constituency, where there are many thousands of workers engaged in the rayon industry, that other Conservative speakers do not give a true picture of the situation.
At a time when the workers are greatly concerned about their future and their well-being, and that of their families, speakers on Conservative platforms do nothing to put the true facts of the situation before them so as to help and not hinder in what is admittedly a difficult industrial position. I am not in any way complaining about the behaviour of the employers. I believe they have done their best to meet the workers on the problems which have arisen and which will arise more acutely if the possible reduction in allocation indicated by the President takes place.
So far as I can in this House, I want to make a plea which I hope may reach the people of the United States. If we could reach them I am certain we should have more sympathetic treatment than that we are receiving at present. I wish I could find among hon. Members opposite one who would really speak the truth, so that I could take him to the United States and try to tell the people there—
§ Sir H. Williams
On a point of order. The hon. Lady said that if she could find an hon. Member on these benches who would tell the truth, she would like to go to the United States of America with 2590 him. Is that not a reflection on the whole House?
§ Mrs. White
It is not intended to be a reflection on the hon. Member for Croydon, East (Sir H. Williams), but I have myself already suffered from misrepresentation on this matter. There have been other people from the opposite side of the House who have been to the United States who have not stated completely accurately, shall we say, the situation in matters of this kind. The point I wish to make is that what we ask of the United States is really very little in relation to their own consumption. What they are doing to us by asking that the sulphur should be kept for their own use will do incalculable damage to our industry.
I understand that the domestic consumption of sulphur for acid and all other purposes in the United States is, roughly, four million tons per annum. Our consumption, on the present allocation, is 326,000 tons. Taking the relative populations, or even the relative level of industrial production, one cannot help feeling that in this situation, in which only 3 per cent. of their consumption of this vital commodity would make so much difference to us, they might well try to meet us in this difficulty. The allocation for the first quarter of this year means for us not a 3 per cent. cut, as would be entailed for them if they met us but, so far as sulphur for acid is concerned, a 28 per cent. cut on our consumption of last year and a 30 per cent. cut of our sulphur requirements for other purposes.
That is so much greater, proportionately, than what we ask them, that I very much hope that the United States representatives who are now meeting our representatives and those of other countries on the sulphur commodity group, and who have been meeting our Ambassador in Washington recently, will themselves display still more of that generosity which they have shown in Marshall Aid and other ways, and will realise that they could help us to keep our industrial production going without doing any very serious damage to themselves. We are not asking that they should do that in perpetuity. It is well known on both sides of the House that while we depend on raw sulphur at present there are alternative methods of 2591 obtaining the same chemicals by using pyrites or anhydrite.
I should like to refer to a comment in the Motion which implies that the Government have taken no far-sighted action in this matter. Industry must surely accept some of its own responsibilities. While we would all admit that the rayon industry, fertiliser manufacturers, etc., are in a difficult position at present some warning, at all events, was given in March, 1949, that it would not be possible to increase their consumption of sulphur. There was a warning, which was very well known in the trade at that time. That was a danger signal which should have been regarded. I understand that the Government indicated in March, 1949, that manufacturers and industrialists would be well advised to consider the alternative methods and not to rely entirely upon the use of raw sulphur, and that that advice was not taken as seriously as it should have been.
§ Mrs. White
I am sorry that I cannot give way to the hon. and gallant Member as I have promised to sit down in a few minutes in order that there shall be adequate time for subsequent speakers.
I understand that this advice was not taken sufficiently seriously by private industry, that applications for a continuing increase in sulphur burning plant were made, and that it is only in relatively recent times that plans have been put forward for alternative methods of production. I am not blaming private industry unduly, but they should not blame the Government because they were no more far-sighted. I make that point only because I do not think it at all fair that those concerned with private industry should try to evade all their responsibility in the matter, and that they should put the whole of the blame on this Government or even on the United States. They had some warning admittedly, not a full appreciation of the position; no one had that—and, according to my information, they did not take full advantage of it.
The difficulties in the future, if we do not obtain an augmentation of this very inadequate allocation, will be considerable. I hope that if we are so unfortunate as not to be able to persuade our 2592 American friends to do what is obviously to the advantage of us all, we shall at least have in industry the best possible information from the Government and the greatest possible measure of consultation with the workers' organisations. I say that because in some areas, such as my own constituency, for example, there is absolutely no alternative work if rayon production is cut. We are not an area like the Midlands, for example, where women workers can, if they are out of one job, be absorbed in some other kind of work. We have no alternative work, and if rayon manufacture is cut it may mean transference of some kind or unemployment on a considerable scale.
I can only reiterate that any Members opposite who have any influence in the United States—and some of them sometimes think that they have—should use that influence to impress on any friends they have there that this is a desperate matter for this country. Industrialists cannot plan if, as has happened in the case of sulphur, it was 18th December before we were informed what would be available on 1st January, and that now, on 2nd March, we do not know what we are to get on 1st April.
§ Mrs. White
That is the United States. We are at their mercy in this matter, in view of the proportion of the available sulphur which they produce. It is surely clear to them that this position is industrially intolerable, and that it is in the interests of re-armament and industrial peace that they should meet us in this extremely important matter.
§ 2.48 p.m.
§ Mr. R. S. Hudson (Southport)
We have listened to an interesting speech from the hon. Member for Flint, East (Mrs. White), with which I shall deal in a moment. The debate was opened by what we on this side at all events regarded as a very able speech by my hon. Friend the Member for Wembley, South (Mr. Russell). After listening to practically the whole debate I am bound to say that very little if any attempt has been made to meet the points which he put forward.
The speech of the hon. Member for Coventry, North (Mr. Edelman), dealt not with the question of supplies and stocks of raw materials, which are the really important considerations in this crisis in 2593 which we find ourselves: he dealt entirely with the question of price, which is relatively unimportant. After listening to the speech of the hon. Member for Stechford (Mr. Jenkins), I hope, if he returns to the Chamber before I have finished speaking, to say a word or two to him about the condition in which his constituents will find themselves as a result of the inaction of the Government in the acquiring of stocks of raw materials which vitally affect the whole of Birmingham and the Midlands.
A good deal of time has been taken in discussing the relative merits of private enterprise and bulk purchasing. I do not propose to spend any appreciable length of time on that topic, except to say that we on this side of the House do not maintain that private enterprise in purchasing is necessarily the best thing in all circumstances, or that bulk purchasing is necessarily bad in all circumstances. We say that the real defect of bulk purchase is that if the person in charge makes a mistake he makes it on a colossal scale, whereas if private industrialists are concerned the mistakes tend to balance each other. The chances are, over a long period, that some good judgment will eventually emerge. But in the case of bulk purchasing, especially by this Government, if a mistake is made the result to the nation is extremely serious. I propose to try to give concrete instances of what has occurred.
We all remember that the right hon. Gentlemen who form this Government assumed that they know very much better than everybody else. They have to be judged by that claim. It will be remembered that the Lord President of the Council—I am sorry that he is not here and taking an interest in this debate—said at the Labour Party conference at Bournemouth, in 1946, or is reported to have said:The real problem of statesmanship in the field of industry and economics is to see trouble coming and to prevent ourselves from getting into the smash. We are determined that we are not going to he caught unawares by blind economic forces under this Administration.The speech of the President of the Board of Trade was a long excuse for the number of occasions on which the Government had been the victims of what the Lord President would call, "blind economic forces." If they had not made 2594 such an exaggerated claim they would receive greater sympathy.
The President of the Board of Trade painted for us a very gloomy picture of the results in the cotton industry of the lack of adequate supplies of cotton allocated by the United States and of the results in the rayon industry and the chemical industry—which the hon. Member for Flint, East (Mrs. White) emphasised—due to the shortage of sulphur. The impression left on my mind, and on the minds of everybody taking a dispassionate view of the matter, is that this is proof of what we have said in this Motion. It is the result of the incompetence of the present Government. It is the result of the failure of the Government to make clear to the United States exactly that shortage which the hon. Member for Flint, East, was talking about.
I have had long experience of discussions with the United States about the supply of raw materials of all sorts, and of other things, dating from the last war. My experience is that the United States negotiators are eminently reasonable men. They are hard and they are tough, but if one puts one's case properly and sympathetically to them they see the point. I am quite convinced that it is because the negotiators of the present Government have failed to do so that we are suffering these results. A different Administration would have achieved a different result.
The right hon. Gentleman talked about the advantages of the Raw Cotton Commission over the private person in buying cotton. I am told that at present the Raw Cotton Commission possess stocks of very low quality cotton which have been forced on them—so they allege, as an excuse—by the United States Government. That would never have happened under conditions of private enterprise.
§ Mr. Oliver (Ilkeston)
That is only hearsay on the part of the right hon. Gentleman, and he knows it.
§ Mr. Hudson
It is not hearsay at all. I have here case after case, but I do not want to keep the House—
§ Mr. Hudson
Well, I am told, but look at the position. When we were engaged in the private importing of cotton 2595 people knew what was available; but under the present ré gime, when everything is bought by the Raw Cotton Commission, the Commission refuse to disclose their stocks. What right has the hon. Gentleman to accuse me of not having statistics? It is disgraceful and that is what we complain about—that the people in Lancashire do not know what is the position.
§ Mr. Oliver
The right hon. Gentleman was talking about quality. I asked for his evidence and he has not any.
§ Mr. Hudson
We are deprived of any statistics because the Government are afraid of being exposed. They are afraid —and I say it deliberately—to tell the public what stocks of cotton there are and what qualities they have, because they are afraid the public would see they are, in fact, overloaded with this third-class stuff. That is one of the handicaps under which the Lancashire cotton industry is working today. A Lancashire cotton manufacturer may ask the Raw Cotton Commission for a supply of so many bales of American type cotton and will be told, "You cannot have more than 25 per cent. The rest you must buy from elsewhere." That is true; any manufacturer in Lancashire will say the same. I had a case quoted to me only this week of a man who was told that he could not have the supplies of American cotton he required and was also told to substitute for it other growths.
§ Mr. H. Wilson
I do not deny for a moment there are many manufacturers who are not able to get the supplies they want, and the right hon. Gentleman is quite right in saying so. Surely he realises that this is due to the fact that the Raw Cotton Commission—and private enterprise would have been in the same position—did not have the dollars to buy all the American type cotton until last year and that, since then, the cotton has not been available.
§ Mr. Hudson
That is precisely the point we made when we were discussing the setting up of the Raw Cotton Commission and the abolition of the Liverpool Cotton Exchange. That is what we said would happen. We said that manufacturers who wanted particular types of cotton for special lines would not be able to get them, although they had been able to get them in the past.
§ Mr. Hudson
To the extent that dollars had been available they would have got the types of cotton they required.
§ Mr. Hudson
No, I wish to conclude shortly in order to give other hon. Members opposite an opportunity to speak.
Let me try to trace the reason for this failure on the part of the Government. The right hon. Gentleman talked about what happened in the summer of 1949. Then there was a depression in the United States. People thought it would last and extend, and prices definitely were falling. In the late summer of 1949 the situation in the United States changed. In the autumn—the pound was devalued about September—there were definite signs that the recession had terminated and was being substituted by an expansion of business. Therefore, any guess by the Government in the summer as to what was going to happen obviously had to be changed by the autumn.
So far as we can make out, and judging by what has happened, the Government continued to believe—and this, I think, is where they made a great error —right through the winter of 1949 and the early part of 1950 that this expansion of business in the United States was a purely temporary one and that we should see a recession again. Therefore, they held off. Apart from the question of lack of dollars they held off purchasing. By the early part of 1950 it was clear to the world as a whole—it was certainly clear to America and to many other countries who had suffered through the recession of United States buying power—that this expansion would continue, and prices started to harden. What was more interesting was that, not only did spot prices harden, but futures hardened, too. That was an indication to anyone who had any knowledge of the subject, and sensible people would have started to build up stocks. Instead, the Government did exactly the opposite.
§ Mr. Harold Davies
On a point of order. I heard an hon. Gentleman hurl the epithet "Gadarene swine" at this side 2597 of the House. Is it in order, Sir, for an hon. Member opposite to call those on this side of the House "Gadarene swine"?
§ Mr. Speaker
Did I understand the hon. Gentleman to refer to a Government crime? If one disagrees violently with what a Government does and says that it is a Government crime, I do not think that it is out of order.
§ Dr. Morgan (Warrington)
The words "Gadarene swine," being Biblical, are well known to have a definite meaning, Sir. I protest against such an expression being used in the House. I have done nothing to make me like a Gadarene swine. I know something about hon. Gentlemen opposite which makes them more like Gadarene swine than I am.
§ Mr. Speaker
One can always use harsh words against a party or a Government: one cannot do it against individuals. I really cannot see that there is anything out of order in this.
§ Mr. Hudson
I want to conclude soon, to allow hon. Gentlemen opposite an opportunity to speak. They can continue to interrupt if they wish, but I intend to make my speech.
I was about to say that by the spring of 1950 it was fairly clear that the situation had changed. But the Government did not agree. In January, 1950, they had a contract for 50,000 tons of zinc a year from Canada, and they cancelled that contract. Since the autumn, they have been endeavouring to get the contract restored at a substantially greater price than if they had allowed it to continue. If I had time I could quote a number of similar instances. By the time summer came, the other countries having already started to purchase, we had the Korean invasion and then, of course, the United States started stockpiling.
We have heard a good deal about the need for co-operation, about which the right hon. Gentleman spoke so eloquently, but why did not the Government start taking steps to get this co-operation last summer? That would have been the time to do it. The time for co-operation was immediately it was seen that the United States were starting stockpiling. Of course, the answer was that, contrary 2598 to what was said by the hon. Member for Coventry, North, about the disadvantages of the increase in the price of rubber, the Chancellor of the Exchequer was only too pleased, because it was helping to build up his dollar reserves.
The net result over the whole year was that the total stocks of dollar raw materials were allowed to run down in this country by a figure of £40 million. I think that the right hon. Gentleman will agree with that. That was the figure given by the Chancellor. Our dollar and gold reserves, on the other hand, went up by £576 million. The net result at the end of the year, was that we had the gold, but we had not got the raw materials. As the Chancellor rightly said recently, he is now proposing to reverse that process and use some of the dollars for buying raw materials. As he said, raw materials are just as good a capital asset as the dollar reserves. If they had been a capital asset in February, 1951, they would have been a far better asset in the summer of last year, because the same number of dollars invested in raw materials in the summer of last year would have produced substantially larger quantities of raw materials in stock today.
The President of the Board of Trade said that, when the third quarter of last year came, they found that they had the dollars, but had not got the raw materials. I am not quite sure that that was a correct statement of fact; it certainly did not apply universally. I am informed that, as far as zinc, one of the key nonferrous metals, is concerned, offers were made in November by the United States at 22 cents., but were refused by the Ministry of Supply or the Purchasing Board at that time, whereas the Ministry of Supply are now only too anxious to get the same supplies at a price of 28 cents.
§ Mr. G. R. Strauss
May I contradict that? There is no truth in it. We are not willing to buy at such black market prices.
§ Mr. Hudson
The result, of course, will be that the Minister will not get the zinc. If I may divert for a moment, that is what the Minister of Food has been doing. The Minister of Food is never tired of telling us of the advantages we get from our bulk purchase agreements.
2599 Most of these agreements contain clauses to allow a variation of price up or down, according to market variations, of 7½ per cent. Last year, at all events, the Minister of Food, in negotiations with our principal suppliers, refused the variation of 7½ per cent., and said that it was too high. He was only willing to offer 5 per cent., and our suppliers had to take it, but what has been the result on the food stocks available in this country?
If we take the case of butter, Australia, New Zealand and Denmark objected to the price for butter being raised by only 5 per cent., and there were considerable additional supplies available. Rather than send them forward at this price, to which they had taken exception, all three countries de-rationed butter, and the consumption has risen very largely in those countries, with the result that the British housewife is today without those additional supplies of butter which she could have got.
If we take the case of bacon, the Dutch objected to an increased price which was less than they thought was right in respect of their supplies of bacon. They had an obligation to send us 20,000 tons, but there were another 15,000 tons available. They sent us the 20,000 tons, it is true, but the additional 15,000 tons which we could have got they have sent to Germany. Here, again, as a result of this doctrine, the British housewife has to do without a lot of bacon which she could have had.
The same thing is true of shell eggs from Holland, and, if I had the time, I could go right through the list.
§ Mr. Hudson
The fact is that the Government take the attitude that the gentleman from Whitehall knows best—
§ Mr. Hudson
I cannot give way; I did not interrupt the hon. Gentleman's speech.
The trouble is that the Government think that the gentleman from Whitehall knows best, and they are labouring under the delusion that, in a period of rising world prices in which we find ourselves today, regarding both food and raw materials, by adopting a system of bulk buying they can prevent the world 2600 market prices rising against them. The answer is that they cannot. They have not got control of supplies overseas, and that is really the answer about rubber. They cannot control the whole overseas supplies of rubber, and, therefore, the price of rubber finds its own level, conditioned by United States stockpiling and by Russian and Chinese purchases.
In the case of tin, the same thing applies, conditioned by Italian and Portuguese purchases, and so forth. The Government are trying to do something which they cannot do, and the only net effect is that they are depriving the British housewife, consumer and manufacturer of valuable supplies of raw materials which, otherwise, they could get.
Let us take the case of zinc. The right hon. Gentleman caused a circular to be sent out in August about copper, lead and zinc. It said:The Ministry of Supply have had under consideration the situation with regard to copper, lead and zinc. The Ministry wish it to he known"—and these are the operative words to which I would call the attention of the House—that there are ample stocks"—I am glad the right hon. Gentleman agrees with me; he will see what "ample" means in a moment or two-to meet consumers' current requirements as they arise, and that purchases by consumers, either for immediate or deferred delivery, are unnecessary. Such purchases create scarcity and are undesirable. In order to discourage such extensive forward buyings of these metals, the Ministry have decided that from tomorrow, 26th August, additional charges for forward purchases will be increased.The circular then gave a list of the increased charges. Copper, £13 10s. instead of 30s.; lead, £7 instead of £1, and zinc, £13 instead of £1. Any ordinary person would say, and I am sure the manufacturers in Birmingham, constituents of the hon. Member would say, "The Ministry have ample stocks with which to see me through, and it is unnecessary for me to incur the additional expense imposed by the Ministry "equivalent, incidentally, to an interest rate of 40 per cent. per annum—" of buying these forward supplies." But what are the facts? What were these ample supplies?
§ Mr. G. R. Strauss
I do not know whether the right hon. Gentleman was 2601 expecting an answer, but I would point out that, at that time, we had ample stocks for current requirements and for immediate future needs of industry, and we were anxious at that time to prevent hoarding by stockists and others. For that reason we issued that notice.
§ Mr. Hudson
I am much obliged to the right hon. Gentleman, and I shall leave it to the House to judge in a moment or two the accuracy or otherwise of his statement.
At the time when he says we had ample supplies in this country for current and immediate future needs, the actual Government stocks of zinc were 41,800 tons in July and 36,900 tons in August. The average consumption at that time for the whole of 1949 was 23,800 tons. So his "ample stocks" were less than six weeks' supply.
§ Mr. Strauss
Stocks include metals on the way to this country and metals which we have purchased in other countries, and which are about to be shipped.
§ Mr. Hudson
The Minister is getting himself deeper and deeper into the mire. He obviously has not taken the precaution to fortify himself with actual figures. The figure for August was 36,900 tons, which was six weeks' supply; the figure for September was 28,900 tons, which was five weeks' supply—I do not see much sign of the stocks on the way coming along—the figure for October was 21,300 tons, which was less than four weeks' supply, and the figure for November was 22,600 tons.
So "great" were the stocks which the right hon. Gentleman says were in the offing, that, in December, he sent a message to the consumers of Birmingham, including the constituents of the hon. Member behind him to say that he was very sorry that the stocks were insufficient and that production must be cut by 50 per cent. That does not sound very much like what he said. The fact is, of course, that this statement was wholly untrue, and that the right hon. Gentleman had no right to lead the consumers to believe that if they went on manufacturing they would he able, in due course, to get the necessary supplies.
Now comes the question of what happens to these men. As the hon. Member for Stechford (Mr. lenk ins) rightly said, 2602 manufacturers will, in the near future, be up against the impossibility of manufacturing a whole range of goods containing scarce raw materials. Nothing has been done so far as I know, or so far as the manufacturers have been told, to cover the gap between these orders running out and the granting of armament orders. It is very unlikely indeed that any armament orders of any substance, at all events in a cold war, will, in fact, come to take care of, or provide alternative work for, these men.
Therefore, we shall have, in Birmingham, a large amount of hardship. We may have a large number of small firms driven out of business and a certain amount of unemployment until men who, for example, have been making artificial jewellery have been found alternative work in re-armament. That is why we have put this Motion on the Order Paper. This is the fault of the right hon. Gentleman. This would not have happened if, in January, 1950, he had not cancelled the contract of 50,000 tons of zinc a year, which now he cannot get. I could say the same about cotton and steel.
My hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher) asked the Prime Minister on 25th July last if he would give an assurance that there were held in this country under storage conditions, giving ample protection, sufficient stocks of all strategic raw materials. The Prime Minister replied:If the hon. Member is referring to stocks of strategic materials held by the Government, it will not he in the public interest to make any statement.That is not surprising, considering how low they had been allowed to fall. The right hon. Gentleman went on:I can assure him, however, that the amount and allocation of stocks of such materials is being kept under continuous review.He added, in reply to a supplementary question:There is a special Departmental committee continuously at work watching precisely these matters."—[OFFICIAL REPORT, 25th July, 1950; Vol. 478, c. 244.]We now know from the Chancellor of the Exchequer's statement that the only noticeable result of the work of that committee was to ensure that our raw materials during 1950 dropped—not rose—by 40 million dollars. Even that does not give the House the full measure of the drop.
2603 because it was carefully stated in the Chancellor's reply that that was the dollar price at the end of 1950—not the tonnage. What would have happened if the dollar price paid in the autumn could have been paid in the summer or spring when prices were low?
There is one other point on the question of shipping. In a supplementary question the other day, I asked the right hon. Gentleman whether he was aware of the extent to which the bulk buying and bulk purchasing Departments of the Government had by their action worsened the freight situation and given an upward rise in freight costs. He challenged me, and said that that was not so. If he will look at page 13 at the Chamber of Shipping Report he will see that important priorities, apart from coal were notified to the shipping industry—timber from the Pacific, coarse grain from the Gulf and the movement of heavy grain from Australia to India.
The comment of the Chamber of Shipping is that, as a decision had been taken to purchase coal from America, it is inconceivable that any private organisation would have announced to the world, as did the Minister of Fuel and Power, in Parliament, that it was about to purchase a large quantity of coal from a foreign country, with the knowledge—which ought to have been in the possession of the Ministry, and which is another example of the failure of this planning Government to make plans—that shipping was fully employed and that the consequences of this abnormal demand would be to force up freight rates.
During the last few weeks it has been our task here to expose muddle after muddle on the part of the Government. We have had the groundnuts muddle, the chicken muddle in Gambia, and now we have this muddle of raw materials, but with this vital difference: that the groundnuts muddle and the chicken muddle at least only cost the housewife the disappointment of her hopes and the taxpayer possibly some money, but the shortage of raw materials, for which the Government alone are responsible—
§ Mr. Hudson
I do not want to take up any more time. I have a number of 2604 examples covering other industries that. I could give.
§ Mr. Hudson
Yes—by the Government's action in not buying the cotton. I am certain that if other people had been negotiating with the Americans we should have had a better chance of getting more cotton.
§ Mrs. White
Does it not depend upon the ability of His Majesty's Ambassador? Is that not a reflection on the efficiency of His Majesty's Ambassador at Washington?
§ Mr. Hudson
The shortage of raw materials is more serious because it affects the employment and cost of living of the people, and, because of the bottlenecks, it will create the possibility of not getting on with our re-armament programme as quickly as we should.
§ 3.22 p.m.
§ Mr. George Craddock (Bradford, South)
At this late hour I intend to confine my remarks entirely to wool. It is an inescapable fact that wool is entirely in the hands of private enterprise. Raw wool from Australia is sold at auctions, and New Zealand wool is sold either by auction or by private treaty. The Commonwealth countries provide 75 per cent. of the exportable wool in the world. The Argentine and Uruguay provide between them 25 per cent. of the exportable wool. This is a very important factor, because Members opposite have repeatedly said that the Government have failed to take steps to acquire reserves of raw materials.
There is no better instance I can give than that of wool. During the war we bought the whole of the Commonwealth wool—about 5½ million bales, each year. By the end of the war, because we had been denying wool to enemy-occupied countries, we had built up stocks of 101 million bales. Therefore, the Government took all steps possible to secure these gigantic reserves. How did it come about that this great reserve of wool diminished until there was scarcely any reserve at all?
§ Squadron Leader Burden (Gillingham)
Those stocks were due to the efficiency of the war-time Government 2605 and had nothing to do with this Government. This Government has dissipated those reserves.
§ Mr. Craddock
If the hon. and gallant Member will permit me to continue I can give him a quite different answer. Since the war the world has used much more wool than has been grown. By the middle of 1950 that l0¼ million bales was less than 500,000 bales. This was at the time of the commencement of the Korean War. The result was that we were forced back on living on what was being grown. With increased military demands, the result has been that prices have gone very high indeed. It may have been expected that we would have reserved part of our accumulated stocks of 10¼ million bales, but in 1945 it was not expected that there would be this continuing demand for wool.
In many countries throughout the world, and particularly in this country where we have full employment, the ordinary common people are demanding better standards. Consequently, we have been using up more in recent years than the world has been growing. There is an unknown factor here. The price rises which have taken place since July have not been reflected in the price of clothes. One reason, of course, is that wool obtained last spring does not come on to the market for a year or more, and that is a most important factor. Then 85 per cent. of the wool cloth for the civilian market is utility, and the tight price control ensures wool being paid for at the old price. It must go into the clothes at a price relating to its cost. In other words, when we buy a large number of bales, the figure which we pay for the clothes in the shop is by price control related to the cost of the raw bales of wool.
It has been suggested that the wool industry may have to face unemployment. It has faced that problem before, but admittedly it has not had to meet prices as high as those of today. In Bradford we believe that both sides of the industry, employers and employees, will put their best skill into it, and no doubt a greater proportion of labour will be put on materials. For many years good relations have existed between the two sides of this industry. We can rely on the employers to do everything to retain the labour 2606 force, because it is such a skilled body of workers.
Wool, which is purchased by auction and private treaty in South Africa, Australia and New Zealand, is on the open market, and it is private enterprise which is running the effort. Therefore, the responsibility is not on this Government, but more and more we are becoming affected by increases in world prices and by the governments in the different parts of the world where the purchases are made. Since prices have gone up—wool prices in Australia have risen more than 260 per cent. in just over a year—we have had a Conservative Government in Australia. Wool prices have increased by more than 260 per cent. in the past 12 months in New Zealand and a Conservative Government has been returned there. I am not suggesting that the return of Conservative Governments in Australia and New Zealand is the prime factor why the prices have risen, but the Conservative Governments there have not checked the high prices of wool which are having such a deleterious effect on world markets. I hope that my hon. Friends will resist the Motion.
§ 3.31 p.m.
§ Mr. Walter Fletcher (Bury and Radcliffe)
Before coming to my main theme, I want first of all to deal with one or two of the speeches made in the Debate. The hon. Member for Coventry, North (Mr. Edelman), and I have shown, rather noticeably, that we differ. I would remind him that on two occasions he has begged the Government to listen to my advice in these matters. Perhaps he will do so on this occasion.
He tried to draw a comparison between rubber and coal, which does not really stand up. Rubber is produced only 50 per cent. within the sterling in the British Empire, and the coal in this country is for internal consumption to a preponderant extent. The hon. Member made certain reflections upon the rubber trade. He said that he had studied the matter very closely but I do not find that easy to swallow. He kept on talking about the Rubber Growers' Association selling rubber in a way that they ought not to do. The Rubber Growers' Association does not do that. That is the function of the Rubber Trade Federation, and, in Singapore, the members of the Singapore Chamber of Commerce.
2607 Many members of the trade, myself included, have pressed the Government for a very long time to take certain action to prevent leakage to enemy sources or sources which may be available to the enemy. But until we revert to full sanctions and the navicert, the stopping of ships going into open harbours—which is nearly always the nearest prelude to war that we can find—it will not be done. Every effort is made to limit it but there is no known means, with the best will and the greatest honesty, for doing it. The rubber trade, which works through the nominated agency of the Government, the Bank of England, is in close touch with the Board of Trade, and in these matters has a record which the President of the Board of Trade, if he so wished, could confirm does not deserve the constant denigration put upon it by the hon. Member for Coventry, North. If the President of the Board of Trade would like me to give way so that he can confirm what I have said, I shall be only too glad to do so.
§ Mr. Fletcher
I do not wish to give way except to the right hon. Gentleman, who, I believe, intended to rise at that point.
§ Mr. H. Wilson
I certainly confirm that the hon. Gentleman and many of his colleagues have at all times offered great assistance and been of great assistance to the Government in the matter of keeping watch on supplies to Eastern Europe and certain other countries. The hon. Gentleman in particular has been very helpful about this. I agree with his diagnosis of the situation as regards shipments to Eastern Europe, and I certainly confirm what he has said in that context.
§ Mr. Fletcher
Let us take rubber at the present moment. What is the stock in this country? Are we not in a dangerous position through lack of stockpiling? We heard from the Prime Minister, the President of the Board of Trade and the Chancellor of the Exchequer that we were to get on with stockpiling. Here is a material for which 2608 dollars are not needed. It is true that the sale of rubber produces dollars, but let us look at the situation here. There is probably not more than 50,000 tons of rubber in this country. Yet Australia, which is in the sterling area and has a consumption one-tenth of ours, announced in the last two days that she will lay in a stock of 50,000 tons. I bring that instance forward as showing the complete lack of comprehension that has gone on throughout in Government Departments over stockpiling.
Now I come to the speech of the President of the Board of Trade, particularly to that part dealing with cotton. The picture he painted was notable for its defects. There was nothing in his speech to show that the present stock of cotton has a hard core of unspinnable cotton, that it was never properly inspected at the source of supply, that today spinners are being asked to take under the name of American type cotton growths which they know perfectly well are no true substitute for American cotton.
§ The Parliamentary Secretary to the Board of Trade (Mr. Rhodes)
To what type of cotton is the hon. Member referring?
§ Mr. Fletcher
I have here a letter which I have received from one of the leading members of the Cotton Council. He will have to remain anonymous, just as high officials will,The R.C.C. appear to have lumped together in total, particulars of all the growths which they have bought, such as Brazilian, Mexican, Argentine, some African growths, and all sorts of odds and ends under the general description ' American Type Cotton,' and disclosed this total figure to those concerned with the arrangements of the formula and with the allocation of U.S.A. cotton. The result is that we are being called upon to use all these miscellaneous substitutes instead of U.S.A. cotton. The allocations made to us are supposed to be enough to increase our present stock of 'botch potch' to approximately the total quantity of cotton we shall require for the end of the season.
§ Mr. Fletcher
Every single person in the cotton trade in Lancashire, irrespective of politics, knows very well that he is being forced to use unspinnable cotton largely because what is supposed to be the stock of cotton really is not available. The right hon. Gentleman drew a picture which is no encouragement to those who have to produce an end product and to increase exports, as exhorted by the Government.
Let me come now to the real history of the troubles we are suffering. We have had many descriptions of the symptoms in every sort of raw material, but not a close enough analysis of the matter. It is not the inefficiency of the agencies—the Board of Trade or the Ministry of Supply—that we call into question so much today—although I shall have a word to say on that. The evil lies in the Government's financial policy over the last six years.
What happened? After the war the first loan thrown away. Grave errors made by the first Chancellor of the Exchequer of the Labour Government on the Convertibility Clause. A gradual worsening in our position throughout the world. The second dollar loan. The gradual gaining of feeling throughout the world that sterling could not hold its position. Then sterling devaluation. At the same time the Russian menace. We saw it in the Berlin airlift, of which no mention has been made, long before the Korean war. All the manifestations of growing tension were visible to everybody except, apparently. Whitehall.
And then what happened? We see no sign that that is being translated into terms of providing, through the Government agencies which have taken away the right of the private trader to provide for himself, the vital raw materials without which he cannot run. Because the House will realise that we cannot have empty warehouses and full employment. Then what happened? We have compared hon. Members opposite very often to Canute. There has been plenty of Canuteism. We have compared them to Ethelred the Unready, to the Unwise Virgins.
All of those are good comparisons, but there is a new one today. These are the Sleeping Beauties. I shall not head the queue to awaken them in traditional fashion. They were asleep during this 2610 period. What happened? Devaluation. The normal need after devaluation is that world prices of commodities in terms of devalued sterling shall adjust themselves to exactly the previous level. They did nothing of the sort. They remained persistently for many months 10 to 15 per cent. below the figures to which they should have gone in view of devaluation. As my right hon. Friend the Member for Southport (Mr. R. S. Hudson) said, that was due to some extent to slight rises in the markets.
It is an axiom to anybody who knows anything about the subject that that is the moment for a large scale buyer to step in and buy. It will be remembered that since the Liverpool Cotton Exchange was closed down they did not have to bother about an annual balance sheet which showed a loss. They are allowed by the Act to take one year with the other. They knew on a long term view that cotton should have been bought. It should have been bought when they would have been welcome to take the surplus from the American market in a very different way from now when there is a shortage.
§ Mr. Fletcher
It is that improvidence and lack of foresight which is the greatest possible danger. The right hon. Gentleman will recollect that many others beside myself have suggested on more than one occasion that his Department should use a barter operation. When they found a shortage of dollars they could easily have gone to the United States and said, "You are short of rubber and other things which we produce. You want rubber and various things. Let us do a big scale barter business and not necessarily go through the ordinary market channels." There is a precedent for that. In 1939–40 a big scale barter scheme for rubber from the British Empire against cotton was carried through by Sir John Hay acting on behalf of the Government. The Government send people who have no knowledge of these things to negotiate. All the trade associations in this country are willing to assist them but they will not take advantage of any proffered help.
After devaluation the shortage of dollars was a great embarrassment to the Government. There was a dilemma.
2611 They had to get the dollars so as to go on buying raw materials, which they began to know were going to be needed, both in the dollar area and in the sterling area—which they should have done in any case since dollars did not come into it. But this dilemma which they produce as an excuse is their own fault. Their years of bad finance have brought sterling into jeopardy. When the President of the Board of Trade gets up and, with some sign of self-satisfaction says that our failure to buy was unfortunately because we were short of dollars it is not a valid reason. It is a confession of failure, of the complete failure of the Government to give confidence in its currency. The whole evil springs from that.
The whole way through, the difficulty of stockpiling and of taking advantage of the knowledge the Government may have, springs entirely from the wrong financial policy. It is no use turning round and saying, as the President of the Board of Trade indicates, that private enterprise should have done this, that and the other. Private enterprise has its hands completely tied by foreign exchange regulations and it cannot do anything, even if it wants to, without the sanction of the Treasury and therefore without Government control.
I want to refer briefly to the question of bulk buying which comes into all these debates like King Charles's head. Bulk buying and long-term contracts have been in existence for decades, if not centuries. Government purchasing is no new thing. I have always thought it dangerous for either side of the House to be too doctrinaire and I ventured to point out in the food debate that it would have been very much wiser to select our bulk purchasing from our good friends, particularly within the Empire, and not to give those good friends a rough deal such as that we have given to Canada for a long time, with results that are known to us from reports by a Minister who has just returned there.
When bulk purchase is nice it is very nice and when it is nasty it is horrid —like the little girl. That is exactly true of our bulk purchase. We have seen it in the case of cotton, as I have explained to the House, in the dangerous position, 2612 only half revealed today, in which we find ourselves. It is equally bad in the case of most metals. When at last after constant urging by others besides myself, the Government began to realise that however much we may plan re-armament or the call-up of our men, none of these things can mean very much, nor can the planned programme be kept going unless we have the raw materials, what happens?
The Prime Minister rises in this House—and I followed him in that debate—and exhorts private enterprise not to stock. He says, "Please do not build up stocks; it will harm your neighbour, it will harm everybody." That plea would have had very great force if, at the same time, the Government had been stockpiling sufficiently themselves to give to those whom they were preventing from helping themselves the help that was needed in order to keep the factories going. But every single figure we have been given shows that even after the Prime Minister had made his statement, there was no urgency felt, no attempt made even in the sterling area, let alone the dollar area, to recreate stocks.
It was quite obvious that it would be necessary to try to make international arrangements. Let me say a word about the international bodies which have been sitting here and in Paris, and in New York. What is the salient fact which emerges? It is that every Government concerned, while they are willing in every way to try to make a contribution to prevent what is a very bad thing and which in the end will be one of the means of upsetting the whole balance of currencies and will lead to devaluations and inflation, say something on these lines, "We are only too willing to help but we have first of all to safeguard our factories, our workmen and any rearmament programme we have planned."
The right hon. Gentleman knows perfectly well that countries like Indonesia, with not much experience in international matters as yet, and even Ceylon, were only too willing to pay a certain amount of lip service, but that the actions of all these Governments, visible every day in the stockpiling which they are carrying out, make it quite clear that the means of international control are as yet not available or are not working.
It is an extraordinary thing that India, who believed so much in the Office of 2613 Good Relations or the Bureau of Good Offices for settling international problems, and who have a great influence on the present Government, have themselves been stockpiling to a very great extent recently. Possibly they think that the Bureau of Good Offices is of more use if they have three inches of steel and a tank as well, before they rely entirely upon the Bureau to help them out of international difficulties.
I am one of those who are sad at heart because of the lack of success which these international exchanges of view have had in the practical field. They have not succeeded so far in persuading any Government of any country responsible for continuous employment and the re-armament programme from considering first their own needs. His Majesty's Government in this case have honestly made their contribution and perhaps have believed a little too far some of the figures put before them and some of the figures put before the American Government before they made the cotton allocation. It is time they realised that their primary responsibility, while continuing international effort, is to see that the factories of this country are supplied, and that employment in this country, which is the main plank in their policy is secured as far as possible.
Even today they are being somewhat slow in action both in stockpiling and in their methods. It is quite extraordinary that this Government, who sincerely believe in planning, should invariably plan in one pattern: that is, to wait for an event to give them such a severe kick that they really have to do something. Their system apparently is that when the ship has gone on the rocks, a pilot plan is produced. That is what happened in the case of groundnuts. If a stockpiling programme of raw materials of some £130 million had been carried out last year instead of about £12 million having been spent for that purpose look where we should have been. We should have been perfectly secure and with no worries such as that referred to by the hon. Lady the Member for Flint, West (Mrs. White).
The Minister of Supply knows quite well that in respect of certain metals in Canada, which I will not specify, he was approached by one of the very well known groups of firms in the metal market last year and asked whether they should assist him. They were told, "No." He 2614 is now asking them to assist him to get exactly the same metals. The whole way through there runs this single thread of no policy, of waiting on the event, of saying "Have we enough dollars?" Surely at no moment could it be said that our dollar shortage was such that we could not have obtained a number of carefully worked out absolute essentials. The bottlenecks which we are going to face are not necessarily in the main commodities, the purchase of which requires a very large amount of dollars, but will very often be in very much smaller quantities of commodities the dollar allocation for which was always readily available.
Never let us forget that it is the overriding financial policy which has brought us to this present pass. Let us see what is to be the result. The standing of sterling has improved. Our stock of dollars and gold is better. But let me issue this warning—and the right hon. Gentleman did me the justice of saying that I had often in the past issued warnings of the dangers which are now realities. The financial structure of this country will be put in considerable jeopardy over the next year because the cost to every single firm of carrying its raw material stock on a fairly normal basis and the cost at the same time of financing the Government's stocks will produce what is very often the prelude to inflation.
The right hon. Gentleman and his friends have always spoken against inflation and have said that we must not have it. What is the truth? We have inflation—a very bad dose of it. I only hope that it will not develop into an even worse disease. The only way that can be avoided is by careful co-operation to an infinitely greater extent than now takes place between the various Government Departments, the trade associations and those in the trade, who are always willing to help.
If one goes into the City of London one will find that in the last fortnight or 10 days the bill market, which the right hon. Gentleman may not think has any effect on this matter but which is an extremely important factor, has begun to show an inflationary tendency, a rise in the cost of money. That is simply because factories have to finance their raw materials—£20 million more for 2615 tobacco, £40 million more for rubber, £30 million more for various other commodities. All those stocks, which could have been built up when the Prime Minister did not want them to be built up last year, are now having to be increased. It is becoming thoroughly embarrassing to every financial institution in the City.
If that takes place let me give a warning to the right hon. Gentleman, and let him pass it on to the Chancellor of the Exchequer. If there is a real beginning of the inflation rise—and the same thing is beginning to happen in the United States and other countries—what today are very dear prices for raw materials will, with no volition on behalf of the producer or the market organisation, rocket to the most dangerous degree.
All the way through the Government have had a certain inhibition. They do not want to show in the accounts at the end of the year which come under the survey of this House that they have bought badly. When an article goes from one shilling to two shillings they are terrified to buy at two shillings in case it goes back to one shilling. They never examine factually the reason why what is costing two shillings may, because of inflation in the world, outside stockpiling and Government stockpiling, increase in price. They have never dared to look ahead. They are timid. The shadow of the Treasury and the Estimates, and the Public
§ Accounts Committee is over them. They never get together in time on a large enough scale.
§ It is the real onus of the case against Government purchase which is a term I prefer to bulk buying, that it is too little and too late in nearly every case. I suggest that this Government has shown with absolute clarity that they are not capable in any way, because they have swallowed, hook, line and sinker, the whole Socialist theory of being able to keep control. Canute-like, they think if they do not buy, they are controlling raw materials which is utter nonsense. They are totally and utterly unfitted to carry through the vital procurement of raw materials on which our re-armament, the insurance of our currency against further invasion, full employment, even the level of life and of food and of other things, depend.
§ If ever an indictment had been made out against the Government; if ever a flimsy pretext had been made to conceal the inertia, the lack of knowledge, the clinging to their own theories and a complete disregard of facts, it has been made by this debate. I hope therefore that the House will not have the slightest hesitation in endorsing the Motion.
§ Question put, "That the words proposed to be left out stand part of the Question."
§ The House divided: Ayes, 167; Noes, 163.2617
|Division No. 51.]||AYES||[3.59 p.m|
|Alport, C. J. M.||Cranborne, Viscount||Hay, John|
|Amory, Heathcoat (Tiverton)||Crookshank, Capt. Rt. Hon. H F. C.||Heald, Lionel|
|Ashton, H. (Chelmsford)||Crosthwaite-Eyre, Col. O. E.||Heath, Edward|
|Assheton, Rt. Hon. R. (Blackburn, W.)||Crowder, Capt. John (Finchley)||Hicks-Beach, Maj. W. W.|
|Astor, Hon. M. L.||Cundiff, F. W.||Higgs, J. M. C.|
|Baldock, Lt.-Cmdr. J. M.||Cuthbert, W. N.||Hill, Dr. Charles (Luton)|
|Beamish, Major Tufton||de Chair, Somerset||Hornsby-Smith, Miss P.|
|Bell, R. M.||De la Bere, R.||Hudson, Sir Austin (Lewisham, N,)|
|Bennett, Dr. Reginald (Gosport)||Deedes, W. F.||Hudson, Rt. Hon. Robert (Seuth[...]aorl)|
|Birch, Nigel||Digby, S. W.||Hurd. A. R|
|Bishop, F. P||Drewe, C.||Hutchison, Colonel James|
|Black, C. W.||Duthie, W. S.||Hyde Lt.-Col. H M.|
|Boles, Lt.-Col. D. C. (Wells)||Eccles, D. M.||Hylton-Foster, H. B.|
|Boothby, R.||Eden, Rt. Hon. A.||Jeffreys, General Sir George|
|Bossom, A. C||Erroll, F. J.||Johnson, Major Howard (Kemptown)|
|Bowen, E. R||Fisher, Nigel||Jones, A. (Hall Green)|
|Bower, Norman||Fletcher, Walter (Bury)||Joynson-Hicks, Hon. L. W.|
|Boyd-Carpenter, J. A||Fraser, Hon. Hugh (Stone)||Keeling, E. H.|
|Boyle, Sir Edward||Gage, C. H.||Kerr, H. W. (Cambridge)|
|Braithwaite, Lt.-Cmdr. Gurney||Gates, Maj. E. E.||Kingsmill, Lt.-Col. W. H|
|Brooks, Henry (Hampstead)||Glyn, Sir Ralph|
|Buchan-Hepburn, P. G. T.||Gomme-Duncan, Col. A.||Lambert, Hon. G.|
|Bullock, Capt. M||Grimston, Hon. John (St. Albans)||Langford-Holt, J.|
|Burden, Squadron Leader F. A||Grimston, Robert (Westbury)||Lennox-Boyd, A. T|
|Carr, Robert (Mitcham)||Harden, J. R. E.||Linstead, H N.|
|Channon, H.||Hare, Hon. J. H. (Woodbridge)||Llewellyn, D.|
|Clarke, Col. Ralph (East Grinstead)||Harris, Frederic (Croydon, N.)||Lloyd, Maj. Guy (Renfrew, E.)|
|Conant, Maj. R. J. E.||Harris, Reader (Heston)||Lockwood, Lt.-Col. J. C.|
|Cooper, Sqn. Ldr. Albert (Ilford, S.)||Harvey, Ian (Harrow, E.)||Longden, Gilbert (Herts, S.W.)|
|Craddock, G. B. (Spelthorne)||Harvie-Watt. Sir G. S||Low, A. R. W|
|Lucas, Sir Jocelyn (Portsmouth, S.)||Orr-Ewing, Charles Ian (Hendon, N.)||Teeling, W|
|Lucas, P. B. (Brentford)||Orr-Ewing, Ian L. (Weston-super-Mare)||Teevan, T. L|
|Lucas-Tooth, Sir Hugh||Peake, Rt. Hon. O.||Thompson, Lt.-Cmdr. R. (Croydon, W.|
|Lyttelton, Rt. Hon. O.||Peto, Brig. C. H. M.||Thorneycroft, Peter (Monmouth)|
|McAdden, S. J.||Pitman, I. J.||Thornton-Kemsley, Col. C. N.|
|Macdonald, Sir Peter (I. of Wight)||Prior-Palmer, Brig. O.||Thorp, Brig. R. A. F.|
|Mackeson, Brig. H. R.||Raikes, H. V.||Touche, G. C.|
|Maclean, Fitzroy||Rayner, Brig. R.||Vaughan-Morgan, J. K.|
|MacLeod, Iain (Enfield, W.)||Roberts, Major Peter (Heeley)||Vosper, D. F.|
|Macmillan, Rt. Hon. Harold (Bromley)||Robinson, Roland (Blackpool, S)||Wakefield, Sir Wavell (Marylebone.)|
|Macpherson, Major Niall (Dumfries)||Rodgers. John (Sevenoaks)||Walker-Smith, D. C.|
|Roper, Sir Harold||Ward, Hon. George (Worcester)|
|Manningham-Buller, R. E.||Ross, Sir Ronald (Londonderry)||Ward, Miss I. (Tynemouth)|
|Marshall, Douglas (Bodmin)||Ryder, Capt. R. E. D.||Waterhouse, Capt. Rt. Hon. C|
|Marshall, Sidney (Sutton)||Savory, Prof. D. L.||Watkinson, H.|
|Maude, John (Exeter)||Shepherd, William||Webbe, Sir Harold|
|Maudling R.||Smiles, Lt.-Col. Sir Walter||Wheatley, Major M. J. (Poole)|
|Medlicott, Brig. F.||Smith, E. Martin (Grantham)||White, Baker (Canterbury)|
|Monckton, Sir Walter||Smithers, Peter (Winchester)||Williams, Charles (Torquay)|
|Morrison, John (Salisbury)||Soames, Capt. C.||Williams, Gerald (Tonbridge)|
|Morrison, Rt. Hon. W. S. (Cirencester)||Spearman, A. C. M||Williams, Sir Herbert (Croydon, E.)|
|Mott-Radclyffe, C. E.||Spens, Sir Patrick (Kensington, S.)||Wilson, Geoffrey (Truro)|
|Nabarro, G.||Stanley, Capt. Hon. Richard (N. Fylde)||Winterton, Rt. Hon. Earl|
|Nicholls, Harmar||Steward, W. A. (Woolwich, W)|
|Nutting, Anthony||Stewart, Henderson (Fife, E.)||TELLERS FOR THE AYES:|
|Oakshott, H. D.||Studholme, H. G.||Mr, Russell and|
|Odey, G. W.||Sutcliffe, H.||Wing Commander Bullis.|
|O'Neill, Rt. Hon. Sir Hugh||Taylor, Charles (Eastbourne)|
|Acland, Sir Richard||Griffiths, David (Rother Valley)||Oliver, G. H.|
|Adams, H. R.||Griffiths, Rt. Hon. James (Llanelly)||Orbach, M.|
|Albu, A H.||Gunter, R. J.||Paget, R. T,|
|Allen, Arthur (Bosworth)||Haire, John E. (Wycombe)||Pargiter, G. A|
|Allen, Scholefield (Crewe)||Hale, Joseph (Rochdale)||Parker, J.|
|Anderson, Alexander (Motherwell)||Hale, Leslie (Oldham, W.)||Paton, J.|
|Anderson, Frank (Whitehaven)||Hall, John (Gateshead, W.)||Pearson, A.|
|Ayles, W. H.||Hall, Rt. Hon. Glenvil (Colne Valley)||Popplewell, E.|
|Bartley, P.||Hamilton, W. W||Proctor, W. T,|
|Bellenger, Rt. Hon. F. J||Hannan, W,||Reeves, J.|
|Benn, Wedgwood||Hargreaves, A||Reid, Thomas (Swindon)|
|Benson, G.||Hastings, S.||Rhodes, H.|
|Beswick, F.||Hayman, F. H.||Robens, A.|
|Bing, G. H. C||Holman, P.||Robinson, Kenneth (St Pancras, N.)|
|Boardman, H.||Holmes, Horace (Hemsworth)||Ross, William (Kilmarnock)|
|Bottomley, A. G||Hughes, Emrys (S. Ayrshire)||Shawcross, Rt. Hon. Sir Hartley|
|Bowden, H. W.||Hughes, Hector (Aberdeen, N.)||Shinwell, Rt. Hon E.|
|Bowles, F. G.(Nuneaton)||Hynd, J. B. (Attercliffe)||Silverman, Julius (Erdington)|
|Brockway, A. F.||Irvine, A. J. (Edge Hill)||Silverman, Sydney (Nelson)|
|Broughton, Dr. A. D. D||Irving, W. J. (Wood Green)||Slater, J.|
|Brown, George (Belper)||Jay, D. P. T.||Snow, J. W.|
|Brown, Thomas (Ince)||Jeger, George (Goole)||Sorensen, R. W|
|Burton, Miss E.||Johnson, James (Rugby)||Sparks, J. A.|
|Butler, Herbert (Hackney, S)||Jones, David (Hartlepool)||Stewart, Michael (Fulham, E.)|
|Champion, A. J||Kenyon, C.||Strauss, Rt. Hon. George (Vauxhall)|
|Cocks, F S.||Key, Rt. Hon. C. W.||Stross, Dr. Barnett|
|Collick, P.||Kirkwood, Rt. Hon. D.||Summerskill, Rt. Hon. Edith|
|Collindridge, F||Lee, Miss Jennie (Cannock)||Sylvester, G. O.|
|Cook, T. F.||Lever, Harold (Cheetham)||Taylor, Bernard (Mansfield)|
|Cooper, Geoffrey (Middlesbrough, W.)||Lever, Leslie (Ardwick)||Taylor, Robert (Morpeth)|
|Cooper, John (Deptford)||Lewis, John (Bolton, W.)||Thomas, David (Aberdare)|
|Cove, W. G.||Lindgren, G. S.||Thomas, Ivor Owen (Wrekin)|
|Craddock, George (Bradford, S.)||Lipton, Lt.-Col. M||Thurtle, Ernest|
|Crawley, A.||MacColl, J. E||Tomlinson, Rt. Hon. G.|
|Crosland, C. A. R||Mack, J. D.||Tomney, F.|
|Cullen, Mrs. A.||McKay, John (Wallsend)||Vernon, W. F.|
|Daines, P.||McLeavy, F||Viant, S. P.|
|Darling, George (Hillsborough)||Mallalieu, E. L. (Brigg)||Wallace, H. W.|
|Davies, Ernest (Enfield, E.)||Marquand, Rt. Hon. H. A||Webb, Rt. Hon. M. (Bradford, C.)|
|Davies, Harold (Leek)||Mellish, R. J.||Wells, Percy (Faversham)|
|de Freitas, G.||Messer, F.||Wells, William (Walsall)|
|Deer, G.||Mikardo, Ian||White, Mrs. Eirene (E. Flint)|
|Delargy, H. J.||Mitchison, G. R||While, Henry (Derbyshire, N.E)|
|Donnelly, D.||Moeran, E. W.||Wigg, G.|
|Ede, Rt. Hon. J. C.||Monslow, W.||Wilcock, Group Capt. C A. B|
|Edwards, W. J. (Stepney)||Moody, A. S.||Wilkins, W. A.|
|Evans, Albert (Islington, S.W.)||Morgan, Dr. H. B||Willey, Octavius (Cleveland)|
|Evans, Stanley (Wednesbury)||Morley, R.||Williams, Ronald (Wigan)|
|Fletcher, Eric (Islington, E.)||Morris, Percy (Swansea, W.)||Wilson, Rt. Hon. Harold (Huyton)|
|Follick, M.||Moyle, A.||Winterbottom, Ian (Nottingham, C)|
|Foot, M. M.||Mulley, F. W.||Yates, V. F.|
|Gaitskell, Rt. Hon. H. T. N||Mulvey, A.||Younger, Hon. K.|
|Ganley, Mrs. C. S||Neal, Harold (Bolsover)|
|Gibson, C. W.||Noel-Baker, Rt. Hon. P. J||TELLERS FOR THE NOES:|
|Greenwood, Rt. Hon Arthur (Wakefield)||O'Brien, T.||Mr. Edelman and Mr. Jenkins.|
Main Question put, and agreed to.
That, in view of the growing shortage of many vital raw materials and its effect on the cost of living, employment, re-armament and the export drive, this House regrets that steps were not taken earlier to build up substantial reserve stocks, and that more use is not made of private traders in ensuring continuity of supplies.
§ Mr. Eden (Warwick and Leamington)
May I ask the Government what steps they propose to take to implement the decision which the House has just registered?
§ Earl Winterton
Surely, it is contrary to the whole procedure, practice and sense of courtesy of the House for whoever is in charge of the Front Bench to refuse to answer a question put by the Deputy-Leader of the Opposition?
§ Mr. H. Wilson
The right hon. Member for Warwick and Leamington (Mr. Eden) addressed a question to my right hon. Friend the Leader of the House. I have no doubt that my right hon. Friend will be prepared, when he has had time to consider the implications of this decision this afternoon, to indicate to the House what action is appropriate in the light of it, but the right hon. Gentleman will hardly expect me to answer this afternoon, so soon after the debate has ended.