§ Order for Third Reading read.
§ 3.47 p.m.
§ The President of the Board of Trade (Mr. Peter Thorneycroft)
I beg to move, "That the Bill be now read the Third time."
We have reached the final stages of this Bill, and I am sure everyone will agree that we have been through it very thoroughly in all its democratic processes, including 10 sittings of the Standing Committee and two full days on the Floor of the House. In the process we have got to know each other rather better, and some of us have even got to know the Bill rather better, than when we started.
I think it is right, and it is certainly in order, to look at the Bill and consider it as it has emerged from its Committee and Report stages. At this stage a Bill is not simply the work of a party but the work of the hon. Members on all sides of the House of Commons who have considered it. I hope that it will be in that light that we shall conduct the debate.
The Bill does two things. First of all, it deals with the interim position which exists between now and when the Commission is wound up; that is to say, it deals with a situation in which cotton is bought partly on private and partly on public account. Secondly, it makes provision for the winding up in due course of the Raw Cotton Commission.
Whatever else can be said about the Bill in its present form, everyone will agree that it has not been embarked upon recklessly or without study. It follows two years of comprehensive study of raw cotton problems in every section of the trade, and it represents the logical conclusion of the two Reports of the Hopkins Committees.
In essence, the problem which the Bill we now have before us has to meet is not whether cotton purchasing should go on as at present or not. Essentially, the problem is whether we should go back to the establishment of a virtually complete monopoly of cotton buying, or whether we should go forward to a free market. The Government have decided 2163 upon this latter and more adventurous course.
I recognise that there are many hon. Members opposite who take the view that that was the wrong decision, and, on other stages of the Bill, they have argued that view forcibly and fully. For our part, we believe it to be the right decision, and we believe that that decision represents the measure of our growing economic strength.
What, as I understand, we have to discuss today, within the confines of the Measure as we now find it, is the mechanics of the decision to go forward. In doing so, may I say that, whatever differences may exist between us as to the larger issues of policy, I am sure we share one common wish. That is that we should do everything we can to safeguard and serve the interests of the men and women who work in this great cotton textile industry.
The first thing I would say is that it would be very hard to advance the policy laid down in this Bill, or indeed any other policy, without the loyal and helpful co-operation of the Raw Cotton Commission itself. I think that the country and the House of Commons can be grateful to the Commission and the men who work in it for the contribution they have made, and particularly the contribution which they are making and can make towards a smooth transition from the existing method of buying cotton over to the new methods when they are introduced.
Next, a word about the new system arising under this Bill. Its success will depend not simply upon the terms of the Bill as it leaves this House. It will depend upon the skill, the vigour and resource of the men who work these various procedures, and it will be something of a challenge to the enterprise that we can show.
I know that, on this subject, there are many questions which vex the minds of hon. Gentlemen on all sides of the House, questions like the type of cover that can be provided—on which I believe that as good, and probably better, cover will be provided in this country as in any other country in the world—questions about the stock position in the industry, and questions about the transitional 2164 arrangements that will have to be made. Many of these matters are probably inappropriate for detailed discussion on the provisions of this Bill, but we are not oblivious to them. I am myself in constant contact with the spinners, the Raw Cotton Commission and the Liverpool Cotton Association in all these matters, and I am not unduly disturbed by any of these problems.
To tell the truth, there is no moment in time when any industry, let alone an industry as big and complex at the cotton industry, is enjoying complete and absolute calm. There are always events in one part of the world or another, something always in glut or in short supply, and markets are in a constant state of disturbance, as anybody who has ever dealt with them well knows. But I know of no difficulty, technical or practical, which looks as if it will be an insurmountable obstacle to carrying out the provisions of the Bill.
The first part of the Bill, in essence, puts the Raw Cotton Commission into the position of a merchant; that is to say, it takes away from it all the obligations which were imposed upon it on the assumption that it was a monopoly, and they are taken away because the Raw Cotton Commission no longer is a monopoly. Indeed, it has not been a monopoly for quite a considerable time, and it has not been a monopoly because everybody in the industry is agreed that it should not be a monopoly.
That has been the case for more than two years. Those obligations are removed, and, in their place, there are retained powers to deal in cotton and to serve, as the Commission must serve, the existing contractors-in—those people who, on 1st September, 1953, agreed for the new cotton year that they would buy their cotton through the Raw Cotton Commission.
The second part of the Bill deals with the winding-up of the Raw Cotton Commission, and leaves the way open for the reopening of the Liverpool Cotton Exchange. Opinions differ in the House as to whether that is a wise thing to do, but I think it is worth remembering the repute and esteem in which the great markets of the United Kingdom are held abroad. The world thinks of us as a nation of traders, who live by commerce and exchange, and it regards this new 2165 prospect of the opening of the great and traditional market for cotton as an indication of our growing strength.
What matters now is not any doctrinal differences which may exist between any of us here. What matters to us, to the United Kingdom, and to Lancashire especially, is that every possible effort should be made to see that these new arrangements work well and smoothly, and none of us must spare any effort to see that that is brought about.
To do it requires a great deal of co-operation between the spinners, the merchants, the men who work in the industry and, not least, the banks who provide the finance. In this House, our part has been to test in debate the proposals of the Government. They have been fully debated and fully analysed, and this Bill, like any other Bill which goes through the House of Commons procedure, is a better Bill at the end than it was at the beginning, because that is the purpose of our Committee and Report stages.
We have examined the various suggestions that have been put forward. We have made certain alterations, notably one on compensation which the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) mentioned the other night. We have done that, and the Bill in its final or near final form is before us now. It is a Bill which enables us to carry on smoothly and effectively with the Raw Cotton Commission during this interim period. It provides machinery whereby the Government's general policy of moving forward to a free market with the historical futures arrangements operating, can be implemented. In commending the Bill for Third Reading, I think I can say that it is our common wish that there should be good fortune in the future for all those, be they merchants, spinners or workers, who operate in the great Lancashire textile industry.
§ 4.1 p.m.
§ Mr. Harold Wilson (Huyton)
The President of the Board of Trade began his speech by saying that we had been through the Bill. He was quite correct in speaking for himself, because he has "been through it"on this Bill during the last few weeks. I will not say that he has been through the mill because that is a building which he gives as wide a berth as possible. He has been subjected 2166 to a very careful and constructive attack on the proposals that he has put before us.
He said one thing which we all welcome and which was that we all wished for the welfare and prosperity of those engaged in the industry. We welcome the belated interest in the prosperity of the cotton industry which the right hon. Gentleman has shown. It is a pity that he had to deal against the prosperity of the cotton industry the three very telling blows that we have discussed in the last few days, before he could come, on the Third Reading, and tell us how concerned he is about its prosperity.
We were also impressed just now when he told us that he was in touch with Liverpool, because we spent some hours yesterday afternoon gaining the impression that the right hon. Gentleman was not in touch with Liverpool at all. However, as he told us, what is now appropriate is not the range of wider subjects that we have been debating in the last few weeks, but what is in the Bill itself, what has emerged from the previous stages of our examination of it.
The right hon. Gentleman went so far as to say that the Bill was not the work of one party. I hope that he will not hold us in any way responsible for an extremely bad Bill. There have been one or two Amendments which, as he knows, were made as the result of our proposals, and in order that the respective shares of blame can be put in their proper perspective I would remind the right hon. Gentleman that the changes in the Bill that are due to us are the replacement of the word "may" by "shall" in Clause 3 and, secondly, the removal of the entirely redundant and meaningless phrase "on, before or after 1st September, 1953."Those are the only changes for which we can take responsibility, but it has been due to the energy of my hon. Friends that the President of the Board of Trade has made other Amendments.
Let me turn to the Bill as it has emerged from its previous stages. It is a short Bill of six Clauses, as we all know by now. The strange thing is that so much harm can be done by so short a Bill. The last two Clauses are purely consequential, and deal with the financial and other machinery. The real substance of the Bill is contained in the first four Clauses, which took most of our time 2167 on the Standing Committee. The first two Clauses are those which remove the obligations which were resting on the Raw Cotton Commission, and which are still today the legal obligations on the Commission under the 1947 Act.
The President approaches those two Clauses rather with an air of injured innocence. He is rather surprised when we criticise them. His argument is that when he found the Raw Cotton Commission in its dying state it was right that he should come to its rescue by removing some of the obligations resting on it. Those obligations were appropriate to it in its monopoly days but were no longer appropriate today. That was the argument that we had from the right hon. Gentleman.
In fact, he made an almost sentimental appeal about these two Clauses. He gave the impression that he is the 20th Century Good Samaritan, who happened to be going through Liverpool when he came across the bleeding body of the Raw Cotton Commission, which had been savagely attacked. The President bound up its wounds and, because of its weak state, relieved it of its burdens and left it to die with some show of dignity and happiness.
He then went further and provided it, as did his predecessor of Biblical days, with a small amount of money to ease out its last few days, in the form of these compensation payments. He said, "Whatsoever more is needed I will repay when I come again," no doubt in the form of further retrospective legislation that he will want the House to pass. All in all, he made a very moving appeal about what he had done, but he did not say that the thieves who made the attack were really the right hon. Gentleman himself and his noble Friend the Minister of Materials.
I put it to the right hon. Gentleman that the moral of the Biblical Good Samaritan story would have been lost if the thief who beat up the suffering man had been found to be the Good Samaritan himself. Thus, the appeal of the right hon. Gentleman on those two Clauses loses much of its effect. I do not intend to say very much about those first two Clauses. I do not entirely disagree with the right hon. Gentleman that we have in the present or later to relieve 2168 the Raw Cotton Commission of some of its burdens. But it is right for the Minister to make clear that it was he who cut its throat.
Last night the Minister used the phrase that this was due to the work of the Hopkins Committee. He said, in so many words, and that idea was contained in some of the fitful correspondence about the Bill that has been appearing in the "Manchester Guardian." I was astonished to see the suggestion from the chairman of the Manchester Cotton Exchange that it was not the Government that had done this, in the fullest consultation, but was the result of the work of the first and second Hopkins Committees. I do not think that hon. Members will want to maintain that the Committee, whose Report we debated last year, suggested anything about the winding up of the Raw Cotton Commission. I think that the right hon. Gentleman will accept full responsibility for bringing the Raw Cotton Commission to an end.
§ Mr. P. Thorneycroft
Certainly. The Government are very proud of the Bill. What the Hopkins Committee did—it is as well to get this matter into perspective—was to end effectively the monopoly position of the Raw Cotton Commission. It was as a result of their influence that the monopoly position ended.
§ Mr. Wilson
If the right hon. Gentleman is going to preach this new doctrine let me remind him—it would be out of order if I followed him too far—that as a responsible Minister he cannot put the blame upon an advisory committee. The Hopkins Committee had no power to alter the situation under the Act. It was done by the Raw Cotton Commission, and by the agreement made after the right hon. Gentleman had received the Report of the Hopkins Committee. We can now see the purpose of the Hopkins Committee, of whose Report the right hon. Gentleman now claims to be so proud. It is a pity that the right hon. Gentleman cannot be so proud of his Bill.
Clause 2 changes the law as regards the ability of members of the Raw Cotton Commission to take on work within six months of leaving its service. We have debated that at a previous stage and I do not propose to say anything more about it tonight. But, once again, I want to draw the attention of the House to the 2169 very serious retrospective legislation which, despite the President's fair words last night to us on this side of the House, can only mean that he has connived at, if not inspired, illegal operations on the part of the Commission, and is now seeking retrospective validation of what it has been doing.
With regard to the statistical part of Clause 2 the President, once again, has been outpaced by the Raw Cotton Commission. Long before the Bill had a chance of seeing the Statute Book the Commission had anticipated the decision of the House and sacked the statistical staff. I hope that when hon. Members are voting they will recognise that, however serious the constitutional implications of that item are, the vote is somewhat academic.
Clause 3 is easily the best part of the Bill, because it provides compensation not only for those who will be made redundant, but also for those who were made redundant even before the Government came to any decision at all about the abolition of the Commission. In fact, this stems from the debate last July when we first asked the President to compensate those who had become redundant as a result of the diminution in the Commission's work.
Clause 4, as we all know, is the really important one. The President is very fortunate indeed that we are debating it at all. He knows that it would have been relatively easy, at an early stage, to have had this Clause taken out of the Bill. But the Bill is here now and Clause 4 is still with us. This Clause does the greatest damage to Lancashire because it provides that the President and the Minister of Materials, if at any time they are satisfied that it is in the public interest to do so, can bring an order before the House providing for the dissolution of the Raw Cotton Commission.
Our attempts to help him define what is in the public interest have been rejected, so that it would be out of order for me now to attempt to say what should have been in the Bill. I hope, however, that the President will realise that the Bill still requires him to approach this subject with an open mind; that it enables him to make the order dissolving the Commission only if he and the Minister of Materials are satisfied that it is in the public interest so to do. For that 2170 reason we are very worried about the many occasions on which he has told us that he, and his colleague the Minister of Materials, will be moved with the feeling that it is then in the public interest on or about 31st August of this year. He is able to forecast that, at that time, it will be in the public interest.
Clause 4—which really is the Bill—presents a series of dangers to Lancashire and to the welfare of its great cotton industry about which he spoke a few moments ago. I want briefly to summarise the effect of this part of the Bill. It means, first, a real danger to Lancashire's continuing supplies of raw material. There may be that danger, for instance, if at any time there is a world famine of raw cotton, such as we have seen more than once since the end of the war. We saw it in 1950–51, after Korea, when the American Government imposed unilateral export restrictions.
It was only because of the activities of the Commission that the industry was able to get through that year. If the Commission had not bought supplies wherever it could throughout the non-dollar world—the Colonial Territories and elsewhere—and if it had not eked out supplies fairly among all the mills requiring them, there would have been severe unemployment in Lancashire.
Those days might come again. I trust that we have moved from the danger of a world cotton famine but, as the right hon. Gentleman said, there is always the danger of a disturbance of markets somewhere. Should we face a shortage of cotton, or of particular growths, Lancashire's ability to meet the situation will be greatly weakened by Clause 4. What is much more likely is that the cotton will be there—perhaps in surplus supplies—but that this country will not have the dollars to buy it.
Whatever the reason for a prospective shortage of cotton, my first attack on the Clause is that it endangers Lancashire's supplies and thereby endangers her ability to maintain employment. It is for that reason that the organised trade unions of the cotton industry have warned the President of the danger of unemployment arising from what they call "this reckless gamble," and have said that a very serious view will be taken should that happen.
2171 As a result of Clause 4 there is a serious danger to the maintenance of colonial supplies. I do not intend to go over yesterday's arguments, but it is obvious to anyone who studies the Bill that neither we nor the Colonial Territories can hope to maintain in this country the same market, the same continuity of marketing arrangements under the private futures market as were enjoyed under the Raw Cotton Commission.
We have given many figures to the House about the development of colonial supplies. We know that that development has been of vast importance in helping the Colonies to diversify economies very often over-dependent on a single group or form of economic activity. We know that these developments have helped to raise living standards in those territories. They have been important also to Lancashire. By this Clause we believe that the President is throwing away all that has been built up in the last 15 years in the development of Empire cotton.
It is a very serious reflection upon this party—which is proud of this Bill, which so often in the past has posed before the country as the party of the Commonwealth, of Commonwealth development, of Empire trade and all the rest of it—that because of its slavish following of doctrines of private enterprise, and its newly acquired taste for a rather bogus form of Cobdenism, it is willing to cast aside everything done in the past few years to develop trade within the Commonwealth.
Clause 4 also means that there will be a dangerous increase in the cotton industry's dependence on the United States. Again, I do not need to give the reasons for this. The form of the futures contract likely to be in force for some time, the tie-ups which we know exist between Liverpool and the United States, the danger that American capital is going to settle in the Liverpool cotton market—all these things are bound to increase the dependence of Lancashire on American sources of supply.
We know what that will mean if there is a shortage of dollars. There will be a sudden imposition of quotas by the Government, and panic will be 2172 inevitable. It will mean the breakdown of the cotton futures market, because that market cannot function against a background of Government quotas or currency restrictions. So far from the free cotton market earning the admiration of the world, as the President said, the result will be weakened world confidence in our handling of cotton affairs and in the Liverpool cotton market.
This will mean a shortage of cotton. Mills will stop because of their inability to get cotton from the Sudan, Uganda and the other areas about which we talked yesterday, because those areas, in self-protection, will have had to seek markets outside this country. Then there is the danger, which we see developing even while the Raw Cotton Commission is still in being, of inadequate stocks being available in Lancashire. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) and many other hon. Members on this side of the House have referred to the stocks of Uganda, Sudanese and Egyptian cotton available in this country.
We have produced figures for the benefit of the President—who had not seen them before—showing that stocks of raw cotton in this country have been going down progressively for some time. The latest figures show that our stocks are well below 200,000 tons, which is almost the lowest figure in recorded history, in spite of the fact that that figure includes stocks held by the Raw Cotton Commission. Once that Commission is dissolved, and the stocks have been run down and disposed of to traders or "spivs," the President will be faced with a situation in which almost no raw cotton stocks will be available, and the whole trade will be living on the supplies of cotton ex-ship. If that happens, and there is any delay or emergency, particularly a military emergency, we shall be in a very serious position.
I do not need to refer to the financial dangers of this Bill; they have been outlined before. Many mills which are short of finance will now have to borrow money in order to buy raw cotton because, up till this moment, the Commission has been the financing agent for holding stocks. Cases have been mentioned of many mills which have been setting aside money for the purpose of re-equipping their industry. That is an urgent priority 2173 in Lancashire. They will now have to use some or all of that money—perhaps even more than they now have—for the purpose of holding such stocks as they require. They have been told clearly and unequivocally by the Liverpool Cotton Association that it will no longer hold stocks for Lancashire, except where individual mills ask them to hold it and pay a special additional premium for doing so.
The great service rendered by the Commission, of holding stocks adequate in quantity and sufficiently wide ranging in growth and quality to meet all the requirements of Lancashire, is coming to an end. All this is being done to satisfy the political doctrines and ideology of the party opposite, and the promise so unwisely given by the Prime Minister to the Liverpool cotton interests in October, 1951.
In the last part of my summary of criticisms of Clause 4 I shall not repeat all that has been said about quality. In the minds of the operatives the Raw Cotton Commission has come to be identified with good quality cotton, whereas, in their memories of pre-war days, the Liverpool Cotton Market—whatever reputation it held abroad—was identified with cotton of variable and sometimes bad quality. Now that so much of Lancashire has to live on cotton supplies ex-ship there is a very serious danger that when the cotton comes off the ships it will not be what the mill owners want. Whatever provision there may be for compensation, it does not provide the cotton, and that means that export orders, about which the Minister of State is always making speeches, will be endangered or lost.
The Government have chosen this moment of time to introduce this new and highly disruptive factor in the life of the Lancashire cotton industry. It would be bad enough if it were being done on its own, but we know that it is being done at a time when two other grave blows are being delivered. The industry is facing the future with very great uncertainty. Not long ago Sir Thomas Barlow, the Chairman of the District Bank—not the hon. Baronet the Member for Middleton and Prestwich (Sir J. Barlow) but Sir Thomas Barlow, who knows what he is talking about—said that in many ways we were facing a situation not unlike that immediately before the slump of 2174 1951–52, from the point of view of export orders and all the rest. At this moment the President introduces this Bill and this policy.
§ Mr. William Shepherd (Cheadle)
Can we have the considered opinion of the right hon. Gentleman? Does he think that the industry is facing a situation similar to that which it faced prior to the 1951 slump?
§ Mr. Wilson
I know perfectly well that if I were to answer that question by saying "No," the hon. Member would say, "What is the argument?" and if I were to say, "Yes," and there were a slump in the next few years, every time that slump was mentioned I should be given credit for having precipitated it, in the same way that my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) has always been given credit—to which he does not aspire—for having caused the slump of 1951. It is impossible for anyone to say what will be the position. It would be irresponsible for anyone to say that the Lancashire cotton industry will go into a slump this year, or to say anything of the kind.
What I do say—and in this I echo the views of an industrialist whom the hon. Gentleman will respect—is that the Lancashire cotton industry is facing a situation of great uncertainty, unsettlement and danger, and it is up to us all, on both sides of the House, and particularly the Government, to give it all the help we can in meeting that situation. But the Government, with the Japanese Trade Agreement, the decision about Purchase Tax and this Bill, are making life as difficult as they possibly can for the industry.
It is clear that whatever are the prospects for 1954 it will be a year of highly competitive trading in world markets, particularly textile markets. We know that the Canadian textile industry is facing a degree of depression such as it has not known for 15 years; we know that many mills in the United States are on short-time, and we know the situation in Japan. The President would be the first to admit that the Lancashire textile industry, this year, is facing a highly competitive situation in world markets. The "Manchester Guardian" says:International trade in cotton goods must be expected in future to be greatly influenced by the respective prices at which the various com- 2175 peting countries have been able to obtain their raw materials. It seems possible that Lancashire, as a result of the disturbance which must inevitably be caused by the cessation of the Raw Cotton Commission's operations on August 31st, will be at some disadvantage—at any rate during the current year—in this respect. This is a point which will have to be watched very carefully.If the President were honest he would not disagree that he is introducing this new and disruptive factor into the situation, and that Lancashire will be at a comparative disadvantage with other countries as a result of this transition—I will not say return to private buying, because he and I have different views about this—from the Raw Cotton Commission to the private futures market.
§ Mr. Wilson
The President is very confident. He does not agree with the expert views printed in the "Manchester Guardian." He may laugh at the "Manchester Guardian," but it knows a great deal more about the cotton industry than he does. He is sufficiently happy in his doctrinaire views to be able to laugh at the warnings being circulated in Manchester. The Government are guilty of introducing this reckless gamble into the affairs of the industry.
There have been many discussions about the relative merits of private buying and centralised buying as a means of supplying the industry with its raw materials. I do not want to go into those somewhat theoretical arguments this afternoon, but there is one thing of which we on this side of the House, at any rate, are certain: whatever the theoretical merits of private buying, however much it may have achieved in the years before 1914 when world conditions were very different, private buying of raw cotton is a fair weather ship. It is something which can succeed when all is set fair in world economic affairs.
But with the very stormy situation which we face in economic affairs today and the very uncertain future surrounding our material supplies and the Lancashire industry generally, I think the President's action in introducing the Bill, then failing to withdraw it, in pushing on with it and in commending it to the House this afternoon, is a very grave disturbance not only to the textile industry of Lancashire but to the economic position of the country.
§ 4.32 p.m.
§ Lieut.-Colonel Wentworth Schofield (Rochdale)
Throughout the progress of the debates on this Bill, both in Committee and on Second Reading, fears were expressed, particularly by hon. Members opposite, about certain dangers which were likely to arise as a result of the passing of the Bill. The right hon. Member for Huyton (Mr. H. Wilson) referred today to the low state of the total stocks of cotton in the country at present. Would he not agree that perhaps the fact that they are lower today has been brought about because of the fear of falling prices of cotton? When prices are tending to fall, traders are not likely to build up large stocks in this country.
The right hon. Gentleman referred to the buying of cotton by private buyers as a fair weather ship which succeeds only in fair weather. I would point out to him that the simile is more applicable to bulk buying than to private buying. In a bull market, when prices are rising all the time, bulk buying is bound to succeed. It begins to fail only when prices start to fall. Then we see large losses, such as the £25 million losses which we have seen in the last two years, largely because of falling prices.
One of the fears which has been expressed throughout the debate is the danger to the small man, as he has been described, in the possibility that he will be unable to finance his stocks of cotton. I do not know what is meant by the small man in the cotton spinning industry. We cannot refer to the cotton spinner as a small man as if he were a small shopkeeper. Most of the cotton spinning mills today would cost between £1 million and £2 million to replace and finance. Such a man is not a small man.
These are quite considerable enterprises. Many of the cotton mills which have been referred to as the single units have liquid reserves in cash of more per spindle than the combines themselves, and I am quite sure that they will have very little difficulty in financing their normal requirements of raw cotton. I am not as concerned about this as are many hon. Members opposite, because I believe that it can be done.
Another fear which has been expressed, particularly by hon. Members opposite but also by some of my hon. Friends, is the possible effect of the passage of the 2177 Bill on the future use of colonial cotton. Personally, I believe that as long as the price of colonial cotton is comparable, Lancashire spinners will continue to use it. I believe that the danger of it not being used is very remote.
Be that as it may, I must confess that at the beginning, when it was first announced that the futures contract to be operated in the new Liverpool futures market would be based on a pure American contract, I also held certain fears and, together with cotton spinning interests, I took part in very long discussions with the Liverpool Cotton Association on this very point. The Liverpool Cotton Association, upon whom will fall the responsibility of making the futures market work, is quite well aware of the desire which is held by many spinners in Lancashire that colonial cottons of equivalent grade and staple to the standard set down—that is, the middling American standard which is the basis of the pure American contract—should be tenderable against that contract. They have been made fully aware of the views of many spinners that that should be so.
The members of the Liverpool Cotton Association, who are to be responsible for the proper functioning of the Liverpool futures market, hold the view that in the initial stages of getting the market going, at any rate, the futures contract should be as simple as possible and should have no more complications than are necessary. Both cotton spinning trade leaders and the Empire cotton growing corporation have agreed on that point. To get it going, they have agreed to have this pure American contract—on condition that within 12 months the whole question of making either a separate contract or a mixed contract, but, at any rate, of allowing colonial cotton of equivalent grade and staple to be tenderable against that contract, should be discussed. The condition is that either this provision should be introduced or at least should be very thoroughly re-examined within 12 months. An assurance has been given by the President of the Liverpool Cotton Association that that will be done, and I think we can rely on that promise.
As the responsibility for making the market work successfully must fall upon the Liverpool Cotton Association, I think it would be wrong for the Government at this point to lay down rules and con- 2178 ditions under which the market should work. We must, however, bear in mind that the more colonial cotton is grown and then used in this country, the greater will be the purchasing power of the colonies concerned. It stands to reason that the greater the amount of raw material produced by the colonies and sold to this country, the greater will be the amount of manufactured goods they will take from us.
I have already said that I recognise that it would be wrong for Parliament to try to impose upon the Liverpool Cotton Association at this time the conditions under which the market should open and the conditions of the contract, but I hope the President will make known to the Liverpool authorities the views which have been expressed on both sides of the House and the concern which has been felt by hon. Members on this point, because I believe it is very important that sooner or later we should recognise those cottons as tenderable against the American variety.
At the same time, I want to make it clear that the considered opinion, at least of the Federation of Master Cotton Spinners, which is regarded generally as the mouthpiece of the cotton spinning employers, is that the Government have acted wisely in introducing the Bill.
§ 4.40 p.m.
§ Mr. W. T. Proctor (Eccles)
The President of the Board of Trade based this gamble that the Government are taking on what he called our growing economic strength. While we are all pleased to see British industry prospering, and to see efforts made to pull the country through, we are deeply conscious of the very narrow margins on which we work at present. Anyone who gives the impression that there is great and growing economic strength which can be played with is wrong.
The right hon. Gentleman said that he had been in touch with the spinners and the Raw Cotton Commission. Apparently nothing that they had told him has given him any cause for anxiety. He is about the only person with responsibility in the Lancashire cotton industry who does not feel a deep anxiety for the future. We are bringing back into being an old system which might have worked very well when we were a rich nation with great resources and power. It is 2179 not a system which, in our opinion, is suitable to deal with our present difficulties.
This is quite a different world from that of 1940, when the Liverpool Cotton Exchange went out of existence. It went out of existence voluntarily, because it felt that it could not face the anxieties of the situation. There was brought into being the system which used the economic strength of the nation to get for this great industry its natural raw material. The nation undertook to use its vast power, strength and organising authority to supply the raw material for this industry. Deep in our hearts we all have great anxiety for the future of the industry.
Let us consider what we are doing in this Bill. We are handing over the future of the industry to a body which has no resources comparable to those of the Commission. The Commission uses and is the custodian of the wealth, the power and the economic organising ability of the whole nation. But the Liverpool Cotton Exchange is not arranged on that basis. It has no responsibility to the nation. The responsibility goes to people who have one motive, and one only, and that is private profit. At the moment, when the anxieties for the future are so serious, this is a wrong action to take.
This is a peculiar Bill. It is a permissive Measure. Ultimately, even after we have passed it, the President himself has to be convinced that it is in the public interest to take the final and irrevocable step. I ask him, and all those who are connected with the matter, to give the most careful consideration before a decision is finally taken to abolish the Commission.
Much has been said during our debates about the Commonwealth position. Over a long number of years we have built up a new source of supply which is of greater importance today than ever before. We have now what looks like a dollar shortage which will last for a considerable time. It is wrong to take any action, such as that which the Government are taking, which jeopardises this great source of supply which has been built up so painfully but so successfully over a long period of years.
The hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) spoke of his anxieties. Listening to him, 2180 knowing that he is a supporter of the Government, and considering what he has to say, it is clear that he has grave doubts about the wisdom of this step and its effect upon the Commonwealth. A party which has prided itself upon its outlook on the Commonwealth should surely give careful consideration—last-minute consideration—before they take a step which will bring us into difficulty.
There is a responsibility on the nation for our great industries. It is a responsibility which perhaps did not exist before the war, for today we work on a very narrow margin. I can imagine nothing more necessary to any industry than that its source of raw material should be secure. All those actively working in industry, whether employers or employees, would feel more secure if they knew that supplies of raw material were safe.
It is a wrong move to go back to a body which has no responsibility to the nation but which operates purely for private profit. The President of the Board of Trade has said that he has the support of the industry for this move. It does not seem to me that he has anything like solid support even among the employers. I stress something which the Government seem to forget, though it certainly is my opinion and I think it is accepted generally. The most important section of any industry is the people who work in it. The cotton workers have clearly indicated that they consider it against the interests of the industry, against their interests and those of the nation, that this step should be taken.
It is unusual, on the Third Reading, to be able to plead that the step which is contemplated in the Bill should not be taken, but this Bill is so constructed that, even after it is passed, the Government can refrain from taking the final step. That shows that there may be doubts among the people who brought it in. I appeal to them to have another look at the matter. We know that the Government are capable of changing their mind. They are capable of repudiating the promises they made before the General Election. They have repudiated at least half a dozen; I should be out of order if I enumerated them. They could with great benefit to the nation repudiate this promise which the Prime Minister made that the Liverpool Cotton Exchange would be reopened. I appeal to them to do so.
§ 4.47 p.m.
§ Mr. William Shepherd (Cheadle)
The hon. Member for Eccles (Mr. Proctor) assumes that the Bill does much more than, in fact, it does. We shall not be turning the cotton industry over to the Liverpool Cotton Exchange. No one would look into the industry and say that it is free from a great deal of supervision. For example, we have the Cotton Board, which still retains its responsibility to the industry. Even when the Exchange is established it will still be subject to the control of the Bank of England in certain respects.
§ Mr. Ernest Thornton (Farnworth)
Is the hon. Gentleman suggesting that the Cotton Board has any supervisory control over the Liverpool Cotton Association, or the Exchange?
§ Mr. Shepherd
I did not say that, and I usually say what I intend to say.
On the other point made by the hon. Member for Eccles, I would say that I am not much moved on this occasion by the fact that certain trade unions are against the Bill. I have already expressed the view that we cannot expect people to run businesses if their commercial judgment—
§ Notice taken that 40 Members were not present;
§ House counted, and, 40 Members being present—
§ Mr. Shepherd
As I was saying before that interruption, the commercial judgment of the people in the industry must receive prior consideration in deciding the manner in which cotton is to be bought. Much as I respect the trade union element of the cotton and textile industry, I do not think that we should take note of their views in preference to the views of the majority of the people concerned in running the industry.
We have had a lengthy discussion on the Floor of the House and upstairs—in my view, too lengthy a discussion upstairs. I am not at all satisfied that the methods by which we discuss Bills upstairs, and particularly this one, contribute to the best interests of the country or of the House. The right hon. Member for Huyton (Mr. H. Wilson) tried to give the impression the other day that not a minute had been wasted. If anybody harbours that fond illusion, I ask 2182 him to look at the record of what happened.
§ Mr. J. T. Price (Westhoughton)
On a point of order, Mr. Deputy-Speaker. May I ask for your guidance? The hon. Member has suggested that the debates upstairs were conducted in a disorderly fashion and that, therefore, the Chairman was not carrying out his duty efficiently or in accordance with the Standing Orders of the House. Is it in order for the hon. Gentleman to make such reflections?
§ Mr. Deputy-Speaker (Sir Charles MacAndrew)
I did not understand the hon. Member to say that. In any case, I am not responsible for what happens upstairs.
§ Mr. Shepherd
I am sure it was clear that I did not for a moment suggest that the debates were disorderly. All I said was that they were of such a length as neither to reflect credit on this assembly nor to serve the interests of the industry. I am not saying this in a partisan spirit.
§ Mr. H. Wilson
It is clear, at any rate, that the proceedings upstairs attracted the attention of more Lancashire Conservative Members that the hon. Member is succeeding in doing this afternoon. If the hon. Gentleman is going to make the accusation that time was wasted upstairs, I hope he will not in any way mislead the House. I hope he will draw attention to two speeches upstairs which we all realised were made for one purpose only; one made by the President of the Board of Trade and the other by the hon. Member for Garston (Sir V. Raikes) to keep the debate going long enough to enable Members who had been attending another Committee to come in and vote.
§ Mr. Shepherd
I do not propose to do that, Mr. Deputy-Speaker. I would merely say, in passing, that I would find it difficult to attach a purpose to many of the other speeches that we heard upstairs.
We had lengthy discussions and, as my right hon. Friend the President of the Board of Trade said, we are proud of this Bill. It is no petulant reversal of what the Socialist Party did a few years ago. It is an act of faith. We believe in it. We believe that the Bill will work, and we are quite confident that it will serve the interests of the industry.
2183 The right hon. Gentleman said that my right hon. Friend the President of the Board of Trade had murdered the Raw Cotton Commission. He did nothing of the kind. This was a case of suicide. As soon as the Commission decided that it was no longer possible to continue on the basis of averaging out prices, and started to act on replacement, the whole reason for the existence of the Commission faded away. It was, therefore, virtually a suicide case. A little later, perhaps, the dying body was finally dispatched by the decision of the industrialists in Lancashire to buy most of their cotton outside the Commission, but it would not be true to say that my right hon. Friend in any way slew this Commission. It was definitely a case of suicide.
This afternoon and in Committee upstairs there has been an air of gloom. Since he ceased to be President of the Board of Trade, the right hon. Member for Huyton believes that the industry of the country is going to pieces, and that doom, destruction and disaster are everywhere because he is no longer at the Board of Trade.
§ Mr. Shepherd
A good deal of the time upstairs was spent in trying to talk the United States into a depression. It seems that there is no gleam of hope for anybody. We on this side of the House do not take that view. There are really no solid grounds for excessive pessimism in industry generally or in this particular industry.
I want to deal with one or two doubts that have arisen as a result of the Bill and which some hon. Members feel adversely affect the industry. The first one has already received some attention, and I do not want to say much about it. That is the question how far the operation of the Bill will affect the sales and growth of Empire cotton. I am satisfied that it will not affect the use of these growths in this country. A strong market exists for Empire growths. Empire growers of cotton are not weaklings; they are in a strong position.
One hon. Member said that as a consequence of the Bill they will lose their markets. But will they? Who is better able to face an adverse situation than the 2184 growers of Empire cotton? Almost every Empire cotton board has not only sold its cotton at the prevailing world prices, but has also accumulated a substantial reserve as well. The Empire cotton boards are certainly no weaklings. Those who grow cotton in the Colonial Empire can draw a good deal of satisfaction from what has been said in this and previous debates.
We on both sides of the House are determined that the acreage of colonial cotton shall not only be maintained, but increased. As I said here last night, if after the expiry of these long-term contracts it is found that Empire cotton cannot be readily sold, or if it is facing an adverse situation, I am certain that the Government of the day, whether a Government of the party opposite or a Conservative Government, will take such action as it has at its disposal to put that situation right. I am satisfied that neither party wants to see any deterioration.
§ Mr. Proctor
Would the hon. Gentleman rule out the possibility of bulk purchase and long-term contracts?
§ Mr. Shepherd
By no means. I am not at all doctrinaire on the question of bulk purchase or even long-term contracts. If we feel that the only way to maintain and increase the acreage of colonial cotton is by long-term contracts or bulk purchase, by all means let us use those methods. All I am concerned with is that at present there does not appear to be any danger, as a result of the operation of this Bill, of any reduction in colonial acreage, and there is a reasonable chance for those growing cotton in the Colonial Empire to extend still further the hold which they have had in the last 10 or 15 years in the business.
The second point of doubt is on the question of stocks. My hon. and gallant Friend the Member for Rochdale (Lieut.-Colonel Schofield) has dealt adequately with the illusion that members of firms in Lancashire are poor people. It is not true. In all this gloom let me say that, apart from the period before 1913, I do not know any time in the history of the textile industry when the financial position of those firms has been so sound. There is really no ground for believing that they will have financial hardship imposed upon them. They are using the 2185 normal method of procuring raw materials, and I feel that there is no real danger on the stock position.
Hon. Members opposite create doubts in my mind about the validity of their fears. I remember that on one occasion an hon. Member opposite said he was very much afraid that there would be no stocks at all, and another hon. Member opposite said that he did not think there would be enough room to put them. They really cannot have it both ways.
Stocks do not exist in private hands today, and there is a very good reason why they should not. The Raw Cotton Commission is liable to lose vast sums of money on its sales; and, with a fairly uncertain position in terms of cotton prices and with inadequate cover for stockholding by merchants, it is obvious that there cannot be any serious holding of stocks until this Bill is passed. That is why I am most anxious for my right hon. Friend to get on with this job as quickly as possible, because we want to see stocks established.
I was rather disconcerted by some of the remarks made by hon. Members opposite and the fears expressed. One would think from the speeches made by some hon. Members on the score of marketing that we were rather puerile and no good at marketing. It is the skill of British merchants which has made this country invaluable to the foreign exchange fund today. It has a reputation which is to my mind unequalled. Are hon. Members opposite telling the House that the skill of our people, admired all over the world, is not equal to providing supplies of cotton for the spinners in Lancashire? That is a most absurd allegation. I am sure that they do not really mean it.
Another objection that hon. Members opposite have to this Bill is on the question of quality. The quality of the cotton, so hon. Members opposite say, has been very good lately and was very bad before the war, and they think that it is going to be bad again. That is the real point which concerns the workers in the industry. The method of payment of wages and the quality of the cotton are a very critical factor so far as the workers are concerned. Let us look at this allegation.
2186 I was listening to a complaint from workers about cotton purchases by the Raw Cotton Commission not so very long ago, and I think I am right in saying there were official complaints by the unions concerned some years ago. I do not blame the Raw Cotton Commission for that, because it was taking 25 per cent. of the supplies, and beggars cannot be choosers. It probably was not its fault. Also it is not fair, in the same way, to compare the cotton purchases before the war with what is likely to be purchased under the new régime.
Why was it that we had in the Lancashire cotton industry between the wars a lot of cotton of very doubtful quality? It was because of the intense competition, and, frequently, this meant a difference to the spinner between survival and giving up. He had to buy down the grade of his cotton because of the urgent necessity related to the economic conditions of the day, and it was not the method of purchase which determined the quality. In the period which will follow this Bill there will be no such difficult conditions similar to those that obtained between the wars, and the reason can be easily found for that.
There is no reason to believe that there will be any deterioration in quality. Indeed, the reason the vast bulk of buyers in Lancashire have opted to take their supplies from private merchants is because they believe that the private merchants will serve them better, and they will get the quality of cotton which they want. So I do not think that this question of quality gives any grounds for fear that this Bill will do any harm in fact, there is every ground for expectation that it will do a great deal of good.
The second point which has ben made by hon. Members opposite so frequently in this debate and in the previous stages of this Bill is that some members of the Lancashire trade do not want the Bill. We have had letters quoted from various people and the surprising thing to me is that they have not been able, to produce more letters. I feel that the Lancashire manufacturers have been rather slow. If any other industry had 25 per cent. stocks in two successive, years to stock up against its raw material losses, I think that there would have been a greater percentage of industries in Lancashire.
2187 It is not an unhelpful thing to have all your stock losses in industry covered by a Government organisation, and my surprise is that not more Lancashire people have opted to say that they want to continue this rather beneficial form of trading so far as they are concerned. The answer is, I think, that Lancashire people are made of different stuff—very good stuff which in no way justifies the pessimism shown on the benches opposite this afternoon.
I believe that the Lancashire industry is a virile industry. It has strong independent people, whether managing directors or the people working the spindles. They are all first-class people who can do a first-class job. I do not for one moment imagine that there is to be the sort of disaster overtaking the industry which hon. Members opposite have been talking about.
What is the position which we have to face. We have to face an export quota at the moment of about 25 per cent. and 75 per cent, home trade. Home demand is strong. We can, I think, maintain our export totals in the next 12 months at any rate. But there is no ground for pessimism because this industry is one in which there are people who have great experience and whose workers are better than those anywhere else in the world. We have no reason to fear competition provided we can buy cotton at the right prices—and that is what this Bill is going to do—and give Lancashire spinners the cotton they need.
I am glad that the Government have brought forward this Bill. I am satisfied that it is the right thing to do. It is not merely a petulant reversal of what hon. Gentlemen opposite have done. We think this because we believe that this is the right and proper way in which cotton should be bought, and because we believe that it will give better quality cotton to Lancashire at world competitive prices. That is our belief, and I am satisfied that when this Bill has had a run of a year or so, the fears expressed by the hon. Members opposite will be found to be groundless and the belief we have in the Bill will be fully justified.
§ Mr. Jack Jones (Rotherham)
This is the first occasion on which I have said anything about cotton; steel is more in 2188 my line. But I spent five years as the senior Member for Bolton, and I want to ask the House and the hon. Member for Cheadle (Mr. Shepherd) this: if there is any other very high-grade cotton somewhere which someone else has been getting while the Cotton Commission has been buying lower grades, who has been getting it and how do we intend to get it without out-bidding them in the future?
§ Mr. Shepherd
I said that they will get more selected grades of cotton. What is important to the spinner, as hon. Gentlemen opposite know, is to get a continuity of the precise grade which will give them no trouble. That is why over half the man buying in the industry opted to go to outside firms, despite the fact that the stock position was not very satisfactory.
§ 5.9 p.m.
§ Mr. H. Rhodes (Ashon-under-Lyne)
The proceedings on the Bill are now nearly over, and it will not be long before Mr. Speaker is gathering us, like a lot of chickens, to go to another place to collect a completed Bill and bring it back here. The President of the Board of Trade will be able to say, as another jester did in one of Shakespeare's plays:An ill-favoured thing, Sir, but mine own.He will be proud of it.
His opening remarks amused me because he said that much study had been undertaken on this subject. The story which the President of the Board of Trade likes to spin about what led up to the introduction of the Bill in this House rather reminds me of a farmer who once lived near me. He got a cat to keep down the rats. But the farmer, over the years, took exception to the cat because he did not like its colour. And so he set up his own Hopkins Committee.
He consulted his pals as to how they could get rid of the cat. They said, "Make it ill so that it cannot do its job, and that will be an excuse to get rid of it." He asked, "What must I give it?" They replied, "Give it a bit of ginger. "So that is what he did. The cat pined and began wilting away, and the fanner had a very good excuse for getting rid of it. But I believe the unhappy sequel was that the rats came out again.
The Bill removes the monopoly rights of the Commission, but it now puts the onus, so the President of the Board of 2189 Trade tells us, on to private purchasers to supply cotton to Lancashire. That is one piece of positive action in the Bill, shifting the responsibility from the Commission on to the shoulders of the merchants, or whoever it may be, to supply their own cotton in Lancashire.
But in the President's speech yesterday, we find this comment:There are arguments in favour of bulk purchase on long-term contracts for the purchase of cotton from the Colonies. No one will dispute that. No one will dispute that some benefits have, and can, flow from that kind of arrangement. There are advantages in having a free market in cotton, advantages that flow not only to the purchasers of the cotton but to the producers of cotton—very solid advantages."—[OFFICIAL REPORT, 17th February, 1954; Vol. 523, c. 2039–40.]On both sides of the House we can nod our acquiescence, because the right hon. Gentleman there propounds two very solid principles. Unfortunately, however, there is a grave omission, because all that the Bill does is to provide what the President wants, or what he has been pressed to provide, and it has no provision whatever for long-term contracts.
I want to bring home to the President of the Board of Trade and those who work with him that the positive action that they have undertaken in removing the responsibility for getting the cotton to Lancashire does not absolve the President and the Government from responsibility. Neither shall we allow the matter to go by default if there is any trouble whatever in Lancashire with regard to cotton supplies. I warn the Government here and now that we shall pursue the matter as vigorously as it can be pursued.
I say to the President, now that he has returned to the Chamber, "You have ostensibly handed over to the trade your responsibilities for the purchase of cotton for Lancashire. Be careful. Before you make the order for dissolution which can be made under the Bill, fight tooth and nail in the Cabinet to see that you still retain the ability to purchase cotton in bulk. If you do not, it may be that you will not be able to step in at the right time to do exactly what you should be able to do for the Lancashire cotton industry. Increased vigilance will be needed.
The President of the Board of Trade and all his assistants, civil servants and 2190 others, must watch this trade from now on until next year, until the season has come for the American cotton and the season is open for the Egyptian, Sudanese and African cottons in the early part of 1955. The right hon. Gentleman will have to watch the trade as the old farmer's cat used to watch the rats. If he does not, it may be that we shall bring home to him the responsibility for introducing the Bill. I say to the right hon. Gentleman that, as soon as it can be done, he should insist that the futures contract shall be open to colonial cottons. We have heard that said so often before, but I say it again because of its great importance.
It would be a tragedy if we were to embark on a series of actions backwards and forwards across the Floor of the House about a commodity which is vital to the well-being of so many scores of thousands of people. The Bill was promised quite fortuitously. The promise just came out like that, on a football field in Everton, or wherever it was, in Liverpool.
§ Mr. Rhodes
Oh, yes, it did. The promise was made, and it had to be kept, whatever the season, climate or circumstances at the time.
I cannot deal with all the omissions because that would take me all night. I ask that everybody should try his best from the point of view of ensuring supplies of cotton for Lancashire. From now on it is the private merchant's job to do it. Let the President of the Board of Trade see that he does it, or else, when the right hon. Gentleman goes out to visit the factories on the Great West Road, that notice which he sees will apply to him:The day of judgment is at hand.
§ 5.17 p.m.
§ Sir John Barlow (Middleton and Prestwich)
I am delighted to follow the hon. Member for Ashton-under-Lyne (Mr. Rhodes). I can start on a point of agreement with him. I, too, think it is important to open futures markets which cover as far as possible all growths of cotton. The first contract is to cover only American cotton. Other similar growths are so similar to it that they can be hedged quite easily on the same contract, 2191 but there are other growths of cotton which are not nearly so similar to the American type, and the sooner they can be put on a futures contract and hedged exactly, the better it will be for all concerned.
Contrary to what the hon. Gentleman said, the idea of reconstituting the Liverpool Exchange was no hasty idea suddenly thrown out on the Everton football ground. It is a matter of fundamental policy with many of us. We fought tooth and nail against the abolition of the Cotton Exchange in 1947, and many of us resolved to do everything we could to restore it as quickly as possible, because we felt that it was for the good of this most important industry as a whole.
From that point, I should like to go on to two questions raised by the hon. Member for Eccles (Mr. Proctor). He said that because it was the working people of Lancashire who were so vitally affected, the Commission should have remained in being. No particular section of the industry can be happy or prosperous if the others are in deep depression. It is not a matter for one section of the industry only, whether it be the workers or the bosses, or whether it be the spinners, weavers or merchants. Taken as a whole, if the industry is not reasonably prosperous no one can make a reasonable living.
There may be a little bargaining as to who is getting a fair share and who is not. That can usually be reasonably settled, but it is only too well-known that in the 'thirties no bread and butter section of the industry could be even reasonably prosperous against Japanese competition. Those of us in the industry know the miseries of empty mills, of seeing machinery taken out of them, and other depressing occurrences with which hon. Members in all parts of the House are as familiar as I am. We are deeply concerned to see that it does not happen again.
The hon. Member for Eccles went on to say that the Raw Cotton Commission was such a good body because it was backed by the whole wealth of the nation and, therefore, it could give such a good cover. I agree it was an excellent cover, but would the nation agree to lose perhaps £25 million a year to give a good cover to one single industry? If the cotton industry had the right to be 2192 covered in that way, then every other manufacturing industry importing raw materials from all over the world would have an equal reason for demanding Government cover. It would be very improper for any one industry to have a Government cover such as was given to the Raw Cotton Commission.
§ Mr. Proctor
Is the hon. Gentleman now saying that the Lancashire cotton industry had an advantage which is now being take away because he thinks it is unfair?
§ Sir J. Barlow
Yes, I think the Raw Cotton Commission did give an unfair cover to a particular industry which the country, when it realised it, would not tolerate for other industries. It must either be given to all industries or to none at all.
§ Mr. F. Blackburn (Stalybridge and Hyde)
Surely the hon Gentleman will remember when the scheme was brought forward for commercial television the point was raised about using public money for private enterprise, and the Assistant Postmaster-General asked what was wrong with that? He did not dissent from the view that at times it may be necessary for public money to be used to help private industry, but hon. Members opposite must be consistent about it.
§ Sir J. Barlow
I do not propose now to go into that matter.
I am convinced that the Raw Cotton Commission could not buy as cheaply and as efficiently as private enterprise. There are already indications that people who opted out of the Commission and bought direct were able to buy cheaper than the Commission. In 1953 they bought more cheaply than they could have done from the Commission. There is ample proof of that in certain instances.
There are one or two other aspects of this matter with which I should like to deal very briefly, one being the suggestion that the quality of cotton supplied was improved by the Raw Cotton Commission, that it was far better than in pre-war days, and that this was appreciated by the workers because it made spinning and weaving so much easier.
2193 There are two or three reasons for that. One was that there was not the severe competition owing to a sellers' market. In the first three or four years after the war people were quite prepared to buy cotton of a quality slightly above that actually required and it did make much easier working. In addition, I am told that in the case of certain growths of cotton sampling was much better done at source, and people knew exactly what type of cotton they were getting. There was not the same variation in the bulk deliveries as there used to be in the old days.
I agree that it is most important to try and keep that accurate sampling of cotton. One does not want variation, because it makes it difficult for the workers and unsatisfactory for the purchasers of the yarn and cloth. It is also very wasteful.
Then there is the necessity for the futures market itself. One of the principal reasons for it is that buyers of cotton can finance their purchases much more easily, and they can cover their risks. I know that this has been discussed ad nauseum but I should like to say a few words about it. If I, as a merchant, go to buy 1,000 or 5,000 lumps of grey cloth on the exchange in Manchester, as I used to do very frequently, I get a quotation. The manufacturer, having got a quotation for yarn, quotes a price to me.
Very often, if I try to get his price down slightly, he will say, "Let me go and see the spinner." Perhaps with a little going to and fro, in half an hour I shall conclude a bargain and buy the cloth. If it was an order of any size the weaver would have booked his yarn and the spinner within half an hour would have booked for a particular delivery. That secured for me my cloth. I should know the finishing price, and the weaver would have been covered for his yarn and the spinner for his cotton delivery perhaps six months ahead.
That is the very negation of speculation. That is covering any imponderable which one can. When I got that cloth and I knew my finishing price, I could go back to my office and wire the cloth details and price to the markets of the world, and I should get a reply in 24 hours or less. That was how the business was done.
2194 I have tried to explain how things can be started and continued. Let me try to explain how the process works from the other end. The grower of cotton, just as the grower of many other commodities, sows his crop and possibly, when it is partly grown, he thinks the price is going down. He wants to cover himself for part of his crop, so he may sell 20 per cent. of it for three months or six months ahead. As he sees the crop gradually mature he may sell more, and at the end of the season he may have very little crop to sell. That is not speculation; it is securing a price.
When he actually goes to settle his forward contract probably he does not deliver his own cotton at all, but he covers it again. If there is a grower on the one hand prepared to sell that crop in April or May and a consumer beginning to buy a cotton crop in April or May for November or October, they are not speculating but securing their position. This is rather difficult for some people to understand, and I can assure the House that it is difficult to explain unless one has actually done it.
The futures market which handles all these matters is in New York or Liverpool. Perhaps the spinner wants to carry a stock of cotton, but now it is said that he will not be able to finance it, and that, even if he has the money, he ought to be spending that capital on modern machinery and not merely on cotton to carry as stock. As hon. Gentlemen opposite no doubt know, the practice of carrying cotton is not one of just buying cotton, paying for it and keeping it in the warehouse until it is needed.
It is put in a bonded warehouse or, by agreement, in a private warehouse and bills can be drawn against it for perhaps 90 per cent. of the value of the cotton, provided it is hedged on the Liverpool Cotton Exchange, so that if there is any substantial fall in the price of cotton there is no loss to the holder of the bills or to the bank advancing the money. By either of those means the spinner can finance his cotton to the extent of 85 per cent. or 90 per cent. of its value, and for that reason it takes little ready cash to carry large stocks.
Although I did not have an opportunity of explaining this upstairs—
§ Sir J. Barlow
—it does not cost a great deal of money for spinners to carry stocks of raw cotton. I think the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) pointed out that per spindle many of the small companies have relatively more cash and capital than some of the large combines. So the suggestion that the small people will suffer and the big people will benefit is just not in accordance with the facts.
I know that many of the big concerns opted out to begin with and that many of the smaller ones did not do so, but that was by no means universal. I know that some of the large ones remained in for certain mills and for certain types of cotton and opted out for others. This gave them excellent experience of how the different methods of buying compared, and they found in certain cases that those mills which opted out and bought direct could do so much more satisfactorily.
In contradiction to what the right hon. Member for Huyton (Mr. H. Wilson) said, I feel it to be most important that this Bill should be implemented as quickly as possible. I do not hide the fact that there will be difficulties, because there are bound to be. Incidentally, the Cotton Commission came into being not because private enterprise could not carry on but solely because of war conditions.
I recognise that Lancashire is up against a difficult time and that because textiles are consumer goods they are much more difficult to export to the ends of the earth than are capital goods. I know too well the difficulties in the'30s. I sweated through the bazaars of India, Malaya and China and tried to sell British textiles against Japanese and Chinese competition and I know the impossibility of doing so. No one wants to see those conditions return.
This is not a party problem but a national and, especially, a county problem. I believe sincerely that the private enterprise way of buying raw cotton is the most helpful in securing markets for our exports. For that reason and because it is so much in the interests of Lancashire, I hope that the Bill will be brought into operation as quickly as possible.
§ 5.35 p.m.
§ Mr. William Keenan (Liverpool, Kirkdale)
I am pleased to be following the hon. Baronet the Member for Middleton and Prestwich (Sir J. Barlow), because he was not quite fair when he said that he had not the opportunity to make what appeared to me to be his Second Reading speech upstairs in Committee. The hon. Baronet appeared upstairs a few times but I do not think he occupied the attention of the Committee more than a few minutes during the 10 sittings of two-and-a-half hours each, so if that is anything to go by, we cannot place much reliance on the rest of what he had to say to us just now.
I am aware that on Third Reading we are confined to speaking on what is in the Bill and, therefore, I cannot go as fully into the matter as did the hon. Baronet, according to whom we are doing a great service by taking the buying of cotton away from the Raw Cotton Commission and handing it over to the speculators, largely if not wholly. I have expressed my opinion about their past operations. The hon. Baronet said that this would cheapen the purchase of cotton, but before that he complained of the £25 million a year which was the Government contribution towards the buying of cotton, thus implying that under the Raw Cotton Commission the buyer was better off to the extent of that £25 million than one buying privately without the subsidy.
§ Sir J. Barlow
Perhaps I have not made the point quite clear. On the one hand, cotton was being subsidised but, on the other hand, there was ample evidence that the actual cost of buying was much more expensive than by private enterprise. As regards the speculators in Liverpool, about whom we have heard so much, if the hon. Gentleman will investigate more closely, he will find that the vast fortunes supposed to have been made in Liverpool were made out of shipping and insurance and not out of cotton.
§ Mr. Keenan
I do not depart from what others have said over and over again, that when cotton changes hands, as it will do again under the new set-up—if, for instance, I sell it to the President of the Board of Trade and he sells it to my right hon. Friend and my right hon. Friend sells it to the spinners—it will cost more because I do not sell it for 2197 fun and neither does anybody else, so all the time something is added to the price. That is what people are in business for. They sell to each other and the cost of what they sell goes up. The price does not get cheaper or the transaction would not be worth while. Do let us be rational about these things—
§ Mr. Keenan
None died in the workhouse. As my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock) has implied, they were the most propperous people in Liverpool. Many of them lived in the best parts of the suburbs and they did not even like living in Blundellsands but went to Southport because they made so much out of cotton. That will happen again.
I want to take this opportunity of saying a few words about the departure of the Raw Cotton Commission. I remember hearing some very fine things said in this House and elsewhere about the Commission. It seemed then that the individuals who were put in control of the Commission were the best of men. Their integrity was never questioned. They were among the finest men in the industry and knew all about the business. They were engaged in the industry.
After all, the owners in the industry had the confidence not only of this Government but of the last Government and the Coalition Government. I remember also that the President of the Board of Trade was quite anxious that at least one gentleman should stay and he offered him six months' salary to do so. To criticise the Commission now and to want to do away with that body does not make sense to me.
In future, instead of having a Raw Cotton Commission capable of safeguarding stocks, it will be nobody's business to find out the stock position. Judging from what has been said from the Government benches, there will be small or no stocks in the country when the Commission disappears. I would remind the President that when war broke out in 1939 the speculators soon packed up. They could not carry on. I understand that they had the opportunity to do so but refused.
2198 We were in a hopeless position in the matter of holding the stocks which were necessary at that time. That is why the then Cotton Board came into being and the buying had to be done by the Government. That will be the position again if similar circumstances arise. We should do everything possible to guard against that contingency.
Like everybody else, I am concerned about the stock position, and I would remind the hon. Member for Middleton and Prestwich that I drew attention two days ago to the position in the Sudan. The President has never satisfied either the Standing Committee or this House about what he envisages will be the position during the next 12 months. I submit that it is altogether wrong to leave matters in the present loose form. I submit to the hon. Member for Middleton and Prestwich that the textile industry was never so prosperous and never enjoyed before the position which it has enjoyed in the last few years of the existence of the Raw Cotton Commission.
§ Sir J. Barlow
The industry enjoyed great prosperity during the sellers' market throughout the world. As regards the Sudan, the hon. Member will understand that the recent sales of Sudan cotton to the Egyptians had nothing to do with a change in buying here but were due to political conditions out there.
§ Mr. Keenan
The report that I read was that the price was too high for the Liverpool speculators. I questioned the spokesman for the Minister of Materials and he suggested that the Egyptians would offer the cotton and perhaps the Liverpool merchants would buy it and the Lancashire spinners would obtain it. But the Liverpool merchants will have to pay more for it than the Egyptians paid, and that price will again be increased when the Liverpool merchants sell the cotton to the spinners. That is the game that will go on.
We should clearly understand that the building up and maintenance of this great cotton industry is not at all likely to take place in present circumstances. I think that we are in for a bad time. The difficulty caused by Japanese competition has been mentioned already, and Chinese cotton goods are now on the market in this country. Is this the time to make it more difficult to obtain supplies of cotton?
2199 It is true to say that the supply of the kind of cottons which the industry has been able to obtain through the Raw Cotton Commission will cease with this contemplated change. For this reason it is regrettable that the Government have had to implement what was promised by the Prime Minister in Liverpool. His promise was not made at a football ground but at a large meeting place in Liverpool where boxing takes place. I am not certain whether the Prime Minister was speaking from the ring or not. If he was, then judging by the decision which he then announced he must have been punch drunk.
§ 5.47 p.m.
§ Mr. Ian Horobin (Oldham, East)
We are coming towards the end of a long debate on a very important matter. As a preface to the few remarks I want to address to the House, I should like to say that I feel that this subject should be treated as a strictly business proposition. It is too important to the livelihood of Lancashire to be dealt with on a basis of Parliamentary back-chat between the living and the dead. I want to stick strictly to the question of how we can obtain the best cotton cheapest.
I want to put one or two points on two main matters which have been in dispute all through the debates on this Bill. Firstly, there is the history of the gradual dissolution of the Raw Cotton Commission. While the Raw Cotton Commission had the monopoly, it was open to everybody to discuss as a matter of theory whether this was a good way of buying cotton. But I submit that debates of that sort are at least 12months out of date. There has been no monopoly for a period extending over more than one season, and we do not have to go for information to hon. Members opposite or on this side of the House, however experienced in our different ways we may be. We can put the matter to the test of what has happened.
I must remind the House of the simple fact that not only have the majority of those who spin the cotton decided that they are better outside, but—and this is even more important—speaking subject to correction, though I am practically certain that I am right, not one single spinner who opted out when he first had the 2200 choice and since has had the choice to opt back into the shelter of the Commission has exercised that second option. So it is really a waste of time to talk to people concerned with the future of the Lancashire cotton industry as though this were a theoretical question between those who like this or that. The people who have actually to spin the cotton or go out of business have decided that by a large majority. Not a single one of them who took his courage in his hands and opted out has since decided that he made a mistake and opted back.
§ Mr. J. T. Price
Will the hon. Member tell the House, if he were acting in this situation as a prudent, independent manufaacturer and were faced with the certain knowledge that it was the intention of Her Majesty's Government to wreck the Government machinery of the Row Cotton Commission, he would not be seeking some alternative source of private supply? He would be frightened out of his wits at the prospect of losing his ready supply from the Commission.
§ Mr. Horobin
The hon. Member is seeking to make his speech in the middle of my speech. This was not known a year ago when the first options were exercised.
The next point which I think must be made quite clear when we are asked whether to give the Bill a Third Reading or not is that we are perpetually having put to us the alternative to the Raw Cotton Commission under this Bill is that the spinners of Lancashire must use these wicked Liverpool speculators. There is nothing of the sort in the Bill. Not one bale of cotton need be bought from a Liverpool merchant by a spinner unless he wishes to buy it; there is nothing to prevent him buying direct and going into business himself like any other manufacturer who buys his raw materials. No cotton will be bought from the merchants unless the spinner decides—whatever hon. Members opposite think—that he will get cotton cheaper from the Liverpool cotton market. The vast majority of them will take that course but they will do so as businessmen and not because they are forced by the Government, or because of what the Prime Minister said in a boxing ring. They will do it simply because, in the free exercise of their discretion, they decide that it is cheaper and better to buy through the Liverpool cotton market.
2201 The Bill contains nothing about starting the Liverpool cotton market. If it is started again it will be solely because enough practical spinners decide that that is the way they want to buy their cotton. The day that the Lancashire spinners decide—if ever they do decide—that the Liverpool cotton market is an expensive, speculative nuisance it will go out of business, because it will have no business to do.
I wish to tie up one or two points on the question of colonial cottons and bulk buying. Even supposing hon. Members opposite are right—we think they are not right—about the advantages they claim for bulk buying for the colonies, there is no need why that should be an argument against giving a Third Reading to this Bill. There is nothing to prevent the Government entering long-term contracts, if they so decide, without this machinery of the Raw Cotton Commission.
The curious thing is that hon. Members opposite never seem to be able to make up their minds either in regard to American cotton, colonial cotton or Sudan cotton exactly on what is their criticism. At one moment they say that stocks of American cotton are being kept low, and that we would be in a better position if the Raw Cotton Commission existed and held stocks and this Bill were not being passed. Yet they frequently tell us that the danger is too much American cotton in the world and that the first futures contract will get into difficulties because of the large stocks of American cotton overhanging the market.
In regard to colonial cotton, at one moment their argument is that the Commission must be kept alive because we should have bulk purchase to encourage colonial types of cotton. The next moment they say the idea is not that this is the best way of giving a good price to the growers but that on the contrary they are grumbling because the merchants outside the Commission having refused to buy at the price now being asked later have to pay more. The two arguments are mutually contradictory.
I am not disputing, no one with any practical knowledge of any branch of the industry would dispute for a moment, that there are grave anxieties overhanging the whole Sudan cotton position, but they have nothing whatever to do with the 2202 method by which we buy cotton. If there is any criticism, it should not be addressed to the President of the Board of Trade but to the Foreign Secretary. What is going on in the Sudan has much more to do with the progressive elimination of British interests there and interference with growing and the Gezira Board, but I must not develop that. Who buys cotton is not the point. Whether we have the Cotton Commission, or Liverpool merchants, or whether spinners buy direct, the anxieties and dangers overhanging the Sudan cotton crop would remain. I freely admit that they are very serious anxieties.
I submit to the House that this return to the traditional way of buying cotton, invented by the practical people of Lancashire over generations, is to be commended to the House. It is not any longer possible to ask the general taxpayer to subsidise very heavily the buying of the raw material for one industry. Why should Lancashire be threatened with ruin if it has to buy its own materials whilst the people of Yorkshire have to buy their wool? Lancashire is just as capable of looking after its affairs as Yorkshire.
It must be clear to people who look at the matter without political prejudice that Lancashire has expressed quite clearly its desire to do its own work and it has confidence that it can do it better than anyone else can do it for Lancashire. There are risks and dangers it is true, but Lancashire will not get out of those dangers nor avoid those risks by trying to shelter behind the general taxpayer, or any bureaucratic machinery doing its work for it. Lancashire is quite capable of looking after itself. It produces the best cotton goods in the world. It is quite as clever and quick off the mark in buying its stuff as anyone else.
I submit that all experience leads us to believe that the less we try to interfere in the purely business arrangements of any of our great industries the better. This is not a new, doubtful, frivolous embarkation into some untried, theoretical scheme, but simply a return to a method invented by Lancashire ingenuity which served Lancashire well and which, I have every confidence, will serve Lancashire well in future.
§ 5.59 p.m.
§ Mr. J. T. Price (Westhoughton)
At this late stage I do not wish to detain the House for more than a few moments, but I do congratulate the hon. Member for Oldham, East (Mr. Horobin) on one thing. Although I disagree with almost everything he said, he has put up the temperature of the House a little on this Measure which we have been debating for about three months. Any intelligent citizen of this country who has tried to follow our debates over that long period must by now have made up his mind that the Government are crazy to be proceeding with this Measure which has been riddled with criticism from every side—professional, industrial and political.
In putting forward his vigorous contribution, the hon. Member for Oldham, East produced no new idea but merely restated the old-fashioned Benthamite idea, which was at the root of the old "Manchester School."
§ Mr. H. Wilson
I am sure my hon. Friend would be the first to agree that, whatever may have been the arguments for the Manchester School, in Manchester there is precious little of that philosophy left in the Yarn Spinners' Association.
§ Mr. Price
I am very much obliged to my right hon. Friend, and I am sorely tempted to pursue that line of thought. It provides a rich vein of criticism to which hon. Members opposite are vulnerable.
In the relatively short time I have been a Member of this House, I have never been regarded as a rank party politician, although I hold as tenaciously as any man to the Socialist philosophy of the electors in my division who sent me here. Nevertheless, it is open to any Member with eyes to see that the Tory Party, on this or on any issue which is regarded as a "sticky wicket"—when something has to be put across to the country which may have unfortunate results for sections of our people—are adepts at introducing the technique of singing "The more we are together, the happier we shall be."
2204 I have never taken the view that in politics a man must hate his opposite number because he thinks differently. But I deplore the sort of thing which has been practised in this House. Yesterday the President of the Board of Trade appeared in a white sheet, asking for an indemnity for something he had done which he had no right to do. Today he appears in a pale pink sheet appealing to us to get together regardless of party considerations. According to the right hon. Gentleman, we are full of good intentions for the welfare of our people. We have no other intentions towards them. All we want to do is to add one more branch to the betting industry in Liverpool.
As a representative of a Lancashire constituency, am I not entitled to object bitterly when the raw material on which the livelihood of thousands of people depend is put into the hands of speculators, people who brought to an end the economic freedom of our people in bygone years? Is not that a moral issue upon which we are entitled to state our opinions?
I claim that by so doing we are carrying out the mandate of the people who sent us here and who have declared with one voice—at any rate so far as the working population is concerned—that this Measure is abhorrent to them; but they regard it with fear and apprehension. Even now, at this late stage, they implore us to appeal to the President of the Board of Trade, and to his colleagues in the Government, to exercise the greatest discretion in the use of the powers still remaining in this Bill.
It is all very well for the hon. Member for Oldham, East to try to explain the recent happenings in the Alexandria cotton market, when merchants from this country failed to buy any Egyptian cotton at all. I think it was my right hon. Friend the Member for Huyton (Mr. H. Wilson) who referred to a speech by Sir Thomas Barlow, one of the most eminent and distinguished figures in the cotton industry, and, incidentally, one who once employed me as a very junior servant in his company—though I do not claim that is anything about which he should be proud. Are we not entitled to point out that the town from which Sir Thomas Barlow emanates, and where his company operate their great factories, is almost 2205 entirely dependent on a supply of Egyptian cotton; and that today we are facing a situation in which the only Egyptian cotton remaining in this country are those residual supplies controlled by the Raw Cotton Commission?
It is all very well to say that this is a political consideration which has nothing to do with the economic factors. I completely reject such a baseless argument. The reason the hagglers in the market at Alexandria are holding out for a fantastic price level, and holding to ransom the merchants and the cotton industry of this country, is precisely that they know that the dislocation created has caught certain sections of the industry short of stocks of the right quality.
It is all very well for my old friend the hon. Member for Oldham, East—if he will allow me so to refer to him—to say that this is politics. I should get into serious trouble with Mr. Deputy-Speaker if I entered on metaphysical grounds and tried to distinguish where economics end and politics begin. But that is the sort of dilemma with which many hon. Members are faced, although we all try to discharge our duties here—at least I hope we do—as fearlessly, as honourably and as vigorously as we can.
This short contribution to the debate may not have followed the lines I originally intended, but nevertheless it is a sincere plea to the Government, on behalf of the people of Lancashire, not to continue with this iniquitious Measure, which is fraught with such great consequences to the people of my native county.
§ 6.7 p.m.
§ Mr. H. A. Marquand (Middlesbrough, East)
We on this side of the House have no difficulty in complying with what we understand to be the view of the Government, that this debate should be drawn to a close. We make no complaint at having been denied time to discuss this matter, either in the House or in Standing Committee. We had no less than ten sittings of the Standing Committee on this Bill which contains five operative Clauses. We feel that was a reasonable amount of time.
By this short but important Bill we upset what is now an institution of long standing, and we are taking a leap in the dark for which very little justification has 2206 been advanced. It is right that we should have had plenty of time to discuss it. But, if it was reasonable to have tea sittings of the Standing Committee on a Bill of five Clauses, we cannot see, why it has suddenly become unreasonable to have eight sittings of the Standing Committee dealing with six Clauses in another Bill—but that, perhaps, is another question.
Hon. Members opposite who represent Lancashire constituencies will have to explain to their constituents why it is that they have taken few opportunities to use the time available to discuss this Measure; and why it was that during all the long sittings of the Standing Committee, and even yesterday, during the Report stage, they did not bother to explain their attitude to a Bill which is bound to affect their constituencies just as badly and adversely as the constituencies represented by my hon. Friends.
§ Mr. Charles Fletcher-Cooke (Darwen)
As one of the Lancashire Members whom the right hon. Gentleman is seeking to attack, I would say that the reason we did not intervene was that the position was put so well by the President of the Board of Trade.
§ Mr. Marquand
I do not know if the hon. Member was a member of the Standing Committee. I cannot remember seeing him there.
§ Mr. Marquand
—he would know that the Government were so hard put to it that they could not man the Committee properly. They had to have two hon. Members sitting on two Committees which were meeting at the same time to consider two separate Bills.
When Government supporters do not make speeches on Committee stage we understand why, but on Report stage, when there is a clear understanding of the limited time-table, we expect to hear from them. Last night they were not even present, and on two occasions an attempt was made to count out the House 2207 because there was not the necessary number of hon. Members in the Chamber. No hon. Member opposite who represents a Lancashire constituency, except the hon. and learned Member for Bolton, East (Mr. Philip Bell), ventured to address the House. In the end, the Government majority fell to 11. It is obvious that hon. Members opposite who sit for Lancashire constituencies have no enthusiasm whatsoever for the Bill. They could not bother to speak in Committee and they did not bother to turn up yesterday, and it is on record that some of them did not even bother to vote for the Government last night.
§ Mr. Marquand
There was a complete absence of enthusiasm on the other side of the House yesterday. The President was glum because he was under heavy fire. The only person who deserves exemption from my strictures is the ever-ebullient hon. Member for Cheadle (Mr. Shepherd). He deserves a pat on the back from his right hon. Friend.
§ Mr. Marquand
Earlier today the President referred to the great reputation which the commodity markets of this country have enjoyed in the past. We do not deny that those markets have enjoyed that reputation or that great merchant firms of this country have an international reputation which stands very high indeed, but we believe that the right hon. Gentleman will very gravely endanger that reputation by setting up, in highly uncertain circumstances and upon utterly inadequate foundations, a new market, for it will be a new market in the absence of many of the former traders who have now been removed from the scene because of old age and so on.
What I have just said was confirmed in the short speech by the hon. Member for Oldham, East (Mr. Horobin). We gladly and warmly welcome his intervention; we were delighted to hear from him. He went so far as to suggest that when the Bill finally reaches the Statute Book—if it ever does; I hope it will not—there may be no market at all.
§ Mr. Horobin
I am sure the right hon. Gentleman does not wish to misconstrue what I said. I said nothing of the sort. What I said was quite the contrary. I went so far as to say that it was obvious that a futures market would be set up. I said that the Bill does not set it up. It will only be set up and will only continue if the spinners of Lancashire decide to do their business through it. That is very different.
§ Mr. Marquand
What I stated was what I understood from what the hon. Gentleman said previously. I accept his correction. I very much agree with him that it remains to be seen how far the spinners of Lancashire use whatever sketchy kind of market the Liverpool merchants succeed in setting up. I shall be very surprised if many of them do not decide not to bother with it at all but, instead, to make their own arrangements for the direct shipment of cotton.
If that happens, it certainly will not fulfil the optimistic prophecies made by the President this afternoon. He told us that he is confident—I know I am quoting accurately, because I took down his words—that as good cover will be provided for spinners as obtains in any country in the world. That may be so; we doubt it, but we accept that it might be possible. But we say that, even if that is true, the cover will not be half as good as that which the Commission was providing while it was in existence.
There is little doubt that the cover will be inadequate. We have heard from hon. Member after hon. Member on the benches opposite, who speak with special knowledge of sections of the Lancashire cotton industry, that those sections are fearful that the cover will not be forthcoming in the types and kinds of growths of cotton in which they deal. They say that cover for the American type will be available because there is a great market in New York which may be used for this purpose—although there is some risk of losing dollars thereby—but they are almost on their knees pleading with the Lancashire merchants to guarantee them cover in the colonial types and the fine long staple cottons which their parts of the industry use.
The President admitted that sections of the industry were worried about the lack of stocks, but he gave no convincing 2209 assurance whatever that the stocks really will be forthcoming. He seems to rely upon the optimistic but entirely doctrinaire and theoretical belief of the hon. Member for Cheadle that, because somebody would make a profit if he had some cotton, we can be quite sure that cotton will be forthcoming. I do not believe we can.
I was fortified in that belief by what the hon. and learned Member for Bolton, East said last night. His very short speech was delivered during one of the curious altercations that we sometimes get in Committee about whether or not something is strictly in order. I have no wish in the slightest degree to suggest any criticism of the Chair—no doubt the Rulings were all entirely correct—but it was nevertheless unfortunate that the hon. and learned Gentleman's speech was cut short. I wish he could have made his speech later on Report. It was a very important speech, and I am surprised that the President did not reply to it today.
The hon. and learned Member referred to:…the real anxiety of many hon. Members representing Lancashire constituencies.He did not mean anxiety on the part of my hon. Friends, for that would not worry him; he meant anxiety among his hon. Friends. He said:The real anxiety of Lancashire—certainly in the fine spinning areas—is the position of stocks.He went on to refer to:…the difficulty which some of us apprehend, which is that when the Raw Cotton Commission ceases to buy there may not be sufficient stocks in the country. I am told that 60 per cent. of the fine spinning trade contracted in and did their buying through the Raw Cotton Commission. The fine spinning areas are particularly anxious that we should have an adequate supply of cotton, for two reasons.The hon. and learned Member said that the first reason was a strategic one. Referring to the other, he said:…we must facilitate employment and avoid the time lag by carrying large stocks. It seems clear that the stocks are temporarily run down for some reason. I should like the Minister to satisfy parts of Lancashire which are most anxious—."—[OFFICIAL REPORT, 17th February, 1954; Vol. 523, c. 2064.]There the hon. and learned Member was cut short. It was a right and proper request, especially coming from a repre- 2210 sentative of Bolton, to ask for such an assurance. But it has not been given today. The Opposition at any rate remain completely unconvinced, from all that we have heard in our debates, that the stocks really will be forthcoming.
The hon. and learned Member, having made that speech a minute or two before the Division took place, did not then support the Government in the Division Lobby. I can well understand why. I have good reason to believe that it may have been due to a perfectly natural and entirely honourable fact in that he happened to have "paired" on that occasion. How glad he must have been that he had paired and thus did not have to support his Government in the Lobby on a matter about which he was obviously entirely in disagreement with the Government!
I hope the Minister will give us some assurance about the availability of stocks of cotton from the sterling and soft currency areas, particularly the long staple cottons from the Sudan and elsewhere which are the issue in this matter.
It is pretty evident from what has been said by hon. Members opposite that they are now beginning to have second thoughts. They wanted to get rid of the Raw Cotton Commission, partly because we set it up, and partly because it conflicted with the views which they have held all their lives. They are now beginning to see that though it may have been reasonably safe, from their point of view, for those who use American growths, it is beginning to look very dangerous for those who use other sorts. They are beginning to wish—and we could see it in the debates last night and again today—that the Raw Cotton Commission had been kept in existence, at least for the long staple colonial, Sterling Area types of cotton. Many of them still wish it now, and there is still time. It could be done, because, even if this Bill goes through, the Raw Cotton Commission does not have to be dissolved or wound up unless the President of the Board of Trade and the Minister of Materials decide that it is in the public interest so to do.
Let Members opposite think it over again. Let them consider whether it would not be better, and worth while even now, to retain the Raw Cotton Commission, not as it is now, because I 2211 do not think the half-and-half business would do, but with its functions so modified as to make it responsible particularly, specially and solely for that type of cotton. Let me not be misunderstood. I am not saying that this is the right way to do it. I dislike this Bill entirely, and I do not wish it to be passed and become law, but I do say that the right hon. Gentleman, if he obtains the approval of this House and of Parliament for his Bill, should then still consider whether, since the Bill gives him power to keep a modified Commission in operation, he ought not to do it in the interests of Lancashire and also in the interests of the colonial and other Sterling Area producers.
The right hon. Gentleman made no reference this afternoon to the Colonies. Surely it is the prime duty, in the interests of Lancashire consumers and also of the Colonies, for any Minister concerned with the cotton trade to preserve, encourage and expand in every way possible the supplies of cotton from the Sterling Area and other soft currency countries. We all know—we have heard the figures many times—that, while the Raw Cotton Commission has been in existence, these supplies have steadily increased. Ever since public buying came into existence during the war, they have gone on increasing.
Now, the hon. Member for Oldham, East expresses grave anxiety about the danger—those were his words—of the position in regard to Sudan cotton, so that it is admitted that there is grave danger of a failure of supplies of Sudan cotton which might seriously affect certain parts of Lancashire. There is almost equal anxiety in the Colonies about this, and the last Report which the right hon. Gentleman the Secretary of State presented to us about the Colonial Territories in May, 1953, referred to some of these Territories as follows:The West and Central African cottons and the output of Aden sakel cotton are still sold to the United Kingdom Raw Cotton Commission under long-term agreements…existing long-term contracts are of course unaffected but, where they do not exist or when they terminate, fresh marketing arrangements will have to be considered.The Report goes on to say, about the West Indian Sea Island cotton producers, that they 2212…are in a more difficult position, and maintenance of production will depend on marketing arrangements now being negotiated with the United Kingdom fine spinners.Whatever may be the state of things in Uganda, it is quite clear that the Colonial Territories, as far as cotton is concerned, are by no means happy about the situation. They do not know exactly what is going to happen. There was no indication of what might happen, and I asked the Secretary of State for the Colonies a Question yesterday about the possible position regarding the cotton exports of these Territories, and the right hon. Gentleman told me:I have asked the governments and marketing boards in territories which have long-term contracts with the Raw Cotton Commission to consider what alternative marketing arrangements should be made when these contracts expire in two to four years' time."—[OFFICIAL REPORT, 17th February, 1954; Vol. 523, c. 208.]It is the same story that we had in this document, which must have been compiled at least a year ago—"I have asked them to consider." There is no certainty about it; no result has been arrived at, and no indication is given to us as to what is to happen in these Colonies.
The effect of this Bill—and this has been admitted by the President himself—will be to increase the drain upon our dollar reserves. It will require the expenditure of more and more dollars, put more and more dollars in jeopardy, and, at least, will open the door to the export of capital on account of that happening, and at a time when we are by no means certain of having sufficient reserves of dollars in hand to be able to carry us through any lurchings in the United States economy which may occur. At the same time, it has emerged, as a result of these debates—and we hardly foresaw the magnitude of it on Second Reading—that even the users of sterling area cotton are confronted with an outlook of uncertainty.
The result of this Bill, if it becomes law, will not only be confusion in Liverpool and at the Board of Trade—and heaven knows, we had plenty of evidence of that already when we discussed the extraordinary retrospective legislation contained in this Bill. In fact, there can never before have been a Bill before the House of Commons which had five operative Clauses and two pieces of retrospective legislation in them.
2213 This Bill will maintain and increase the confusion in Liverpool and in the Board of Trade which already exists. It will ensure for the Chancellor of the Exchequer and the Bank of England uncertainty about our dollar reserves. It has spread and will spread dismay in the Colonies and among the Lancashire workers in the cotton mills, where already we see the growing shadow of the fear of unemployment.
One day, as a result of what is being done here, as a result of certain other things that have happened recently, and as a result of the failure of hon. Members opposite properly to look after the real interests of their constituents in Lancashire—and before long, too—this discontent in Lancashire will bring the party on this side of the House back to power. On that day, we shall not fail them.
§ 6.30 p.m.
§ Mr. Sydney Silverman (Nelson and Colne)
I am taking the unusual course of speaking from a back bench at the end of a debate, and of intervening between two Front Bench speakers who are charged with the responsibility of making the final observations on the Bill for their respective parties. I do it the more sincerely in that I realise that I have nothing very new to say; but I represent a constituency which came into existence only because of the rise of the textile manufacturing industry in Lancashire. Today, to a greater extent than any other constituency, it depends on the textile manufacturing industry, which itself depends upon raw cotton, for its livelihood. I do not feel the same willingness, which apparently some other Lancashire Members feel, to give a silent vote in the matter.
What is the House being invited to do? It is the Third Reading of the Bill, and therefore it would be out of order to refer to anything which is not in the Bill or which one might wish were in it. What does the Bill positively do? The Government have already brought to an end the Raw Cotton Commission and this is a Bill to give retrospective validity to what is virtually a fait accompli. What is the contemplated result? What is it that the Government wish to do and that they are asking for in the Bill? They are taking a number of things for which there has been since 1940 public respon- 2214 sibility and they are saying that there shall not again be any disinterested public responsibility for seeing those functions performed.
The functions for which the Government are abdicating all public responsibility are those about the importance of which in the national interest there cannot be, and has not been at any time, any dispute. One is the supply of raw cotton at reasonably stable prices. Another has been the maintenance of adequate levels of stocks of that raw material in the country. No doubt the levels ought to be different at different times, but one must see that there is at any time the level adequate for that time. The public interest further requires, the cotton textile industry being still our principal exporting industry, that all those firms, big and little, desiring to take part in the industry shall have secured to them an adequate supply of suitable raw material at suitable prices on suitable terms. It is in the public interest to see that the cotton-growing capacity of the territories overseas for which we have responsibility that we ought not to evade and cannot escape are not merely maintained but are encouraged to develop.
For all those things there was, while the Raw Cotton Commission was still functioning, a non-profit-making body, an impartial, disinterested body, charged with the performance of those public responsibilities. I see two Lancashire Members on the Government side of the House smiling. I am sure they are not smiling in disagreement, because the first Government to say that there should be public responsibility for those matters was not a Labour Government but was a Conservative Government.
§ Mr. Shepherd
I was laughing at the extreme delicacy with which the hon. Member described a loss of £50 million as "non-profit-making."
§ Mr. Silverman
The hon. Member may think it worth while at this stage of this long controversy to make a rather cheap and—if he will permit me to say—stupid debating point. Whether a loss or a profit is made at any particular moment is one thing, which may depend upon efficient handling or upon quite other matters; but my point is not affected at all.
While the Raw Cotton Commission existed there was a non-profit-making 2215 body, that was intended to be a non-profit-making and disinterested body, charged with the responsibility for seeing that certain matters which are obviously in the public interest were discharged in the public interest. All that the Government are scrapping. Never again while the Government have the power will there be such an authority to secure the public interest in these matters. Every attempt has been made during the course of these proceedings on the Bill to see that some semblance of public responsibility remained was resisted to the end, and each of them was defeated.
The Government have never said that at all times and in all circumstances this business is best left to the private enterprise of profit-making concerns. They have recognised that for 10 years there were circumstances in which this business had to be done in other ways; but now they are taking away the controls and this public responsibility, at a time when two things are happening which should at least have stayed their hands for the time.
One thing is the powerful and almost catastrophic new blow which is given to Lancashire's diminishing trade by the Japanese Agreement, when one would have looked for a little greater care for Lancashire's interest rather than a little less public care. The other circumstance is that the world is obviously—I will not say "tumbling"—progressing towards a period of great economic instability. I do not pause to examine why or to apportion responsibility for that kind of thing, but everyone knows the trend of world trade today, and that we are on the eve of critical conditions not comparable with anything the world has known for, it may be, 25 years.
At this moment, when Lancashire is staggering under the blow of the Japanese Agreement and when world conditions are getting progressively more insecure, the Government take the course of removing all public responsibility for matters on which the economic health of the nation obviously depends.
§ 6.38 p.m.
§ The Minister of State, Board of Trade (Mr. Heathcoat Amory)
I agree with the hon. Member for Middlesbrough, East (Mr. Marquand) that this is an important Bill, and that we are quite right to dis- 2216 cuss it fully and carefully because its proposals affect the welfare and efficiency of one of our most important national industries.
We have discussed the Bill during its various stages from every conceivable angle. We may be said to have talkedOf shoes—and ships—and sealing-wax—Of cabbages—and kings—all in their aspects relevant to the Bill. We had one interesting controversy as to whether it was possible for a body to bleed to death, and we were told that it was not, because death supervened in the meantime That seemed to me rather an academic point, wearing an air of distinction. At another point there was deep anxiety because it appeared that the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) was involved in a snow drift.
There are real differences of views between us on this matter, but in spite of those differences our debates have been good-tempered throughout. I realise that we have not succeeded in overcoming the anxieties of hon. Gentlemen opposite. I am sorry about that. The anxieties they feel were temperately expressed today in the speech of the hon. Member for Eccles (Mr. Proctor). At bottom there is a basic difference in outlook between us. Hon. Gentlemen opposite like State-sponsored monopolies and are intensely suspicious of a market. We, on the other hand, believe that a properly constituted market generally provides the most economic and efficient service.
I would point out to the hon. Member for Kirkdale (Mr. Keenan) that it is possible to avoid losses, to make money and at the same time to provide a cheap and efficient service. He seemed to imply that if one made money in providing a service one automatically provided an expensive and an extravagant service.
§ Mr. Keenan
The right hon. Gentleman misinterprets me. I have attempted to point out that the speculator did not add anything—he took money out. That is my point, and has been all along.
I would not agree with the hon. Gentleman in all cases—but I will not go into that very deeply at the moment.
We believe that in this case all the evidence points to the fact that, in the long run a free market will provide a 2217 more efficient and economical service. I want to make it clear that we are just as anxious as any hon. Member opposite that everything possible should be done to ensure that the sad days in Lancashire between the wars shall never return. But I want to bring the House to the realities of the issue facing us.
To repeat what my right hon. Friend has said, there are, in the present circumstances really three alternatives. The first is to go back to the full monopoly. If we were to adopt that course we should be flying in the face of the advice of the two Hopkins Committees. Or we can continue with the present half-and-half system. No one seems to be very enthusiastic about that, and I think it is clear that if we followed that course continuing charges on public funds would result. The third course, which we have adopted, is to terminate the Cotton Commission. In spite of all our discussions, I am not quite clear which of the three courses hon. and right hon. Members opposite want.
§ Mr. H. Wilson
Since the right hon. Gentleman is producing this quite false antithesis of the three courses, will he first recognise that it was his own Government which first introduced the miserable half-and-half system which he now condemns? Will he also recognise that on many occasions we have produced a fourth workable course, not listed in his three, which it would be quite out of order for us to debate when we are debating, not what ought to be but what is, unfortunately, in the Bill?
I do not quite agree with what the right hon. Gentleman has said. He has suggested courses to be adopted for the short-term, but I know of no suggested long-term courses other than those three.
§ Mr. Marquand
What about a Commission specially responsible for buying the colonial and sterling area cotton products, and nothing else?
That, surely would not cover the ground completely. I suggest that would be a very partial step.
We have three main reasons for believing that the course which we have selected is the right one. First, it does pave the way for a reopening of an inter-national free market. Over the years, 2218 we sincerely believe that that is most likely to provide a flexible, sensitive and quick working source of procurement of raw cotton, and the most efficient means of providing cover. Second, the retention of the Raw Cotton Commission would be likely to involve, as I have mentioned, a continuing charge upon public funds. In this connection we really must not forget that figure of over £45 million of public money which has been lost over the last two years. Third, we believe that the restoration of an international market will enhance the commercial prestige of the United Kingdom, and over the years, bring important financial benefit.
Doubts have been expressed on several heads. We have dealt with them very fully, and I am not going over the ground again. The first doubt is whether supplies will be available in the transitional period. I agree that it would be most serious if, during this period, an adequate service were not to be available. If we felt for one moment that the situation were going to affect adversely employment in the cotton textile industry we should be loath indeed to go forward with these proposals.
The hon. Member for Middleton and Prestwich (Sir J. Barlow) gave some interesting information about the financing of stocks. I would urge spinners once more to look ahead and plan with their brokers or merchants their future requirements. Very similar fears to those we have heard have been expressed during the past year or two when other markets were reopened but, in the event, things have gone more smoothly than was expected. I believe that will be the case here too.
§ Mr. Philip Bell
Is the right hon. Gentleman going to deal with the Group II spinners, who are at great disadvantage when there is no Egyptian futures contract? I never suggested that the Raw Cotton Commission should go on indefinitely, but until the Ministry have ascertained that the merchants are going to take up the cotton, cannot we, as a reserve, keep the Commission alive?
If my hon. and learned Friend will wait, I shall say a word about that in a moment.
The second doubt concerns the quality of cover likely to be provided. I sug- 2219 gest that, in fact, there will be little difference in the quality of the cover provided under the futures scheme and that existing under the present cover scheme. In both cases the basis is the price of American cotton. I believe that even while there is only the American contract there will be some quite important advantages under the new system. As far as the cover goes for Sudan, colonial and Egyptian growths, the position will be almost identical because, under the present scheme, the basis for covering those growths is, again, the New York price of American cotton.
The hon. Member for Ashton-under-Lyne (Mr. Rhodes) raised the question of a contract for those other outside growths. We all entirely agree that it would be a most desirable thing to have. As the hon. Member knows, the Liverpool Cotton Association has promised to consider, and, in fact is considering that problem now. It is aiming to introduce another contract for outside growths as soon as circumstances make it feasible, but the hon. Gentleman knows that there are some very real difficulties against doing that now. The biggest difficulty is probably the fact that there is not an international market in Alexandria at the present time.
§ Mr. Marquand
Could we now have a guarantee from the right hon. Gentleman that, under the terms of Clause 4, it will not be in the public interest to wind up the Raw Cotton Commission until that contract for outside growths has been made?
No, I never said, or implied that for one moment, and certainly we could not give such an assurance. I said—and I would like to repeat—that we should all like to see a second contract brought into existence at the earliest practical and possible time.
Everyone wants to see Commonwealth and colonial production of cotton con-
§ tinue its remarkable development of recent years. It is really a very fine story indeed We believe that development will continue, because those cottons are earning a great reputation on their merits. This view is also held by the colonial authorities concerned, who have made no representations which would indicate that they are unduly worried about the proposals contained in this Bill.
§ We are just as concerned as hon. Members opposite that the interests of colonial cotton producers should be watched and actively encouraged. A time may come when further long-term contract will be in the interests of certain colonial producers, but to continue a State-buying monopoly would be a very blunt, clumsy and expensive way to provide against that possibility.
§ As my hon. Friend the Member for Cheadle (Mr. Shepherd) said, hon. Members opposite do not pay enough regard to the fact that our cotton merchants are skilled, experienced and responsible people. Their energies will be devoted to building up the prestige and the standing of the market, and we must remember that their own living depends on selling as much cotton as they can, whether for forward delivery or from stock, and in providing the most efficient service possible to all sections of the trade.
§ We are all glad that the important matter of compensation has been settled to the complete satisfaction, I believe, of all hon. Members. We are satisfied that in the present circumstances, and also looking to the future, this Bill is a thoroughly sensible Measure, and that the new arrangements that will follow its passing will provide a vitally important industry with a service second to none in the world for the supply of its raw material. I confidently invite the House to give this Bill a Third Reading.
§ Question put.
§ The House divided: Ayes, 280. Noes, 261.2225
§ Bill accordingly read the Third time, and passed.