Lords Sitting of 26 February 1918

VISCOUNT NORTHCLIFFE.
Alfred Charles William, Baron Northcliffe, having been created Viscount Northcliffe of St. Peter, in the County of Kent—Was (in the usual manner) introduced.
LORD CAWLEY.
The Right Honourable Sir Frederick Cawley, Baronet, Chancellor of the Duchy of Lancaster, having been created Baron Cawley of Prestwich, in the County Palatine of Lancaster Was (in the usual manner) introduced.

ETTLINGER AND COMPANY.
LORD SYDENHAM LORD SYDENHAM had the following Question on the Paper
To ask His Majesty's Government—(1) Whether the firm of Ettlinger and Company, which was precluded from trading in India in 1916, has obtained through the medium of the Baluchistan Mining Company a monopoly of the supply of Indian chrome ore for Europe, excluding the United Kingdom; (2) Whether this firm is permitted to hold a large consignment of chrome ore at Calcutta; (3) Whether this firm of naturalised Germans, having obtained a decree severing its connection with Beer. Sondheimer and Company, of Frankfort, in October last, is now free to trade as a British firm.
The noble Lord said: My Lords, I have twice drawn attention to the operations of Messrs. Ettlinger and Company in connection with manganese in India. On the first occasion my noble friend the Under-Secretary of State for India said that he was informed that this firm had no connection with the firm of Schroeder and Schmidt, which was about to he closed: but six months later in July, 1916—he stated that it had been discovered that "the manganese business of Schroeder and Schmidt had been largely financed by Ettlinger and Company." My noble friend also said—
"Recent investigations regarding the character of Ettlinger and Company had brought out the fact that before the war close relations existed
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between this firm and Beer. Sondheimer and Company, of Frankfort... Accordingly, after consultation with the Government of India, it was decided to issue orders terminating their [that is, Ettlinger's] business in India."
The noble Lord further said that the Government of India were issuing two Ordinances which would give them all the powers required in cases where "a firm's business was being carried on before the war for the benefit of enemy interests, and is likely to be resumed on similar lines after the war."
The winding-up of the business Of Schroeder and Schmidt took a long time; and what apparently happened is that Ettlinger and Company took over the manganese from Schroeder and Schmidt and sold it to the Carlton Iron Company, who sold it to munition factories, but, as the noble Lord said, not to the Ministry of Munitions. As the very close connection of Ettlinger with Schroeder and Schmidt and also with Beer, Sondheimer and Company had been established, and as the Government of India had ample powers, it is difficult to understand how Ettlinger was able to obtain what is really a monopoly of the chrome of India for the European market. Chrome is a very important ore. It is found, I believe, only in India, in Rhodesia, in New Caledonia, and, I think, quite recently in Canada. After the war there will he a great demand for chrome, and, if my information is correct, Ettlinger and Company will be the source of supplies for our European Allies as well as for Germany. Quite a short time ago there was a consignment of 1,600 tons of ore from the Singbhum Chromite Company, stored at the Kidderpur Docks, Calcutta, which was the property of Ettlinger and Company; and I am told that Ettlinger refused the vendor's offer to buy it back. In theory, of course, the Ettlinger business in India had been closed; but it was held there that, as the contract of sale was made in London, this ore did not come under the control of the Indian authorities.
Now, surely this is a very instructive and illuminating case. We have a German firm, "A," which was trading in manganese and in other commodities in India. It was ordered to close, but the liquidation took a very long time and was not really accomplished until the Chamber of Commerce of Upper India had made some very strong remonstrances. It was then discovered—as I pointed out in your Lordship's House

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in January, 1916—that firm "A" was being financed by another German firm, "B," in London, and that this firm "B," was also in close partnership with another German firm, "C," in Frankfort. Nevertheless, firm "B" seems to have been permitted to carry on its operations in India and to have obtained a privileged position as regards dealing with Indian chrome ore. More than that, firm "B" seems to have been allowed to purchase a large amount of Indian chrome because the contract was made in London and not in India. That clearly shows the protean-like character of German activities. If checked in one case and in one form, they immediately reappear in some other place and form.
I turn to my third question. In October last, more than three years after the outbreak of war, an undefended action was brought in the King's Bench Division by Messrs. Ettlinger to dissolve a contract between them and Beer. Sondheimer and Company, of Frankfort. The contract was made in the German language; it was to be construed under German law, and the place of jurisdiction was to be Frankfort. The Court dissolved that contract as from August 4, 1914, and I suppose it could have taken no other course, because it would be evidently impossible for funds to pass from Ettlinger to Beer, Sondheimer, or vice versa, during the period of the war. But what would happen when peace comes? The contract may then come before the German Courts, and it is by no means certain that the German Courts will recognise the release given by the British Court. I understand that Ettlinger and Company have large contracts for the delivery of manganese ore after the war, and that these contracts, which were entered into in 1914, contain it proviso that they shall not be vitiated by the outbreak of war, but merely be suspended. I hope the Board of Trade will be able to say that these contracts have by this time been cancelled. More than this, in 1914 Schroeder and Schmidt, Ettlinger, and Beer, Sondheimer—the firms I have called "A," "B," and "C"—were all partners in the Nord-Deutscher Hütte Gesellschaft, of Bremen, and I hope the Board of Trade will be able to say that this partnership has also been cancelled.
In these cases we seem to have had a little light thrown upon the proceedings of the great Frankfort combine, which had
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before the war obtained a deadly grip upon the metal market of the world. Professor Liefmann, of Freiburg, in an article written before the war, explained part of the modus operandi of this combine, but, of course, he did not tell the whole story. The aim was to obtain control of firms, and of prices, which is, of course, most important, and to obtain that control with no more participation of German capital than was necessary for that purpose. As Professor Liefmann very artlessly pointed out, "if such a participation takes the form of a control of the foreign undertakings, the financial and economic management is guaranteed by the home [that is, the German] firm, in spite of the apparent independence of the foreign firm." The "apparent independence" of the foreign firm seems to have misled our authorities in this and some other cases. Professor Liefmann explained the complex system of banks and interlocking directorships by which this huge machine was directed from central sources, and he gave the names of the principal firms involved. The most important of them are the two Merton firms, of which the London Merton was acting as Metal Broker to His Majesty's Government even after the outbreak of war. The next in importance, he tells us, were Beer, Sondheimer and Company, and Aaron Hirsch and Company. Now Beer, Sondheimer and Company have been blacklisted in America, Ina they have an alter ego there in the Minerals Separation North America Corporation, of New York, which is now trying to hamper the mining industry at Cobalt, in Canada, by raising claims for infringement of very doubtful patent rights. In London Beer, Sondheimer and Company were represented by Ettlinger and Company, who seem to have been at least very useful tentacles of the German octopus; and my Question is whether this firm now ranks as a British concern, and whether it can fortify its position and restore its German connections after the war.
Trade with Germany must be resumed in due time, and I believe it will have to be resumed, but this kind of peaceful penetration, which we were told by the noble Viscount, Lord Haldane, was for the benefit, of mankind, must be finally stopped. It was directed to obtain economic control of British resources for the benefit of Germany, and was most carefully designed to hamper us in war, and it has so hampered us. If it had gone on for another twenty years, I think most of our great industries

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would have fallen under German domination. I feel that we must make certain that this dangerous influence shall cease in the future, and I am sure the Board of Trade is doing all it can in that direction; but I am not certain that it is a match for the extraordinary artfulness of the Germans. We have heard much of the "Hidden Hand" during this war. There is not one Hidden Hand, but there are many, and I believe they belong chiefly to persons who are deriving advantage from this system of peaceful penetration, and who are very much afraid that the advantages which they now possess may cease when the war ends. I hope that your Lordships will pardon me for detaining the House so long, but I venture to think that the public importance of these matters is some justification. I beg to put my Question.
LORD HYLTON: MY Lords, before I attempt to answer the Question on the Paper, I should like to express the thanks of the House to the noble Lord for having once more directed our attention to what he very justly describes as the protean character of German, semi-German, and naturalised German activities in this country, and perhaps your Lordships will agree with me that the speech of the noble Lord is one that fully justifies the passage into law of the Non-ferrous Metals Act, which has taken place during the last few weeks.
The particular company to whose activities the noble Lord has directed attention this afternoon belongs to two individuals—a Mr. Ettlinger and a Mr. Bernstein, both of German origin, but both naturalised British subjects. One was naturalised on February 3, 1888, and the other on July 23, 1903. This firm has carried on business for some years at Finsbury Court, in the City of London, as merchants; and it had branch offices, as the noble Lord has pointed out, in Bombay and other places in India, where it had a German as manager. With regard to its business in India, the India Office is better informed than the Board of Trade can be, and I think the noble Lord the Under-Secretary of State for India dealt on a previous occasion with the affairs of Ettlinger and Company as far as India is concerned.
In Finsbury Court the firm of Ettlinger employs a staff—not a very numerous one; I am told not exceeding ten in number—but it is perhaps a rather surprising fact that
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one of the number is a German subject, and I am told of military age, but he has not been interned because of ill-health. Another member of the staff is a Swiss subject. Your Lordships will remember that the Trading with the Enemy (Amendment) Act, 1916, received the Royal Assent in January, I believe, of that year. Very soon after the passing of that Act—I think as early as February, 1916—the business of Ettlinger was investigated by officials of the Board of Trade, but no circumstance was disclosed which gave the Board of Trade power at that time, and no circumstance has been since disclosed which would give the Board of Trade power at any time, to wind up the business under that Act on the ground that it was "carried on wholly or mainly for the benefit of enemy subjects." Those of your Lordships who are acquainted with the provisions of the Trading with the Enemy (Amendment) Act, 1916, will know that that is the only ground on which the business could be wound up. Accordingly, the business continues under supervision, and I am informed that one of the Board of Trade inspectors visits the offices of Messrs. Ettlinger very frequently. It is the fact, as my noble friend Lord Sydenham quite correctly stated just now, that before the war this firm of Ettlinger had very intimate relations with a firm at Frankfort named Beer, Sondheimer and Company with regard to minerals connected with the iron and steel industries, and on June 6, 1912, Messrs. Ettlinger signed an agreement with Beer, Sondheimer and Company for carrying on a portion of the London business and I think possibly the Indian business, though I am not quite sure of that, but at all events as regards 35 per cent. of the London business—on joint account with Beer, Sondheimer and Company. But this agreement was terminated ipso facto by the outbreak of war, for such is the legal effect of the war on a contract of that kind.
The answers to the specific Questions put by my noble friend are as follows. In his first question the noble Lord asks "whether the firm of Ettlinger and Company, which was precluded from trading in India in 1916, has obtained through the medium of the Baluchistan Mining Company a monopoly of the supply of Indian chrome ore for Europe, excluding the United Kingdom." The answer is that the firm of Ettlinger and Company have not obtained through the medium of the

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Baluchistan Mining Company a monopoly of the supply of Indian chrome ore for Europe, excluding the United Kingdom. Early in the year 1916, before this firm was precluded from trading in India, they bought certain Indian chrome ore in the London market through London brokers, but no purchase of Indian chrome ore has been made by the firm since they were precluded from trading in India. The firm have an agreement for the sole agency for the sale of certain Rhodesian chrome ore in France and Switzerland, and I believe the noble Lord is perfectly accurate in stating that this chrome ore is exceedingly valuable material, especially in time of war, because it is used for hardening armour plates. As I say, they have an agreement for the sole agency for the sale of certain Rhodesian chrome ore in France and Switzerland, but owing to the supplies having been requisitioned by the Government the firm are not now supplying ore in France and Switzerland under the agreement.
The noble Lord asks, in the second place, "whether this firm is permitted to hold a large consignment of chrome ore at Calcutta." The firm do not now hold any consignment of chrome ore at Calcutta. Part of the chrome ore purchased in 1916 on the London market was retained at Calcutta owing to the difficulty of obtaining freight, but this was sold to a London firm, an English firm, on January 30 of this year, and it awaits shipment at the direction of the purchasers. Messrs. Ettlinger and Company have no further control over this ore.
As regards the third Question—"whether this firm of naturalised Germans, having obtained a decree severing its connection with Beer, Sondheimer and Company, of Frankfort, in October last, is now free to trade as a British firm"—it is a fact, as the noble Lord stated, that Messrs. Ettlinger and Company applied to the High Court one day in October last for a declaration that the agreement with Beer, Sondheimer and Company, which has already been referred to, had been terminated by the outbreak of war, and such declaration was made by the High Court. This order was merely declaratory of the effect of the war on the agreement with Beer, Sondheimer and Company, which was terminated by the outbreak of the war and not by the order of the Court.
I think that in the course of his speech the noble Lord referred to some doubt in
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his mind as to whether there was in existence in the year 1914 between Messrs. Ettlinger and Company and some German firms any contract as to the delivery of manganese ore, with a suspensory clause in the event of war. The Board of Trade is not aware that any such contract was in existence at that period or at any other period. I have endeavoured as well as I can to answer the Questions placed on the Paper by the noble Lord.
THE MARQUESS OF CREWE: My Lords, I think the House is indebted to my noble friend below the gangway for raising this question, which is obviously one of real importance; and it is useful to draw a distinction between the class of case into which inquiries of this kind ought to be not merely made but continued, and the general idea of stopping for ever all German trade, with which some minds are impregnated. My noble friend said that the time would come when trade would have to be resumed with Germany. I entirely agree. That undoubtedly is so. But there is all the more reason for keeping careful watch, both now and in time to come after the war, on trade in certain specific articles which, as the noble Lord opposite has said, have in the past been made subjects of special attack by those who have attempted to promote the German system of penetration. Chrome ore is undoubtedly one of these subjects, manganese is another, and the great steel-hardening product, nickel, is a third; these are the three main steel-hardening products, apart from the rare metals which are used in small quantities for hardening special qualities of steel. I confess that it has always been something of a puzzle to me how Germany, in the absence certainly of two of those articles——a complete absence of manganese and chrome, and a great diminution in the supply of nickel, of which some is, no doubt, obtained from Scandinavia—has been able to maintain the great output of steel for guns and for defensive purposes throughout these three years of war. There must have been enormous stocks of these materials laid down in Germany in anticipation of war, in order to enable that vast output of steel to go on, as it has, throughout all these years. It is only one more instance of the careful preparations for war which Germany had indulged in for years past. On the whole I consider—and I think my noble friend will consider—that the replies made by the noble Lord

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who represents the Treasury are not unsatisfactory, but this is evidently a case in which continued watchfulness with regard to the supply of chrome from India will be necessary, not only now, but for many years to come. There is only one observation which was made by the noble Lord with which I venture, respectfully, to differ. He instanced this as an example of the valuable operation of the Nonferrous Metals Act which we passed through the House the other day.
LORD HYLTON: I am sorry to interrupt the noble Marquess, but I did not say that, because that Act has not come into operation. I only ventured to suggest that the speech of the noble Lord (Lord Sydenham) bringing out the protean activities of the Germans in these trades was, in my humble opinion, a justification for the passage of that Act.
THE MARQUESS OF CREWE: I hope I did not misrepresent my noble friend in any way. Of course, it is not true that any of these proceedings were a result of that Act. The point on which I wish to lay emphasis is this, that it is, I think, an exemplification of what I ventured to say when that Bill was under discussion—as to what it is important to do in order to check these illicit proceedings namely, to keep a tight hold on the sources of supply rather than on the particular operations of the metal market in London, which was all that the Non-ferrous Metal Bill, as it then was, contemplated. This is one of those cases where, though not a monopoly, yet a very large part of the sources of supply, are within the British Empire, largely in India, to some extent in Rhodesia, and to some extent in Canada. That ought to give us in the future all the requisite control over the supply of this supremely important, article, and I am glad that my noble friend below the gangway has raised this question, if only to give us an opportunity of expressing that view.
LORD SYDENHAM: I beg to thank the noble Lord for his very full reply. I hope I have understood exactly what he said. I gather from him that this firm has continued its operations, but under supervision, and that it is possible that it may be developed in some further direction, still under the close supervision of the Board of Trade.
LORD HYLTON: I do not know whether it can be developed or not.
LORD SYDENHAM: The instance I gave seemed to show that a developing process was going on. The noble Lord spoke of the contract of 1913 as having been automatically terminated. I am not quite clear whether that automatic termination will not mean that it will be automatically revived when the war ends.
LORD HYLTON: I think that may be so.
LORD SYDENHAM: I am not quite clear, if that contract was terminated automatically, whether it was necessary to bring the case into the King's Bench Division. I think the noble Lord has made it quite clear that Ettlinger's have not obtained a monopoly over the supply of Indian chrome, but they seem to have obtained a monopoly over the chrome of Rhodesia.
LORD HYLTON: I think they have a monopoly of agency in Rhodesia; but, as I pointed out, or endeavoured to point out, whatever monopoly they had was quite inoperative because the Government had requisitioned chrome ore.
LORD SYDENHAM: It is undesirable that a monopoly of Rhodesian ore, which, after all, is British, should pass to this distinctly German firm. I understand that the consignment at Calcutta, which Ettlinger held for some months, has now passed out of his hands. I do not think the noble Lord made it quite clear why he was allowed to purchase such a large amount, and why his business in India had not been finally put an end to. I take it, therefore, we may assume that no more chrome or manganese can be purchased by this firm.
LORD CLIFFORD OF CHUDLEIGH: My Lords, on this subject it might well be worth while making further inquiries as to the manner in which we can best defeat the peaceful penetration of Germany. The only nation, since 1886, that has been able successfully to defeat the peaceful penetration of Germany is Japan, and it may be worth while investigating minutely the manner in which she has frustrated German peaceful penetration.

SMALL HOLDINGS.
LORD STRACHIE LORD STRACHIE had the following Notice on the Paper
To call attention to the unsatisfied demand for small holdings and the refusal of the Government to enable county councils to provide them, and to naive "That in view of the large and increasing demand for land for small holdings, it is desirable that the Government should modify their present policy so as to meet the large and growing demand for land on the part of discharged soldiers and others."
The noble Lord said: My Lords, I have put this Motion on the Paper at the request of the County Councils Association, who feel very strongly on the matter. Your Lordships will notice that I call attention to the unsatisfied demand for small holdings and the refusal of the Government to enable county councils to provide them, and then move a Resolution on these points.
It rests with me, very shortly, to go into the history of the refusal of the Government to put the county councils in funds in order to enable them to carry out their duties under the Small Holdings Act, which I think every member of this House who is a member of a county council will admit has been a great success. As regards the first action of the Board of Agriculture, in December, 1914, they sent out a circular to county councils telling them that it was necessary for the conservation of the resources of the Public Works Loan Commissioners and for assistance to local authorities for relief and other works of employment, that there should be no lending by the Public Works Loan Commissioners of any money to county councils for small holdings. They also went further and said that these small holding loans could not be provided owing to the necessity of providing for unemployment. As your Lordships are well aware, instead of there being any unemployment it has been the other way—half a dozen masters running after one man—and there has not been any unemployment in this country since the war began. We know that a large sum of money raised by His Royal Highness the Prince of Wales for unemployment has never had to be used for that purpose, although a large amount was used to make up deficiencies in providing for the relief of relatives of soldiers.
As regards the circular itself, it really falls to the the ground, because the reason given for not allowing time Public Works Loans Commissioners to make advances for small holdings has never occurred. It has never been necessary to advance any money for works owing to want of employment, and as we are told now, even after the end of the war there will be no difficulty in finding employment. No doubt there will be a great boom in trade for some time immediately after the close of war in order to make good the great loss that has been suffered from the suspension of ordinary commercial business, and from those undertakings and manufactures which have been idle except as producers of war material. The circular went on to urge the county councils to obtain land upon lease. Those of us who are members of county councils know how very difficult it is to obtain land upon lease. A good many landowners do not care to let land upon lease, and those who do generally do so either at a very high rent, or the land that they let is land which has been derelict and requires a large amount of money to be spent upon it for equipment in order to make it of use to small holders. It requires sub-division, fencing, buildings, and the like. Therefore, if the county councils cannot borrow money it is quite useless for them to take any land of that sort, because they cannot equip it.
In addition to the large unsatisfied demand for small holdings—and there was a large demand even before the war, and that demand has, of course, during the last two or three years increased, and would have been even larger had it not been found that it was impossible for county councils to buy land for small holdings—we have to remember that there will be in future a very large demand from discharged soldiers and sailors when demobilisation takes place. Even now, there is a demand from those men who are discharged owing to ill-health, but who are, nevertheless, quite fit to undertake the cultivation of a small holding.
A deputation went to the President of the Local Government Board in April last from the County Councils Association. They pointed out that the reasons given in December, 1914, for withholding loans had entirely failed. I think that I shall have the agreement of the noble Duke, the Joint Parliamentary Secretary of the Board of Agriculture, that a quite fair statement as regards the reason given in 1914 was that

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the money would be wanted for unemployment. Certainly no money has been used for unemployment. The county councils further pointed out by their deputation that unless borrowing powers were given at once to county councils for the settlement of discharged soldiers and sailors on the land in accordance with the Report of the Departmental Committee of the Board of Agriculture, it would be impossible to meet that demand. The House will see that it is very essential, if the county councils are to be prepared and ready to meet this demand when demobilisation comes, that they should be able to look ahead and buy land when the opportunity occurs. This very deputation pointed out to the Board of Agriculture that many favourable chances of acquiring land at reasonable prices had been lost. Mr. Prothero, in reply, stated that he was in accord with the views of the County Councils Association, and said that he would press the Treasury to relax their restrictions. Unfortunately, nothing has happened as the result of the endeavours of Mr. Prothero. I feel perfectly certain that Mr. Prothero in this matter is doing everything he can, and is in sympathy with the creation of small holdings. Any failure that there may have been is not due to want of sympathy on his part but to inability to press the Treasury sufficiently to make them yield.
There is another thing which is rather curious, and one which, perhaps, the noble Duke can explain. A deputation also went from the British Empire Lands Settlement Committee. The Report of that Committee, in clause 14, page 3, states—
"The experimental scheme is on a very small scale, and it is not expected that under the present conditions it would be self-supporting. We are informed, however, by the Board of Agriculture that they have in view proposals for obtaining land for the settlement of ex-Service men on a large scale."
It would be interesting if the noble Duke would tell the House what is the exact meaning of that statement made in the Departmental Committee's Report. Upon the Empire Settlement Committee, curiously enough, there was no representative of the County Councils Association, nor was there any person representing a county council called as a witness, although the Committee dealt with matters connected with home settlement as well as settlement within the Empire overseas.
I noticed the other day a statement in
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The Times, in which the British Empire Lands Settlement League said this—
"For the purpose of home settlement the Government should acquire land as far as possible in each county, and discharged sailors and soldiers should be installed thereon at the earliest opportunity; and the Government should deal with the whole subject as a national and Imperial question."
I notice that this had the support of a large number of Members of Parliament sitting on both sides in another place.
There was another deputation November, 1917, to the Board of Agriculture from the County Councils Association to discuss the prohibition of loans to county councils, and the Empire Settlement Committee's Report was discussed. The President of the Board of Agriculture told this deputation that he had no desire to interfere with the duties of county councils to provide small holdings, and that he was in favour of county council administration except in regard to State Colonies, which would only deal with a very small part of the demand. One would imagine from this that the Board of Agriculture would then have taken some steps to remove the prohibition under which county councils are suffering. Until that prohibition is removed, as the noble Duke perfectly well knows, it will be impossible for county councils to prepare effectively for this great demand, either for civilians or for soldiers and sailors.
The Board of Agriculture, on January 14 last, sent out another circular. They are very fond of sending out circulars, but nothing seems to come out of them. This circular stated that the Treasury had arrived at a general conclusion that it would be impracticable during the war and for some time after to provide capital for the purpose of small holdings, but that Mr. Prothero had other proposals under consideration which, if carried into effect, would enable the acquisition of land for small holdings to be proceeded with. I venture to ask the noble Duke whether he will tell the House what that scheme is which is under the consideration of the President of the Board of Agriculture. Does it mean that the Board of Agriculture is to be the small holdings authority in every county, as suggested by the Empire League, and which has the support of so many members of the House of Commons?
Another suggestion has also been made. I would ask the noble Duke whether there

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is another alternative in contemplation. It is only a rumour that I have heard, but it is this—that it is the view of the Board of Agriculture that it may be desirable to take the question of small holdings out of the hands of the county councils and put it into the hands of the county war executive committees. We are given to understand that these committees will come to an end at the close of the war, but that the Board of Agriculture, which appoints them and whose servants they are, desire to maintain them as a useful means of communication with each county. The County Councils Association itself took no part in relation to that circular. I suppose that they were really tired of continually asking questions and getting no satisfactory replies.
The clerk of the Bedford County Council wrote, in reply to this circular, drawing attention to the fact that the Board of Agriculture had expressed no opinion as to borrowing from private persons. He inquired whether the proposals under consideration related to the acquisition of land by the Government or by the county councils. On January 23, 1918, the Board of Agriculture, in their reply, merely said that their proposals were not sufficiently advanced to enable the Board to make any definite pronouncement in respect to them. Yet Mr. Prothero at the end of last year had said that they were under consideration. They made no reply as regards loans from private individuals. I should have thought, even if the Public Works Loans Commissioners were not allowed to make any loans for such a good purpose, it might be desirable for the county councils to borrow sums of money from private individuals at such a rate of interest as would make it possible to acquire land for small holdings, or certainly for equipment—because that is also an important matter. There is no reason for standing in the way of county councils raising money in that way. The clerk wrote again, and the reply received from the Board of Agriculture was that they had consulted with the Local Government Board, who refused to give their assent, because the Treasury view was that it was undesirable even that county councils should be allowed to borrow from private individuals. It seems a curious position. Here is a public body wishing to provide small holdings not only for civilians but also for men demobilised from the Army, and for soldiers and sailors who are discharged through no fault of their own. You would not think there
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could be a better purpose for which to raise money. Also it is a purpose which is to a large extent remunerative, because in many cases a small holder is able, by means of intensive cultivation, to produce as much as or more than the big holder.
On behalf of the County Councils Association, I must say that they feel rather aggrieved be the way in which they have been treated in this matter, and they wish to have some very clear and definite statement from the Board of Agriculture to-day. I do not think I can do better, to show what the feeling of the County Councils Association is, than conclude by reading to your Lordships a resolution passed recently by the Association—
"The Association is strongly of opinion that any scheme for the provision of small holdings for ex-Service men (other than Under the State Colony scheme) should be undertaken by county councils; further, that it is essential that the existing restrictions on their action in acquiring land under the Small Holdings Act should at once be withdrawn, as opportunities of acquiring suitable land at reasonable prices are being continually lost, and the value of land is rapidly going up; also that the Public Works Loans Commissioners should be authorised to issue loans to county councils for the purpose; and that this view should continue to he pressed upon the Board of Agriculture."
Moved to resolve, That in view of the large and increasing demand for land for small holdings, it is desirable that the Government should modify their present policy so as to meet the large and growing demand for land on the part of discharged soldiers and others.— (Lord Strachie.)
THE JOINT PARLIAMENTARY SECRETARY OF THE BOARD OF AGRICULTURE (THE DUKE OF MARLBOROUGH): My Lords, I am sure that your Lordships will be grateful to the noble Lord for having brought tins subject to the attention of the House. I know well that it is a matter of great concern and deep interest to every member of your Lordships' House that a greater number of our fellow-citizens should be placed on the soil in such a condition and in such a position that they can earn a decent and respectable livelihood. I cannot quarrel with the account which the noble Lord has given of the different interviews between the Association and the President of the Board of Agriculture. He gave your Lordships a very accurate and careful résumé of those various meetings, and I should like also to assure the noble Lord that he was perfectly justified in saving

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that Mr. Prothero, the President of the Board of Agriculture, gave his warmest sympathy to the views and ideas expressed by the County Councils Association.
I need hardly remind the House that there are two kinds of applicants for small holdings. There is the man who before the war was either an enterprising man in commerce or a successful agricultural labourer. We have to-day the ex-Service man who has fought for his country and is anxious to acquire some stake and holding in the country for which he has fought. I can assure the noble Lord that the Board of Agriculture are fully alive to the situation, and that they have given this matter very serious consideration and earnest thought. But may I point out that there are a great number of difficulties in our way? The noble Lord rather passed them over, and did not feel disposed to examine them very closely. In the first place, we are confronted with the difficulty of money. Money is dear, and the rate of interest is very high. Money is required for war expenses, and any funds which are diverted for social purposes or for ameliorating the lot of our fellow-citizens must in some small degree diminish the sum-total of money available for the prosecution of the war. It is quite true that the sum required for carrying on the extension of the Small Holdings Act is infinitesimal compared with the sum-total that we are spending a day. But at the same time the noble Lord will possibly agree with me that at the present juncture it is vital that all the funds at the disposal of the nation should be employed for the prosecution of the war. Then I think the noble Lord will also agree that to-day the cost to the small holder himself is quite out of proportion to what it was before the war. I suppose that the cost of equipment for himself alone has gone up, in round figures, nearly 100 per cent.
May I remind the House, since the noble Lord alluded to the Small Holdings Act, of what the Board of Agriculture spent during the years from 1908, when the Small Holdings Act came into force, down to 1914, just before the war, and of what has been achieved. The Board of Agriculture acquired, in round figures, 200,000 acres of land; 140,000 acres were purchased, and 60,000 acres hired. Some 14,000 men were placed on the soil. The average cost of the land was £32 an acre, and the average rental was 25s. an acre. I certainly desire
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to associate myself with the noble Lord when he said that he thought the Small Holdings Act had been a success; and I am bound to say I think that all those who, like the noble Viscount opposite (Lord Harcourt), were associated with the passing of the Act, may congratulate themselves upon the fruitful result of their efforts.
It was the hope of the Board at one time that they would be able to continue this work. It involved an expenditure of £1,500,000 a year and the acquisition of some 30,000 acres of land. But for reasons which I have already explained to the noble Lord and some of which he himself has already laid before the House, the Treasury have been unable to accede to the request of the county councils to allow them to borrow money from the Public Works Loans Commissioners during the period of the war.
I have dealt with the civil applicants who were able to get small holdings under the Act. Let me pass to the consideration of those whom we might call the military applicants. It is within the recollection of the House that the Small Holdings Colonies Act was passed in 1916. Under that Act the Board of Agriculture were entitled to acquire 6,000 acres of land for the purpose of putting upon it ex-Service men. The Board did acquire the 6,000 acres to which they were entitled, and the result of their administration during the year 1916–17 will be laid on the Table in the course of a few days. But, in connection with this existing scheme under the Small Holdings Colonies Act of 1916, the Government hope to introduce legislation at an early date with a view to extending that Act. I hope I have made myself clear to the noble Lord. The Government were entitled to acquire land to the extent of 6,000 acres, but it is proposed to extend the principle of the Act of 1916 by which that was done. That is the real point of the speech of the noble Lord. He wanted to know—as a result of a discussion with the Empire Settlement Committee, and other information which he read to your Lordships, either from the Press or from meetings between various associations and the President of the Board of Agriculture—whether the Government had any further plan in view. My reply is that the Board of Agriculture have had the question of land settlement for ex-Service men under their consideration. They have prepared a comprehensive scheme for the acquisition

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of land, which scheme is now being discussed with the Ministry of Reconstruction prior to submission to the members of the War Cabinet. The noble Lord asked me whether I could give him any detailed statement in connection with that scheme. I am sure that on consideration he will see that, until a scheme of such magnitude is laid before the members of the War Cabinet for their consideration, it would be better for me not to attempt to disclose any of its details.
THE EARL OF SELBORNE: My Lords, I am very glad that my noble friend Lord Strachie has brought this matter before your Lordships' House. I can understand that the noble Duke who represents the Board of Agriculture has answered under some difficulty; because the Board of Agriculture has of course, had to submit this scheme to the Treasury for their sanction, and it has at the present moment, apparently, a scheme which is being considered by the Minister of Reconstruction, and probably will then have to be considered by the Treasury, and eventually have to go to the War Cabinet.
Let me remind your Lordships what the history of this question is. When the war broke out a very gallant member of your Lordships' House—the late Lord Lucas—was President of the Board of Agriculture. At some early period of the war he saw what an important question this matter of the provision of small holdings for demobilised sailors and soldiers was going to be, and he appointed a very strong Departmental Committee, over which Sir Harry Verney presided. That Committee presented its Report a few days after I had had the honour of becoming President of the Board of Agriculture, in 1915. That Committee recommended three things. It recommended an experiment in what are called "colonies"—a small experiment of three colonies of ex-seamen or ex-soldiers. It recommended a large expenditure by the Board of Agriculture in the settlement of demobilised sailors and soldiers on the land, in addition to the colonies. Further, it recommended in the strongest way that the county councils should be furnished with funds to enable them to meet the demands in their counties that would come upon them from all quarters, and particularly from demobilised sailors and soldiers after the war to provide them with small holdings.
The only action that has been taken on
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that Report was that action taken by Parliament on the Small Holdings Colonies Bill; and the noble Duke has told us that there is in contemplation an extension of that scheme. I am very glad to hear it. But I want to draw your Lordships' attention—and through Parliament the attention of the public—to the fact that there is too great a delay, a dangerous delay in my judgment, in dealing with this matter. I understand the position of the Treasury. The noble Duke told us and we all know without his telling us—that the attitude of the Treasury is naturally that of "no expenditure at the present moment, if we can help, it, on any scheme, however good, that is not directly connected with the prosecution of the war." This is exactly one of those eases in which that natural attitude of the Treasury, if not overruled by the War Cabinet, is going to lead to disaster. I use that word advisedly.
What is the position? It was my business when I was at the Board of Agriculture to try and ascertain what the views of the men in the Fleet and in the Army were on this subject; and since I have been out of office I have continued to do what I could to ascertain what those opinions were. I am now going to tell your Lordships what the position is as I understand it. How many demobilised seamen or soldiers will wish to go on the land nobody can tell. Some people think a good many; others think a few. I do not know. Nobody can know at present. In such units as a test has been carried out, I believe something like 17 per cent, of the men have expressed their intention of going on the land—men who were not on the land before. But that is evidently a calculation on which no firm estimate can be based; therefore I do not pretend to say what proportion of these men really will, in the last resort, determine to make a settlement on the land in order to try and make their livelihood out of it. I say that the sentiment in the Fleet and in the Army on this subject is extraordinarily strong. What is running through their minds is this—and it is not only the men who for the moment think of going upon the land; this sentiment is shared by all the men who have no idea of going on the land at all—their attitude is this." We have saved the land. At the present moment we do not consider that Parliament gives us sufficient access to the land, and we are going to claim as our right an access to the land." That

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feeling is held with vehemence both in the Fleet and in the Army; and I want to say here—as I know I can—to the men of the Fleet and of the Army that they are going to meet with no opposition from the landowners of this country.
Several NOBLE LORDS: Hear, hear.
THE EARL OF SELBORNE: Quite the contrary. The landowners of this country yield to nobody in their admiration of what these men have done. They admit the justice of this aspiration, and, so far as in them lies, they will do all they can to assist the Government to give access to the land to all the men who bona fide mean to make that their occupation in life.
The question is, What is Parliament going to do to give this access to the land to the men, where it does not exist now? The colony plan is one means of access. We have already discussed that, and I will not say any more about it. The noble Duke has told us that the Board of Agriculture has a further scheme in view. We shall be able to pronounce upon that when we are told what it is. But the best means of all of giving access to the land is through the operation of the county councils. In each county you have an experienced committee which knows how to deal with this matter, a committee that has been anxious all through the war to make preparation for the demand which it knows is coming directly the war is over. We all know that land has been changing hands freely during the war. Every county council will tell you that over and over again they have had a chance of acquiring suitable land for this purpose but have not been able to take any steps towards that end because the Treasury will not allow them to spend any money in this way. That is where I say the action of the Treasury, if wholly intelligible, is really constituting a public danger; because if nothing is done by the end of the war it will be too late to do anything properly. The demand may be very large; the county councils will be told at time last moment by a reluctant Treasury that they may spend the money, but all the opportunities of acquiring land may have passed by, and they will have great difficulty in acquiring compulsorily land which a few months before they could have acquired voluntarily.
Just think what will be the feelings of these men, who know that this question
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has been before Parliament and the Cabinet for four years, when they come back from the war and find that nothing has been done. The situation will be lamentable; and your Lordships know that there are in this country men—I hope not a great number, but still there are men and very active men—of what I might term the Bolshevik frame of mind, who will do all they can to use this position in order to excite the feelings of the demobilised soldiers and sailors, and who will say, "This is all you have to expect from society as it exists at present," and "This is the gratitude you have for saving England and Scotland; Parliament during all these years has made no provision for your access to the land." I sincerely hope that the President of the Board of Agriculture will take this matter straight to the War Cabinet, that he will not allow the Department to be blocked by the Treasury, but will support the county councils, because whatever the Board of Agriculture may do I believe it can be better done by the county councils.
VISCOUNT CHAPLIN: My Lords, I am speaking on the Motion before the House to begin with, and I wish to express my regret that I was prevented from being here in time to listen to the whole of this debate, because many years ago I was the author of a Bill for dealing with the question of small holdings. Unhappily that measure was, brought to a rapid termination, because very shortly after it came into operation the Conservative Government went out of office. The object of that measure was to provide small ownerships; in other words, to try to restore something in the nature of the peasantry that used to exist in this country many years ago. There was no class which at one time flourished more than they did. They were described on one occasion by Mr. Bright as "men who tilled the land and owned the land they tilled," and in many parts of England, especially, in the county in which I lived for so many years, there were thousands of these small freeholders, all flourishing, all farming admirably well; but when the time of the great depression came, they were the first to suffer. They had no landlord to fall back upon, and the mortgagees enforced their interests ten times more harshly than the landlords ever thought of doing their rents. Consequently, in a great measure these men have disappeared.

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I share entirely the anxiety of my noble friend to see small holdings provided for the men who are coming back from the war, or for others who may desire to have holdings in the land; but whatever the measures are, I do hope that the question of ownership will not be lost sight of. I have the most profound belief that this is the way to re-establish a peasantry, in this country. It is quite true that the Bill which I carried had only a short time for operation, because the new Government which came in at once passed another measure, the principle of which was that small holdings should be held by people as tenants under the county councils. I do not believe for a moment that the soldiers coming back from the war will be altogether satisfied with that position. I think that what they will desire to become is the owners of the land. On those lines I sincerely hope it will be done. I fully agree with my noble friend that this is a question which cannot be overlooked, and that it ought to be part of the policy of whatever Party may be in power when the war is over.
On Question, Motion agreed to.

THE MINISTRY OF FOOD.
VISCOUNT CHAPLIN VISCOUNT CHAPLIN rose to call attention to the following statements by the Controller of Food in his speech in the House of Lords on February 19 last—
"I have no close estimate of what the food consumption would amount to in value for the whole country, but it probably exceeds £700,000,000, or at the rate of over £60,000,000 a month. … It is hoped—and I trust this is not merely the expression of a pious wish—that all direct and indirect administrative costs will be covered by margins received in connection with the sale of commodities";
and to ask the Controller of Food the following questions: Is it intended that the cost of administration is to fall on the producer of food either imported or home grown, and what share would fall on the producer of home-grown food; and, if not, by whom is the cost of administration to be borne.
The noble Viscount said: My Lords, I am sorry to intrude again so soon upon your Lordships' attention, but I can relieve your Lordships by saying at once that I do not rise for the purpose of initiating a debate. What I want, rather, is some explanation from the noble Lord of the statements which he made the other day in
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reply to questions from myself. I am sorry to say that I hear so deficiently very often that I was not able to follow exactly what he said, and it was only when I saw it in print afterwards that I thought that in some respects it required further explanation. I have set out in my Notice on the Paper the statement which the noble Lord made, and I think there will be a natural desire on the part of most people to know precisely what it means.
Under these proposals, are the Government themselves to be engaged in trade? Are they to purchase commodities in the first place, and then re-sell them? Is that the way in which these margins of profit which are to cover the whole administration of £700,000,000 worth of food, the cost of which in itself must be something almost fabulous—is that how it is to be done? If it is not, then I should be very glad to hear an explanation from the Food Controller. I own that at present I feel very much in the dark upon the question that I have put to the noble Lord. I can hardly understand on what ground, with anything approaching to fairness, the cost can fall upon the producer of home-grown food. It seems to me that that would only be an instance of imposing on the food producer an amount of heavy taxation which is not borne by any other class of the community. It is upon that point, and upon the remaining part of the Question that I have put to him, that I desire information. As I say, I have not raised the matter for the purpose of initiating a debate, and therefore I have expressly omitted the ordinary Motion for Papers. I shall be grateful to the noble Lord if he will give me some reply which will enable us to understand exactly what this new and very large and important proposal of the Government really means.
THE FOOD CONTROLLER (LORD RHONDDA): My Lords, the noble Viscount is, I think, unduly suspicious. I did not intend to convey the impression that I propose to make any charge at all upon the producer, and I should hardly have thought there was anything in my reference last Wednesday to what may be called the marginal cost of distribution which could lead the noble Viscount to suspect that I cherished any design against the agricultural producer. The Ministry of Food has now become the purchaser, on behalf of the nation, of the vast majority of our imported foodstuffs. The cost, insurance, and freight of these commodities, and to

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some extent the expenses of their distribution to the retail traders, constitute in the first instance a charge upon the Ministry of Food. The incidence of this charge follows the ordinary economic rule, that all expenses paid by the merchant on and after importation are added by him to the price of the commodity, and are thus eventually paid by the consumer and not the producer. The same rule applies to the marketing of home produce. Beyond the expenses involved in the preliminaries of sale, which have always formed part of the cost of production, it is not intended that any cost of administration shall fall on the producer of food either imported or homegrown.
VISCOUNT CHAPLIN: May I ask a further question? Perhaps I did not sufficiently explain myself. Is it a fact that the marginal profits are to arise as regards home-grown food from this—that the Controller is to purchase from the producer the home-grown food at a price less than that which he is able to obtain in the market afterwards?
LORD LAMINGTON: My Lords, I understand that meat imported from Australia and elsewhere is sold here at the full maximum price, which leaves a large margin of profit, I suppose, to the Department of the Food Controller. There is also, of course, the question of wool, which is rather analogous. I see that the noble
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Lord shakes his head. He does not know anything about wool. I heard to-day that there is a large margin of profit on imported meat, even after paying all the charges to which he referred, when he sells at the price at which the meat is sold in this country. I presume that there is some profit which does accrue to the Government at the cost no doubt of the consumer.
LORD RHONDDA: My Lords, I do not know that there will be any profit. I have already explained to the noble Viscount and to the House that the price paid for any commodity is based upon the cost of production plus a reasonable pre-war profit. I do not know that I can give the noble Viscount any further information Whether there will be a profit on the sale I do not yet know. The noble Lord opposite stated that we were purchasing certain important articles and making a profit on them. He did not name any article, except wool. As the noble Lord knows, wool is entirely outside the scope of the functions of the Ministry of Food. It is very possible later on—I hope so—that there may be a profit made out of the price fixed for some imported food commodities, and, if so, it will go partly, I should assume, to provide the expenses of administration and possibly to meet the loss that may be made on other commodities.
House adjourned at five minutes before six o'clock.