HL Deb 30 January 1918 vol 28 cc191-218

Order of the Day for the Second Reading read.


My Lords, I have to ask your Lordships to be good enough to give a Second Reading to this Bill. Put in a nutshell, the object of the measure is that, during the war and for a period of five years after the war, no company, firm, or individual shall be allowed to win, refine, or deal in a wholesale manner with these non-ferrous metals without in the first instance obtaining a licence from the Board of Trade. Before I go on to deal with the details of the Bill, I think I ought to ask your Lordships for a few minutes to consider what was the position of this country with regard to the non-ferrous metals industry at the moment when war broke out. I do not intend to weary your Lordships with a mass of details as to the exact extent of the trade in this country in respect to each of these non-ferrous metals at that time or in the years immediately preceding the war, because those are figures which, after all, any of your Lordships who are sufficiently interested in the subject can easily obtain by looking at Whitaker's Almanack or any of the ordinary books of reference. To a certain extent it is true that the position, with regard to these different metals, slightly varies. But there are two common features attaching to the position with respect to non-ferrous metals in this country and in the Empire at the time when war broke out. The first is the very limited extent to which these metals were, either produced, or refined in the United Kingdom, and the second point—a common feature—was the control that was exercised by foreign interests even where the sources of the supply of the requisite ores existed, either in the British Empire, or were owned by British companies.

How was this control by foreign interests exercised ? It was exercised by means of a group of German metal companies who largely controlled the world's metal market for these non-ferrous metals. This group formed a complex organisation by means of stock control, inter-ownership of stock, inter-locking of directors, joint syndicates and a common policy, though with methods so varied and, in some eases, so intricate and insidious that any action to prevent, after the war, a revival of the activities of the group must, in the opinion of the Government, be very comprehensive. I have here details as regards the names of most of the companies connected with this group to which I have alluded, and I have some details regarding the procedure adopted by them. But I am most loath to take up the time of your Lordships unnecessarily, and I am anxious therefore not to be obliged to go into a mass of figures, although I have them here.

But there is one point to which I might call your Lordships' attention, in passing, and it is that, even during the war, the energies of this great German metal group are not altogether dormant, for it is the fact that a case has occurred in Cornwall where an attempt has been made, during the war, to acquire certain tin mines by foreigners acting, it is believed, in the interests of the enemy. When the war began this group had control, and complete control, by means of long-period contracts, over the whole of the output of the Australian zinc concentrates which form the raw material of smelter. This group had also gone a long way in controlling other nonferrous metals. It had, in fact, complete world-control with regard to some of the non-ferrous metals, and a huge world-control in respect of others. This control, as I have said, was exercised by German companies or by German controlled firms. This position has not unnaturally caused Very grave embarrassment to us and to our Allies during the war, and it is essential in the opinion Of the Government, that this state of things, so dangerous in the first place to the defence of this country in war time, and in the second place to its economical stability in peace time, should not be renewed after the war. It is a matter that has engaged the close attention of a Committee that was appointed some time back by the Board of Trade to consider the question of the non-ferrous metal industry after the war, and that Committee urged upon the Board of Trade that, if the nonferrous metal industry and the trade of the Empire was to develop freely and on sound lines, it was essential that legislative measures should be taken against the perfectly certain German attempt that would be made to renew, after the war, their action and control over the industry. I may mention that the Government have been in communication over this matter with the French Government. They enjoy the full sympathy of the French Government on this matter and the French Government have promised, or undertaken, to deal on similar lines with it.

As regards the Bill itself, it provides in Clause 1 that during the war, and for five years after the war, no company, firm, or individual shall carry on the business of winning, extracting, smelting, dressing, refining, or dealing by way of wholesale trade in metal or metallic ore, unless licensed to do so by the Board of Trade. The licence is to be in the form set out in the Second Schedule of the Bill, and once granted it will continue to remain in force so long as the Bill is in force. The licence will, necessarily, be liable to suspension or revocation, under the circumstances set out in Clause 1, subsection (4). The metals to which the Bill is to apply include zinc, copper, tin, lead, nickel, and aluminium, and provision is made for its extension to other non-ferrous metals by the Board of Trade. In order to avoid unnecessary interference by the Board of Trade there are excluded from the scope of the Bill, in the first place, cases where the purchase of metal is merely incidental to the trade carried on by the purchaser or seller. For instance, a builder or plumber may buy metal for his own use and may sell some which he wishes to dispose of. He will not come under the Bill; nor will a lank, which sometimes deals with considerable parcels of metal. There is also excluded from the scope of the Bill cases where the winning, extracting, smelting, dressing, refining, or dealing is carried on wholly outside the United Kingdom. The Board of Trade have certain powers under Clause 6 to exclude from dealings by way of wholesale trade dealings in quantities below certain limits, as may he prescribed generally, in order to relieve the smelter and dealer from the necessity of taking out a licence.

The conditions are so framed as to bring within the Schedule, in the first place, businesses controlled or managed to any substantial extent by persons who are or may have been enemy subjects. This is intended to cover the case of the businesses of naturalised British subjects of enemy origin. Secondly, it brings in companies whose capital is or was held by or on behalf of an enemy. Thirdly, any company, firm or individuals, which have been parties to any agreement, arrangement, or understanding which enables an enemy to influence the policy or conduct of the business. Fourthly, any company or firm in which enemies are interested, directly or indirectly, to the extent of one-fifth or more of the capital, profits, or voting power. Fifthly, companies, firms, or individuals who are by any means whatever subject, directly or indirectly, to enemy influence or association. And sixthly, companies which have issued share warrants to bearer and have not given notice under this Act requiring the holders of the share warrants to surrender their warrants for cancellation.

Clause 1, subsection (5), your Lordships will see, gives a right of appeal to a Divisional Court on the following points: (a) as to whether or not the business carried on by the company, firm, or individual is such as to require a licence under this Bill; or (b) as to whether or not any of the conditions set forth in the First Schedule of this Bill apply in respect of the company, firm, or individual; or (c) as to whether or not the company, firm, or individual is controlled by a company, firm, or individual in respect of which any such conditions apply; or (d) as to the requirements of the Board of Trade for the production of books or documents for inspection. Your Lordships will see that there is no right of appeal in the Bill given from the refusal by the Board of Trade in the exercise of their discretion to grant a license if the conditions apply.

Clauses 2, 3, 5, 7, and 8 are necessary for carrying the Act into operation. Clause 4 makes certain provisions regarding bearer shares. Clause 6 empowers the Board of Trade to carry the rules into effect, and provides that such rules shall provide for excluding from dealings by way of wholesale trade which fall within the limits of the Bill dealings in quantities below such limits as may be prescribed generally or as respects any particular metal or metallic ore. It is also provided that the Rules are to be laid before Parliament. Clause 10, subsection (2), provides that the Act shall continue in force only during the continuance of the present war and for a period of five years after its termination.

Notice has been given by the noble Earl, Lord Beauchamp, of his intention to move that this Bill be rejected. Of course, it is impossible for me to anticipate what the arguments will be by which the noble Earl will enforce his wishes in this matter, but I should like to call your Lordships' attention to certain objections that have already been raised against the Bill in another place. I believe most of the objections that have been raised against the Bill hitherto are objections founded on misconception of the objects of the Bill. Some strong language has been used in another place with respect to this measure. It has been described as a protective and punitive Bill introduced by the present corrupt and inefficient Government. Secondly, it has been stated that an atmosphere of suspicion surrounds its initiation, and in the third place, it has been asserted that the Bill was introduced in order to further the interests of a certain nickel company. It has also been alleged that the Bill is an attempt to injure British trade, and so forth. Now, my Lords, I humbly venture to assert that language of that kind is not calculated to prove the strength of the arguments that it professes to support. Quite the reverse. It seems to me rather to remind one of the advice that was said in past days to be familiar at the Old Bailey, that if you had no case you should abuse the plaintiff's attorney.

But there are objections to the Bill which have been stated elsewhere in far more moderate terms than those I have alluded to just now. These objections that have been stated in more moderate terms come mainly under three heads. The first class of objection has been that the Bill carries with it Government control over the non-ferrous industry after the war. My Lords, that is not so. The object of the Bill is to eliminate any enemy influence from a British industry that, as I have said, is vital to the defence of the country in war time and to its economic independence in peace. And though this business cannot be carried on, if this Bill becomes law, either during the war or for a period of five years after the war without a licence first obtained from the Board of Trade, once that licence is granted the licencee will be free from Government interference provided he keeps clear of the Schedule contained in the Bill.

In the second place it has been urged against the Bill that it does not control these metals either at the source or on the market. That is so; but the Bill does not profess to obtain that object, and has not been framed with that intention. The object is to eliminate enemy influence from this industry during a period which in the opinion of the Government is long enough to enable a strong industry to be established in this country. The period of five years which has been fixed by the Bill is, in the opinion of those best qualified to judge, the shortest period during which it would be possible to attain this object. The third objection which has been raised against the Bill is on the ground that the First Schedule infringes the rights of naturalised British subjects. This question has been very carefully considered by the Board of Trade and those responsible for the drafting of the Bill, and they hold that the provision is absolutely necessary. There is no intention to refuse a licence to a man because he is a naturalised British subject, but the fact of his being naturalised is in the opinion of the Government a sufficient reason for bringing his case under view and investigation. That is all the Bill intends to do. There have been instances during the war where naturalised subjects have sought to evade the Acts passed against trading with the enemy. There was one case, I understand, in which a number of books and documents dealing with the transaction of a firm were actually destroyed. I venture to think that the conditions attached to the grant of these licences must be considered in conjunction with others such as those I have indicated as to the proportion of the capital of a company held by an enemy.

There is probably no one in your Lordships' House, and I strongly suspect few in the country, who wish to sec any legislation passed giving the Board of Trade or any Government Department power and authority to interfere with any branch of British industry; but I humbly venture to think that we must not forget that we live in a new world. Things that were or seemed impossible before the war have become possible and may be necessary now. In asking your Lordships to give the Board of Trade the powers contained in this Bill, I admit that any powers given to a Government Department, or to a Government, are capable of abuse, but it seems to me that, if you push such a doctrine to its extreme limits, no legislation at all would ensue. Whilst apologising for taking up more time than I might do in bringing in this Bill, I ask your Lordships to give it a Second Reading.

Moved, That the Bill be now read 2a.—(Lord Hylton.)


My Lords, in moving that this Bill be read a second time this day six months, I hope that I may say to the noble Lord who has just sat down that he need not offer any apology for the time that he took in moving the Second Reading. I am sure that, as one interested in the measure, I was immensely pleased by the lucid, clear, and able way in which he explained the provisions of the Bill. I only wish that he had gone still further and, in the course of some further time, had laid before your Lordships some of the facts to which I am afraid I shall be obliged to ask you to give your attention during my remarks.

I confess that there was one special point in the observations which the noble Lord made that failed to carry conviction to my mind. He explained lucidly and clearly what were the objects of the Bill. We understood that they were to prevent the enemy from. getting too great a control over the non-ferrous metals lest that, when peace came, they would embarrass the trade of this country and also lest that, in the event of war, there would be a situation that would be exceedingly dangerous with respect to the manufacture of munitions. He explained with equal clearness the method by which no enemy was to be allowed to trade in this country. I fail to see the connection between the two. Let us take an analogy. Supposing that there was a shortage of butter or sugar or meat or any of the things of which we have a shortage at the present moment. How Would it assist us to get more of them if you prevented certain people from dealing in them in this country? It seems to me that what you could rather do in matters of this kind would be to encourage everybody here to deal in them, for the more restrictions that you put in the way of people dealing with them the less likely you are to get the goods which you want. In peace time, and without the operation of this Bill, it would be perfectly possible for any firms to bring these goods into this country at a time when there might be a commercial shortage of them here and when we might be wanting them. This Bill would prevent them from relieving our distress in that matter.

I am afraid that in one respect I may disappoint the noble Lord. I must rank myself amongst those who oppose this Bill for, amongst other reasons, this one, that it is of a protective character. I oppose it on the old-fashioned. Free Trade grounds of which I am not ashamed, for, after all, Free Trade means a great deal more than the imposition, or forbidding the imposition, of duties on imports and exports. It means freedom of internal trade as well as freedom of external trade, and I am sure that even the noble Lord himself will admit that the provisions of this Bill are meant and are designed to interfere with the enemy dealing with this country.

I think that tins is an unfortunate moment to bring forward a Bill of this kind. The commercial community of this country are very restive under all the regulations which the Government have issued during the past two years. We know that a great many of the restrictions might be necessary. At the same time we must all admit that the commercial community feel that a large number of restrictions have been imposed which are not necessary, and that there is nothing more necessary for the future of British trade than that Government control should be removed as soon as possible from every commodity from which it can possibly be taken away. More than that, I think that it is not unfair to say that at the present time, amongst the different services in this country, those which are most intimately connected with the Government are those which are probably the least satisfactory.

The period for which the Bill has been introduced is one upon which I think it is only right to say something. The noble Lord has explained that it is for a period of five years. That is a very considerable period and is one which the Board of Trade has advised to be necessary. Let me recall a passage from one of the speeches of the President of the United States of America, in which he says that that country shall not enter into any vindictive action on any account. "No nation or people," he said, "should be robbed or punished because the responsible rulers of a single country have themselves done an abominable wrong." I think that it is very questionable if this distinction against the enemy people at the conclusion of the war would not fall under the ban of President Wilson in those terms. I think that an alternative, and a more satisfactory alternative, would have been if His Majesty's Government had asked for a much shorter period than five years, and if they had been content with six months. If after six months they had found it necessary, they could have come and told this House that a further period was required, and I cannot doubt but that your Lordships would have agreed to give them a longer period than the six months originally asked for.

But there is still more to be said on the subject. As we understand it, this Bill is recommended to your Lordships' House on the Report of one of the Committees which has been appointed by the Board of Trade. It is one of those Committees, I think, which were appointed by my right hon. friend Mr. Runciman while he was at the Board of Trade, and which was making a series of Reports, upon which a further Report was to be made by a super-Committee of which the noble Lord. Lord Balfour of Burleigh. is super-Chairman. But this Report has never been published or laid upon the Table of either House of Parliament. That seems to me to be an unsatisfactory procedure. We should like to know a great. deal more about this Report. There are other recommendations in it. What are they? Do they recommend that other measures should be taken by His Majesty's Government, and if so why is this the only measure which they have hatched in order that it should receive legislative sanction at once? More than that, who comprises this Committee? Were they only manufacturers and dealers, or was the consuming interest also represented? Your Lordships will see that it makes a very great distinction indeed if you merely represent one of the two classes in the community who wish to deal with this subject. If you do that you get a recommendation which may not necessarily be fair as it affects the other classes in the community. I therefore wish to press His Majesty's Government to allow the Report of this Committee to be placed upon the Table of your Lordships' House.

There is something to be said with regard to the method of the Bill. Obviously it will be very easy for the German rivals of British traders to make considerable use of the provisions of this Bill. They will say to those with whom they are trying to deal, "It is all very well your going to our British rivals, but you must remember that they have to get a licence from their Board of Trade. That licence is liable to be revoked. If they come to you and make a contract with von, are you perfectly sure that they will be able to carry it out?" My Lords, an unscrupulous enemy will be able in that way to affect very seriously the position of the British trader.

Your Lordship will have heard from the noble Lord how under Clause 1 it is only licence-holders who may deal with all these non-ferrous metals. That, I have already said, does not by itself bring a single ounce more of any one of these metals to this country, and if the object is to prevent a shortage, as I understood from what was said by the noble Lord opposite, and to prevent us from being in time of war in a dangerous position, I would ask which is the clause in this Bill which will prevent a shortage of that kind. The enemy will still be able to speculate in the metals, provided his business is not a metal business entirely. That is under the first proviso of Clause 1. You do not entirely remove enemy influence. Another thing is that the enemy can deal through anybody else who is not habitually engaged in dealing with those goods, so that if an enemy were anxious to corner one of these metals it would be perfectly simple for him, by dealing with a number of different firms, who might not know whence the orders came, to effect as great a disturbance upon our market as if he were acting directly in the matter. Then a licence-holder can do nothing. He might buy metal for a German trust. It is true that under those circumstances, when the Board of Trade got to know about it, they would have the power of revoking it, but by that time the mischief might have been done. There are two or three loopholes of this kind which will certainly not prevent that action of which the noble Lord is afraid.

But more than that, every foreigner except enemy foreigners will be able to deal in this matter, and they will be able to deal through some friendly neutral. There is nothing, so far as I can see, in the Bill which will prevent a friendly neutral firm dealing on behalf of a foreign firm on exactly the sate terms as if they were themselves a British firm. More that that, a British company with capital invested in a United States company, in which a German company has also funds invested, is not to get a licence except for special reasons. That is in the fourth paragraph of the First Schedule. That might put a British company in a very serious position, quite unknown to themselves. The German company proceeds to buy a number of shares in. say, an American company dealing with these things; the British company is also interested in the same company, and thereupon the British company forfeits its licence, and the Board of Trade have to investigate all the circumstances of the case. I venture to think that one of the ways in which British companies may be hampered will be if enemy firms take that line, and try to buy up in neutral countries the share of neutral companies in which British companies happen also to be interested.

These are all naturally new methods in dealing with British trade, but there is another one to which I think it is only fair to take some exception, and that is the one by which nobody is to trade unless the Board of Trade approve of them. I wish that we could hope that His Majesty's Government would place the obligation the other way, and that everybody should be allowed to trade unless the Board of Trade had some reason to suppose that they should not do it. There is an inquisition of books provided for, a statutory inquisition of books, which will be very I much resented indeed, and certainly by those companies which are quite innocent of any guilty intent. It follows from what I said just now that if the Board of Trade object the applicant has to prove his case in the High Court. The Board need do nothing at all, but they find a man guilty without any evidence, and they leave it to him to prove his innocence. That, I think, is a thoroughly unsatisfactory provision, and one which British traders will not appreciate.

I said just now something on the question of time. May I return to that. The Federation of British Industries passed a Resolution in favour of the Bill. But it was a somewhat halting approval of the Bill, because they say that they reserve to themselves "the right to criticise certain details of the Bill at a later stage, especially in regard to the period for which control is to be taken." and in conveying this expression of view to the Government, "special attention should be drawn to the peculiar position of the copper smelters and to the importance of sources of supply and the supply of raw material for that industry to be assured." And the National Union of Manufacturers took the same line. I could only wish that the Government would give me some assurance that an Amendment in Committee was likely to meet with any success, if I were to move it on the lines of the resolution of these very important bodies, asking the Government to curtail very largely the period of time through which this Bill is to act. I am quite sure that, supposing it was found that there was a real desire and need for this Bill both Houses of Parliament would be willing and anxious to pass a measure effecting what the Government might desire.

I was somewhat surprised at the fear which was expressed by the noble Loud of a shortage of these metals in time of war. There was no shortage when this war broke out. There was no shortage in copper. I wish that the noble Lord had told us which of the metals that are going to be dealt with under the Bill we were short of in this country at the beginning of the war. It would have been of very real interest to those of us who are concerned about this Bill if they had known which of these metals it was particularly that was in the mind of the Government. It is perfectly true that at a later stage in the war there may have been a shortage of ammunition, but that would have been due rather to the shortage of munition works than to the shortage of these metals. The noble Lord no doubt knows quite well that more than once in another place it has been stated, without any contradiction, that there was no shortage of these metals when the war began. In fact, I believe that there has never been any shortage of these metals owing to enemy action. There may have been owing to want of certain facilities or certain methods of dealing with them in this country, but owing to enemy action I believe there has never been any shortage.

I confess that it is with a good deal of hesitation that I should accept the theory of the noble Lord that the result of this Bill will be to transfer the control of copper to this country. Copper is, as I understand, controlled in the United States, whence 50 per cent. of the production comes; and I wish I knew if the Report does mention copper as being one of those non-ferrous metals. With regard to the immense control which the Germans have over zinc, of which the noble Lord spoke quitefairly, surely that was due rather to tin fact that their methods of education and research and industry had allowed them to discover the proper way of dealing with zinc rather than to any hostile action of their part. And. I am quite sure that that is a point which would be enforced by Lon Haldane as being one of the stronges arguments in favour of the further prosecution of industrial research in this county Because it is undoubtedly true that, in that particular case, the Germans, by the knowledge and research, have been all to take over the control of zinc.

Tin was mentioned by the noble Lord, but I do not think there is any cause c quarrel between us in regard to tin. The somewhat obscure attempt which seem to have been made to get hold of some tin mines in Cornwall was effectually dealt with under the Defence of the Realm Act, and no more has been heard of since that time. I would wish, indeed that before this Bill became law we coal have one single instance when these firms, against whom this Bill is directed, ever diverted their metals from this country so that we may really understand what is the need for the introduction of this Bill. With regard to the rights of the naturalised enemies, to which the noble Lord referred I will not trouble your Lordships. That is a matter upon which, I think, a circular has probably reached every member of your Lordships' House, and therefore it is unnecessary for me to deal with it. It is, perhaps, sufficient to say that I view with very great suspicion this alteration of the naturalisation laws; but it may be that this is a subject which we shall discuss more properly and more conveniently when it comes up (as we understand it will have to come up) at the conclusion of the war.

To summarise what I have said. I confess that the contents of this Bill seem to me thoroughly unnecessary. I have a considerable fear in the matter which is based upon the doubt that I feel as to why His Majesty's Government have chosen to deal with these non-ferrous metals. Why non-ferrous metals? Why have they not dealt with iron and steel in the same way? Is there not the same case for them? What is the difference between iron and steel and these non-ferrous metals? Why have they not dealt with chemicals and with dye-stuffs? Or is it that this is the first of a series of Bills of a protective character which are going to be introduced, dealing with a number of different articles? It seems clear to me that a Bill of this kind must unsettle British trade; and so far as you put shackles upon, and make difficulties for, British trade, so far you handicap it when it enters into competition with its rivals. It is a measure of Protection by bits; a negation of Free Trade; and in so far as it is an interference with British trade (as I think it is) it seems to me that it can certainly do very little good, and will probably do a great deal of harm. I beg to move that the Bill be now read six months hence.

Amendment moved— To leave out "now" and insert at the end of the Motion "this day six months."—(Earl B[...]auchamp.)


My Lords, I rise to endeavour, to the best of my ability, to answer some, at any rate, of the objections which the noble Earl has put before the House. I shall not follow him into any abstract argument as to whether Free Trade or what he called Protection is or is not the best system for this country. To a large extent, as the noble Earl knows, I share in theory the views of which he is a distinguished exponent; and, if I may say so, I have in the course of my political life given certain pretty substantial guarantees that, so far as theory is concerned, I am upon the side of the Free Trader rather than in the opposite camp.

But I have always held, and I hold now, that no abstract rule should dominate the policy of any country—certainly not of our own—if it is proved that a blind adherence to that rule, in all circumstances, is operating to the disadvantage of the country. I think in the case of these metals to which this Bill specially refers it will not be difficult to make out that case. The noble Lord who moved the Second Reading of the Bill (Lord Hylton) told the House that non-ferrous metals were largely controlled by an international syndicate. The position of German interests in the syndicate was so strong that they were able to force the smelters of these metals in other countries into combinations which regulated the world prices.

The noble Earl who moved the rejection of the Bill asked, How on earth are you to get more of any particular commodity by preventing people from dealing with it in this country? That is not the object of the Bill. As I understood him, the point which I he noble Lord who introduced the Bill made, and the point which I want to press upon the House, is this—the fact that the existence of this monopoly prevented the goods from coming to this country. It was because those who were in control of the market had the power to say where this or that article was to go, which deliberately attempted to prevent the goods coming here. Now, it is to prevent that power and that monopoly that this Bill is framed. It is the fact that these syndicates controlled the market. They were able to restrict the development of smelting everywhere else than in Germany. They controlled, by long-period contracts, the output of Australian zinc, the raw material of which was actually produced in our own Dominions. I say that this is an improper condition, and one to which we should never have been subject. I hope that this Bill—and any other necessary Bill—will be produced and passed by Parliament to prevent a recurrence of that position. That is not Free Trade in any fair acceptation of the term. It is a monopoly, ruled by those who are hostile to this country, for the purpose of doing harm to our interests.

The noble Earl asked for an article, and I give him as a specimen the article zinc, the raw material of which is spelter provided from the Australian Dominions. I go further, and I answer the question of the noble Earl by saving it is a fact that the control of this non-ferrous metals trade (especially in this matter of zinc, and, perhaps, copper) by German interests has been, during the war, the cause of grave embarrassment to the Allied Governments; and it is essential that this control should not be renewed after the war. As the noble Lord said, it has engaged the attention of the Board of Trade, and a Committee was appointed by that Board to deal with it.

I may perhaps tarn aside, in answer to a question put by the noble Earl, and say that this Committee was not what is called a subordinate Committee to the large Committee on Commercial and Industrial Interests after the War, over which I had the honour to preside. But we saw its Report. I may say that the special circumstances of this non-ferrous industry make it necessary, in my opinion, that it should be taken first. It is not specially mentioned in the Report to which the noble Earl referred—the Report of my Committee—which has been in the hands of the Government for some weeks. It is no secret that this is the case; and I have every reason to believe that, so soon as the text of that Report has been communicated to the Dominions and the Colonies, it will be made public for the information of Parliament and of the country generally.

The noble Earl said that the commercial community would be restive about control. I believe that is absolutely the case; and I join with him in thinking that control is an evil which should be, if possible, avoided; and I shall rejoice with the noble Earl when every domestic industry can be freed from control so far as practicable. I am of opinion that there is nobody more anxious than the Board of Trade to get rid of the control which is necessary during a period of war. But, so far as the safety of the Realm is concerned, the control of these important raw materials must be continued during the war. One of the objections which I understood the noble Earl to indicate —I do not know whether he committed himself to it—was that it would involve Government control of the nonferrous metals industry after the war. That is not the case. I have every reason to believe that this is not the intention of the Board of Trade; and that the sole object of the Bill is to make sure of being able to eliminate hostile interests from British industries.

My Lords, the industries of which this is a specimen are vital to the defence of the country in war, and also to our economic independence, and it is not right or reasonable that there should be a control, acquired perhaps by legitimate and legal means, but exercised contrary to the interests of this country. To obviate that, the Board of Trade formulate the policy of giving a licence. Once a licence has been granted, the applicant, if he play the game, will be free from all Government interference. The whole power is vested in the Board of Trade to license if the conditions in the Schedule apply, or to suspend or revoke a licence which has been granted. The noble Earl tried to make the point that It the onus of proof would be upon the applicant for a licence. That is not the case. There was a provision in the Bill, I believe—I did not see it, but, so far as I have read the discussion which took place in another House, I think I am right in saying that there was a stringent condition in the Bill, as it was first introduced, which I would have given weight to the noble Earl's contention—that the onus of proving, if the applicant went to the High Court, that he was not guilty of being under enemy influence, was upon the applicant for the licence. That has been changed, and the position now is, as I understand the Bill, that if the applicant applies to the Board of Trade for a licence, and is refused, he can then go to the High Court, and the Board of Trade will before the High Court be obliged to produce its case and show reasons for refusing the licence. That seems to me perfectly fair and reasonable, and the conditions to which the High Court have to adhere are given in the Bill. The whole point turns upon the question whether the conditions under which the licence is to be granted are fair or not. I say, reading them fairly, with the experience which we have, that they are obviously reasonable and in the interests of the country, and I cannot see one of them to which any one who desires reasonably to carry on business in the interests of this country could refuse to adhere.

There was one other objection—namely, that the conditions in the Schedule infringe the right of naturalised subjects. We have had experience of naturalised subjects and some of them have not, as I have said, played the game. Some of them, after taking all the privileges of naturalisation, have not accepted all the obligations and duties of British citizenship. They have been more or less secret agents for the enemy. Now, I say, that is a thing which, with our past experience, we have to provide against in the future. If a man comes here and asks for all the privileges of British citizenship, then let him become a British citizen in fact as well as in name. He must not, with all the privileges of British citizenship, go on working in the interests of the country which he has apparently left and from whose allegiance he has departed. I have read the debates on this Bill in another place, and I say—can produce quotations if necessary—that it was distinctly stated by the President of the Board of Trade that there is no intention of refusing a licence because a person happened to be a naturalised subject, but that, as I have said, our recent experience justified us in taking precautions in the case of naturalised subjects, although it would be quite unreasonable to refuse a licence to a man who had otherwise shown himself to be a good subject of this country, merely because he was naturalised. It would be unreasonable to refuse a licence if a small portion of the capital of the company belonged to foreign subjects, but the fact that the company or firm falls under any of the conditions is a case for careful scrutiny, if not for actual refusal. I think it may be fairly said that the restriction of the activities and influence, nether direct or indirect, in the United Kingdom, of powerful alien influences, is essential if British non-ferrous industries are to be given an opportunity of free development. Only by that means can we have effectual protection against the growing dependence upon foreign supplies which has been the cause of grave peril in the past. Any one who desires to trade in this country and who has, so to speak, a clean bill of would be entitled to and will get a licence. I believe that this Bill will be a great safeguard in the future, and I hope it will be passed into law.


My Lords, I am anxious to say a few words upon this Bill, particularly because, when it was introduced in another place, it was stated to be the outcome of the Economic Conference held in Paris in the month of June, 1916; and as I was one of the representatives of this country at that Conference, in company with the present Chancellor of the Exchequer and Mr. Hughes, Prime Minister of Australia, the subject is naturally of particular interest to me. The noble Lord, who so capably introduced the Bill, said he thought that the Bill had been the subject of not a little misconception, My Lords, that may be. But so has the Economic Conference at Paris. I have been often almost diverted by the comments that I have seen made by quite different schools of thought on what passed at the Economic Conference at Paris.

One would have supposed from what I have observed, both in Free Trade speeches and Free Trade newspapers, and equally in Protectionist organs and on Protectionist platforms, that the Paris Conference was in effect something of a Protectionist orgy, and that it was the prelude to the dropping of a system of Free Trade by those countries who were represented there and which had hitherto made it their main policy, and of a series of economic changes in the policies of countries which had not before confined themselves to dirties for revenue purposes. That, of course, is a complete error. The respective merits of Free Trade and Protection were never a subject of discussion in any sense at the Economic Conference at Paris. All sorts of different views were represented, not only by the representatives of this country, but by the representatives of other European countries there, and I can cheerfully ask the present Chancellor of the Exchequer or Mr. Hughes to confirm absolutely what I have said. But, my Lords, it is said, of course, that the whole theory of Free Trade is to be reconsidered in the light of the war, and my noble friend who has just sat down has stated his view that while the theory of Free Trade may be held to be good by him or by others, yet that certain departures from the strict canons of Free Trade may be necessary in the present circumstances. I have no doubt or hesitation in saying that I still hold the view which I held before, that the free exchange of commodities between nations should be the general rule, with certain exceptions which can be shown to be necessary. This, of course, is the reverse view to that of those who hold that the encouragement of production at home ought to be the general rule, although certain departures from that rule may be necessary in permitting free imports in some eases. All I can say, my Lords, is that nothing that has happened in the war has led me to depart in any degree from the views which I held before, and a great many things have happened to confirm those views.

But that is not in itself, of course, the subject of discussion this afternoon. I certainly do not deny that there are cases in which what I all the exceptions from the Free Trade rule may be enlarged and multiplied in the circumstances in which we now find ourselves. One subject not altogether remote from those which we are asked to consider this afternoon, and one of supreme importance, is a question on which I would say one word—that of optical glass, which might very properly have been the subject of a similar measure to that which we have before us to-day. As your Lordships are aware, the trade in optical glass had fallen almost entirely before the war into German hands. There were only one or two manufacturers of that glass in this country; and of somewhere about 150 varieties of the glass that were made only, possibly, some twenty were made at all in this country, and we were dependent on our supplies from abroad, in fact from Germany. That dependence proved a serious misfortune. It can be said of this commodity, what has been said less correctly of others, that without doubt our shortage in it was directly responsible for the loss of a number of lives of our soldiers, which, if we had had a full supply, might have been saved. That, I think, cannot be disputed. There is no Free Trade or Protectionist argument, I venture to think, to be founded on that fact. Nobody, I imagine, would maintain that if we had had a duty on optical glass in this country before, the production here would have been so stimulated as to give us the supply which we needed, but I have not the slightest doubt, now we have taken in hand most seriously on a large scale, not merely the greater production of this glass in the country, but also the education of those workmen, students, and researchers and others who are con[...]erned with it, that it will be necessary to take—and I have not the least doubt that His Majesty's Government will confirm the view—in one way or another special steps to protect (if that is the proper word) the industry, when once more imports from a broad can be introduced. That is to say, you must place that commodity, and you may place others, in the same position in which we have always placed, and in which every country places, material of war. Nobody has ever suggested that we should be dependent for our artillery or for our armour-plating on any other country, however friendly, and if it can be shown that the metals which are mentioned in this Bill are in the same position as the illustration which I have given of optical glass—which would have to be taken out of the Free Trade list and put into a special list with other commodities after the war—I should not have a word to say against this measure.

I confess, however, that I cannot see from what has been said, not even from the very powerful and convincing speech of my noble friend who has just sat down, that as regards these particular non-ferrous metals—at any rate, the whole of them—the case is anything like so strong as it may be for certain other commodities like that which I have mentioned. In the debate in another place a further instance was mentioned by a strong supporter of this Bill of a commodity which is not included in the Bill. The particular case was pressed by the hon. Member, and the circumstances of it happen to be quite familiar to myself because I was concerned with them as head of a Department. There is a substance called thorium, a, rare metal used for making gas mantles in the Welsbach incandescent gas system. It is a very rare metal of which a large quantity was discovered, I believe, by a German-American—rather picturesquely discovered—in a part of the world which is not very familiar to tourists or specially devoted to commercial enterprise—I mean the Southern Indian State of Travancore. There great deposits of monazite sand, from which thorium is produced, were discovered. Well, these deposits fell in the manner in which my noble friend describes into German hands. It was regarded as indispensable by the Department that the company should be a British company, but by manœuvres of the kind which have been mentioned the business fell into German hands, with the result that the incandescent mantle makers in England could not get thorium at a reasonable price, whereas the German makers obtained as much as they pleased. That is a flagrant instance, but I do not feel that it is an instance which can be correctly prayed in aid of this Bill as regards all the metals mentioned. For this seems to me to point to the fact, which I should have thought cannot be disputed, that the only method of definitely preventing the diversion of any one of these valuable commodities from this country is to obtain control of the source of supply. There we were able to control the source of supply, and as soon as it was discovered that thorium was being manœuvred away from this country, steps were taken to prevent it and to see that manufacturers here got their fair chance.

But of which of the metals mentioned in this measure have the Germans ever had, or conceivably can have, control of the sources of supply? My noble friend mentioned Australian zinc. That, of course is a question which is greatly complicated by the fact mentioned by the noble Earl, Lord Beauchamp, that the smelting of that particular form of zinc ore—these particular Australian concentrates—was carried out by a German invention, by, if you like, superior metallurgical skill, with the not unnatural result that the industry itself went rather to Germany than here. But, so far as the actual source of supply is concerned, the moment the war began we obtained complete control of that, and I was surprised to hear my noble friend say that the supply of zinc to this country had been adversely affected by what was almost the German monopoly of smelting the Australian concentrates. My information was to the contrary effect. Certainly I had supposed that, as regards tin and copper, the same can be said and that the diversion of any appreciable quantity of the materials which we require, owing to the action of the Metallgesellschaft, which is the body complained of, could not be proved.

It is quite true that when war began we found we wanted a great deal more of some of these materials than we had ever supposed to be possible, and we could not, at once, get all that was required. That was owing to the enormous development of munition making, and armaments generally, which made it difficult for the supplies to keep pace with the new demand. Although there may be facts of which we know nothing contained in the Report of this confidential Committee, which I understand cannot be laid upon the Table in another place because some of the information it contains might be of advantage to the enemy, so far nothing has been stated in public to show that as regards these particular metals the ease can be said to have been proved.

One objection to the Bill is that, on the whole, it seems to tend to discourage the continuance of London as the main centre of this particular international trade. We all know the circumstances which have made London the great en[...]repôt of the world, kind it obviously will be difficult after our colossal war expenditure to maintain the position of London as the great central market in all its branches. This of course, one may say, is one and by no moans the largest, but everything which would tend to operate adversely in that direction is surely to be deprecated. My noble friend also alluded to the objection which many British traders find of submitting their books to a public Department for inspection before they can get a licence. If it can be shown to be necessary for the general protection I have no doubt they would submit to it, but they would have to be convinced that this was so, and so far I do not think they have.

I confess I am not myself convinced by the arguments which have been used that this measure is, as it stands, entirely fair upon the naturalised aliens. We ought, I think, to be careful how we pare anything away from the full right of citizenship which is granted by naturalisation. When a man naturalised—I have said it before in this House, it may have been too easily done in the past, I do not dispute that, and I should not myself regret to see it made more difficult—but, once it is done, one does not like the idea of the citizenship being whittled away even in a good cause like that of the elimination, not of German competition, but of illegitimate German influence from a particular trade.

There is another objection which I think my noble friend did not mention, but which I understand is felt by some. There is a feeling that the effect of a Bill of this kind may be to encourage the creation in this country of an English Metallgesellschaft, and that there may be a tendency for the trade to get into the Lands of great trusts or rings, which would be composed of a few powerful firms, and that the smaller people will not have the chance they had before. I have not sufficient knowledge myself of the circumstances of the trade to express any Opinion cm that point, but it is a fear which I know has been uttered. Therefore, my Lords, cannot myself look upon this Bill with any particular satisfaction. I have always regarded our economic weapon against Germany as one of the most powerful we have. it is one of the weapons which, when the time comes and the terms of peace have seriously to be considered, may prove to be the most valuable to us of any.

The Germans talk of the possession of parts of France and Belgium and the rest of it as pawns in the game of chess which they have to play. My Lords, our economic control of the seas and of the sources of raw material, now that the United States is whole-heartedly with us in the war, is far more powerful as a piece on the chessboard than the possession of any territory which Germany may hold. I say that without hesitation: that the power which we continue to hold over. Germany of practically, if we so desire, debarring her for as long as we like from any substantial overseas trade, leaving out the question of the enormously expanded trade which she had before the war—our power of absolutely throttling that trade is a source of strength to us when it comes to seriously counting up the pieces on both sides of the chessboard the value of which it is impossible to over-estimate. But that fact, to my mind, is a reason for not beginning to employ it now.


Hear, hear.


if now you begin to impose various restrictions, or to inflict disabilities upon German trade, you either place Germany in the position of knowing the worst already and of having to face it now and light it as best she can, or you place us in the position of conceivably having to withdraw certain restrictions which we have placed on German trade now by this Bill, because those particular restrictions may form part of the discussions of the terms of peace. I, for one, would very much rather leave the question of the imposition of such disabilities until a moment when they can be most profitably used. That is another reason why I cannot regard this Bill with great favour.

At the same time I confess I cannot advise my noble friend below the gangway to press his Motion to a division, and indeed for this reason. The Bill as introduced in the House of Commons contained not a few provisions infinitely more objectionable from our point of view than any which appear in it now. I have mentioned those which we do not like, but it has been already pointed out that the licence, which at one time had to be renewed every year, has now become a permanency during the currency of the Bill. It is also true that the power of appeal was considerably enlarged during the progress of the Bill, and therefore I cannot advise my noble friend to divide against the Second Reading, although I am glad that he has so fully exposed what he considers, and what many of us consider, to be the defects of the Bill, and has given His Majesty's Government, and in particular my noble friend, Lord Balfour, the chance of stating all there is to be said in its favour.


My Lords, I should not have intervened in this discussion but for the fact that I am to some extent acquainted with the subject-matter of the Bill, and the House Will perhaps not take it amiss if I return somewhat more closely to the Bill itself. I happen to be connected with a company which is the largest producer in this country of tungsten, and which had the enviable distinction of being the only company able to supply our war requirements of tungsten during the first six months of the war. Tungsten is not actually mentioned in the Bill, but power is taken to include other nonferrous metals, and I cannot doubt that it will be one of those included. I am rather surprised not to see it in the Bill itself, and I think the history—I am not proposing to weary the House with it at any length—but the general history of how it was that in this country there was only one firm in a position to supply tungsten for war requirements is instructive as supporting the principle urged in favour of this Bill.

There are now in this country at least six companies supplying tungsten, but had it not been for the particular company with which I happened to be connected we should have been without any plant for manufacturing tungsten in this country, and that would have been a serious thing. That arose in the way which has been pointed out. The sources of supply, the ore from which the metal is produced, had passed into German hands. There were long contracts and good prices given and so on, although the prices were to some extent reduced by the elimination of competition by their methods. This raw material the wolfram ore which is converted into tungsten—was obtained to a large extent from our own Dominions, and yet the entire control was absolutely in German hands before the war.

I understand that what is at the back of this Bill is a desire to make that state of things impossible, and if I have any particular criticism to make on the Bill itself it is rather that I do not think it carries out by a very long way the high expectations with which it is supported and with which the noble Lord recommended it to the House. There is, as has been stated in the course of this discussion, only one real way of making certain of obtaining these supplies, and that is to control the source of supplies. There is probably only one real way of ensuring that you have smelting furnaces and other works for the purpose of producing the metal in this country, and that is either fostering them by a tariff, which I do not recommend, or giving them contracts which make it worth their while. That policy was not adopted before the war. What you are competing against is not the ordinary American idea of a trust which gets hold of a thing and raises the price to the consumer and makes it difficult to get. That is met by business men with their own business methods. But you have here the same thing with a national backing behind it. No one can doubt that these industries were carefully fostered by the German Government and that they had public money behind them. You can only meet that kind of national competition by some method of national defence. I understand this Bill to be some attempt to do that. I do not myself think it will achieve much. I think the most you can say for this particular measure is that it will prevent or make it difficult for the financial and commercial resources of this country to be used for dealing in these particular metals.

There is one very serious blot in the Bill to which I should propose to put down an Amendment in Committee, and that is the second proviso to which reference has been made:—"Provided also that no licence shall be required when the winning, extracting, smelting, dressing, refining, or dealing is carried on wholly outside the United Kingdom." I do not quite know what "dealing" means in that respect, but if it means that a mine may be owned by a British company outside this Kingdom and that the produce of that mine being sold where it is raised to somebody else is not dealing with it in this Kingdom—I rather think it is not—then it seems to me that you lose a very important item of control. I can give your Lordships au instance which is in my own knowledge of a British company registered in Great Britain, but which has a very large number of bearer shares—one of the very evils which this Bi11 seeks to prevent. As to these bearer shares, it is known that a great many are held in Holland, and it is suspected that a great number are controlled from Germany. That company owns a mine which is not in this country nor in any of the Dominions, and it could, as I understand it under this Bill, without a licence be able to work that mine in this foreign country and deal in its produce at the mine and enter into a contract there to sell its products to Germany. That seems to me to be a gap in the Bill which ought to be removed, and I should be disposed to put down an Amendment to remove that proviso unless it can be explained.

I do not think, however, that this Bill will do much. I do not think that it can honestly be said to have a protective element about it. I do not believe that manufacturers, as such, are going to welcome the necessity of applying for this licence. They are not particularly anxious to have their books overhauled. They are not particularly anxious to be compelled to go to the Board of Trade for a licence, and they are quite prepared to compete on a business footing with all comers, and are very likely to do as well, and possibly even better, if they are not in any way controlled. But you certainly cannot allow—and this I feel most strongly—that state of things to be re-established which undoubtedly did exist when the sources of supply, and the arts and processes and plant for the purposes of manufacture, were entirely outside the Empire, and the Empire was deprived of the things which it required, at the outbreak of the war. With the objects of this Bill I sympathise, and my only regret is that it does not do very much towards what is required. The view has been expressed that it is a protective measure. I dislike protective measures now as much as ever I did.


Perhaps I ought to explain that it was far from my intention to imply that this measure could be described as protective. In the accepted sense of the word it certainly is not.


I am glad that the noble Marquess agrees with me. I was referring rather to what was said by the noble Earl who moved the rejection of the Second Reading of this Bill. I think that if you were to impose a protective tariff, although it might, be to the advantage of manufacturers here, you would not by any means necessarily achieve your object. Your object is to be able to rely upon a supply of all these particular things when you want them. It is perfectly true that we must have a command of the metals which are now included in the Bill. The case for zinc I am aware of, and I am also aware how strong a case there is for including these others. I am not personally aware of the conclusions of the Committee which have been referred to, but if they stand on anything like the footing of tungsten, about which I know, and of zinc, of which I also know a little, there would be ample justification for taking all the measures that you can to secure a supply.


Does the noble Earl press his Amendment ?



Amendment, by leave, withdrawn.

On Question, Bill read 2a, and committed to a Committee of the Whole House.