§ Order of the Day for the House to be put into Committee, read.
My Lords, I beg to move that the House do now resolve itself into Committee upon this Bill; and in doing so I wish to take advantage of this opportunity to reply to the very grave charges that were made by the Duke of Northumberland a fortnight ago against the conduct and the good faith of the Ministry of Munitions, against certain officials of that Ministry, and, incidentally, against the firm of Messrs. Pearson in their dealings with the Ministry. Unfortunately, my Lords, no notice was given by the noble Duke either that he was going to make an attack, or as to what points specifically he was going to raise, and so it was perfectly impossible for me at the time to reply; but the noble Earl who leads the House intimated that a full reply would be given when the Bill went into Committee. This, my Lords, I propose to do now, and I will be as brief as I can.
Coming to the actual charges made by the noble Duke against the Ministry, he said first of all that they had used their powers to retard and hamper instead of hastening the production of petroleum. I would like to ask what evidence the noble Duke brought in support of that 1050 charge. Your Lordships will remember that he read a somewhat lengthy extract from the letter of Mr. Cunningham Craig, a geologist, who was for a time, but no longer is, attached to the Petroleum Research Department. In that and other letters written by Mr. Cunningham Craig charges were made, somewhat broadcast, as to obstruction and wilful and deliberate discouragement of effort by the Ministry of Munitions. My Lords, I would like to ask you to judge of the value of that evidence. Your Lordships will remember that it was pointed out at the time by the noble Marquess, Lord Crewe, that those letters from Mr. Cunningham Craig had not in reality the smallest bearing upon the subject under discussion. None of those letters, my Lords, referred to boring for petroleum at all, but to the production of oil by distillation from Cannel coal and other kindred products, and I should like to supplement what was then said by the noble Marquess by adding that all these letters from Mr. Cunningham Craig formed the subject of an inquiry by a special Committee, which was presided over by Lord Crewe. The Report of that Committee has been printed and has been laid on the Table of both Houses. This is what Lord Crewe's Committee say about Mr. Cunningham Craig's report, upon which the Ministry of Munitions steadfastly refused to act—which I think the noble Duke calls obstruction. Lord Crewe's Committee said—The scheme of carbonisation of Cannel coal and kindred substances recommended in the Petroleum Research Department Report was not a practicable one, and the Ministry of Munitions was justified in declining to embark on it.Therefore, my Lords, not only had these letters quoted by the noble Duke in support of his charges nothing to do with the subject under discussion, which is boring for oil, but in addition to that all the complaints in those letters had been carefully investigated by an impartial tribunal and declared by that tribunal to be totally baseless. I feel that the noble Duke cannot probably have been fully aware of these facts, because it does seem to me that his position, far from being strengthened, cannot but be weakened in regard to his charges as a whole against the Ministry.
The next charge was that the Ministry had not safeguarded the interests of those concerned in the production of oil, but had used their powers in a manner the 1051 reverse of impartial, and had not hesitated to adopt a course designed to squeeze out—that was the noble Duke's phrase—other firms, such as the Darcy Company. This was developed later by the accusation that the Government were creating a monopoly for the benefit of a private firm, and this I will come to in a moment. The noble Duke alleged that had it not been for this conduct on the part of the Ministry the Darcy Company could have got to work long ago and could have been producing oil for some time past as they had all the machinery and staff necessary for the purpose. I should like to take the last point first. The noble Duke says that the Darcy Company had all the machinery ready more than a year ago at a time when Messrs. Pearson were not so equipped. Having read the correspondence myself, I find a letter written by the Ministry of Munitions on March 27 last to the Darcy Company, asking them what plant they actually had at the moment, and, if they had no plant, what amount would be required. The company replied on the following day, March 26, "The plant is not in our possession." They added, however, that with certain priority facilities it could be procured. I feel it extremely difficult to reconcile this admission made by the company itself at the end of March last with the noble Duke's confident assertion that they had the whole of the plant ready a year ago and could have got to work. It subsequently transpired that they would require a very large amount of steel, including, I think, 172 tons of casings. I cannot say whether they have the plant to-day or not, but in due course a priority certificate was issued to them; but I do not think it is necessary for me to remind the House of the enormous difficulty which surrounds the whole question of priority certificates. Many very urgent and important applications have to be refused simply owing to the fact that there is in certain raw materials a great shortage, and as regards skilled labour there is an ever-increasing shortage. However as I say, the fact remains that at the end of March the company themselves say that they had not got the plant.
Now I come to what the noble Duke terms the persistent squeezing out of this and other firms. It sounds a formidable charge, and one pictures to oneself innumerable applications for licences ruthlessly refused by the Ministry of Munitions, 1052 but I think it may interest your Lordships, and possibly surprise you, when I say that up to date we have received only six applications altogether for licences for boring. Four of these came from the Darcy Company, one from another firm, and the sixth from another firm.
While I am on the subject of licences I think I might take the opportunity to remove what I cannot help feeling is a misconception that exists in the minds of some. The Ministry of Munitions is advised on all these matters by a standing Geological Advisory Committee, which was constituted by Mr. Long's Petroleum Executive. The Ministry of Munitions does not arrogate to itself full technical knowledge, and in all these matters it relies on the advice of the standing Geological Committee. That Committee consists of Dr. Strahan, who is head of the Geological Survey; Dr. W. Gibson, who is also a member of that body; Professor Boulton, of Birmingham University; Professor Watts, of the Imperial College of Science of London; and Professor Sir John Cadman, who is Director of the Petroleum Executive. I should like to make it clear that all geological matters connected with drilling for oil are submitted to this Committee, who have done most excellent work. No steps are taken by the Ministry of Munitions without the scheme having been first approved by this Geological Committee, and therefore all applications are in the first instance referred to them.
Of these six applications, which are all we have received, two were rejected by his Geological Advisory Committee as being geologically unsound. Of the remaining four, two were for small areas forming portions of larger areas already marked out for Government drilling, and those of your Lordships who are conversant with the science of drilling for oil will realise that to have allowed two or more applicants to go in for competitive boring in the same area could only have resulted in each trying to cut the other's throat, and, in consequence, in the waste of oil. That leaves two applications unaccounted for. One was received from the Darcy Company, which has been accepted by the Geological Advisory Committee, with the proviso, however, that as it cannot be regarded as a very promising area it should be considered a post-war proposition and no high priorities for material should be recommended for it at this 1053 moment. In this the Darcy Company concurred, and I find a letter in which they say they agree that the prospect of finding oil is not very hopeful. However, should they wish for a licence on these terms they can have it. The sixth application is from a firm called the Coal and Iron Development Syndicate, and a draft of the proposed licence has been submitted to them and is now being considered by the firm. Should they wish it, it is at their disposal. I am sorry to be so long, but this is the record of the licences which have been asked for at the Ministry of Munitions and how they have been dealt with. I venture to think that it does not bear out the noble Duke's accusation that other firms were consistently squeezed out in favour of Messrs. Pearson. The only applications refused were refused either on geological grounds or because, if granted, they would have resulted in competitive boring in the same area, and that is I think the one thing on which we are all agreed in this matter—that it must in no circumstances be allowed in view of the disastrous experiences that other countries, such as America, have had.
Now I come to the charge that a monopoly is being created in favour of Messrs. Pearson. It has never been pointed out to me exactly wherein this danger lies, and I cannot help feeling that one is arguing not on concrete facts as they exist to-day, but really in the dark, on fears as to what may possibly occur in the future. For instance, I am not quite clear if the idea as regards this charge is that a monopoly is being created by the appointment of Messrs. Pearson as agents for the Government, under the Agreement, or whether the idea is that after the Agreement has expired this firm will inevitably be in a privileged position, owing to its presence on the spot and thanks to the experience gained during the life of the Agreement. One thing I can say with absolute confidence, and that is that I am quite sure that Messrs. Pearson, from a purely selfish point of view, would have been in a very much better position to-day if this Agreement were not in existence, and if they were working on their own account with their own money and reaping the benefits for themselves. I feel that really the position is this. Had it not been for this Agreement, it would have been possible for Messrs. Pearson to create for themselves a position which would have resulted in their having a 1054 virtual monopoly; and for this reason—they were the only firm who had carried out any research work on an extended scale in this country, which means that they have four years start of their rivals. Had they been working for themselves they could hove got control of all the most likely areas for themselves, and if oil were discovered I think there is no doubt that they would have made probably a very large fortune. That is not the position to-day.
What are the facts that we are dealing with under this Agreement? Messrs. Pearson are working on behalf of the Government without any remuneration whatever. They cannot make a single penny out of that Agreement. Is that a monopoly in favour of this firm? It is not a monopoly that many people would like. As your Lordships will see from the Agreement, they have voluntarily placed at the disposal of the Government, free of any charge so to speak, their own services and experience, the services of an expert staff, and, what is of even greater value than all that, the knowledge that they have accumulated in the four years of research work which they have carried out in this country. The whole of the plant used by them is the property of the Government. I need hardly add, I suppose, that the proceeds, if any, belong to the Government. In these circumstances it seems to me that, if there is any monopoly at all in the Agreement, it is a monopoly not in favour of Messrs. Pearson but in favour of the Government.
The noble Duke asked why this firm was selected. I shall be glad to tell him. They were selected because they were the only firm in the country (for the reasons that have given) who were in a position to make the offer that was in fact made, and because, in the opinion of the Government, it was an offer so advantageous to the country that it would have been wrong to have refused it. I really doubt whether the noble Duke is prepared to say that this offer should have been refused. I suppose, my Lords, if one fears any semblance of a monopoly it might possible to argue that whenever you ask a firm to carry out any work for you, such as to build docks, to construct railways or anything else, you are to that extent creating a monopoly in favour of that firm. I do not think for a moment that is what the noble Duke meant, and I cannot believe that he, or any one 1055 else, is prepared to say that in order to avoid even the suspicion of creating a monopoly or a most favoured position for any firm the Government ought to have refused this offer, and to have employed other firms in place of, or as well as, Messrs. Pearson, even though, in the opinion of the Government, those other firms were not in such a good position to carry out the work for them owing to their having less plant, less experience, and certainly less, if not no, research work to their credit. After all, my Lords, the Government in this matter are responsible to the country for what we used to consider before the war a very large sum of money—a million pounds. And I maintain that it was not only their right, but it was their absolute duty, to select those people to carry out the work for them who, in their opinion, were the best qualified to do so. So the Agreement, my Lords, was made with Messrs. Pearson, as Government agents. Copies of that Agreement have been laid on the Table, and your Lordships are, no doubt, thoroughly conversant with it by now.
Your Lordships will see that, in spite of what I might call the suspicion which has been cast over it, all it amounts to is this: that Messrs. Pearson work as Government agents without any remuneration whatever, so long as the Agreement lasts, merely stipulating that they shall thereby not be in any worse position afterwards than any other firm as regards making leases or applying for or of getting licences, should eventually licences be granted to develop this industry. I have seen this paragraph in the Agreement referred to as proof positive of the nefarious designs both of the Government and of the firm of Messrs. Pearson. But surely, my Lords, nobody is prepared to say that, having made the offer that Messrs. Pearson made, not only were they not to receive one penny remuneration for the whole of their work carried out under the Agreement, but that they were to be absolutely penalised for doing so by having refused to them the same rights which were open to all their competitors in that industry; that while they were working for nothing for the Government they were to stand aside and watch other firms applying for, and possibly getting, licences to work the oil which they, Messrs. Pearson, had been the means of discovering. I cannot believe that this really could be argued.
1056 The noble Duke may say this is all very well as regards the Agreement; granted they are going to get nothing out of it during the Agreement; but what about afterwards? Will this firm not be in a privileged position owing to their being on the spot and owing to the knowledge that they have gained of these areas at Government expense? In support of this argument I believe it is contended that the fifteen areas which are now definitely set aside for Government drilling must necessarily cover the whole of the resources of this country, should such oil resources exist. I think this must be a very exaggerated view, fifteen areas out of the whole of Great Britain; it is perfectly true, my Lords, that Messrs. Pearson think that these are the best areas in the country, but that is not the opinion of all the other oil experts in the country. And the only evidence, so far, is really evidence against Messrs. Pearson's contention being right that these areas are the best, if not the only ones, because out of these six applications received, four were for areas quite outside and apart from the areas that have been set apart for Government drilling. Therefore, my Lords, that means that the opinion generally of the oil experts in this country is two to one against those areas being either the best or the only ones. Under this Agreement there is no undertaking, either given or implied, in any way to treat Messrs. Pearson in any privileged way as against other firms when the Agreement expires. The whole of the information gained by them during their operations under the Agreement belong not to Messrs. Pearson; it belongs to the Government, for whom they are working. This Agreement provides, though, that they are to make full reports on all matters to the Government, and this information will be at the disposal of whoever carries on the work afterwards.
I ought, perhaps, to refer for a moment to the Amendments to this Bill which have been put down to-day, as they refer to this point. In the last Amendment standing in the name of the noble Duke it is provided that the records of the petroleum got are to be kept for every separate borehole, and that those records are open to the inspection of every person interested in the land. That, my Lords, is an Amendment which, when the noble Duke moves it, I have no intention of opposing; and therefore I presume it will find its place 1057 in the Bill. Then there is an Amendment standing in my name that "any person entitled to sink a shaft or borehole for the purpose of searching for or getting petroleum shall, before commencing to sink the same, give notice in writing of his intention to the Director of the Geological Survey." And then it goes on to say that a journal shall be kept of the portions or fragments, and the Director of the Geological Survey is allowed to have free access to any such shaft or borehole, and to inspect all specimens and the journals of such shafts, and so on. And as your Lordships are aware, all the information collected by the Geological Survey is open to inspection by any member of the public, while certain portions of it, those which they consider of great national interest, are published.
I have endeavoured to show that the whole of the information that is going to be collected by Messrs. Pearson is not their property, but the property of the Government, and owing to the way the Agreement is drawn and the Amendments that are down, that information will be at the disposal of other would-be licensees. But further than this, I would like to say that it really is absolutely impossible to predict to-day how the Government of the day and Parliament may decide that this industry, if proved, is to be carried on. There will be different ways open to them. For instance they might, when the Agreement expires, conceivably elect to carry on the industry themselves. In that case what happens? Messrs. Pearson simply drop out, and having made, as your Lordships will admit, nothing under the Agreement, they will make nothing afterwards. All that they will have will be the satisfaction of feeling that they have been the means of initiating and developing an industry of, we will hope, immense value to the country. Or again, it might be decided by the Government of the day to offer licences by tender or otherwise. Then, as I said, the knowledge acquired by the Government agents is available for all the tenderers. I would like to say now that there is not only no intention of creating a monopoly in favour of this or any other firm, but I submit that there is no evidence that a monopoly must result. Parliament will, after all, always have the deciding voice, and will be in a position to ensure that fair play is done. Under the Bill all licences granted are to be laid on the Table of both Houses as and 1058 when granted, so that Parliament really will be able to keep control.
Now I come to what I think can only be regarded as the most serious charge by far brought forward by the noble Duke, and that is his charge that certain officials of the Ministry of Munitions, and incidentally Messrs. Pearson, used information which they could only have obtained from Government sources. This is a repetition of the charge made by the Darcy Company in a letter written to the Ministry of Munitions on October 7 in which they alleged that a report by Mr. Cunningham Craig on the Butterly Company's property, given confidentially to Sir John Cadman, had been, passed on to Messrs. Pearson, and that the latter were making use of it to bore for petroleum. I wish at once to give a most emphatic denial, on behalf both of the officials of the Ministry of Munitions and of the firm of Messrs. Pearson, to that. I am informed that Messrs. Pearson located this particular area as far back as January 1916, and, if it were required, they are in a position to prove this definitely before any impartial tribunal. I do not think that they claim any wonderful perspicacity in selecting this area, for the Director of Geological Survey informs me that it is one of the most obvious places in the Midlands, and I have no doubt that it was the obviousness of this particular site that led Mr. Cunningham Craig to select the same area at a later date. As a matter of fact, the site in question which was asked for by the Darcy Company is only a very small portion of the larger area which Messrs. Pearson had investigated previously as a whole.
I must say that I am exceedingly sorry that the noble Duke should have lent the great weight of his authority to this grave charge, and should have formulated it without, I venture to say, bringing forward any evidence at all in its support. The charge against the officials of the Ministry of Munitions is one which involves a breach of the Official Secrets Act, and as against Messrs. Pearson, of conduct which no honest or reputable firm could be guilty of; and I think a charge of that sort ought only to have been brought forward after the most careful investigation and after the most conclusive evidence. As far as I can see, far from that, it seems to have been brought forward by the noble Duke on what is, after all ex parte statement by Messrs. Darcy without any opportunity having been given 1059 to the officials concerned to rebut the gravest charge that can be brought against officials of the Government. I sincerely hope, before this debate closes, that the noble Duke may find an opportunity, and may see his way, unreservedly to withdraw the charge that he made a fortnight ago without, I venture to say, any evidence at all in its support. I apologise for the length of time that I have occupied, but I conceived it to be my duty, and I thought that probably your Lordships would wish me, to make as full and frank a reply as I possibly could to the very grave charges brought forward by the noble Duke, and I hope that I have done this to the satisfaction of your Lordships.
§ Moved, That the House do now resolve itself into Committee.—(Lord Elphinstone.)
THE DUKE OF NORTHUMBERLAND
My Lords, the noble Lord who has just spoken made certain statements regarding the charges which I brought against the Government, and before the House goes into Committee I should like to make, very shortly, a reply to his statements. First, as regards the criticisms which the noble Lord has made on account of my quoting Mr. Cunningham Craig. The noble Lord appears to imagine that I based my charges on what Mr. Cunningham Craig said. That was not the case at all. I only quoted Mr. Cunningham Craig as showing the state of disorder and confusion which appears to prevail in the Petroleum and Oil Production Department. It is true that Mr. Cunningham Craig was referring only to the distillation of oil from cannel coal, but what he said did not seem to me to be wholly beside the point in showing that the state of things which was prevailing in that Department with regard to that question also prevailed in regard to other questions. But I did not base my charges on anything Mr. Cunningham Craig said, and that is really of comparatively little importance.
I will deal with the noble Lord's statements one by one. The noble Lord said that the Darcy Company was given, as I understand, full opportunities for obtaining priority certificates to bore for oil in this country, and that the Government did not delay the production of oil by refusing certificates to the Darcy Company. He also said that the Darcy Company stated in March last that they had no machinery at that time 1060 in their possession. The facts of the case are as follows. The Darcy Company applied in September, 1917 for machinery for boring for oil. They could have got all the machinery they wanted from the Oil Well Engineering Company. That Company had at that time sufficient machinery to start work at once; but they could, in any case, have obtained the whole of the plant necessary by January of this year. The noble Lord said that he does not understand how the Darcy Company's statement that they had no machinery in March is compatible with what I said. The explanation is perfectly simple. It is that the Government refused Messrs. Darcy a certificate on December 31, and naturally they had no machinery in March, as is not at all surprising, but they could have started work, I believe, in September of last year. At any rate they could have had all the plant necessary nine months ago—in January of this year—and it seems to me quite incontestable that the Government, by refusing them priority certificates, have deliberately delayed the production of petroleum for certainly nine months.
The noble Lord objects to the phrase which I used that other firms were being deliberately squeezed out. The Darcy Company started applying last September for certificates, and have been applying off and on ever since, and they have never been allowed these certificates. They were informed in August that it was impossible to grant any certificate which would be likely to be satisfactory to any company that wished to work petroleum. In view of this statement it seems to me that the Darcy Company have certainly been squeezed out, and, as none of these other applications have been granted, that the other firms also have been squeezed out, while Messrs. Pearson have been given an opportunity to transfer the whole of their machinery from America. The noble Lord says that Messrs. Pearson are the only company which has carried out the work on an extended scale in this country; and he further asserts that they are in every way the best qualified company for the boring of petroleum. I think that statement is probably open to the gravest doubt. In the first place, I should like to know very much more about this work which Messrs. Pearson are supposed to have carried out. The noble Lord, I think, admitted—at any rate it is a fact—that in the case of the Butterly Company, to which the noble Lord referred, no geologist employed by 1061 Messrs. Pearson ever visited that particular property.
With regard to this work which they carried out, I quite admit that Messrs. Pearson have probably been investigating oil areas in this country longer than any other firm, but from some of the language which has been used by the noble Lord, and also by the Press, one would imagine that a whole host of geologists were being employed by Messrs. Pearson to roam all over the country and carry out the most exhaustive enquiries. The position I believe is that any one of us can go to the Geological Survey Office and examine the records in that office, and, providing we have the previous expert knowledge, we shall know exactly where all the oil areas in this country are. But before you go down and actually start work in any particular area, there is certain information which you can only obtain on the spot; and it does not appear that Messrs. Pearson could have carried out this work on the spot in a great many cases, and the greater part of these enquiries which they are said to have conducted have, so far as I know—I am open to correction—been carried out in the office of the Geological Survey.
Messrs. Pearson have nothing like the qualifications of the Darcy Company for drilling for oil. The Darcy Company have probably drilled at least ten wells to Messrs. Pearson's one; they have carried out work in every part of the world under every sort of condition; and they have infinitely more experience than Messrs. Pearson. The noble Lord says "Why did I ask why this firm was selected"? I think it is a very pertinent inquiry. This firm, Messrs. Pearson, were not ready to start work when the Darcy Company were ready to start work, and they had not the knowledge which the Darcy Company possessed. The noble Lord tries to raise our sympathy for Messrs. Pearson by suggesting that surely in undertaking this work the Government was bound to protect them. The Government was certainly bound to protect them, and it has protected them to such an extent that it has come to an agreement with Messrs. Pearson by which there are no less than thirty areas in this country on which Messrs. Pearson have the exclusive right to drill for oil.
THE DUKE OF NORTHUMBERLAND
As Government agents, not as a private firm. The noble Lord suggests, I suppose, that as soon as this Agreement has fallen through—he has in fact suggested it in his speech—Messrs. Pearson will drop out. I think not. It seems to me very unlikely, because the Government has placed no less than one million pounds at the disposal of this firm, and the Agreement continues until this million pounds is expended. I believe it is a fact that all preliminary work which is necessary to find oil in these areas can be done for a much less expenditure than one million pounds; therefore, it appears to follow that when this Agreement comes to an end, if it ever does, Messrs. Pearson will be in possession of all the oil areas in this country; they will be free to make their own terms with landowners; they will be the people in possession, and no other firm will have the slightest prospect of competing with them. The noble Lord says that he does not see where the monopoly comes in. If that is not a monopoly I do not quite know what is. The only way in which he can prevent Messrs. Pearson obtaining a monopoly is by the Government keeping the monopoly for themselves. It is, I suppose, possible for the Government to refuse to grant Messrs. Pearson licences after this war, in which case Messrs. Pearson would remain sole agents and would not obtain any profit out of this transaction. But from all that has happened, the circumstances would seem to suggest that the monopoly will in fact be for the benefit of Messrs. Pearson and not for the Government; otherwise it is difficult to see why Messrs. Pearson should have been accorded such extraordinary favour; and we are told in no measured terms the Government owes an extraordinary debt of gratitude to Messrs. Pearson for their generosity and patriotism. It seems to follow from the action taken by the Government that Messrs. Pearson must receive some quid pro quo.
I now come to the charge which the noble Lord has said was very grave, in that he accuses me of accusing Government officials of imparting information to Messrs. Pearson which they had received in the strictest confidence. I think he has not understood exactly what I meant by that charge. I did not mean that there had been any leakage in the ordinary sense of the word. I did not mean that any particular official of officials of the Ministry of Munitions had for any dishonourable motive imparted 1063 confidential information to Messrs. Pearson. That is not the point. If I have said anything which would lead to such a conclusion, I can only say that I am very sorry and that I withdraw it. I do not know whether one can withdraw a charge which one has not consciously made; at any rate, I did not make it at all; and so far as that is concerned I can assure the noble Lord that anything I say does not involve any reflection upon the officials of the Ministry of Munitions.
But what are the facts? The Government invited all firms to make their own arrangements with landowners last January, and the Government said that providing landowners did not ask for a royalty no difficulty would be made about granting licences, either to these firms who wished to work landowners' land or to the landowners themselves to bore for petroleum on their own account. That was the distinct invitation made last January to Sir Arthur Churchman, whose official title, I think, is Controller to the Mineral Oils Department. The Darcy Company naturally acted on that invitation and applied for licences and tried to make their own terms with the landlords. Mr. Kellaway has informed us that the policy embodied in the Pearson Agreement had been agreed to and had been settled, as long ago as last March, although the Agreement was not actually signed till the 10th of September. It is somewhat surprising to find, in view of the fact that that policy was all settled, that the Government never informed these firms whom it had invited to bore for petroleum and make their own arrangements, that their labours were likely to be wasted; they never mentioned a word of the Agreement which they had made with Messrs. Pearson, and they not only allowed them to carry on these investigations at considerable expense to themselves, but they even induced those firms to give them the geological evidence which they had collected; and that was going on up till September, all that evidence being used for the benefit of Messrs. Pearson. It must be used for the benefit of Messrs. Pearson; they are the sole agents of the Government. The noble Lord appears to imagine that this is some reflection upon the Ministry of Munitions. It is not. It is a reflection upon the Government. The Ministry of Munitions is bound to give them the information. But with regard to the Butterly Company's case, the noble Lord says—at least I think I understood 1064 him to say—that Messrs. Pearson had carried out all the investigations regarding the whole of this area, and that in fixing upon this particular property to bore upon he was acting on his own information and not utilising information which the Darcy Company had obtained. Whether he was or not, the fact remains that he must have had in his possession the information which the Darcy Company had obtained. There is a point which the noble Lord has not explained—namely, that Messrs. Pearson submitted to the Butterly Company a facsimile map, a map which was an exact facsimile of the map which the Darcy Company had prepared for themselves when they were going to bore on the property. The fact that it was a facsimile is of course nothing, because all these maps are the ordinary geological survey maps, but the exact spot which the Darcy Company had selected to bore on had been selected by Messrs. Pearson. I do not say that the noble Lord has not got a perfectly satisfactory explanation of that fact, and it would not involve any reflection on the Ministry of Munitions if Messrs. Pearson had obtained that map which the Darcy Company had prepared. It would be a very grave charge against the Government—a charge of breach of faith and nothing less.
It may be noted also that the Government, while inviting these firms which have obtained all this geological evidence to give their evidence, is refusing to divulge the areas on which Messrs. Pearson intend to bore. There is a good deal more in this matter which I could say, as I have been carrying out very full inquiries, but there are other noble Lords who could also throw considerable light on the matter.
The three charges which I have made are: (1) That the Government are establishing a monopoly for a private firm; (2) that they have deliberately delayed the production of petroleum, and that the working could have been begun nine months ago; and (3) that the action which the Government have adopted, the policy which they have been pursuing, amounts to nothing less than a breach of faith. In view of these circumstances I think your Lordships' House would be failing in its duty if it allowed the Bill which is now before the House to pass before a very searching and exhaustive inquiry has been carried out into the whole of the circumstances which have induced the Petroleum Executive— 1065 for they are the people concerned: the noble Lord talks about the Government, but the whole of this business has been handed over to the Petroleum Executive—into the circumstances which have induced the Petroleum Executive to carry out the policy which is embodied in this very undesirable Agreement with Messrs. Pearson.
My LORDS, I thought the noble Lord in charge of the Bill explained the position fully and admirably, and after his explanation I must, admit that I am disappointed and surprised that the noble Duke adheres to many of the mis-statements (because mis-statements they are) that he made to this House on the Second Reading. The position as far as I am concerned is very simple. My firm has devoted three and a half years to a careful study of the oil prospects in this country. That study has been made by probably the finest oil experts in the world. They found such geological indications of oil from the public geological maps of this country that they were surprised that other geologists had made no search for oil in face of the evidence that existed. But it turned out that there was a belief among geologists that crude oil did not exist in this country. The oil indications in the shape of bitumen or in the shape of dark viscous oils that were found in some of the mines were believed to be the result of the distillation of coal. That theory had been accepted as a fundamental position for very many years. My geologists said, "Well here are the geological conditions; of those there can be no question. We must bring to our aid chemistry, and see whether those indications of oil that we see throughout the country really betray the presence of crude oil or are the products of the distillation of coal." We fortunately have in our employ a chemist who has made a study of oil and its sources, and he was able to prove chemically that when the evidences of the existence of oil in many places in the country were subjected to chemical analysis they were found to be products of crude petroleum.
We, naturally, having made this discovery—because discovery it is—expected in due course to have a commercial advantage from it. We commenced three and a-half years ago to make leases with some of the great landowners. The negotiations were slow, and before any of them were completed we were asked by the Admiralty, whom we had kept advised confidentially 1066 of our belief that oil existed in this country, to commence drilling at once, If you remember, in June of last year the shipping position was very critical; we were losing tonnage at an alarming rate through the German submarines. The Admiralty became very nervous about the supply of oil, and they asked me at once to begin to drill. I have had within the last eighteen years some experience in the oil world. The noble Duke speaks of the Darcy Company's experience as if it were unique. When I tell him that for twelve years in succession we spent £1,000,000 a year in connection with petroleum he will realise that unless we have thrown our money away, which fortunately the results show that we have not done, we must have learnt a great deal about this very interesting subject.
Our knowledge of the subject taught us that to allow drilling over small areas without any control meant disaster in a country of this kind. We have to remember that, compared with America, England is a very small country, and the probabilities are that our oil resources will be correspondingly small. Thirty years ago the total production of oil in America was only four million tons a year. To-day it is a little over ten times that quantity, and the American Government is very disturbed because it believes that in another twenty-seven years the oil in the United States will be exhausted. Knowing this, when I was asked by the Admiralty to commence drilling on small areas, without there being any control as to the methods of drilling, I declined. I thought I would rather have the odium attached to me of declining to proceed with drilling at a time when admittedly it was necessary, than ruin an industry which in my opinion is vital to the interests of this country.
What happens from promiscuous, uncontrolled drilling? I have seen in the United States, on an areas the size of this Chamber, two or three rings each competing and trying to extract the maximum quantity of oil from the reservoir below, simply through their having that small ownership, on which they have put two or three rings. Of course the result is that the surrounding owners naturally begin to put holes down themselves to protect their own interests, and this goes on, drilling against time, putting four or five wells down and sometimes more where one would do. To get the oil from the ground to the maximum extent possible 1067 it is necessary to conserve the gas pressures. It is the gas which forces the oil from the strata, or the caverns, wherever it may be, to the well. It is not the natural flow of the oil to the well that brings any great production. If you once lose the gas pressure you lose half or even three-quarters of the oil in the ground; and how can you conserve the gas pressure when you have indiscriminate, uncontrolled drilling—five or seven or even ten wells where one would do and each exhausting the gas? Again, another danger is that you may flood the oil lands. If you admit water from the upper strata into the oil deposits you send your oil heaven knows where. It is lost.
Knowing these things, I declined to drill unless the Government protected the industry by legislation. By "protected" I mean controlled it—regulated the number of wells that should be put down and the method in which they should be put down. Of course, this was quite contrary to my interests and my policy. I had hoped to secure leases over the oil areas. I had expected a Rockefeller fortune. The needs of the country demanded that I should make the sacrifice, and without a second's hesitation I offered the whole of my knowledge and help to the Government, provided the Government did what I believed it was essential they should do—namely, look after the industry. The Agreement is the result. Under that Agreement we give all the knowledge we possess. We give all the services we can, because we give the services of our geologists and of my colleagues and office. We give the knowledge we have, the discovery which we have made, and every effort that we can make. And what do we get? We get accusation in this House, as if I were not giving something not making one of the handsomest presents man ever made to his country, but as if I were trying in some way or other, by some scheming, to get some personal advantage. The contrary is the case. Under that Agreement it is impossible for me to get one cent out of the Government. It is impossible for me to have any monopoly. There is no monopoly so far as we are concerned. We are agents of and working for the Government. Our information is theirs, and when we have finished we have to make our bow. We expect to get thanks, because we believe we shall produce oil. We are certain, in fact, that we shall produce oil, but the uncertainty is as to the quantity that we shall produce. About our producing oil there is no doubt, and at 1068 the finish when we have produced oil we hope that some of these unworthy thoughts that have been expressed will give place to an appreciation of what we have done.
§ VISCOUNT HALDANE
My Lords, had I had any idea that the noble Lord who has just addressed the House was about to speak I would not have endeavoured to rise before, and I still more regret having endeavoured to rise because I think his speech has given us most valuable information. I think the House is indebted both to the noble Duke who raised this question and to the noble Lord who has just spoken, because this is really a Second Reading debate but a Second Reading debate taken on the Motion to go into Committee, when we have far more knowledge of what the real motive and nature of this Bill is than ever before. There has obviously been a great deal of misapprehension as to what was the attitude of the Government in this matter, and I think it has been made perfectly distinct by the noble Lord who has just spoken what the difficulty is. There is a general idea floating about that if there is petroleum and you can find out where it is, then anybody can go and bore for it. Even in the correspondence which is available to your Lordships it appears that the result of that procedure in the United States has been that experts begin to fear that in twenty-nine years from now the whole of the supplies in the United States will be exhausted; and the noble Lord who has just spoken has made it I think quite clear what is the consequence of indiscriminate boring. He has told your Lordships that he had the Admiralty behind him at a time when there was a general desire to supply a national necessity somehow, and it was only his own forbearance which led him to abstain from the opportunity afforded of putting great pecuniary benefit into his own pocket, rather than run the risk of getting supplies most uneconomically and exhausting the resources.
The noble Duke raised the point of what appeared to be a monopoly to Messrs. Pearson, and no doubt in this country we are all very suspicious of anything which looks like a monopoly. Why was the matter given to Messrs. Pearson by the Agreement of September last? The noble Lord who made the Motion to go into Committee, and Lord Cowdray himself, have made the reason I think perfectly clear. It was realised, perhaps not as early as it should have been but in time, 1069 that the process of indiscriminate drilling in this country was a disastrous process, and that in the national interests if we were to get the benefit of the national resources drilling must be placed under control and regulated by considerations which were not only geological but chemical, because the sources of the oil, as now known, have to be taken into account. Under these circumstances the Government did what was just the right thing. They bring in a Bill to regulate this, and nothing more than this. It is to regulate the control of operations for boring for petroleum.
There were first fifteen areas which I think were suggested by Messrs. Pearson, but which are now likely to become thirty in consequence of other investigations, and the Bill says that nobody is to bore in those areas or elsewhere without a licence which is not to be given until all the considerations which are necessary for the regulation of control in the national interest are taken into account. What does the Agreement do? It has nothing to do with the Bill, though it is naturally connected with it. It makes Messrs. Pearson the agents of the Government for the purposes of that boring. Why? I have no doubt that the Darcy Company have been most successful in boring for petroleum elsewhere, but Messrs. Pearson have made an exhaustive study of this subject in this country, and not only have they done so but they have got the plant and machinery ready, which no other firm has at this moment.
If Messrs. Pearson had chosen to use the opportunities which they had when the Admiralty were behind them, no doubt they could have made a great deal of money, but the noble Lord has shown why they did not. It is a sheer case of acting in the public interests, to point out that indiscriminate boring is a bad thing, and that even for themselves they did not wish to have the power of indiscriminate boring. The purpose of the Bill is to regulate that power, and the purpose of the Agreement is to make investigations which are to be made on behalf of the Government. It cannot be too clearly borne in mind that under the Agreement Messrs. Pearson will be mere agents of the Government in making the boring. They do not receive any remuneration for doing so, but they receive their expenses out of the £1,000,000 which it is proposed to employ. I think the essence of the conclusion that results from 1070 the noble Duke's speech is that it is clear that somebody ought to have been appointed to do this work. It had either to be Messrs. Pearson or Messrs. Darcy. We cannot judge here. The Government must take the responsibility for judging; but I can only say, after hearing the speech which the noble Viscount has made, that I, for my part, am satisfied that his firm, from the point of view, not of his own interests—it is not a question of his own interests that comes in—but of the nation's interests, was probably as likely a source as any other to get the result aimed at by this Bill.
§ THE MARQUESS OF SALISBURY
My Lords, we are placed in some difficulty in regard to this Bill, but before I say anything in reference to it I should like to disclaim any desire to make any charges against anybody. I am sure the House listened to the speech of the noble Lord below the gangway with sympathy. The noble Viscount, Lord Cowdray, spoke very well, and I think he showed your Lordships that he was acting a purely disinterested part and had no desire to do anything but what was right in the interests of the country. By all means, let us give everybody full credit for good faith; but the history of this Bill has been rather a remarkable one, and that is what makes it especially difficult for your Lordships to deal with it. It was not discussed at all in the House of Commons. It was a Bill which went through, as many Bills have done, without discussion, and therefore it comes to your Lordships to be discussed practically for the first time.
There is another very remarkable circumstance in reference to it—that when this Bill was first talked of, and this subject was first raised, we treated it as an urgent war question. It belonged to that class of Bill, of which your Lordships have dealt with a great many during the last four years, which were put forward on patriotic grounds and were treated in that spirit by your Lordships. Bill after Bill was often neither carefully nor closely scanned. Indeed, we have often given very little discussion and consideration to them, because we always felt that what was necessary for war purposes must be passed, and must be passed without delay. Of course, circumstances have altered. It is the fault of nobody. We are deeply thankful that they should have altered. But circumstances have profoundly altered, and it is absolutely certain that no result can come 1071 from the patriotic endeavours either of the noble Lord, or of the Darcy Company or any other company, which will affect in the least degree the fortunes of the present war. I suppose that on the most favourable consideration—I speak in the presence of a great expert—no oil can come from the investigations of the noble Lord and subsequent developments under many months, perhaps years. I do not know, but many months.
§ THE MARQUESS OF SALISBURY
Well, we have every hope that the war will be practically over before that. Therefore, it has no bearing whatever on the war. It does not mean that it is an unimportant matter—far from it—but it ceases to be one of those matters of vital urgency with which we have had to deal as war measures throughout these desperate four years. Consequently, we look at this subject as we used to look at subjects before the war, with a certain amount of freedom from war urgency. That is the first consideration.
Then, I ought to say one other word in order to show in what spirit your Lordships may consider this bill. I understand from the noble Lord who opened the proceedings this afternoon that upon the Amendments considerable concessions are to be made to the wishes of my noble friend the Duke of Northumberland. If that is so, we may look upon the interests of the landowners, in so far as your Lordships consider them, as more or less dealt with. It is no longer a question of the landowners, and any action which is taken in this House will have no reference specially to them. The question is a different one. It is not a question between the landowners and the people. It is not a question of war urgency, but it is a question whether it is in the interests of this country that anything in the nature of a monopoly should grow up. That is the only issue. At this moment I am not disputing the question of the Bill itself. Probably the Bill, or something of the same nature, may ultimately have to be passed in order to prevent the indiscriminate boring of which the noble Lord has spoken. That may very likely be true. But the question really is whether this Bill, as it stands, and taken with the Agreement which has been laid upon the Table of your Lordships' House, does amount to a monopoly, or anything in the nature of a monopoly, and, if so, whether it is wise to 1072 proceed with the granting of such a monopoly without very careful consideration. That is the only point, without any charge. The noble Lord is perfectly entitled to have a monopoly, if he can get it.
§ THE MARQUESS OF SALISBURY
That is what I am going to discuss for a moment. The noble Viscount may be perfectly right, I daresay he is right. I speak under correction, for I hope your Lordships will not think I lay claim to any special knowledge on this subject, but I understand that what this grants to Messrs. Pearson is a right to prospect, bore, and develop not more than thirty drilling areas. I am told that there are certainly not thirty areas in this country, so that what this amounts to is that a right is granted to Messrs. Pearson to prospect, bore, and develop all the oil areas of this country. That may be a good policy, or it may not, but, prima facie, it does seem to amount to something in the nature of a monopoly. No doubt the fact that an investigation takes place, and that primary development takes place, does not of necessity carry with it that Messrs. Pearson will be afterwards entrusted with the right to carry out development as a commercial undertaking. It does not follow, as my noble friend the noble Duke behind me has said. The Government might elect to develop oil on their own account. If that is the case, that is a very big matter of policy. That, again, seems to be a very important decision to take this afternoon as an alternative. But I should think many of your Lordships would very much doubt whether it was wise for His Majesty's Government to undertake the oil business of this country. I should rather question whether that would recommend itself to Parliament.
Then is it possible that Messrs. Pearson having patriotically come forward, and having bored and developed all the oil areas in this country, will afterwards give place to some other contractor? Is that likely? I must say that, on the face of it, it seems to be rather an improbable contingency. I hope the noble Lord will understand that this is no charge against him; there is no charge against him whatever. He will have placed the services of his experts at the command of the country, and they will have done all they can patrio- 1073 tically to discover what are the oil capacities of all these regions. But at the end of it, is it likely that the country will say to Messrs. Pearson, "Good morning, we are very much obliged to you; we are going to give these oil areas which you have developed to others; we are going to hand them over to the Persian Oil Company," or some other company? I do not think it is in the least likely.
I noticed that my noble friend opposite spoke, as you would expect him to speak, of treating everybody fairly, and of course the obvious equity of the position would be that, having taken this tremendously patriotic gift from Messrs. Pearson of digging these wells, that they would be entrusted with the further development of them. Therefore I must say that, on the face of it, unless the Government undertook the oil business of this country themselves, I cannot escape from the conclusion that what we shall do by this Bill, taken with the Agreement, is to grant a monopoly. And is it wise? That is the question. I feel that a Bill which is brought forward as an urgent war measure and has ceased to be an urgent war measure, a Bill which has not been discussed in the House of Commons at all and which seems to involve such very formidable consequences, ought not to be lightly accepted by your Lordships' House.
I very much regret that upon the last occasion when this matter was under the consideration of the House, when my noble friend the noble Duke spoke on the Second Reading and afterwards moved that this Bill be referred to a Select Committee, that that course was not accepted by His Majesty's Government. It seemed to me to have been the very obvious course to take in a Bill of this kind, because the process of referring to a Select Committee—I mean a real Select Committee, not one of those shelving Select Committees with which we are very familiar—the effect of that would not have been necessarily hostile to the Bill, but would have been useful in examining these particular points which I have ventured, very imperfectly, to lay before your Lordships now.
It does seem to me that in these days we cannot be too careful in matters of this kind. We want not merely to avoid anything in the nature of undue favouritism in matters of commerce; we want to avoid even the suspicion of any undue favouritism. There is a tremendous feeling in the public mind that political society is undermined 1074 with all sorts of sinister influences of a pecuniary nature. I do not believe that is so, my Lords, but I believe there is a certain amount; and I am speaking of what is, in my own opinion, true. But I do not think it is anything like so much as popular imagination conceives. It seems to me it is of vast importance that we should do nothing to lead public opinion to think there is more in this than there is. If we could, only have had an examination before which the matter could have been sifted, it would have been better. How can it be sifted here? How can we try across the floor of your Lordships' House all these little difficult issues as to what amounts to monopoly and what does not, and what the equity of treating the man in possession would be hereafter? If all those things could have been gone into, if the representative of the Darcy Company could have been heard in Committee, or any other evidence necessary, the whole thing might have been cleared up, and the noble Lord below the gangway might have shown that what was wanted was not only in the public interest but did not amount into a monopoly.
I think your Lordships would do well not to proceed with the Bill immediately; that, I suggest to the Government, is the right course. There is nothing going to be lost by a little delay now; it is not like it would have been when the war was an urgent matter. It is only a matter of a few weeks, at the outside. And I venture to think that the Government will do well not to press the matter at this moment. Surely it would be wiser, I put it to the Government, in order to avoid any question or suspicion, that we should have this thing carefully examined. If we only could have it carefully examined by a properly constituted tribunal, that would be effective. I noticed, for example, that my noble friend who opened the proceedings to-night said that Messrs. Pearson claimed to prove, before any impartial tribunal, that they were not unduly using of her people's information. By all means let them have the advantage of the acceptance of that claim. I suggest, therefore, to my noble friend who is now leading your Lordships' House that the proper course would be not to proceed with the Bill now, but to allow a proper investigation before we commit the country to a policy which may be wrong, and which will certainly give rise in the public mind to all sorts of misconceptions.
THE LORD PRIVY SEAL (THE EARL OF CRAWFORD)
My Lords, I cannot help feeling that my noble friend opposite has spoken under some misapprehension. He asks us to postpone the Bill; in other words, to do what your Lordships declined to do a fortnight ago, and refer the matter to a Select Committee rather than consider it in full Committee of the House. What is the object of Lord Salisbury in making that proposal? He disclaims the making of charges explicitly, and almost in the next sentence he says that there is an idea of suspicion that political society in this country is undermined, and that to avoid all questions of suspicion delay should now be incurred, and either that the Bill should be withdrawn or that some special inquiry should be made. That is what I call a misapprehension of the actual Parliamentary situation, and I will explain in a moment why I take that view.
Let me say at once that I am glad that Lord Salisbury disclaims charges in this connection. He asks us to give everybody full credit for good faith. I wish the noble Duke opposite had done so, because a sequence of charges have been made not only against Messrs. Pearson and Company, in whom I am neither interested nor concerned, but against the Ministry of Munitions which is responsible for this Bill—charges not merely of obstruction and incompetence, but of trickery and of collusion. So far as I am concerned I am perfectly impartial in the matter, not having known that there was a Petroleum Bill until it was presented two or three weeks ago. Frankly, I consider that the charges made a fortnight ago by the Duke of Northumberland break down completely under the reply of my noble friend beside me (Lord Elphinstone). I can only wish that he had gone a little further in withdrawing the charge of collusion explicitly made against the Ministry of Munitions.
On the point of procedure, to which Lord Salisbury attached much greater importance than to what was dealt with in earlier speeches, I wish to point out what I think is not quite clear to your Lordships. Lord Salisbury starts with the assumption that this Bill can have no bearing upon the war. I will not dogmatise on that point. Three years ago efforts were abandoned because people said that they could have no bearing upon the war. Three and a half years ago people refused to join 1076 the Army because they said they could see no chance of fighting. I hesitate to say that this Bill will have no bearing upon the war, though from the bottom of my heart I trust that Lord Salisbury is right. But we must not be leisurely in dealing with this problem in consequence. We have not hurried the matter unduly, as Lord Salisbury seemed to indicate.
THE EARL OF CRAWFORD
I must remind your Lordships that the Bill came here in August. We had the Second Reading a fortnight ago, and we are having an ample discussion to-day, and I do not think it is unduly hurrying it if we decline to accept the view that it should be still further hung up, especially from the point of view, in which I completely join issue with Lord Salisbury, who says that monopoly is the only issue. This Bill does not make a monopoly. It does nothing except prevent Tom, Dick, and Harry from boring for oil in a restricted area. I listened with interest to the speech of the noble Lord below the gangway, who explained how undesirable such a course was; and I think that Lord Haldane, who is interested in the scientific side of it, has also referred to that particular point. The only object of this Bill is to prevent indiscriminate boring; and the necessity for the Bill, if indiscriminate boring be conceded by your Lordships to be undesirable, lies in the fact that if, as Lord Salisbury says, the war is now coming to an end the powers of the Government to prevent this wholesale, indiscriminate boring come to an end with the end of the war; that is to say, that the powers exercised under the Defence of the Realm Regulations, which last for the war and a few months afterwards, come to an end then, and this Bill must take the place of the Defence of the Realm Regulations. I think in fact that everybody who has spoken has said that it is undesirable that indiscriminate boring should take place. Either Lord Salisbury, or the Agreement, says that Messrs. Pearson have the right to deal with thirty areas, and Lord Salisbury contends that there are not more than thirty.
THE EARL OF CRAWFORD
This is a matter upon which all the experts are divided, but whether the number be thirty more or less, my point is that it is not prejudged by this Bill. There is to be a Bill after this Bill. That is the point, and Lord Salisbury says "Is it likely Messrs. Pearson will be displaced?" I do not know. That will be for Parliament to settle. There is to be a subsequent Bill, and Parliament or the responsible Minister of the day must take that into account. I therefore submit to your Lordships that no case is made out for postponing this Bill, although I dare say a very strong case may be made for the closest scrutiny of the Bill that must follow. Personally I am not afraid of monopoly. If there be a monopoly, it is a monopoly in favour of the Government. This Bill, however, does not touch that point. It deals with a matter which, quite apart from the war and the production of oil for motive purposes—what did the noble Lord say?
§ LORD BUCKMASTER
I merely said that the Bill is unlimited in duration, and is not confined to the period of the war.
§ VISCOUNT HALDANE
That is quite right, and it is rightly unlimited. The Bill is only to put restrictions on boring for petroleum. That ought to have been the law long ago, and I hope that it will continue to be the law after the war.
THE EARL OF CRAWFORD
No, I said that the powers exercised by the Government to prevent indiscriminate boring are derived from the Defence of the Realm Regulations, and that those powers end with the war or a few months afterwards. This Bill, therefore, was necessary 1078 to replace and invest in the Government powers derived from Statute. I submit that to your Lordships' consideration, and I ask you also to bear in mind, what was not very clear, that the variety of questions about which discussion has taken place to-day must necessarily be the subject of subsequent legislation.
§ THE MARQUESS OF LANSDOWNE
My Lords, I am not quite sure that my noble friend who has just sat down did complete justice to the argument that was put forward from the bench opposite by Lord Salisbury. I understood Lord Salisbury's main point to be this, that some further inquiry, particularly in regard to the terms of the Government contract with Messrs. Pearson, was desirable in order to allay the great cloud of suspicion which has grown up round this business. It is no use dissembling the fact that a great cloud of suspicion has arisen in connection with this matter, and I think a not very unnatural suspicion. I admit readily that a great part of that suspicion was quite unfounded, and any feeling of that kind that I had myself has been very much dissipated by the frank statement of the noble Lord in charge of the Bill, and by what was said just now by Lord Cowdray himself, when he addressed your Lordships with a sincerity which must have been obvious to all of those who listened to him. In the first place I agree with my noble friend Lord Salisbury, when he asks the House to bear in mind that in no circumstances can this really be described as a war measure. No one believes for a moment that out of this Bill you will get a teacup full of oil before the war comes to an end; and therefore there is no occasion for the shortcuts and the rough-and-ready methods to which we have become very much habituated during the last three or four years. There are really two separate questions before the House. There is the Bill which we are asked to read a second time, and the contract between the Government and Lord Cowdray. The Bill itself seems to me to be an innocuous Bill, and I think its objects are perfectly legitimate. The objects are twofold—(1) to promote the development of a very important and probably much neglected industry; and (2) to prevent that industry being exploited in a wasteful and improvident manner. There is no doubt whatever in regard to the importance of the second of those objects. What was said by Lord Cowdray, speaking 1079 with a thorough knowledge of the subject, must have carried conviction to every one—that it is necessary to do something to prevent indiscriminate boring and a reckless use of such resources as may be discovered under the soil of the country. It is also, I think, quite clear that these precautions are specially necessary when you deal with a mineral product like petroleum, which I need not say stands upon an entirely different footing from stones, ores, or other substances brought from below the surface of the earth. The Bill seems to me to be very well designed for the purpose of preventing wasteful exploitation of the oil resources of the country. We can only prevent such exploitation by putting a Government Department in a position to take measures of precaution You must do that; that is done by this Bill.
But, my Lords, when you come to the effects of what is going to be done upon the future of the development of the oil industry, I confess I am more doubtful, because it looks to me as if this Bill, with the contract which accompanies it, would not only prevent indiscriminate competition, but might have the effect of preventing competition altogether, which is a very different matter. The suggestion that this is a monopoly has been indignantly repudiated; and I certainly would not dream of suggesting that there is any idea of a monopoly in the more odious sense of the word. On the other hand, I am bound to say that when one comes to look at the terms of this contract it is difficult to resist the conclusion that it will yield something which in effect, and looked at as the ordinary uninformed person will look at it, will amount to a sort of monopoly. I hope I shall be contradicted if I am mistaken as to the facts. I am, of course, putting entirely on one side the idea that Messrs. Darcy or other competitors were squeezed out, or anything of that kind. I am quite satisfied by what my noble friend Lord Elphinstone told us upon that point. But is it not the case that although Messrs. Pearson have undertaken this great work, as they put it, without remuneration, fee, or recompense, it gives them an exclusive right in virtually the whole of the areas within which there is any likelihood of discovering mineral oils? Does it not give them one million pounds of public money with which to carry on these operations? And, finally, I would like to ask, as it gives them the right not only to drill for oil but also to 1080 get the oil, whether it does not give them, so long as they hold the field, the right of possessing and converting to their own profit any oil which may result from their operations. If that is the position, and if as one of the results of the firm being put in that position it has come to pass that no competitors have come forward who have been able to take up rival schemes, then I say it does look to me as if the effect of what was going to be done would be to create something that in effect is a kind of monopoly. That is how it strikes me. I should have thought that His Majesty's Government would not have been very sorry to have the matter looked into, but that is, of course, for them to judge; and if they are content to leave the question as it stands, I think we on our side must be content with having called attention to the matter, and I, for one, do not desire to press the objection further.
§ LORD MORRIS
My Lords, I should like to say one or two words in relation to the question before the Chair. I do not agree with those who endeavour to make out any case that this Bill or this contract creates a monopoly of the class so correctly described by the noble Marquess who has just spoken—namely, an odious monopoly; and I think that if there was any danger of that, this House would be well engaged in safeguarding the public from any such enactment. But I think any one who will read the Bill and the contract will see that none of the dangers exist in the contract or in the Bill which generally attach to the class of monopolies so pertinently and correctly described by the noble Marquess who has just spoken.
The present suggestion comes from Lord Salisbury for a postponement of the Bill. Anything that he says in this House must have weight, and with me always has very considerable weight. But I think on the present occasion that I am not over-stating it when I say that we have had this Bill now before this House for nearly three or four months, and ample opportunity has been afforded for any one to make any public or private inquiries in relation to it. It has been stated here this afternoon that it cannot possibly affect the war in the ordinary sense; in other words, that the wra will be over, that Peace will be signed probably before a cup of oil is successfully brought from the bowels of the earth. I agree with that. The war is now prac- 1081 tically over, and if the German Emperor not was the finished highwayman that he is the war would have been over days ago. I suppose he is the only man in the world to-night who does not know that the war is over, and all the fighting that is now going on is nothing short of wilful murder for which he is responsible, and notice should be served on him from that standpoint. But the point I want to make is that, although it is not likely that oil can be recovered to affect the carrying on of the war, a war is going to take place after this war. That is the industrial war—a war in which England will have to take a very important part, in which oil will be a vital factor, and you cannot get that oil too quickly.
The noble Viscount, Lord Haldane, pointed out that a great many of the objectionable features or rumours in connection with this contract had been removed by the speech of Lord Cowdray. I agree, and I think it is a matter of regret that at the very introduction of this Bill all this information which we now possess was not frankly stated, so that the House could have discussed the Bill from the first with the fullest information. There is no mineral operation, especially from the national stand-point, requiring such special knowledge as the discovery of oil. I know a little about it, because out in Newfoundland for the last twenty-five or thirty years oil-boring operations have been going on, and I am quite satisfied that if the work had been undertaken scientifically at the start, undertaken in the way that Lord Cowdray has pointed out, we should have had to-day a very large supply of oil, whereas we are still only taking out a few barrels. I saw a well ten years ago where 1,000 barrels of the very finest petroleum was taken out, but through mismanagement and unscientific boring—boring wells here, there, and everywhere—up till to-day nothing of a commercial character has been effected.
For that reason, whilst I strongly oppose any attempt at creating a monopoly in this country, I shall favour any method that will enable industrial England to get as quickly as possible the advantages which, from the point of view of national competition, would accrue to her by the possession of that great motive power, an oil supply.
I listened with a great deal of interest to the speech of the noble Duke, and I appreciate the high motives which actuated 1082 him in taking up the opposition to this, measure, but I never knew any great undertaking like this to be launched without suspicions being immediately aroused, and without the idea being industriously put about that the country was being given away. Here no monopoly is created in the ordinary sense of the word, and I think the Law Officers of the Crown, if called upon, would very easily be able to set that feeling at rest. If this contract were cancelled even after the passing of this Bill, and even though the contract was entered upon, and work performed, I am quite satisfied it would be very easy to get a legal opinion that would not be questioned that the measure of damages for breach of contract would be a mere fleabite compared with the advantages that the discovery of oil would be to industrial England.
It is on those large grounds, which do not depend in any way on the signing of peace to-morrow, or a month, or six months hence—it is on the ground of the importance of oil to this country in view of the great war that we shall very shortly have to face (the war of international competition and of competition arising out of new conditions), that I think the Bill should be proceeded with, and, if there is any serious doubt, then a legal opinion ought to be obtained to set at rest the fears that have been suggested during the debate.
§ THE EARL OF STAIR
My Lords, I wish to give the House a small piece of information which will be my reason for supporting a postponement of this Bill, or at any rate the Agreement with Messrs. Pearson. I should like to tell the House my own private connection with the matter. Some months ago I was approached by Messrs. Pearson with a statement that they had been asked by the Government to investigate the oil possibilities of the country, and had come to agreements with proprietors of lands where there was a prospect of the oil being developed, that the oil was urgently needed by country, and so on. I was perfectly ready to do all I could to help the country to get any oil that was available, and would not put any trouble in the way. The reason does not exist to the same extent now, because nobody thinks there is any prospect of getting oil in this country during the war. However, I was then quite favourably disposed to come to some sort of agreement with Messrs. Pearson until I began to make inquiries. I found that Messrs. Pearson were offering me a royalty 1083 of a certain amount; I found they were offering my next-door neighbour a royalty on a different scale, and the very next day I saw in the paper articles or letters signed by Lord Cowdray pointing out the iniquity of anybody being allowed to have royalties at all. I leave it to the House to judge whether that is straight dealing or not. It was not the impression conveyed to me.
I thought that if the oil were to be got I would rather deal with some other firm who were doing the same thing. I found there was a firm, the Darcy Company, in which the Government, or rather the country, is, I believe the largest shareholder. I thought they were more reliable people, and along with sundry of my neighbours came to an agreement to work, and came to an agreement with the Darcy Company, subject to their being granted a licence by the Government. Yesterday, or the day before, I was informed by the Darcy Company that the Government had refused them a licence because Messrs. Pearson were the sole people who had the right to deal with me, mine being one of the areas handed over to them.
It seems to me that I and other proprietors of land so to be handed over, or so investigated by Messrs. Pearson, were at least entitled to some sort of inkling from the Government that these things were being done, and that we should not have been allowed to go to the expense of making agreements with other companies, and of starting all the necessary legal formalities, without any hint that our valuable agricultural land was going to be converted into oil land. It is treatment of that kind which gives rise to the extraordinary suspicions which have got all round the country, and which the papers have been full of lately, as to the reasons why a certain firm gets the sole right of dealing with a big industry like this. I shall certainly support anything that leads to further inquiry.
§ LORD PARMOOR
My Lords, I think every distinction is to be drawn in this case between the terms of the Bill and the terms of the Agreement. As regards the terms of the Bill I do not propose to offer any criticism at all. The effect of it is that no one who does not hold a licence under this Act for that purpose shall search or bore for or get petroleum within the United Kingdom. Of course, that applies to the 1084 owners of land as well as to everyone else, but I am assuming that it is necessary in order to prevent indiscriminate boring to have a provision of that kind. Now I must say, having read the Agreement very carefully, and having listened to the discussions which have taken place, that it does appear to me that there is a very strong argument in favour of saying that it does confer a monopoly on the firm of Messrs. Pearson. I need hardly say, after what Lord Cowdray has stated—and I am sure we all listened to him with great interest—that I am not making any accusation against anyone. I think that is quite the wrong way to approach a question of this kind.
I merely deal with the Agreement as I find it, and as it stands. This is how it appears to me. These are the words. Messrs. Pearson are called the Petroleum Development Managers, and the power which is conferred upon them as Petroleum Development Managers is to have—
Full control of, and to supervise on behalf of the Minister, the entire prospecting, boring, and development in this connection of not more than thirty drilling areas—Of course, I do not suggest that the so-called monopoly extends beyond the thirty drilling areas, but whether the noble Marquess is right that there are less than thirty, or not, the thirty drilling areas must be a very large proportion of the area capable of oil boring development in a country of this size. Then the Agreement proceeds—
(hereinafter called 'the said drilling areas') of which said drilling areas particulars of fifteen areas have been handed in confidence by the Petroleum Development Managers to the Right Honourable Walter Long, M.P., to be handed by him to the Minister on the passing of the legislation necessary to protect the oil fields against indiscriminate drilling.These fifteen areas are said to be in Messrs. Pearson's opinion the best areas in the kingdom for laying down oil wells and developing oil production, and so far as I gather it is merely a question of saying that the Agreement makes what I should call a monopoly. A monopoly may be good or bad. For instance, a patent monopoly is a very good thing because it encourages invention. Whether you call a monopoly good or bad, I cannot regard the words in this Agreement as having any other effect than conferring a monopoly as regards prospecting, boring, and development in connection with the thirty drilling area, including the fifteen best areas for oil production.
§ LORD PARMOOR
As I understand the Agreement, it operates until the million pounds have been expended. How long that will be I do not know, but until that sum has been expended—it does not matter for the purposes of my argument whether it is a short or a long time—there is a monopoly in this sense, that no other person can be licensed to bore in the thirty drilling areas, fifteen of which are selected by Messrs. Pearson as the best areas for oil production in this country. I should have thought that that was a monopoly. I do not want to bandy words with the noble Lord, who made an admirable speech, but I should have called it a privilege and a privileged monopoly. Whether it ought to be granted as a matter of policy I am not saying for a moment. Then it goes on to say that as regards various matters under the Agreement Messrs. Pearson are not only to be agents but are to be solo agents; that is to say, during the period for which this Agreement runs not only have Messrs. Pearson themselves what I call a monopoly, but no other agent of any kind, as I understand the Agreement, can be employed during that period. Therefore you have the strongest ground for saying there is a monopoly both on the positive and the negative side. You are to have the sole right and no one else is to have any right.
I am not intending to attack Lord Cowdray in any way. I quite agree that this is not an Agreement in perpetuity. It would be almost impossible to suppose that any Government Department would enter into an Agreement in perpetuity on matters of this sort, but it is an Agreement which will last for a considerable period—during the whole expenditure of the sum of £1,000,000. That must be a large sum even in the expenditure of oil fields, and, as I understand it, at the moment only one of these oil fields is being developed. If that is so—
§ LORD PARMOOR
Whatever the expenditure may be, during the period over which it is incurred the monopoly lasts.
§ LORD PARMOOR
There may be ten distinct drills, but I am stating how the Agreement stands upon the face of it. Although the Agreement does give for a period of time what must be admitted to be a privileged monopoly, I dare say it may be an excellent matter of policy that having regard to Messrs. Pearson's qualifications such a monopoly should be given, but surely an Agreement of this kind ought to be much more carefully considered. I am not now dealing with the Bill, but with what is being done under the Bill. The Bill gives the Government Department power to grant licences, and the Agreement deprives them of that power, except in regard to a particular firm, for a long period of time. That is the effect of the Agreement. Under these circumstances, should an Agreement be made, having regard to what is the obvious purpose of the Bill not to give a monopoly to one firm but to prevent indiscriminate boring? I do not at all desire to say a word about any individual allegation, or any matter of that sort, but it does appear to me that when we look at the Agreement it not only suggests, but gives within the time I have mentioned, what is really a privileged monopoly. On that ground I should think it deserved further consideration.
Before the noble and learned Lord sits down, would he kindly explain how this monopoly that is being given to us is going to be of any personal benefit? For a monopoly to be of any value it must have a personal value.
§ LORD PARMOOR
You can give a monopoly of course to a man who does not want to get a financial advantage out of it. The monopoly is given as against the State. You deprive the State of having its oil fields developed except through one firm. I should be the last person to suggest that Viscount Cowdray was influenced by the advantages to be obtained. That is another matter altogether. I hope he will not suffer pecuniarily from his patriotic and public conduct in a matter of this kind. That is quite a different question altogether. This is a much larger subject than that. I should not trouble to address your Lordships if it were merely a question of whether Messrs. Pearson derived a pecuniary benefit or not. The point is whether the Department who are given the power to grant licences are to deprive 1087 themselves of that power, except as regards a particular firm, for what must be a considerable period of time. It appears to me that that is not an advantage as regards public policy.
I would like to point out to the noble and learned Lord that Messrs. Pearson, acting as Government agents in these areas, do not have any licences. There is no licence to bore. They are not boring as—
§ LORD PARMOOR
They have a monopoly of boring ground, and you cannot grant a licence while this is in operation.
What I tried to point out was that if there is any monopoly, it is a monopoly in favour of the Government. The mistake which many of your Lordships make is to regard Messrs. Pearson as an individual firm acting on their own, whereas they are not. It is the Government who have these fifteen areas reserved for the purpose, and instead of doing their own drilling they employ the firm which, in their opinion, is the best they could have to do it. That is Messrs. Pearson. It is not a monopoly in any shape or form in favour of Messrs. Pearson.
§ LORD BUCKMASTER
My Lords, it is the last remark of the noble Lord which tempts me to ask him a few further questions about the matter which appears to be very obscure. There are two things which are quite distinct. There is this Bill which is to prevent indiscriminate boring as to which I think everyone is agreed. It is perfectly plain that to permit our oil fields to be developed by uncontrolled and reckless competition will destroy the very thing which, in the national interest, it is of the utmost importance to safeguard. But there is added to that this Agreement for the exploration of certain numbered areas, which in the Agreement are contemplated as extending to thirty, and which, I understand from the noble Lord, have already been allocated at thirty.
What puzzles me a little is this—What are the rights that the Government possess over these areas? I understand them to be rights that they enjoy by virtue of the Defence of the Realm Act. Now the Defence of the Realm Act, of course, is an emergency measure passed under the necessities of war, which, on the face of it, only continues while the war lasts. No one 1088 can assign a limit of time within which this war will end, but there are indications that make us all hope that it may end quickly, and when it ends the powers under that Statute end too. Now, as I understand it, the Government cannot acquire, under that Act, land for purposes that are not connected with the war, and I do not imagine that they have acquired, under that Statute, the absolute ownership of these areas on which the boring is to take place. I know nothing about it. No one can know but the Ministry of Munitions.
I assume that they have acquired rights to bore, that they have entered on the land under that Statute, without having fixed any price which they are to pay for the rights they are going to exercise, and that they have left for subsequent assessment payment for the damage they will cause to the land. Well and good. When the war is over, what are they going to do then? So far as I know, the only powers they will possess with regard to that land will be powers under the Land Acquisition Act, which gives them undoubtedly considerable powers of acquiring property which has been used for the purposes of the war while the War is going on. Is it within the contemplation of the Government to purchase the whole of these areas, and become the owners of these oil fields? If not, what will happen when this Agreement has been worked out and the agency of Messrs. Pearson has terminated? If the rights of the Government do not extend beyond the period of the Agreement the opportunities that will then be enjoyed will be enjoyed by the people who have got the rights of working this oil, subject, of course, to the Government being able to take away the opportunity of exercising those rights by refusing licences under the provisions of this Bill.
It is these considerations that lead me to think that there is great weight in the request that has been made by the noble Marquess behind me that this matter should be further explored in order that we may really know what it is to which we are committing the Government of this country by the passage of this measure. I might add that, though I listened, as I am certain every one did, with the greatest interest—and if I may say so personally the greatest admiration—to the clear speech in which the noble Lord opened the debate this afternoon, there were one or two things connected with it, which 1089 puzzled me greatly. He explained why it was that some of the applications for licences have been refused. It seems to me that the only ground upon which these licences ought to be refused is that they would be prejudicial to the oil interests of this country. There cannot be any other reason, surely.
I cannot think of any other reason; but, in truth, the noble Lord told us that four had been turned down because the geological experts came to the conclusion, as I understood it, that they could not be properly worked, and that there was no oil there. Surely, that is a matter for the person who applies for the licence. If that is the reason, why should you stop enterprise? If a man wants to bore, and he is going to bore at his own cost, and is going to lose his own money, what concern is it of the Government? Why should they interfere? I must say that that statement, which I may have misapprehended, seemed to me to indicate the exercise of paternal care on the part of the Government which was not at all in the national interest, and, although I have done my very best to understand the position which the Bill and the Agreement together constitute, I cannot feel that I have properly grappled with the whole of the situation. I do think that more time ought to be granted for the further consideration of this matter, and I cannot see that such an arrangement can now place us in any jeopardy, seeing that this matter must have ceased to be a matter of war urgency and have come into the wider sphere of general national importance.
§ THE LORD CHANCELLOR (LORD FINLAY)
My Lords, I agree with what has been said by several of the noble Lord who addressed the House, that the Bill and the Agreement are separate; they are not identical. I think we have been rather mixing them up. The effect of the Bill, as the noble and learned Lord below the gangway very clearly pointed out, is simply to put a stop to indiscriminate boring. The provision as to this, every one can understand. You rely on the gas to get the oil expelled, and if the surface becomes like a sieve, permeated with a number of holes, the pressure is diminished, and you do not get the oil in the same way. That has been the experience in America, and it might emerge here. That is the object of the Bill—to stop indiscriminate boring.
1090 It has been said that there is no emergency about this because the war is about to end. I devoutly hope that it is. At the same time, I think it would be a mortal mistake if we were to relax any precautions which otherwise would be prudent in reliance upon a very speedy end to the war; we ought to go on taking reasonable precautions in order to deal with the case of our expectations being falsified. But more than this, in the event of the war ending this Bill would be more needed by far because at present you have powers, under the Defence of the Realm Regulations, to restrain boring. The Regulation provides that boring may be effected by persons licensed, and by no others. That Regulation remains in force only during the war. The war comes suddenly to an end—let us hope at a very early date—and then, if you have not this Bill passed into law, you have no power to check indiscriminate boring. I venture to criticise the argument in favour of treating this as a matter of no emergency in these two respects—in the first place, I think it very rash to speculate, as it were, on the certainty that the war will end almost at once; in the second place, when the war does end you will want this measure, and want it more than ever.
§ THE LORD CHANCELLOR
I am speaking of the Bill, and I think the Bill and the Agreement have been too much mixed together. The other observation I wish to make relates to the Agreement. If the Agreement creates a monopoly in the manner in which the noble and learned Lord was disposed to think it did, it creates a very odd sort of position. I do not think my noble friend sufficiently realised that all that Messrs. Pearson are to do under this Agreement is to act as agents for the Government. In the preamble, which my noble and learned friend referred to, he will see that the words occur—I will read the first three lines only, just below the middle of the first page of the Agreement—"and whereas it is considered advisable with a view to obtaining the benefits of the knowledge acquired by the Petroleum Development Managers, and also in order to secure their experienced services, to entrust to them, on behalf of the Minister, such prospecting and dvelopment work as petroleum development, and to ask them to take, subject as is hereinafter provided, full control 1091 of, and to supervise on behalf of the Minister, the entire prospecting, boring and development in this connection of not more than thirty drilling areas." You would not call that a monopoly.
And then the first Clause of the operative part of the Agreement says—The Petroleum Development Managers, at the request of the Minister, agree to act as the agents of the Government in and about the matters referred to in this Contract, and shall make full reports to the Minister in such manner and at such times as the Minister may from time to time determine in relation all the said matters, and shall not at any time unnecessarily disclose any information relating therefrom to any other person without the previous consent in writing of the Minister.That is a very odd sort of monopoly. As regards the oil that they get by their testing and development, that oil, as I read in this Agreement, inasmuch as it is got by them as agents of the Government, will not be theirs, but will be the property of the Government. That is how I read the Agreement.
§ LORD PARMOOR
Might I ask the Lord Chancellor one question, because his answer to that will probably satisfy me? While the Agreement is in force, does he think a licence could be granted to other persons than Messrs. Pearson as regards these thirty areas?
§ THE LORD CHANCELLOR
While the Agreement continues in force the Government have agreed with Messrs. Pearson that they shall have the opportunity of developing these areas. That is the monopoly, but it is a monopoly of an extraordinary kind; it is merely giving him the exclusive agency. He does not dig on his own affairs, he digs on account of the Government; he is to report to the Government. And I do not think there will be any disappointment about this. The oil that he gets would not belong to them—that is to say to Messrs. Pearson—but would belong to the Government. Well, my Lords, if that is so, surely it takes away the argument which was put forward by my noble and learned friend below the gangway as to the creation of a monopoly in that respect.
Now, there is another part of the Agreement to which I should like to call attention as showing how care has been taken to prevent Messrs. Pearson from acquiring any right in respect of their getting land or 1092 anything of that kind while this Agreement is going on. It is a recital early in the Agreement—I think the fourth recital—Whereas such negotiations have not been conducted by them as representing the Government in any way, and whilst nothing in this Agreement is to prejudice any rights the Petroleum Development Managers may have as ordinary traders to obtain leases of land from private owners, it is understood between the parties that the Petroleum Development Managers waive any moral or other claim to compensation in connection with such negotiations and leases.It has been pointed out by more than one speaker, notably by the noble Lord who opened this debate, that the Government have reserved to themselves full powers of dealing with Messrs. Pearson in connection with such matters, and there is an express waiver even of any moral right to compensate them on behalf of Messrs Pearson, if the Government should exclude them. In these circumstances, my Lords, I do put it that it is not correct to speak of this Bill as creating a monopoly in respect of the agency, and that the renunciation of any claim, morally or otherwise, by Messrs. Pearson in case of the Government exerting the rights which undoubtedly they may have, prevents the Agreement from being regarded as in any way creating a monopoly.
In these circumstances I put it to your Lordships that it would be a mistake to postpone this Bill until a number of vague allegations have been inquired into. I think that it was admitted by more than one speaker in the course of this debate that these allegations have to a great extent been dispelled by the course of the debate and by what has been said by those who have taken part in it with full knowledge of the circumstances. Surely it would be a very great pity to go into an inquiry on these matters, which, after all, have very little to do with the Bill, the object of which is to stop indiscriminate boring, and I would respectfully ask your Lordships not to take a course which might end in the complete loss of this Bill.
§ THE EARL OF SELBORNE
My Lords, what is in dispute, and keenly in dispute, is—What is the real effect of the Agreement and the Bill taken together?" We shall never properly probe that in Committee in this House. I cannot admit that this Bill has any reference to war conditions at all, and if the war happily comes to an end, as we all think it will before long, and 1093 the Defence of the Realm Act is going to be abrogated, there will be no difficulty whatever in passing through Parliament a Bill to prevent indiscriminate boring, with this advantage (which we have not got now) that we should then know what the real effect of the Bill and the Agreement taken together is. I move the adjournment of the debate.
§ Moved, That the debate be now adjourned (The Earl of Selborne.)
THE EARL OF CRAWFORD
May I suggest to your Lordships that a decision should be come to and that we should settle whether the House is to go into Committee or not. Surely that is a more reasonable course. We had a fairly good discussion on the Second Reading of the Bill, and we have had more than a Second Reading discussion this evening, because it has extended a good deal wider. I submit that the most suitable course would be to take a decision on the Motion already made that the House resolve itself into Committee.
§ THE MARQUESS OF SALISBURY
With all respect to my noble friend, we cannot take that view. It is impossible to avoid coming to the conclusion that the Bill and the Agreement are intimately bound up. Moreover, very important questions affecting the Bill itself have been put to the Government, and have not been answered. I refer to those put by my noble friend who sits behind me, and by Lord Buckmaster, as to the policy that the Government intend
§ to pursue if the Bill pass into law. These matters have not been dealt with. I do not blame the Government for not being able to answer them, but it is clear that we ought to have a little more time.
§ VISCOUNT HALDANE
The Agreement is signed, sealed, and delivered, and with their executive authority the Government have made Messrs. Pearson their agents to explore. That has been done and is over. The Bill does not give validity to the Agreement. If the Bill does not pass, the only consequence will be that Messrs. Pearson will be in a position to make any boring contracts that they like.
§ VISCOUNT HALDANE
The Agreement does not turn on the passing of the Bill. That is the mistake which the noble Marquess has fallen into. The Agreement is signed, sealed and delivered, and is operative to-day, and if you do not pass the Bill the position of Messrs. Pearson under it will be stronger than if the Bill passed.
§ On Question, whether the debate should be now adjourned?
§ Their Lordships divided:—Contents, 26; Not-Contents, 39.1093
|Argyll, D.||Armaghdale, L.||Oxenfoord, L. (E. Stair.)|
|Northumberland, D. [Teller.]||Avebury, L.||Parmoor, L.|
|Balfour, L.||Penrhyn, L.|
|Cholmondeley, M.||Beresford of Metemmeh, L.||Saye and Sele, L.|
|Salisbury, M.||Buckmaster, L.||Strachie, L.|
|Ancaster, E.||Fairfax of Cameron, L.||Stuart of Wortley, L.|
|Doncaster, E. (D. Buccleuch and Queensberry.)||Kintore, L. (E. Kintore.)||Sydenham, L.|
|Lambourne, L.||Willoughby de Broke, L. [Teller.]|
|Grey, E.||Lamington, L.|
|Selborne, E.||Muir Mackenzie, L.|
|Finlay, L. (L. Chancellor.)||Devonport, V.||Emmott, L.|
|Wigan, L. (E. Crawford.) (L. Privy Seal.)||Falkland, V.||Faringdon, L.|
|Haldane, V.||Harris, L.|
|Lansdowne, M.||Knollys, V.||Hylton, L.|
|Peel, V.||Newton, L.|
|Chesterfield, E.||Annesley, L.||Pontypridd, L.|
|Kimberley, E.||Bledisloe, L.||Ranksborough, L.|
|Lucan, E.||Blyth, L.||Rathcreedan, L.|
|Stanhope, E.||Burnham, L.||Shandon, L.|
|Strafford, E.||Carmichael, L.||Somerleyton, L. [Teller.]|
|Cawley, L.||Southwark, L.|
|Farquhar, V. (L. Steward.)||Clinton, L.||Stanmore, L. [Teller.]|
|Sandhurst, V. (L. Chamberlain.)||Colebrooke, L.||Tenterden, L.|
|Cowdray, V.||Elphinstone, L.||Weir, L.|
§ Resolved in the negative, and Motion disagreed to accordingly.
§ On Question, Motion to go into Committee agreed to.
§ House in Committee accordingly.
§ [The EARL OF DONOUGHMORE in the Chair.]
§ Clause 1 agreed to
§ Clause 2:
§ Powers of Minister of Munitions.
§ 2.—(1) The Minister of Munitions on behalf of His Majesty may grant licences conferring authority to search and bore for and get petroleum to such persons and upon such terms and conditions as the Minister of Munitions may think fit:
§ Provided that nothing in this Act shall be construed as conferring on any person any right to enter on or interfere with land for the purpose of searching or boring for or getting petroleum which he does not enjoy apart from this Act.
§ (2) Where any such licence is granted a copy thereof shall be laid before Parliament as soon as may be after the grant thereof.
§ THE DUKE OF NORTHUMBERLAND moved, at the end of subsection (1), to add "or shall prejudice, diminish, or interfere with the legal rights of any owner of land or of mineral rights in respect of petroleum gotten through or from land of which he is the owner or in respect of which he is possessed of mineral rights." The noble Duke said: The object of this clause, about which it is not necessary to say much, is this. As the Bill stands it merely safeguards Messrs. Pearson—the persons who are sole agents for drilling for petroleum—against all competition. It also deals with conditions after the war, and it must be remembered also that the Government is able, under the Acquisition of Land Act, to enter on and acquire land after the war for the purpose of boring for petroleum. I think, in any measure which is so partial as is this Bill at the present moment, that there should be some clause safeguarding the rights of landowners and others interested in land, and it is with that object that this Amendment is being moved.
I have always maintained that nothing in this Bill does prejudice or affect the rights of landowners. These are questions that have to be decided afterwards, and, that being so, I have no quarrel with the spirit of the noble Duke's Amendment, and if he will see his way to accept a slight verbal 1096 alteration I will not oppose it. The reason I ask for this slight verbal alteration is that in his Amendment he rather asserts that there are rights. What the Government say is, "We do not know. We leave this question to be decided after the war." Therefore, if he will say "or shall prejudice or affect the rights, if any, of any person interested in any land in respect of petroleum gotten through or from land in which he is so interested," I will not oppose that Amendment.
THE DUKE OF NORTHUMBERLAND
The words will not in any way alter the sense of the Amendment, and there is no reason why I should not accept them.
Page 1, line 19, after ("Act") insert ("or shall prejudice or affect the rights if any of any person interested in any land in respect of petroleum gotten through or from land in which he is so interested."—(The Duke of Northumberland.)
§ On Question, Amendment agreed to.
§ Clause 2, as amended, agreed to.
§ Clause 3:
§ Powers to inspect plans of mines.
§ 3. For the purpose of ascertaining the geological conformation and the position, direction and dip of strata, any officer of the Minister of Munitions shall have the same rights as to the production and examination of plans and sections kept at a mine in pursuance of section twenty of the Coal Mines Act, 1911, or section nineteen of the Metalliferous Mines Act, 1872, as are by those Acts conferred on inspectors, and those sections shall apply accordingly.
The first Amendment to this clause has been framed to meet the criticism that was expressed on the Second Reading of the Bill, chiefly by the noble and learned Viscount, Lord Haldane. It was also referred to by the noble Duke, the Duke of Northumberland. I trust that in the form in which I now move it that it meets with the views of those noble Lords. The first part of my Amendment transfers the powers respecting mining plans, &c., from the Ministry of Munitions to the Geological Survey. This inspection alone is not sufficient for geological purposes. It is right to find out where workings are, or are to be, so as to prevent bore holes being put in places where they would impede the working of coal mines. The Amendment gives the Geological Survey the right to acquire all geological information that can be got from the bore holes. That was in accordance 1097 with the recommendation of the noble and learned Viscount's Committee and I hope that it will meet the point of his very helpful criticism on Second Reading.
Page 1, lines 23 and 24, leave out ("the geological conformation and the position, direction and dip of strata") and insert ("on behalf of the Minister of Munitions the position of the workings, actual and prospective, of any mines or abandoned mines through or near which it is proposed to sink any shaft or borehole for the purpose of searching for or getting petroleum").—(Lord Elphinstone.)
§ VISCOUNT HALDANE
I am quite satisfied with the Amendment as the Government have moved it. A little later probably we shall put in the words "Minister of Research" or "Department of Research" instead of the words there now. Although that Department exists, and is a valuable and important one, it is not sufficiently familiar to the public perhaps to justify the Government referring to it any Bills. I am therefore quite content to take the reference to the Director of Geological Survey who, as a matter of fact, will presently be transferred to the Research Department.
§ On Question, Amendment agreed to.
§ Amendments moved—
§ Page 1, line 25, leave out ("of the Minister of Munitions") and insert ("appointed by the Director of the Geological Survey").
§ Page 2, lines 1 and 2, leave out ("at a mine")
§ Page 2, line 2, after ("twenty") insert ("or twenty-one")
§ Page 2, line 3, after ("section") insert ("fourteen or")
Page 2, line 5, at end insert as a new subsection:
(2) Any person entitled to sink a shaft or borehole for the purpose of searching for or getting petroleum shall before commencing to sink the same give notice in writing of his intention to th Director of the Geological Survey and shall keep a journal of any such shaft or borehole, and shall retain for a period of not less than six months such specimens of the strata passed through as may have been obtained in the course of the sinking thereof, either as cores or fragments, and shall allow the Director of the Geological Survey or any officer appointed by him to have free access to any such shaft or borehole whilst in process of being sunk, and to inspect all specimens so obtained and kept and the journals of such shafts and boreholes, and if any person fails to comply with any obligation imposed on him by this provision he shall on summary conviction be liable to a fine not exceeding fifty pounds."—(Lord Elphinstone.)
§ On Question, Amendments agreed to.1098
§ Clause 3, as amended, agreed to.
§ THE DUKE OF NORTHUMBERLAND moved a new clause. The noble Duke said: This clause is to give compensation. I quite admit there are strong arguments against making an exception in the case of boring for petroleum. No satisfactory compensation was given under the Defence of the Realm Act except where there had been a substantial loss. But, of course, the Defence of the Realm Act will come to an end very soon and the Government can after the war act under the Acquisition of Land Act. That Act contains a clause which provides for compensation, but it does not provide for any compensation for loss of amenities. I think, that, in view of that, there is a very strong case for this clause to provide compensation in the special cases which are affected by boring for petroleum. It is quite true it will be making a new departure, but there is some precedent for it in the Corn Production Act which was passed by this House. I believe the Government feel somewhat strongly about this clause. They feel strongly against making any exception in the case of boring for petroleum, but I hope, in view of the fact that the position is somewhat exceptional, that the noble Lord will see his way to accept this Amendment.
§ Amendment moved—
§ Insert the following new clause:
§ "Compensation shall be paid by any person acting on behalf of His Majesty or by a licensee under this Act to any persons owning or interested in any land, for any damage sustained by them through surface damage, subsidence, flooding, destruction of vegetation or loss of amenity caused by or arising out of the exercise by any such person or licensee of the powers conferred by this Act, and the proof of such damage and the amount of such compensation shall in default of agreement be determined by arbitration."—(The Duke of Northumberland.)
I do not think that the adoption of this Amendment will really achieve what the noble Duke has in view as regards compensation. A compensation clause in a Bill surely is a clause showing that compensation is payable if any loss or damage is occasioned by the action of that Bill, but it is not under this 1099 Bill that petroleum is going to be worked, so that a compensation clause really would be entirely meaningless. The place for a compensation clause will be in the Bill which the Government will have to introduce to regulate the whole carrying on of this industry. Then those questions of compensation and royalty and those other intricate questions in doubt to-day will have to be decided. Till then any action taken is taken under the Defence of the Realm Act and under the Acquisition of Land Act. In both those Bills compensation clauses are provided. So that really a compensation Clause in this Bill is rather out of place.
I gather from what the noble Duke said that he is dissatisfied with this compensation clause under the existing Defence of the Realm Act and the Acquisition of Land Act, but, as regards that, I can only say that, even if it were possible, I do not know whether it could be said to be justifiable to attempt to remove from the jurisdiction of those Acts the oil interest alone, when every other interest in the country has to abide by them. The noble Duke referred to the Corn Production Act, but I think, as far as my memory serves me, the two cases are entirely different. In the case of corn production the Defence of the Realm Act came to an end before the end of the war, and as it was felt desirable to continue the regulations they were continued, but on the understanding that they were to receive special treatment in the way of compensation as a sort of quid pro quo. I think that is the right interpretation. In this case it is quite different.
The noble Duke seems to have made up his mind that the compensation payable under the Defence of the Realm Regulations is bound to be inadequate. I really am not in a position to argue with him on that point, because I would not venture to predict how the Losses Commission to whom this question will have to be referred will deal with it when it comes before them. They have, as the noble Duke knows, to compensate for any loss sustained by the subject owing to action by the Government, and in this matter the Government place themselves within the jurisdiction of the Losses Commission in the same way that the individual does. Then, under the Acquisition of Land Act the compensation clauses, I remember very well, were very thoroughly discussed in this House, and they were considerably amended, and I certainly recollect that when that Act 1100 passed all noble Lords in this House seemed to be satisfied with the compensation clauses, as amended by this House. I hope that, for the reasons I have given, the noble Duke will not press this Amendment, as I am afraid I could not accept it.
§ THE EARL OF SELBORNE
I hope your Lordships will give your attention to this matter, because, as I understand it, it really is a very serious point. I do not think that my noble friend has in the least disposed of it by his arguments. He tells us that compensation is payable under the Defence of the Realm Act. Certainly it is, and anybody can make his case good before that tribunal. But the whole intention of this Bill is based on the fact that the Defence of the Realm Act will not be in operation. Therefore we have to deal with the time when the Act has ceased to be in operation. "Oh," says my noble friend, "then you have got the Bill for taking land under compulsory power." In the first place, when that Bill was framed nobody thought of oil; and, in the second place, suppose those powers are not exercised, and the land is not taken, and yet there have been borings, and very great loss of amenity. You cannot bore and leave things exactly as they were before, and yet that is wholly unprovided for. But my noble friend's Amendment does provide for it. I should like to hear what the Government say to that.
I am sorry I did not make the position clear. Under the Bill which we are discussing to-day no work can go on. I suppose we are at one about that. It is not a Bill to regulate the oil industry; no work can be done under this Bill.
§ THE EARL OF SELBORNE
Yes, but when the Defence of the Realm Act ceases the drilling will have taken place.
It would come under the Acquisition of Land Act.
Surely it is hardly likely that they will begin operations and spend a considerable sum of money——
§ THE EARL OF SELBORNE
Let us just follow this out. Under the Defence of the Realm Act boring takes place—we will say in Chatsworth Park. That boring is unsuccessful. The Defence of the Realm Act comes to an end. The boring stops. The Government say we do not want Chatsworth Park. Yet Chatsworth Park has been largely spoilt. There is no compensation in the Bill. My noble friend has not answered that point.
§ THE LORD CHANCELLOR
The noble Earl will see that this Bill provides as follows, line 16, page 1:—Provided that nothing in this Act shall be construed as conferring on any person any right to enter on or interfere with land for the purpose of searching or boring for or getting petroleum which he does not enjoy apart from this Act.You would want the compensation clauses if the Bill purported to confer the right to interfere with land, a right which was not enjoyed before. As regards what my noble friend has said about the Acquisition of Land Act I should have thought that for the purposes of compensation, in respect of anything done before, the Act would remain in force, but I have not looked up the point. I will look into it before the next stage of the Bill and will give my noble friend a more definite answer.
§ THE EARL OF SELBORNE
If the Lord Chancellor will be good enough to look into it I should not advise the noble Duke to press the Amendment to a division. But I do think that there has been no answer at all to the point I have made.
THE DUKE OF BUCCLEUCH
May I ask a question, and that is as to whether collieries may also be damaged? Some people fear that under this Bill or under licences collieries may be affected or very seriously damaged. I do not know whether there is anything in that. Perhaps that is a point which might be considered at the same time.
§ Amendment, by leave, withdrawn.
THE DUKE OF NORTHUMBERLAND
I beg to move a new clause which provides for a record being kept, and I do not think that anybody can possibly have any objection to it. Obviously it is desirable that such a record should be kept. A point has been raised as to whether the landowner is or is not entitled to the petroleum. Whether that is so or not, or whether the Crown is entitled to the petroleum, it is equally desirable that a record should be kept of all the oil in the country and the amount being produced, and if it should be proved that it belongs to the Crown the Crown can then decide what is to be done with it. It might well happen that Parliament might decide that any profits which accrue should belong to the particular locality from which the oil comes. From every point of view I think it is desirable that this new clause should be inserted.
§ Amendment moved—
§ Insert the following new clause:
§ "Records of petroleum gotten.
§ ".—(1) Any person acting on behalf of His Majesty or holding a licence under this Act who gets petroleum shall keep and furnish to the Minister of Munitions a record of any petroleum gotten by him and made available for use, distinguishing the amount gotten from each separate borehole, and if any such person fails so to keep and furnish any such record, or knowingly furnishes a record which is false in any material particular he shall be liable on summary Conviction to a fine not exceeding fifty pounds.
§ "(2) The records so furnished to the Minister of Munitions in respect of any particular borehole shall be open to inspection by any person interested in land in the neighbourhood of the borehole."—(The Duke of Northumberland.)
§ On Question, Amendment agreed to.
§ Remaining clauses agreed to.