HL Deb 18 August 1919 vol 36 cc1017-31

Order of the Day for the House to be put into Committee, read.

Moved, That the House do now resolve itself into Committee.—(Viscount Milner.)


My Lords, I should like to ask whether the noble Viscount in charge of the Bill could not give us some assurance that the Government will do what we regard as the Government's part in order to keep down prices. That is, first of all, to open, the ports more largely for the admission of articles which have been restricted; secondly, themselves to sell more largely the supplies of all descriptions that they have in hand; and, thirdly, give their attention to the currency. To this end we urge that they will not grant donatives and doles which involve the further issue of Treasury notes, and that it will be regarded, whatever be the demand, that it is absolutely necessary to prevent a farther inflation of the currency. On these points I have great hopes that the noble Viscount will give us some assurance, because the Government has far more power to control the great inflation of prices by these means than by any individual action such as it is proposed to take under this Bill.


My Lords, before the noble Viscount replies may I venture to suggest, in regard to what my noble friend said about opening the ports, that there are imports and imports. He is talking the old pre-war language to a certain extent. Then we were a rich nation, and imports were one of the means of paying off our debts. We are no longer a rich nation, but a poor nation. You must, of course, encourage food imports, except in so far as you can do without them by a wise agricultural policy in this country. You cannot do what you used to do. We all know the state of the American exchange. I need not go into details about that, as it is so well known to your Lordships. It really does not do to put us off—because that is what it amounts to—with the great platitude, "Open the ports." You must do that wisely, and with great discrimination. You ought to import nothing that you can do without, not because we do not all want to live in the land of plenty, but because those days are gone by for us. We have to produce everything, whether it is corn or cattle or articles of merchandise, as far as we possibly can in this country, and the surest way of breaking this country is to let imports come in anyhow.

In regard to the question of the currency, I may say that I know a little about this terrible note issue. I remember in the House of Commons long ago calling attention to it, and pointing out that it was a most serious matter, because there is nothing behind the note except the printing press. The Bank of England note on the other hand—it is common knowledge, and I must almost apologise for saying it—has gold and securities behind it, and is in a different category altogether. The £1 note has only the Government printing press behind it; in fact, it is an I O U, and nothing more. On October 30 last year the note issue was £175,000,000; on December 18 last year it was £292,000,000, and on March 18 last it was £314,000,000, and I think I am right in saying that on the 10th of this month it was £340,000,000. Here I associate myself, if I may be allowed to do so, completely with what the noble Viscount has just said. We must keep our eyes on this note issue; otherwise we shall never get to the end of the vicious circle.

The note issue began, as we all know, at the beginning of the war. It was necessary for two reasons—there may be lots of other reasons, but there were two in particular. An immense quantity of labour was let loose that had not been employed before. Women came into business in thousands, and there was constantly that great raising of the wages of what are called the working classes. We are all working classes to-day. I think we have all been working classes for a long time, although the country does not seem to appreciate or understand that. The working classes had a great rise in wages, and for those two reasons the note issue became necessary, because the man who had a thousand operatives suddenly found them increased to 2,000, and, having to pay them weekly, the currency was not enough for that kind of process. That to my mind, was the origin and the necessity of the note issue. Then it got out of hand. It is like everything else. A wild animal is all right as long as you can keep him in hand. Once let the note issue get out of hand—and it has got out of hand—and you get this terrible inflation. Profiteering is one of the offsprings of this currency inflation, although there have been plenty of other circumstances. Until you can reduce the note issue you will never get rid of this vicious circle; you will never get the nation back to sound finance.

One more remark, with many apologies, and I shall have finished. It is dangerous in so many ways. The working man goes about with a lot of these "Bradburys" in his pocket, and he thinks he is a rich man; and not only that, he thinks the country is rich. And if you say to him, "Retrench, reform" when his wife is going to buy a fur coat at Selfridge's, he says "Why, I have got these in my pocket." You say, "The country cannot afford," and he says "Why not?" You cannot give him a lesson on finance and political economy; he will not believe you if you do. And I think the noble Viscount put his finger on one of the cardinal points of this matter when he said that until you are able hugely to reduce the £1 and 10s. note currency you will never bring the people back to sanity; you will never get out of the vicious circle; and, instead of getting further up the slippery slope, as I described it three or four weeks ago, you will get further down, and you will not get back until we are in the bankruptcy court.


My Lords, I have listened with a great deal of agreement to the noble Lord, but I rise at the present moment to say that I feel placed in a difficult position and that it is a somewhat inconvenient course which is being followed. Just two minutes before the Committee stage opened, I received a note from the noble Viscount opposite (Lord Midleton) saying that he hoped I would make some statement on behalf of the Government with regard to the questions of opening the ports, of selling surplus goods rapidly, and of inflated currency. Now, these are all very important matters, but the very fact that they are so important makes it difficult to call upon a Minister suddenly to make a pronouncement upon them on this occasion. I may remind your Lordships that a full and considered statement of the Government policy is being made to-day by the Prime Minister in the House of Commons. I do not think, in these circumstances, it is right to hold a pistol at the head of a particular Minister in this House, and to ask him at once to deliver himself on some of the most important questions of trade policy with reference to the Committee stage of the present Bill. I really am not prepared to do it. But, as far as can be reasonably asked of me, I should like out of courtesy to the noble Viscount to answer him. With regard to the question of opening the ports, by which I suppose he means removal of all restrictions upon imports—


The removal of all restrictions which did not exist before the war.


Yes. I may say that the policy of the Government is one of steadily increasing removal of restrictions, but this is a very complicated and difficult matter, and if the noble Viscount wishes the Government simply to sweep away all restrictions existing before the war I can only say that I do not believe the Government is prepared to go that length, and I would not remain in it for one day if so sweeping a measure as that were to be adopted totally regardless of its effect upon the industries and manufactures of this country. It astonishes me beyond words that we should be pressed to do so by the noble Viscount, if he is in any sense representative of the opinion of the Party of which he is so distinguished a member. At the same time we fully realise the importance of removing restrictions wherever it can be done, and I think the noble Viscount, when he reads the statement which is being made to-day by the Prime Minister, will be satisfied to know that the policy of the removal of restrictions is being pursued steadily, and that there will be a very great diminution of the existing restrictions within a short space of time.

As regards the rapid sale of surplus stocks, I believe the stocks are being sold as rapidly as, in the interests of the National Exchequer, is at all desirable. Of course, we might throw all our stocks on the market and lose a couple of hundred millions. I wonder if the noble Lords who are always reproaching the Government for its lack of economy would be prepared to defend such a procedure. I think, if we were to adopt that course, we should be justly liable to criticism on the ground of the gravest form of extravagance, which is the wasting of valuable national assets.

Lastly, with regard to the inflated currency. I may say that I agree to a very great extent with the remarks which have been made by the noble Lord, Lord Wittenham. Any further increase of the uncovered note issue would be regarded by the Government with the greatest possible concern, and, as a matter of fact, steps have been and are being taken to reduce that issue. We are perfectly alive to the danger of it. At the same time, may I be allowed to say this? Any great disturbance, either upwards or downwards, in general prices is a misfortune. I believe that anything like a violent and sudden reduction of prices by artificial means, such as by a very sudden and rapid contraction of the currency, would be an even greater evil than a sudden rise. By all means let us stop any further increase of this currency; let us try gradually and sanely to reduce it. But do not let us, in a panic about prices, take steps which might lead to a very great disaster. Anything like a complete or rapid change in the general level of prices would lead to consequences which personally I am afraid to contemplate.

I have, perhaps, said more than I ought to have said and even this much under protest, and simply because I feel bound, out of consideration for the noble Viscount, not absolutely to pass by the points which he has raised, although I think they were raised a little suddenly. It was hardly fair to call upon me to deliver myself on some of the most difficult economic questions at a moment's notice.


I only want to explain to your Lordships that when I corrected the noble Viscount with regard to what my aspirations were, I did not, of course, intend in any way to infringe upon any considered policy of Preference which has been announced by the Government. I was thinking only of the state of imports generally before 1914.

On Question, Motion agreed to.

House in Committee accordingly.

THE EARL OF KINTORE in the Chair.]

Clause 1:

Powers of the Board of Trade to investigate complaints and take proceedings.

1.—(1) Subject to the provisions of this Act., the Board of Trade shall have power in respect of any article to which this Act applies—

  1. (a) to investigate prices, costs, and profit at all stages, and for that purpose by order to require any person to appear before them, and to furnish such information and produce such documents as they may require; and on any such investigation they may by order fix maximum prices; and
  2. 1022
  3. (b) to receive and investigate complaints that a profit is being or has been since the passing of this Act made or sought on the sale of the article (whether wholesale or retail) which is, in view of all the circumstances, unreasonable, and on any such complaint they may by order, after giving the parties an opportunity of being heard, either dismiss the complaint or—
    1. (i)declare the price which would yield a reasonable profit; and
    2. (ii) require the seller to repay to the complainant any amount paid by the complainant in excess of such price.

(2) If, as a result of any investigation undertaken on their own initiative or on complaint made to them, it appeals to the Board of Trade that the circumstances so require, the Board shall take proceedings against the seller before a court of summary jurisdiction, and if in such proceedings it is found that the price charged or sought about which the complaint was made or the price discovered at the investigation to have been charged or sought was such as to yield a profit which is, in view of all the circumstances, unreasonable, the seller shall be liable on summary conviction to a fine not exceeding two hundred pounds or to imprisonment for a term not exceeding three months or to both such imprisonment and fine. Provided that a rate of profit which does not exceed the fair average rate earned by persons in the same way of business as the seller upon the sale of similar articles under pre-war conditions, shall not be deemed unreasonable.

(3) If any person fails to comply with or infringes an order of the Board of Trade under this section, he shall be liable on summary conviction to a fine not exceeding fifty pounds or to imprisonment for a term not exceeding one month, or to both such imprisonment and fine, and in the case of an order requiring the repayment of any amount that amount shall be recoverable summarily as a civil debt.

(4) If any person at or for the purpose of any such investigation or in any such complaint furnishes any information or snakes any representation which is recklessly or to his knowledge false in any material particular, he shall be liable on summary conviction to a fine not exceeding fifty pounds or to imprisonment for a term not exceeding three months, or to both such imprisonment and fine.

(5) Where a person convicted under this section is a company and every managing director and every officer concerned in the management of the company shall be guilty of the like offence, unless he proves that the act which constituted the-offence took place without his knowledge or with out his consent.

(6) In any proceedings under this section to which the Board is a party costs may be awarded to or against the Board.

(7) This Act applies to any article or class of articles to which it is applied by order of the Board of Trade, being an article or class of articles declared by the order to be one or one of a kind in common use by the public, or being material, machinery, or accessories used in the production thereof, but this Act does not apply to any articles which are sold by public auction or competitive tender or which are from time to time declared to be controlled articles, and different provisions of this Act may be applied to different articles.

(8) The Board of Trade shall have power to require any person appearing before them under this Act to give evidence on oath, and shall have power to authorise any person to administer an oath for the purpose.

(9) In this Act the expressions "sale" and "seller" include respectively any offer for sale and any person offering to sell.

(10) Nothing in this Act shall apply to the sale of any article for export from the United Kingdom.

LORD EMMOTT moved to omit from subsection (2) the words "Provided that a rate of profit which does not exceed the fair average rate earned by persons in the same way of business as the seller upon the sale of similar articles under pre-war conditions, shall not be deemed unreasonable.''

The noble Lord said: I have put down this Amendment not so much because I feel any violent hostility to the words whose excision I have moved as that I really want to ask for an explanation from the Government about the whole of this subsection. I want to know what its meaning is, and whether they can tell us how it will work. The words of the earlier parts of the subsection are that proceedings may be taken and a, penalty may be inflicted when the profit made is, in view of all the circumstances, unreasonable. It is obvious that, when the decision is going to be left to a Court of Summary Jurisdiction, our benches in different parts of the country might materially differ as to the view they would take as to what an unreasonable profit is. Some benches may take a very narrow view, and anything over 5 per cent. might be considered an unreasonable profit. Other benches might be manned largely by men who themselves had profitted a good deal through the war and who would take a liberal view. There is, therefore, a great danger that we shall have different decisions from different benches. We know what happened with regard to the Tribunals during the war. With regard to local benches there will be a great danger of inconsistent decisions being given on somewhat similar facts.

But apart from that, how is any one to tell what a reasonable profit is? My experience in business has been manufacturing, and I have at times had great surprises when the results of the half-year have been shown by incontestable figures. In many trades the manufacturer does not know whether he is making a profit or a loss at any particular moment. Conditions and prices often vary so much that he is unable to tell. During the war there is no doubt that a great many manufacturers have made enormous profits through the prices of goods, which have been held in stock for a considerable time, going up. Is that an abnormal profit, or is it not? Is it a profit which is reasonable or unreasonable? Is it reasonable that a man who has had goods in stock for two or three years which have doubled in price during that time should charge the full market price? There is no indication in the Bill on that point. Somewhat similar considerations apply in the case of merchants and shop-keepers who make a profit sometimes on one class of goods while they may be making no profit at all, or even losing, on another class.

The first questions I want to ask are these. Is the profit that is considered reasonable to be based on the actual prices at the time of the raw material and the cost of manufacture at the moment; and is the same thing to apply to a merchant or a shopkeeper who has bought the goods long ago and who has held them in stock for some time? Is it the present-day price or the actual profit the man is making that is to be the first consideration? Is it the individual who is not to make a profit, or is it the commodity in question that is not to make a profit? I do not know whether I have made my point clear but I am certain that it is fundamental in regard to this matter. I am formally moving the excision of these words for the purpose of asking these questions.

In regard to the proviso, I want to know this. Is the average rate earned by persons in the same way of business meant to be calculated on the capital of the trader, or is it meant to be calculated on the commodity in which he deals? If it is to be on the capital, is it to be on his actual capital (which may be a very small matter in his books) or is it to be on what the capital would be in the case of a newcomer to the trade who had to take premises and to furnish them at present-day prices? On the other hand, is it to be calculated on the goods? Supposing a man before the war was selling a certain class of goods at 10s. an item, the price to-day, if it had gone up proportionately to other goods, would be (let us say) 20s. or 25s. Supposing 1s. were considered a reasonable profit on his 10s. before the way, is he to have 2s. profit on the 20s.—or what is a reasonable profit? Then, does this proviso mean that you must assess the man either according to his capital, or according to the goods he sells, whichever may be most favourable to him? I do not know what it means but I think we ought to know.

My next question is a legal one, and I myself am really unable to form any opinion worth anything about it. Is there any protection at all to the trader in this proviso? I need not say that I am no more anxious than any of your Lordships to shelter the profiteer—quite otherwise, in fact. Do the words "not be deemed unreasonable" mean that this should be a guide to the minimum profit that he is to be allowed; and if they are meant to give that as a minimum standard, then I ask whether they are likely to be so used when they come to be construed by the Law Courts? Is it not the case that this proviso will be considered rather as a standard, or maximum, by which to work, than a minimum below which they must not go? I should be very glad to have a considered opinion on that from His Majesty's Government, and, indeed, if I might dare to ask for it, from any noble and learned Lord present who is not connected with the Government, as I think flu matter is of considerable importance.

Amendment moved— Page 2, line 12, leave out from ("fine") to end of subsection (2).—(Lord Emmott.)


I am sorry to see that no other noble Lord appears to be anxious to come forward and answer the very formidable set of questions which has just been addressed to the House by the noble Lord. I am rather reminded of the old saying that the simplest child can ask more questions in five minutes than the wisest man can answer in a life-time. I certainly am not prepared to decide now what view the numerous committees or the numerous Courts which may have to deal with the matter will take of the word reasonable" in all conceivable circumstances. I take it that the noble Lord's object is to protect the honest trader.


That is so.


That is an object with which we all sympathise. The words that he proposes to omit were words which were not originally in the Bill, but were inserted by the House of Commons with the particular object of protecting the trader. For this simple reason I think it would be undesirable for us to strike them out. Especially undesirable must it be on the part of those who are anxious that this clause should not be interpreted in such a way as to act at all harshly towards some. These words are not the Government's own device; they are words inserted in the House of Commons in order to protect the trader, and I submit to your Lordships that we should not be wise in striking them out.


Whether or not the House would be wise in striking the words out, I think it will hardly be satisfied with the explanation given by the noble Viscount of his own Bill. These words were added to it and the Government adopted them and made them part of its own drafting. My noble friend is not the simple child he tries to make out; he is a very skilled debater, and these are very pertinent questions.

It seems to me extraordinary that the Government has not considered that this clause will involve all the difficulties of a levy on capital. I take it that these penalties are to be enforced not only against the small shopkeeper, but, as it was said in another place, also against the large producer. Let me take for example the business associated with a member of this House—time great soap monopoly which is carried on by various companies supposed to be under the control of Lord Lever-hulme. Does it mean that in the case of soap sold by the grocer in the small towns there will be an inquiry into whether the rate of profit earned by the companies with which the noble Lord is associated is a reasonable one or not? If so, does it involve the whole question of the capitalisation of the various public companies of the country? It would be almost impossible to say without a close and careful investigation as to how far the capital even represents the present value of a particular concern.

We all know the differences between public companies. In the case of some the stock has been largely watered; in the case of others it represents nothing but the present-day value of the equipment and premises. I cannot conceive myself what would be considered to be reasonable—that is to say, whether the rate of profits is to be taken as the dividend declared on the capital of the company, or if it is to be taken as the rate of profit earned by a great concern after re-valuation by the officers of Inland Revenue. All these things will come up. We are not now discussing abstract resolutions; we are discussing powers which are to be put into the hands, first of all, of the Board of Trade, and then of the network of these miscalled tribunals which are to be set up throughout the country. I do not think it is fair, with these Courts or committees, that the matter should be left at that.


We are dealing now with a clause which brings in Courts of Summary Jurisdiction. There is nothing about committees or tribunals in this clause.


But the Board of Trade is empowered by the clause to take proceedings in a Court of Summary Jurisdiction.


Yes, before the Court of Summary Jurisdiction, but not before the committee.


No, but the initial step of ordering the prosecution is in the hands of the Board of Trade, of of the committees appointed by the Board of Trade. I do not know that Courts of Petty Sessions, or even the stipendiary magistrates, would be fair judges of these matters. What experience have they had to guide them' in these very difficult matters of trade and finance? If this was merely, as was said in the other House, a placard to put on the wall—if it was merely a bogey Bill as it was called elsewhere, I would not so much mind. I am not, however, so certain that it is only a bogey Bill—that is to say, it is going to frighten all the greedy traders without being put into operation, and not in many cases to bear very hardly on both great and small concerns.

The difficulty is that companies which have been most conservative in their finance are liable to be most heavily penalised. The company which increases its capital without any regard whatever to sound finance of course declares the lowest rate of dividend. I do not mean to say that that would impose upon the officers of Inland Revenue. But here you are dealing with committees and tribunals and even Courts which are quite unskilled in these matters. They can only take the face value, so to speak, of the statements which are made; they cannot go behind, in many cases, the declarations made by the committee. A clause of this sort, framed without thought, or at all events without investigation, is a very strong step; and there is not the least doubt that here, as in so many other cases, there has been established an atmosphere of prejudice which prevents one from trying to amend a Bill because of its title and because to do anything to make it workable or rational is supposed to show that one is in sympathy with profiteering. Otherwise I do not believe it would have passed through either House of Parliament in its present form.

I quite recognise the difficulties of the noble Viscount. He individually is not responsible for the whole of the Bill; but he is in charge of it here. Serious questions have been put, and they deserve a serious answer, and not to be treated—shall I say?—with flippancy. I do not know that that is quite the word to use, but with so light a touch as that possessed by the noble Viscount in dealing with this Bill.


I was not present at the last sitting of the House. The noble Lord who has moved this Amendment, and the noble Lord behind me have mentioned a great deal about Courts of Summary Jurisdiction. It is all very well if you have stipendiary magistrates, becauses they are always there. Benches of magistrates in the country, however, are not always the same. The consequence is you will have most extraordinary divergences of opinion. It really seems almost a farce. Practically this procedure is the same as we hear about with regard to food. The Food Controller of the district gets leave to bring a prosecution, and every single prosecution that has come before me has been the most nonsensical and the most trivial you ever came across in your life. They leave out many others which were very good cases, and in which they might have got a judgment. As a matter of course, it is too late in the session to do anything; but I draw attention to the fact that you will not have on the benches of magistrates in the country the same men sitting always to bear these prosecutions, and you will get very curious convictions or judgments, just as the case may be.


I asked the questions in all seriousness. I think they were germane and proper questions to ask. With the utmost respect I say that they were questions which ought to have been answered. The noble Viscount recommended this Bill to us on Friday by saying that he had no particular affection for it, and he is now recommending it to us by rot offering any defence of the proviso the omission of which I formally moved, and by not attempting to explain how the subsection will work. I have no intention of pushing this Amendment to a Division. I moved it rather for the purpose of asking for an explanation. But I cannot say less than that I think the House has been treated with very scant courtesy. In a somewhat long Parliamentary experience I have never heard a point of this importance treated so cavalierly.


Do you withdraw, Lord Emmott?



Amendment, by leave, withdrawn.


The next three Amendments in my name are all drafting.

Amendments moved—

Page 2, line 25, after ("complaint") insert ("knowingly") or ("recklessly")

Page 2, line 26, leave out from ("is") to ("false") in line 27

Page 2, line 36, after the first ("Board") insert ("of Trade").—(Viscount Milner.)

On Question, Amendments agreed to.

Clause 1, as amended, agreed to.

Clause 2 to 4 agreed to.

Clause 5:

Information to be treated as confidential.

5. The proceedings before the Board of Trade or any committee or tribunal under this Act shall, unless in special cases the Board of Trade otherwise direct, be held in public, where such proceedings are founded on a complaint. Save as aforesaid information and documents required to be given or produced to the Board of Trade or to a committee or tribunal under this Act shall be treated as confidential, except in cases where the person giving or producing the same otherwise agrees, and in eases where legal proceedings are taken, for the purpose of such proceedings:

Provided that nothing herein shall be taken as preventing the Board or any committee or tribunal from publishing their findings and decisions.

VISCOUNT MILNER had on the Paper an Amendment to insert the following new subsection at the end of the clause— (2) A fair and accurate report in any newspaper of any proceedings held in public under this Act shall, if published contemporaneously with such proceedings, be privileged. The noble Viscount said: With the permission of the House, I wish to move this Amendment in a different form from that in which it appears on the Paper. This is to meet the noble Lord, Lord Burnham. I think that he will follow what I now propose, and that the words will entirely meet his case. The new subsection which I desire to insert here, instead of the words standing in my name, is as follows— (2) Any investigation under this Act shall, for the purposes of the law relating to libel and slander, be deemed to be proceedings before a Court exercising judicial authority. I think that meets the case.

Amendment moved— Page 5, line 7, at end insert the said subsection.—(Viscount Milner.)


I am obliged to the noble Viscount for the manner in which he has now put these words into the Bill, because they completely cover the matter. I was going to point out that the wording of the Amendment on the Paper would not cover reports issued by the Board of Trade, or one of its Committees, of proceedings held in private, as they have a right to hold them. Now the case is completely covered, and I am much obliged.

On Question, Amendment agreed to.

Clause 5, as amended, agreed to.

Remaining clauses agreed to.

House resumed.

Then (Standing Order No. XXXIX having been suspended) Amendments reported.

Clause 1:


I wish to propose two Amendments in this clause—to leave out the words "which are sold by public auction or competitive tender or" in subsection (7), and at the end of subsection (10) to insert the words "or to the sale of any articles by public auction or competitive tender." These are mere draftin Amendments.

Amendments moved——

Clause 1, page 3, line 2, to leave ("articles") to ("which") in line 3.

Clause 1, page 3, Line 13, at end insert ("or to the sale of any articles by public auction or competitive tender").—(Viscount Milner.)

On Question, Amendments agreed to.

Clause 2:


There is another Amendment of the same character Clause 2.

Amendment moved— Clause 2, page 4, line 5, after ("committees") insert ("other than a decision to take proceedings before a Court of Summary Jurisdiction").—(Viscount Milner.)


May we ask for an explanation of this? I do not understand it.


The matter is quite plain. As the Clause stands at present, it is provided that there is a right of appeal by the seller to the Appeal Tribunal against any order or decision of local committees. This Amendment excludes from that general range of appeal matters as to which a decision to take proceedings before a Court of Summary Jurisdiction under the earlier clause has been reached. In other words it is proposed that, where a local committee decides to take proceedings before a Court of Summary Jurisdiction, this should not be one of the points to go by way of appeal to the Appeal Tribunal. I think the noble Lord will see that it is a reasonable provision.

On Question, Amendment agreed to.

Bill read 3a and passed, and returned to the Commons.