HL Deb 19 May 1920 vol 40 cc439-65

Debate on the Motion for the Second Reading resumed (according to Order).

THE UNDER-SECRETARY OF STATE FOR WAR (VISCOUNT PEEL)

My Lords, I am told that I have exhausted my right to speak on the Second. Reading of this Bill, but your Lordships raised yesterday certain questions to which you wished a rather fuller answer than I then gave. I am ready to deal with those points, but I do not know whether I have the leave of your Lordships to do so.

Several NOBLE LORDS

Hear, hear.

VISCOUNT PEEL

Two main points were raised. The first was brought up by the noble Marquess, Lord Crewe, when he asked what were the objections to postponing this Bill until after Whitsuntide, because there was a provision in it that when it became law the existing Act—which I think expired at midnight last night—will, as it were, be carried, on to fill the gap. I think I ought to deal with that point. I should like to say first of all that the provision was inserted in order to meet any short interval that might possibly elapse between the two Bills, but it was never contemplated by the Government that this gap would be anything like the fourteen or eighteen days it might be before the Act came into operation. That is a far wider area than they ever imagined.

If the amending Bill does not become law before the recess, certain things may happen. In the first place, expenditure will be incurred that would not otherwise have been necessary. It should be remembered that as far as the administration of the Profiteering Acts is concerned—I am speaking of retail sales—the work has been delegated to Profiteering Committees, some 1,800 in number, who are appointed by the local authorities all over the country. The expenses of those committees are defrayed out of the local rates in accordance with Clause 7 of the principal Act. At midnight on May 18 the principal Act lapsed, and the result is that until the amending Act comes into force these local committees will not only have no jurisdiction to deal with any case of profiteering but they will also have no right whatever to incur any expenditure on the administration of the Act of Parliament which has ceased to exist.

I do not know that it is a very popular or a very pleasant thing to sit on these committees, but the result will probably be that many members of those bodies will resign, and when the amending Act comes into operation it will be necessary to go through all the machinery of re-appointing the committees, which will mean additional expense. This applies also to the work of the Central Committee; because during this hiatus between the death of the one Act and the birth of the other—or the possible birth of the other—this Central Committee will have no power whatever to pursue its investigations. The activities of the Central Committee through its sub- committees is very great. I am informed that it has held something like 300 meetings during the last six months, and among the many valuable and useful investigations it is carrying out is one into the cost of building material. Your Lordships know very well the immense importance of dealing immediately with that matter—certainly my noble friend beside me (Lord Astor) does—and I think this is an additional reason why it would be a pity to put a stop to the acitivites of those committees. They would have no right, of course, to summon any witnesses before them; and any witness would have the right to refuse to obey the orders of those tribunals.

The noble Marquess may say that they could still function because they might take the chance of your Lordships passing this measure afterwards to justify what they have done. But their position would be a rather dangerous one, because they certainly would have no power to incur expenditure. Again, there are plenty of people who are ready to flout these committees, because the Profiteering Act is very unpopular in some quarters. As a matter of fact, on arriving at the House this afternoon I received a bulky telegram urging me strongly to vote against the Second Reading of this Bill. It may not surprise your Lordships to know that I do not intend to follow that advice; but there is no doubt that a good deal of hostility exists in many quarters against this Bill, and I think that fact would be largely taken advantage of if there is this contemplated big gap between the death of the principal Act and the birth of the amending Act.

My noble friend Lord Askwith raised a further point, and he was supported by other noble Lords, on the financial positions of the Bill. The principal Act, which came into operation on August 19, 1919, provided that the expenses of the Board of Trade under that measure should not exceed £75,000—subject, of course, to the approval of the Treasury—to be paid out of moneys provided by Parliament. The principal Act was to remain in force for a period of six months only, during which time the Board of Trade were authorised to spend this sum of £75,000. The policy of the Board of Trade has been to administer this Act with the greatest possible economy compatible with efficiency. During seven and a half months they expended only £17,000 out of the £75,000 which Parliament had authorised.

In regard to the estimate for this year of £120,000 there are those who have contended that it is excessive, and I should like to all you Lordships' attention to one or two points which I think I should plead anyhow in mitigation of sentence. The first is that there was very little expenditure during the first month and a half or two months, because the machinery and so on had not been brought fully into operation. Therefore, you must not judge the possible expenditure under the Act by what was spent in the first few months. Further, during the seven and a half months in which the Act has been in operation the Board have not been called upon to meet any legal expenses of a heavy nature in connection with large prosecutions. It by no means follows because that has been their fortunate experience during the past seven or eight months, that they will be so fortunate in the next twelve months, especially—and may I remind your Lordships of this—especially because the Board is under a statutory obligation to obtain information about trusts and combines.

Clause 1 of the Amending Bill contemplates the promotion of schemes limiting the profit to be allowed on the manufacture and distribution of articles or classes of articles at any stage of manufacture or production, and such schemes are going to have the approval of the Board of Trade. It is obvious that if these schemes are approved and the traders are let alone—and one hopes they may be let alone—in that way there will be much less work for the officials of the Board of Trade to do when such schemes have been set up; but it is quite obvious that the setting up and approving of schemes will cost a certain amount of money, because the schemes must be examined and enquired into to see that the prices to be charged are proper prices and that the accounts for costs and so on are properly made up. For this purpose it will be necessary to employ not officials—and it is, I think, rather the permanence of the permanent officials to which your Lordships' object—it will be necessary to employ expert accountants who will be called in to do the work. Once the work is done the work is over and it will not be necessary to do it again, but it is, I suggest, not permanent, but temporary, work.

I think your Lordships will also take into account that all this money, this maximum of £120,000, or whatever amount is spent on these matters, is not spent on officials. Let me make that quite plain. It is not spent on those permanent officials to whom sonic of your Lordships (but I am sure not my noble friend opposite) take exception. The expenses of the Board of Trade in administering the Profiteering Act include not only the work of the Board of Trade but also the expenses of the Central Committee and the Appeal Tribunals. These Appeal Tribunals are 106 in number, being established, of course, all over the country to hear appeals from the 1,800 primary tribunals. If your Lordships are apt to think that £120,000 is a large sum it must be understood that it does not mean in the least that, with this expenditure before them, the Board of Trade intend to depart by one jot or tittle from the careful and economic way in which they have hitherto administered the Act.

I can give your Lordships that assurance and I hope that what I have been able to say about the cost of the administration of the Act may so far satisfy your Lordships that the sum asked for in respect of the ensuing year is really not excessive, considering the obligations which may come upon the Board of Trade and the wide range of expenditure which may have to be met. There was a third point raised by my noble friend Lord Midleton. His general point was this, "Supposing you are going to limit, profits in this country, will not everything tend to be exported and will there be enough in this country to meet the requirements of the population?" On that point it would be improper for me to give any answer at this stage because my noble friend has put down an Amendment, and it is more in accordance with the usage of the House to deal with that Amendment when I come to it on the Paper.

LORD ASKWITH

Am I to understand that the noble Viscount can also give an assurance that supposing something is saved out of this £120,000 it would not be used by the Board of Trade as savings of the Board of Trade and transferred to the excess expenditure of another Department?

VISCOUNT PEEL

That would be a very just question to ask in another place, but I do not think that here, where we do not deal with questions of finance, I could answer it. Of course, I could not give an answer off-hand, and I do not think I should be in a position to give an assurance that expenditure saved under a particular head would not be transferred to another head. I hardly think I should be able to do so and, if I did, I am not sure that the assurance would be worth very much.

LORD ASKWITH

It is not much use saving if the money saved is to go to the enormous expenditure which is now being incurred by the Board of Trade upon various things throughout the country. I should have thought, in view of the fact that £17,500 was spent in six or nine months, that £120,000, which is £100,000 more, is a rather lavish estimate. One knows that accountants and auditors of big companies can be got for reasonable sums.

THE MARQUESS OF CREWE

My Lords, I am not sure that I have not also exhausted my right to speak, but perhaps, by the indulgence of your Lordships, I may assure the noble Viscount that I have no desire to interfere with the passage of the Bill in Committee, and I think other noble Lords on this Bench take the same view. When I spoke of the possibility of the further consideration of the Bill being adjourned until after the recess, I confess I did take the view that in practice nothing adverse to the future progress of the Bill would be likely to happen, and that, having regard to its retrospective character, nobody, during the brief interval of a week or two, would be likely to take advantage of the fact that the former Act was not actually in operation; but I frankly say that the noble Viscount has made out, particularly from the point of view of public expenditure, a good case for hurrying on this measure, and certainly I have no desire whatever to obstruct it.

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

Moved (Standing Order No. XXXIX having been suspended), That the House do now resolve itself into Committee.—(Viscount Peel)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF DONOUGHMORE in the Chair.]

Clause 1 agreed to.

THE EARL OF MIDLETON had an Amendment on the paper to insert in Clause I the following new subsection after subsection(2)— (3) It shall be permissible to the Board of Trade to provide in the case of any articles or classes of articles on which a limit of profit is fixed that an adequate supply is secured to the home market. The noble Earl said: It has been pointed out to me that the Amendment on the Paper, hurriedly drafted, was calculated only to apply to Clause I of the Bill, whereas the intention was that it should apply generally and not merely to the cases dealt with by that particular clause. Therefore I do not move my Amendment to Clause 1. I now move, after Clause 1, to insert the following new clause— ( ) In fixing maximum prices or declaring a price which would, yield a reasonable profit, or approving a scheme for the limitation of profits for any article or class of articles, the Board of Trade shall have regard to the necessity of securing an adequate supply to the home market of the article or class of articles, and may if they think fit by Order, to take effect as an Order made under Section 1 of the principal Act, make such provisions as in the opinion of the Board of Trade are necessary to secure such supplies as aforesaid. I assure the Government that this Amendment is not brought forward in any way with a desire to limit the Bill but to enable the principle of the Bill to be more clearly established. The only objection I can see is that it may be urged that it causes still more interference with traders than the Bill of last year and the Bill now before your Lordships' House. I explained the object of the Amendment last night, but perhaps I may be allowed briefly to explain it again.

In the Act of 1919 the intention of the Government was to try to limit undue profits on particular classes of articles. From the speech of the noble Viscount I did not gather that they had so far dealt with large classes of articles. They have dealt through a great number of committees with articles of general consumption, chiefly food, but there are large classes of articles which remain, articles of general use in this country, the prices of which have gone up by leaps and bounds since the Profiteering Act was passed last year. The. question is, How can the Government check this progress? The difficulty, of course, is that the whole world is hungering for these articles, and if traders are denied a market in this country they seek and obtain it abroad, and at prices which are almost prohibitive. If the Government takes any class of articles, unlike food which to a large extent must be dealt with in this country, and says that manufacturers must lower their prices by one-third, the manufacturer is able, as soon as he has fulfilled his existing contracts, to fill contracts for months and possibly years to come at equally good prices, or higher prices, abroad, and the only result of fixing prices in such cases is to cause a shortage in this country.

There are two objections which I apprehend will be raised by the Government to the Amendment. One will be that they have not found this difficulty in a serious form up to the present. That is very obvious. Since the Armistice there has been a great shortage of sea transport, but that shortage is every day disappearing. Indeed freights have, in some instances, fallen considerably, and the alternative which was not open to the manufacturer eight or ten months ago is not only more open now but will be the natural and legitimate alternative in a few months' time.

The second objection will no doubt be that any check on exports must lengthen the period during which our exchange is righting itself with foreign countries. Perhaps I might be allowed to examine that objection for a moment. Take the case of the United States. I have seen it stated in trade journals of that country that the United States would be willing to take the whole of the linen production of Belfast if Belfast would only enter into an agreement to send abroad the greater part of that export. Unquestionably so far as our exchange is concerned that would be a most admirable operation for our trade. But from the point of view of prices and of wages, which are constantly chasing each other in a mad struggle from which the workman receives the minimum of profit and by which the period of reconstruction and contentment is immeasurably extended, if you allow a large portion of the linen, woollen, or cotton trade to go abroad you are doing the most serious damage and. increasing the unrest in this country.

I would ask the Government not to take powers forcing them to limit exports, but to take powers in the case of staple commodities for which there is a great market here and outside, and lay it down that to whatever proportion of that commodity there is a real need in this country the price should apply, and should apply on condition that the manufacturer sells that portion of his production in this country. There are statistics which make it perfectly easy to decide what portion should be exported and what portion should be reserved for use in this country, and I consider that to pass this Bill without such a power in the hands of the Government may make it, as the last one has been, almost totally inoperative in some classes of production.

There is nothing more serious at this moment than the pace at which prices are rising for commodities which must be obtained. They are absolutely nullifying all the increase of wages, increases which themselves are making food and other articles scarcer every day and more costly. I cannot imagine anything which will more rapidly increase contentment and still the unrest among the wage-earning classes than if we showed them before the end of this year that a term has been placed on these continuous advances, that prices are beginning to fall, and that those who have had the great advantage out of the fortune of the war are contributing their fair share to filling the markets at home.

Amendment moved— Page 1, line 26, after Clause 1, insert the said new clause.—( The Earl of Midleton.)

VISCOUNT PEEL

The noble Earl has raised a very difficult point. Necessarily, I was going to say, in theory at any rate, if there is a tremendous demand for goods outside this country or for a certain class of goods, at high prices, and you limit prices in this country, there is a great danger that the goods will be sent into the most profitable market. That is an obvious proposition, and a very important one too. I would only say that in his Amendment first of all—because this is an important distinction—the noble Earl deals with the settling of maximum prices. The Bill dose not deal with the question of maximum prices at all, but only with the question of profits. The cost of production, of course, is taken into consideration, and a fair profit on that allowed. That is a different thing from saying that the price shall be less than a certain amount without considering the cost of production. I think your Lordships will also agree in this. Everybody lays stress upon the necessity for increased production, and therefore anything which might militate against production and the progressive pace of production would be dangerous and should be avoided. It is obviously important that the least difficulty should be placed in the way of trade, especially at this time, and therefore we have to consider even in this Bill how much damage it may do to the reviving trade of the country.

Before I examine the particular proposal made by the noble Earl, I should like to say a word upon his criticism of what the Board of Trade is proposing and what is being done, because he desired rather to anticipate, I think, any possible points that I might urge in favour of the Government's proposal by dealing with them himself beforehand. There were two points on which he dwelt. The first was that if it had not yet been found a danger, it was theoretically a danger. His point was that this might become a real danger because of the question of transport. His second point was as to the effect upon exchange, and he tried to counter the important effect upon exchange which exports might have by drawing a terrible picture of what might happen in certain cases; for instance, the whole of the linen trade of Belfast being swept up in one enormous shipment into the American market. Everybody must admit, of course, that it is true that that danger does exist, and that it would exist to a far greater extent than at present if the principle were to obtain, or the practice were to obtain, that the Board of Trade should fix these maximum prices. I have shown, however, that it is profits and not prices with which the Board of Trade is dealing.

I must, in spite of the noble Earl's contention, urge that in the past certainly and up to the present this grave danger which he has suggested has not taken place, and whether it is necessary for the moment to take into account dangers which have not taken place yet, but which may take place, it is for your Lordships to determine. For instance, we were assured some months ago that we were going to have a tremendous drop in shipping freights. That did not take place, and therefore this present state of things may be prolonged, and I am afraid it will be for a much longer period than the noble Earl suggests. I think also, if the noble Earl will look at the particular provisions of the Bill, he will see what an effort has been made by the Government to meet that particular difficulty, because, as I explained on the Second Reading of the Bill, these schemes for the limitation of profits are made as far as possible in combination and in consultation with the trades themselves, and the trades themselves in fixing these prices of course have regard to the questions of the home market. The noble Earl talked rather in a light way of sending all your products suddenly into a new market, but that is not the usual process of many of these trades. These traders have for years built up their trade in particular quarters and through particular channels in this country, and they do not want to lose those channels in order to get larger profits, perhaps, in a wider market. I think the noble Earl rather exaggerates the facility with which traders can change their markets.

Let me put this one point on the question of exchange, which I think to some extent the noble Earl slurred over. It must be the case, if you are going to prevent many classes of goods being exported from this country, that you must retard the recovery of exchange and suffer in your purchases in other countries, and suffer severely. This Amendment is much more far-reaching, far more expensive, far more productive of interference with trade, and sets up larger masses of officials than anything which the Government ever proposed. In fact I was astounded to hear that objection was taken to the hundred thousand pounds to be spent on this Bill, when it is difficult to overestimate the far greater numbers of officials and the much greater expense which must be involved under the proposal of the noble Earl.

THE EARL OF MIDLETON

Under the present Government.

VISCOUNT PEEL

Under any Government at all. In fact, the little finger of the noble Earl is much thicker than the loins of the Government. Let me try to establish that particular proposition. First of all, the noble Earl reposes an exceedingly generous confidence in the Board of Trade, because in order to keep down prices and to ensure a sufficient supply of materials in this country the Board is to be able to take any steps that it may think necessary. I do not wish to be too critical of the words of the Amendment, but the noble Earl has so much confidence in the Board of Trade that he is prepared to give absolute carte blanche to that Department to deal with this subject in any way it chooses. I know that your Lordships have great confidence in the Board of Trade, but unfortunately I doubt whether in another place, looking at it as a practical question, they will be prepared to give such unlimited confidence to the Board of Trade as the noble Earl.

What is involved? I must point out that in the Government Bill itself, in fixing the profits, regard is to be had to the supply of ordinary commodities in the United Kingdom. But the first thing that must be done under the Amendment is to restrict exports. As we know, in view of the exchange, in view of the growth of trade, and in view of the necessity for increased production, that is first of all a very dangerous and a very difficult thing to do at this stage of affairs. Moreover, how are you to restrict trade? You can only do it by setting up control over the whole of an article. It is obvious, before you can restrict trade, that you must know exactly the number of articles which should be retained in this country, and you must know precisely how much production there is at any particular time and at all times. And to do that you must, I suppose, set up your system of licences which has been a good deal criticised by my noble friend, and set up also this machinery for control over all these articles. And my Lords, you would have to do it at the very time when the Government is doing its best to free the country from this system of control. The noble Earl's case, in practice, leans in favour of the re-establishment of all this system of control. And at what expense? And who is to carry this out? This hundred thousand pounds is a mere bagatelle compared with the expenditure which would be incurred if this were done.

Your Lordships are quite familiar with what was done in the case of Coal Control. In that case the price was fixed in the country both for industrial and household coal, while exporters made very large profits. Obviously it was monstrous that some persons should be allowed to export their coal at a very large profit, and that others should have to sell it in this country barely at the cost of production. The result is that there has to be a pool—a sharing between exporters and those who sold at home. So that not only would the Board of Trade, without coming to Parliament, be able to control exports, but it would also have to set up this great machinery of controls over again, and have a system in all these different trades and commodities for sharing all the profits, as was done in the case of the coal trade, the policy in regard to which was so vigorously denounced by noble Lords opposite. The noble Earl, in making such a proposition, has raised a very difficult point, and I ask him whether he has fully considered the consequences of what he advocates. I am afraid that the remedy that he suggests would be far worse than the disease. If any such set of circumstances as he foreshadows were to take place the Government no doubt would have to deal with it. I hope he will not urge us, and I hope your Lordships will not urge us, to spend, on the hypothesis indicated, so large a sum of money in setting up all these permanent officials.

LORD EMMOTT

My Lords, we are in a difficult position this afternoon, because the new clause which has been moved is one which we have only heard read from the Table. I understand that it differs in form from the actual Amendment upon the Paper. The Amendment upon the Paper refers only to Clause 1, and in regard to the articles and the schemes dealt with under Clause 1 it might have been possible to make an arrangement with manufacturers to see that an adequate supply was kept for the home market; but if, as I understand is now intended, the new clause is applied to all articles, then I am afraid it will be very difficult to carry out.

Although I have the utmost sympathy with the motives by which the noble Lord opposite is actuated in moving this clause, I think that in carrying out any such proposal as is here suggested an enormous amount of control and interference is absolutely inevitable. To carry it out effectually—I must say that here I agree with the noble Viscount who speaks for the Government—would mean a huge army of officials. Furthermore, I think in regard to many trades it might not be a practicable proposition. I happen to know most about the cotton trade, and if I may give an instance from that trade to show how difficult such a clause as this would be to carry out I should like to be allowed to do so. Cotton cloth is for the most part bought from manufacturers by merchants. Those mer- chants often have the goods finished, and then they use them indiscriminately either in the home market or in the foreign market, for there are many goods which are sold both in the home and in the foreign market in precisely the same form. In a case like that I think that it would be almost impossible to carry out such a clause as this.

There is no reason from the point of view of the country why the utmost possible price should not be obtained for cotton goods that are sent abroad. It is clearly to our interests in every way, from the point of view of the exchange and from every other point of view, to obtain the highest price we can. I regret incidentally that the profits in the trade have been so high, for that brings other dangers in its train which I very much deplore. But there tine facts are, and it would be simply folly on our part not to take any price that we can obtain from overseas for the cotton goods which we make in such large quantities in this country. And I do not see how it would be practicable, when goods have left the hands of the manufacturer—and the manufacturer has only one price for them—and have gone into the merchant's hands, to discriminate between goods which even the merchant himself might not know when he bought them whether he was going to use in the home trade or the foreign market. I must say that I think this proposal is not a very practicable one.

I am not sufficiently acquainted with the question of transport by sea to know what the facts are about outward cargoes, but I do not think outward cargoes have been so short as the noble Earl suggested. It is the inward cargoes for which we have been short of shipping rather than the outward cargoes since our coal exports have been so much diminished. Finally, I think this proposal must have a serious effect upon exchange. It is entirely contrary to the advice which has been pressed upon traders by the Government that they should run the home markets as short of goods as possible in order that goods may be sent abroad to improve our exchange. In regard to the question of prices and wages chasing each other, of course that is a phenomenon with which we are all too familiar, and for which there does not seem any very short and simple remedy. I am sorry that I cannot support this proposal, for it seems to me so impracticable that I am quite unable to do so.

THE EARL OF MIDLETON

Before the Amendment is put I should like to ask the noble Viscount whether he thinks that his eloquent exposition of all the dangers which attend this comparatively innocuous Amendment are really justified by the facts of the case. The noble Viscount speaks as if the Government has not got power. But we know that wide powers are possessed by a number of Departments, and that those powers have been exercised without the slightest restraint for several years past. A Department, for instance, has had the power under the Defence of the Realm Act of putting on duties which this country has never yet in detail practised. Duties have been put on imports which the Department thought for one reason or another undesirable. At this moment a thirty-three per cent. ad valorem duty is being levied on goods coming from abroad, for which the. Government. are taking every bit as much responsibility as they are in regard to anything contained in this Amendment.

Then, again, the noble Viscount was extremely eloquent about the necessity of not stopping exports. Only yesterday he passed a Bill through this House—or some member of the Government passed a Bill through this House—for stopping the export of all sorts of fertilisers, the export of which is entirely prohibited. There are a number of other exports which at this moment are prohibited. I should like to ask him a plain question. The whole object of this Amendment is to male the Bill clearer. The noble Viscount has spoken to your Lordships five times—not too many—in the course of the last few days on the subject of the desirability of this Bill as it stands. Can he tell me of any of these staple commodities of which the price has been reduced in the least by the Profiteering Act of last Session? Why does not he tell us—not that this provision might be used in such a way as to create a very large staff, if the Government were, as I think, unwise enough to do anything of the kind, or that the Government would have enormous power to draw upon the public purse in order to create another of these huge bureaucracies with which we are so familiar—why does not he tell us that there is no necessity for such action because they are able to provide against the danger which we anticipate if this Amendment is not passed. Will he get up and tell us of any commodity in which the action of the Profiteering Act has been such that it has reduced the price, or kept it to anything like a normal figure? I put that as a challenge, and I think, before we decide the Amendment, he ought to be good enough to deal with it.

As regards the general scope of the question the mere fact that the noble Viscount hopes, under Clause 1 of the Bill, to use associations of trades themselves for a number of other purposes makes it obvious that he can use them also for this purpose. But if he desires that we should proceed no further with this Amendment I hope he will, at all events, give us some means of judging how far the Government without such powers are likely to be able to deal with great emergencies.

VISCOUNT PEEL

The noble Earl asks me a very difficult hypothetical question. He asks me how far prices of staple commodities have been reduced by the action of the Profiteering Act during the last six months. Every one knows that with the shortage of commodities and with all the difficulties we are familiar with, and the rise in wages, and so on, these prices are rising. I should like to ask him this question. How far have these prices been prevented from rising, rather than falling, by the provisions of the Profiteering Act? It really is most unreasonable, when we know that all prices must inevitably be rising through the rise in wages, to ask "In what staple trade have you by your Act caused them to fall?" The noble Earl knows much better than I do the answer to Ns question on that point.

There was another point, too, which he raised, and that was that you can already—you have been dealing with restrictions of import, and so on, under the Defence of the Realm Act Regulations. But surely the noble Earl knows that those provisions come to an end about August, and I must say I am surprised to hear from the noble Earl that he is openly advocating the extension of the Defence of the Realm Act Regulations. I am afraid those Defence of the Realm Act Regulations are having a very short shrift in the other House. I may even say that some of their legality has been challenged, and that a Bill called the Indemnity Bill is now under consideration in another place to try and justify and give an indemnity for actions taken under those provisions. I hope your Lordships do not wish to go back to the procedure during the war and to inflict again on this country all the difficulties and trouble under the Defence of the Realm Act Regulations.

LORD ASKWITH

I think the noble Viscount is accusing the noble Earl of certain charges as to what he wants which are very different from what the noble Earl is apparently aiming at. What the noble Earl is aiming at appears to be the very serious difficulty of the cost of living in this country. That is what he would like to see reduced, and that is what the country would like to see reduced. He now fears, if this maximum price is put on in this country, that merchants or manufacturers will sell all their goods to foreign countries if those countries can give them either other goods or credit in return or if they recover their position in such a way that they can buy. This country would be swept of those goods, and people would not be able to get goods, which would not be on the market or, at any rate, they would not be put upon sale at the price which was proposed. That, I understand was his point, and it seems to me a very important one.

This is a most difficult subject, and a subject introduced at forty-eight hours' notice. I do not think it can possibly be tackled by an Amendment of this one Bill, but I would suggest to the noble Earl that he should reserve to himself the right of introducing—and this House should consider very carefully the responsibility—of an amending Bill, if such a result occurs in any of the staple necessaries. It can very easily occur, and in certain countries during the war export was stopped. Denmark stopped the export of eggs and butter in order that her own people might have sufficient. And when there is an enormous demand throughout the world for such things as cotton and woollen goods manufactured in England it is quite possible there might be a shortage of clothing, and it is quite possible there might be a shortage of other goods.

THE MARQUESS OF SALISBURY

I venture to congratulate your Lordships on having adjourned the debate last night, because we have had the opportunity of hearing an excellent speech from the noble Viscount in charge of the Bill which, I think, he was not in a position to deliver yesterday. He has evidently taken to heart the observations of your Lordships, and has made himself acquainted with the difficulties of this subject and has delivered to us a very interesting speech showing all the objections which there are—necessarily are—to this restrictive legislation. Of course, no one would defend a check upon exports per se. The question is how far must you go if you start once upon this road of restrictions. Some sort of Profiteering Bill was no doubt necessary, but the one thing we seem not to have obtained from the Government is a defence of the profiteering policy, as they conceive it. None of us is in favour of profiteering, but we are not particularly lost in admiration of the methods which the Government have taken to restrict profiteering. Not only has the noble Viscount delivered a very interesting speech, but also he has delivered some excellent sentiments about the iniquities of bureaucracy, and of control, and of all the things which His Majesty's Government do.

VISCOUNT PEEL

It was the noble Earl's bureaucracy I was criticising.

THE MARQUESS OF SALISBURY

No, it was quite general in terms. I am sure the noble Viscount will not think I am going too far if I remind him of a little proverb about Satan reproving sin. But the real point is that, though my noble friend has made his point absolutely clear to your Lordships, the Government have not made their reply clear. The noble Viscount said that when the occasion arises the Government will no doubt have to deal with it. That is a concession. I take that to be an announcement, on behalf of the Government, that if, in fact, in the working of this Bill, when it becomes an Act, there is an undue shortage of supply in the home market, the Government will feel it necessary to take legislative action. I am not, of course, wishing to interpret it too rigidly, but there is evidently a limit past which the restriction of supply cannot be allowed to go, and this the noble Viscount has recognised. It is a distinct achievement on the part of my noble friend that he has elicited that assurance from the Government. Personally I should be content to rest upon that. I recognise to the full the difficulties of the system which is proposed. I was very much impressed not only by the speech of the noble Lord, Lord Emmott, who speaks with great authority, but also by the speech of the noble Viscount, Lord Peel. I do not wish to restrict exports unduly, and I know how necessary it is to maintain the exchange; but I think that the Government ought to face the possibility, even the probability, of the event taking place which my noble friend has suggested—namely, that there will be a shortage of supply, and I hope they are considering what course they should take in that event. That appears to me to be the result of a useful debate and of the action of your Lordships yesterday.

THE EARL OF MIDLETON

After the discussion which has taken place I shall not press the Amendment. I hope, however, that the noble Viscount realises that no one in this House objects more than I do to the necessity for this control, and that no one is more anxious than I am to maintain the foreign exchanges; but I am afraid that under this Bill the Government will concentrate too much on comparatively small and irritating restrictions and will prove, as in the past, faint-hearted in dealing with what is developing into a most serious evil.

Amendment, by leave, withdrawn.

Clause 2:

Amendments to section I of principal Act.

2.—(1) Section one of the principal Act shall extend to hire purchase transactions and to the letting on hire of articles and offering to let, articles on hire in like manner as it applies to the sale and offering for sale of articles, and the expressions "sale," "seller" and "price" shall be construed accordingly.

(2) The Board of Trade may, by order, extend section one of the principal Act to any process of manufacture, or the repairing, altering, dyeing, cleaning, washing or otherwise treating of any articles mentioned in the order and processes incidental thereto, or after consultation with the Minister of Transport to any form of road transport, subject to such modification as may be necessary to adapt the provisions of that section thereto.

(3) For the proviso to subsection (2) of section one of the principal Act, the following proviso shall be substituted:— Provided that the profit sought or obtained shall not for the purposes of this section be deemed to be unreasonable—

  1. "(a) in the case of a seller who was in the same way of business before the war, if the percentage rate of profit sought or obtained does not exceed the rate of net profit obtained by him upon the sale of similar articles under pre-war conditions, due consideration being given to the relative expenses of carrying on the business; and
    2. 458
  2. "(b) in the ease of a seller who was not in the same way of business before the war, if the percentage rate of profit sought or obtained by him does not exceed the average percentage rate of profit obtained by sellers in that way of business in the same locality on the sale of similar articles under pre-war conditions, due consideration being given to the relative expenses of carrying on the business."
The said proviso shall not apply in any case where the profit in respect of any transaction has been fixed by a scheme approved by the Board of Trade under this Act.

(4) Notwithstanding anything in any other Act a prosecution for an offence under subsection (2) of section one of the principal Act may be instituted at any time within one year after the commission of the offence, except where the act constituting the offence is a sale by retail.

VISCOUNT PEEL moved, in subsection (3) (a), to leave out "rate of net profit" and to insert "percentage rate of profit." The noble Viscount said: This Amendment is purely drafting, and consequential upon some mistake in the other House.

Amendment moved— Clause 2, page 2, lines 17 and 18, leave out ("rate of net profit") arid insert ("percentage rate of profit").—( Viscount Peel.)

LORD EMMOTT

May I ask whether the noble Viscount can explain to me on what principle it is intended that the purpose of this paragraph should be carried out. Is the profit reckoned on the cost of the article?

VISCOUNT PEEL

It is reckoned on the cost of the article, I understand, taking into consideration also all the relative expenses of carrying on the business.

LORD EMMOTT

Therefore it is not reckoned upon the profit he is making but upon the cost of the article, whether he is making a reasonable or an unreasonable profit on the article?

VISCOUNT PEEL

Yes.

On Question, Amendment agreed to.

VISCOUNT PEEL

The next Amendment is purely drafting.

Amendment moved— Page 2, line 19, leave out ("under pre-war conditions") and insert ("before the war").— (Viscount Peel.)

On Question, Amendment agreed to.

VISCOUNT PEEL

My third Amendment is very nearly drafting. It is merely to make perfectly certain that such matters as the Excess Profits Tax and the Corporation Tax, and so on, can be taken into account. It was rather doubtful whether that would be done if the word "expenses" remained in—that there might be too narrow an interpretation of the words.

Amendment moved— Page 2, line 20, leave out ("expenses") and insert ("costs and charges").—(Viscount Peel.)

On Question, Amendment agreed to.

VISCOUNT PEEL

The next Amendment is to make it equally fair whatever the district is in which the business is being carried on.

Amendment moved— Page 2, line 26, leave out ("in the same locality") and insert ("under similar conditions").—(Viscount Peel.)

On Question, Amendment agreed to.

VISCOUNT PEEL

The next two Amendments are drafting.

Amendments moved— Page 2, lines 27 and 28, leave out ("under prewar conditions") and insert ("before the war") Page 2, line 29, leave out ("expenses") and insert ("costs and charges").—(Viscount Peel.)

On Question, Amendments agreed to.

Clause 2, as amended, agreed to.

Clause 3:

Interpretation of s. 2 (b) of the principal Act.

3. For removing doubts, it is hereby declared that a person shall not be deemed to be a trade competitor within the meaning of proviso (b) to subsection (2) of section two of the principal Act of a person against whom a complaint is lodged by reason only that he is a member of a co-operative society which carries on a business of the same class or description as is carried on by that person, if he does not take part in the management of and is not a paid official of the co-operative society.

LORD SOUTHBOROUGH moved, after "society" where that word first occurs, to insert "or a shareholder in a company." The noble Lord said: Your Lordships will see upon the Paper three Amendments to this clause and it is with the first that I am now dealing. The argument upon them is short and simple. The noble Viscount, when moving the Second Reading, referred to the committees which were established in different parts of the country for the purpose of giving effect to the machinery of the Bill other than those provisions of it dealing particularly with prices. The main point of difficulty which has arisen is that whereas it was laid down that a competitor in trade must not be upon the tribunal which dealt with the case of a person charged with profiteering, some doubt has occurred as to the interpretation which can properly be put upon the term "trade competitor." The object not only of this Amendment but of the two succeeding ones is to make it quite plain that the definition of "trade competitor" shall be widened so that a shareholder of a company or a co-operator paid or unpaid shall not be excluded from sitting on the tribunal provided be takes no part in the management.

Amendment moved— Clause 3, page 3, line 2, at end insert ("or a shareholder in a company").—(Lord Southborough.)

VISCOUNT PEEL

This is a perfectly fair Amendment. The provision is, of course, to apply only to officers of the company.

On Question, Amendment agreed to.

LORD SOUTHBOROUGH

The other two Amendments are consequential.

Amendments moved— Page 3, line 5, leave out ("a paid") and insert ("an") Page 3, line 6, at end insert ("or company").—(Lord Southborough.)

On Question, Amendments agreed to.

Clause 3, as amended, agreed to.

Clause 4:

Minor amendments of principal Act.

4. The provisions of the principal Act specified in the first column of the schedule to this Act shall have effect subject to the amendments (being amendments of a minor character) specified in the second column of that schedule.

LORD ASKWTH moved to leave out "(being amendments of a minor character)." The noble Lord said: The amendments must surely stand by themselves. It is the opinion of a draftsman outside that they are of a minor character, but I have heard that in the Schedules of some Acts of Parliament you find things which might be very important to the trader, or factory, but which are thought by the draftsman to be of a minor character. I am not sure that even in this Schedule there is not one. The word to which I particularly object is "minor."

Amendment moved— Clause 4, page 3, line 9, leave out ("(being amendments of a minor character)").—(Lord Askwith.)

VISCOUNT PEEL

These words were inserted by the draftsman because these Amendments were of a minor character.

LORD ASKWITH

In his opinion.

VISCOUNT PEEL

Yes; and, I may add, in the opinion of those who have scanned them. But I see the objection to the principle, that it may be much more difficult for those who are construing these Acts, or who suffer from them, and their attention may not be so much called to Amendments if they are placed in that particular part of the Bill. May I suggest to the noble Lord that he might substitute such a word as "miscellaneous" which would not have the invidious meaning of "minor," and which would avoid the difficulty he has raised?

THE MARQUESS OF SALISBURY

I see no reason why the brackets should not be left out altogether; they have no enacting power. The words would not mislead the Lord Chief Justice—I see that he agrees entirely with what I say—but they may mislead any layman who read the Act. He would think "I need not bother about the Schedule; that is only a minor matter." We had better avoid expressions of opinion in an Act of Parliament.

VISCOUNT PEEL

I agree that it is impossible to deceive the Lord Chief Justice. I understood that my noble friend who moved the Amendment said that my suggestion would meet his point.

LORD ASKWITH

I thought it was a word which would go far to meet my point. I understood he suggested the word "miscellaneous."

THE EARL OF READING

Would the noble Viscount tell me the object of putting in words of this character which have no enacting effect? You must turn to the Schedule to see what are the particular cases or amendments dealt with. It is stated that you turn to the Schedule, and therefore there does not seem to be any object in retaining these words. It does no harm to leave them out.

VISCOUNT PEEL

I have had a very great deal of high legal advice since I had the opportunity of speaking on the Amendment, and I will accept it.

On Question, Amendment agreed to.

Clause 4, as amended, agreed to.

Clauses 5 and 6 agreed to.

Clause 7:

Investigation as to proprietary articles.

7. Nothing in this Act or in the principal Act shall (in its application to a proprietary article hereinafter defined) require particulars of any secret process of preparation, or of the ingredients used in the composition of such article to be furnished: but the Board of Trade shall be entitled to require that the cost of any such article (exclusive of overhead charges) shall be furnished by the proprietor under the certificate of a duly qualified chartered accountant verified by statutory declaration. The accountant by whom the certificate is to be given shall be approved by the Board of Trade.

A "proprietary article" shall be deemed to be any article, the exclusive property of any individual, or company, or firm, the composition of which is secret or in the preparation of which secret processes of manufacture are employed.

LORD ASKWITH had Amendments on the Paper altering Clause 7 to read as follows— 7. Nothing in this Act or in the principal Act shall require particulars of any secret process of preparation, or of the ingredients used in the composition of any article by such process to be furnished; but the Board of Trade shall be entitled to require that the cost of any such article (exclusive of overhead charges) shall be furnished by the owner or owners under the certificate of a duly qualified chartered accountant verified by statutory declaration. The accountant by whom the certificate is to be given shall be approved by the Board of Trade. The noble Lord said: The decision of your Lordships with regard to the first Amendment in my name will decide all the rest, and also the question whether the Government prefer the wording of my Amendment or that of a new clause which my noble friend Lord Southborough proposes. I am inclined to think that Lord South-borough's clause is a little better than mine, particularly in regard to his description of the officer who is to give this certificate. I attempted to deal with the Government's own wording, but I think Lord Southborough's is better.

My first Amendment is to leave out the words "in its application to a proprietary article hereinafter defined." This clause, as at present drafted, provides that secrecy should be kept with regard to proprietary articles and goes on to define proprietary articles. There is very considerable objection to this form of words and this definition "proprietary article" has come to mean something like" quack medicine." It is a phrase that is not applied to a great many trades. It is most unreasonable that, under the Profiteering Act, secrets of processes and preparations should be obtained, when the desired effect can be secured by knowing the cost of the whole thing. It is quite possible that that can be done.

If this Bill becomes better known I am perfectly certain there will be a great deal more excitement about this and the risk of the possibility of processes in the iron and steel trade becoming known. I have heard of one instance in connection with cement. There is also the possibility in regard to other articles which are in common use among the people and are really, with some people, almost necessary, such as custard power, Worcester sauce or, to mention another sauce on which in order to keep its secret hundreds of thousands of pounds years ago were spent in litigation, Yorkshire Relish. I have heard of the cases of particular classes of lens for spectacles which have been found out partly during the war and which are secret processes which it is most undesirable should become known. As the clause is worded it might allow, and I think on interpretation would allow, investigation to be made which might cause the secret processes to become known. I know that the steel trade certainly would have the strongest objection to any of their secret processes becoming known in this way. They suffered considerably during the war by some of their competitors happening to learn from the Ministry of Munitions—necessarily happening to learn—some of the secret processes that were being carried out. Of course, a great many things are made—some possibly by secret processes—which come into the ordinary necessaries of life in the iron and steel and tin plate trades. I therefore move to omit these words.

Amendment moved— Clause 7, page 4, line 11, leave out from ("shall") to ("require") in line 12.—(Lord Askwith.)

THE LORD CHAIRMAN

I understand that the noble Lord prefers Lord South-borough's words. Do I understand that he moves his own Amendment?

LORD ASKWITH

I move it for the purpose of getting an answer from the Government. But if the Government accept the principle and prefer Lord Southborough's Amendment, I shall withdraw all my Amendments.

VISCOUNT PEEL

I should be very happy to accept the Amendment of my noble friend. In fact, this Amendment would carry out the promise or suggestion that was made in another place that this protection should be extended more widely than to proprietary articles in order to cover secret processes or preparations. There are one or two points in which I should prefer the Amendment of Lord Southborough, more especially because of the expression "chartered accountant." The noble Lord knows that there are incorporated accountants, and one would not wish to exclude one set of accountants from the Bill. Therefore if my noble friend moves it in that form I should be very pleased to accept it.

LORD ASKWITH

I withdraw my Amendment in favour of Lord South-borough's.

Amendment, by leave, withdrawn.

LORD SOUTHBOROUGH moved to leave out Clause 7 and insert as a new clause— .Nothing in this Act or in the principal Act shall require particulars of any secret process or preparation, or of the ingredients used in such process or preparation to be disclosed, but the Board of Trade shall be entitled to require that the cost of production (exclusive of overhead charges) shall be furnished by the producer under the certificate verified by statutory declaration of a qualified accountant approved by the Board of Trade. The noble Lord said: I am content to move my Amendment. My noble friend has made the speech in favour of the new clause.

Amendment moved— Leave out Clause 7 and insert the said new clause.—(Lord Southborough.)

On Question, Amendment agreed to.

Clauses 8 and 9 agreed to.

Clause 10:

Short title, construction and duration.

10.—(1)This Act may be cited as the Profiteering (Amendment) Act, 1920; and the Profiteering Arts, 1919, shall be deemed to have continued in force until the date of the passing of this Act, and the principal Act as amended by this Act may be cited together as the Profiteering Acts; 1919 and 1920.

(2) This Act shall be construed as one with the principal Act: Provided that the limit on the expenses of the Board of Trade, payable out of moneys provided by Parliament under that Act shall not apply to expenses incurred after the date of the passing of this Act, so, however, that the expenses so payable after that date shall not exceed one hundred and twenty thousand pounds.

(3) The principal Act and this Act. shall continue in force until the nineteenth day of May nineteen hundred and twenty-one.

VISCOUNT PEEL

The first Amendment that I move in subsection (1) is purely drafting.

Amendment moved— Clause 10, page 5, line 4, leave out from ("1919") to ("this") in line 6, and insert ("and").—(Viscount Peel.)

On Question, Amendment agreed to.

VISCOUNT PEEL

My next Amendment, in subsection (3), is also drafting.

Amendment moved— Page 5, line 15, leave out ("and") and insert ("shall be deemed to have continued in foree until the date of the passing of this Act and the principal Act as amended by").—(Viscount Peel.)

On Question, Amendment agreed to.

Clause 10, as amended, agreed to.

Schedule:

MINOR AMENDMENTS.
Enactment Amended. Amendments to be made.

LORD ASKWITH

The Amendment that I propose to the Schedule is consequential.

Amendment moved— In the Schedule, line 2, leave out ("Minor").—(Lord Askwith.)

On Question, Amendment agreed to.

Schedule agreed to.

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