WEST AFRICAN TRADE AND TAXATION.

HL Deb 10 May 1922 vol 50 cc315-54

LORD EMMOTT rose to draw attention to the Report of a Committee on Trade and Taxation for British West Africa, and to urge upon His Majesty's Government the importance of the immediate abolition of the Differential Duty on palm products in the Dependencies of West Africa.

The noble Lord said: My Lords, it is now two years since we last discussed one portion of the question that I propose to bring before your Lordships this afternoon—namely, the Differential Duty on palm kernels. Prices were then still high, but the fall in prices was beginning. To-day I am going to deal with that question, but also with a wider question. The great depression of trade that has affected the whole world has affected West African produce particularly. There are many of our raw materials of industry to-day which, although their price has fallen very heavily from the figures of 1920, still stand at considerably more than they stood at before the war in 1914. But in regard to the main West African staples—palm kernels and cocoa, as well as timber and hides—the price in Liverpool is lower today than it was on the average for some years before the war. The price payable to the native, therefore, is immensely lower than it was; in fact, in regard to practically all the articles of produce which we import from West Africa, including palm oil and ground nuts, owing to the Export Duties and to the increased railway and other charges, the price that the natives can obtain for them is very much less than it was before the war. Also, the Import Duties in those countries have been largely increased and now stand at very high rates; so that the native is prejudiced doubly—he obtains less for what he has to sell, and he pays more for what he has to buy.

When compared with other British Colonies, and, particularly, with French and Belgian Colonies in West Africa, the position of the native in our Colonies today is indeed lamentable and calls for the earnest attention of the Government and of the House. The seriousness of the whole position impressed itself very much upon me in the course of my investigation of it during the last few days. The fall in prices and the depression of trade which that connotes are bad enough, but there is also great anxiety as to the financial position of these Colonies. There are two reasons for that. There has been a profound change in the whole policy of those countries, owing to the prohibition of the import of "trade" spirits which took place in 1919, which was faithfully carried out by us but, until recently at any rate—and I am not quite sure what has happened recently—has not been carried out by France. The loss caused to the revenue by that prohibition of "trade" spirits was enormous, and these Export Duties were put on the main articles of produce in order to replace the loss that was caused by the abolition of the import of these "trade" spirits.

These Export Duties hamper trade and prevent recovery. In fact, it seems to me that a sort of vicious circle has been created there. The Export Duties which have been put on in order to make ends meet in finance kill the trade which is the real cause of the prosperity of these countries. Again, these Export Duties were imposed at a time of high prices and great prosperity in the Colonies. The Duties were made without any prevision of the inevitable depression that must follow a time of that kind and, being made at a time of prosperity, were synchronous with a period of high expenditure on work which had been delayed by the war. Schemes of development were at that time made extending over a period of years which were apparently justified then, but in the light of later events are quite unjustified. The whole position is an anxious if not alarming one, and to my mind the anxiety of the position is somewhat added to by the fact of our system of appointing Governors for five years. In times of prosperity Governors of these Colonies are so easily led to evolve schemes, the financial effects of which, if they do not happen to be successful, fall not upon them but upon their successors. I speak of the system in this case; I make no personal reference. In fact, with regard to the last Governor and the present Governor of Nigeria—I allude to Sir Frederick Lugard and Sir Hugh Clifford—both are remarkable for ability, energy, experience and prudence. But while they and others are men of the highest class, I say that the system is a rather dangerous one.

There is another factor in this case. For the last four or five years it has been far too much the practice for the Secretary of State for the Colonies for the time being—who ought to be sufficiently employed by the affairs of 40,000,000 coloured people in our Crown Colonies and 15,000,000 whites and a great many coloured people in the Dominions—to be taken off his Colonial work to attend to other matters. Of the great ability of the present Colonial Secretary there can, of course, be no sort of doubt, and may I say how deeply I regret the illness from which, at the present time, he is suffering; but it is a misfortune that so much of his time has been taken up, as so much of Lord Milner's time was taken up, by subjects outside the work of the Colonial Office. The system seems to me to be bad for the Empire. It lowers the prestige, not of the man who holds the Office, but of the Office itself, in the eyes of the people of the Dominions and Colonies, and it makes one doubt whether the questions we are discussing to-day have had adequate personal attention from the holder of the Office for the time being.

In the case I am bringing before your Lordships to-day—the case of the general financial position of these Colonies—signs of financial difficulty were apparent about a year ago. They were so apparent that a Committee was appointed with Sir Hugh Clifford as the Chairman, which sat in October and November and made a unanimous Report in December. The terms of reference to that Committee are interesting, and I will read some extracts from them. They are asked to report with special reference to the adequacy or otherwise of the existing sources of income to meet the requirements of the Colonies and Protectorates concerned. They are asked to formulate recommendations designed, if possible, to widen the basis of taxation and to tap new sources of Revenue, and to submit any recommendations that the Committee may desire to formulate for the management of the financial affairs of the Colonies and Protectorates concerned that may enable them, in spite of the falling Revenue wherewith they are at present threatened, to finance the loans needed by them for essential public works. The whole meaning of that remit is to ask for suggestions as to new taxation, to suggest another turn of the screw, to increase the burdens of those Colonies "in spite of the falling Revenue wherewith they are at present threatened," and not to suggest economy.

At the very first meeting of that Committee the unofficial members passed the following Resolution: That the unofficial members of this Committee cannot usefully serve unless the terms of reference are extended so that they may consider and advise upon expenditure and the allocation of the same to capital or Revenue. To that Mr. Churchill replied that the Secretary of State had never had any intention of appointing a Committee to inquire into the Government expenditure in West African Colonies, and saw no reason for doing so. It is true Mr. Churchill went on to state certain objections of substance to that particular Committee being a suitable committee for the purpose, but the fact remains that just at the time when the Government here had at last been driven to recognise that if they desired to reduce taxation they must reduce expenditure, and had appointed the Geddes Committee to advise them in regard to that question, this West African Committee was not allowed to examine expenditure, or, what is almost as important in West Africa, allocation between capital and Revenue.

It was a proverb in Cicero's day that thrift is a large revenue. This Report is shorn of half its value by the restrictions imposed upon the Committee. Its conclusions must be read in the light of the fact that they were excluded from examining expenditure in detail. Expenditure creeps in, however, in their conclusions. Whether in a spirit of irony, or, as I think was the case, owing to the broad necessities of the matter they had to deal with, the greater part of the recommendations lay stress upon the necessity to reduce expenditure. The direct reply to the invitation for suggestions as to widening the basis of taxation is curt and emphatic. The Committee say they are not prepared to put forward any proposals to widen the basis of taxation, but in paragraphs 183 to 187 of their Report most of the recommendations really deal with expenditure.

They say, in paragraphs 183 and 184: The Committee considers…that the Governments of Nigeria, the Gold Coast and Sierra Leone are to-day incurring expenditure in excess of the revenue which they have a reasonable prospect of obtaining from existing taxation. The Committee is of opinion that the abnormal and, in a measure, the fictitious prosperity of these Colonies during 1919 and 1920, caused by the radical change in their fiscal systems, which had been worked by the sudden decision to prohibit the importation of 'trade' spirits, to be to some extent lost sight of by the Colonial Governments; and that this has led to the work of reconstruction…being undertaken by them on too lavish a scale, and with too great rapidity. They go on to say that they are of opinion that it should be the dual object of the Governments concerned to submit their expenditure to drastic revision, and, when possible, to remit taxation. I might read a good many other extracts bearing out my point.

My remarks to-day are made in no spirit of hostility. It is very easy to be wise after the event, and I quite see how mistakes were made, but what I am anxious to know, above all, is whether the Government are taking the situation seriously now. They, who have the power, ought to insist on retrenchment and economy at the present time. I want to know whether they do really recognise the danger of the position of these Colonies; whether they recognise that the cost of marketing produce in French and Belgian Colonies is so much lower than in our own that that alone is a very serious danger to our British Colonies in West Africa; and whether they see that heavy Export Duties, plus Import Duties, and, in the case palm kernels plus a Differential Duty if the kernels are sent to foreign ports, may lead to permanent disaster. I want to know whether the Government do appreciate the necessity at all costs of getting out of the vicious circle in which these Colonies seem at present to be placed, and, if so, what they propose to do.

Up to the time of the war these Colonies were extraordinarily progressive and prosperous. The fifteen years before the war was a time of great general prosperity. During those fifteen years the exports of this country doubled, a most unprecedented thing in our financial history, but in regard to these Colonies the exports doubled in five years. From 1908 to 1913 they grew from £7,000,000 to £15,000,000, and the Revenue of the four Colonies taken together increased during those five years by 94 per cent. There were no Export Duties then, and I do not think there was any increase of Customs Duties, but on the whole Customs increased by 60 per cent. during those five years. I was at the Colonial Office at that period, and I remember how fascinating it was to watch the progress that these Colonies were making at that time.

The set-back that came at the beginning of the war, was soon recovered from, and after the war, when control of prices had been removed, there was a great boom in these Colonies. In 1920 exports from Nigeria and the Gold Coast were more than twice what they were in 1913, and four or five times what they were in 1908. That was chiefly due to prices, the price of palm kernels being more than double what it is to-day. It was in this period that the prohibition of "trade" spirits took place, and these Export Duties were placed on cocoa, palm oil, kernels, ground nuts, coconuts, and on hides, skins, and timber. That policy could very well be borne at that time, for the native did not worry very much when he was getting £25 for his palm kernels as compared with £14 before the war. The Revenue also extended greatly at that time, and there was a surplus in Nigeria of £2,000,000 in 1920, and of £1,500,000 in the Gold Coast. Their system of finance is entirely different from that of this country. Surpluses are carried forward, and large sums are annually spent out of Revenue on permanent improvements.

Not unnaturally, at a time of great prosperity such as that, great schemes of improvement were made. Looking back we see, of course, the policy was wrong and short-sighted, but it was precisely the same policy that was at that time pursued in this country. Your Lordships often warned the Government during that period of the danger which they were running. Your Lordships foresaw that a lean time was coming, and now the lean time has come both here and in West Africa, and how lean it is in West Africa, I will, with your Lordships' permission, show. May I first say how greatly I regret the absence of Lord Leverhulme to-day. He is on his way to America. He desired to take part in this debate, and I am sorry that he is not in the country at the moment. May I also acknowledge my indebtedness to his son, Mr. Hulme Lever, for sending me some of the figures which I shall venture to give to your Lordships.

The price of palm kernels for some months has run between £18 and £18 10s. The average price for 1911 to 1913—I am giving the Liverpool prices—was £20 9s. 3d. I will now say what the native got then, and what he gets now. Taking the same price of £18 10s., the cost of marketing including the Export Duty to-day is £10 6s. 6d. as compared with £6 9s. when there was no Export Duty before the war. The increase is £317s. 6d. of which £2 0s. 6d. is due to the Duty and the cost of inspection and 13s. 6d. to the extra railway charges. Out of that total increase of £3 17s. 6d., £3 0s. 3d. is due to the action of the Government. The maximum price payable to the native—I should explain that these figures apply to Ibadan, a place 120 miles from the coast—if nothing whatever is obtained by the merchant for doing the business, would be, to-day, about £8, and certainly not over £11 on the coast. Before the war that same native was getting £14 inland and over £16 on the coast, or would have got that had he obtained the maximum price.

Take the other side of the question. The natives who bring in palm kernels often buy cotton goods. The price of cotton goods is immensely higher to-day than before the war, but, in order to be well within the mark, I will take the increase at 50 per cent. The native gets £8, but he can only buy what £5 6s. 8d. would have bought before the war. Before the war he was getting £14. Therefore, for the same quantity of palm kernels which would have bought 100 yards of cotton cloth before the war he can only buy 35 yards 81 inches to-day. Is it any wonder that Lancashire trade is depressed, or that hundreds of thousands of pounds have been paid by West African merchants in order to cancel contracts made at high prices, because there is no demand?

If every other Colony was in this position it would not matter so much; but that is not the case. I am going to give some figures showing the cost of bringing kernels from Kinshasa to Matadi in the Congo, and the cost of bringing them from Ilorin to Lagos, in Nigeria. The rail freight in the Congo is £1 3s. 7d. at the present rate of exchange, and £4 18s. 10d. in Nigeria; and the whole cost works out, including Export Duty and inspection, at £7 10s. 7d. in Nigeria against only £1 15s. 3d. in the Congo. The railway rates on that particular railway in the Congo have been immensely reduced. Since April 24 they have dropped from 195 francs to 59 francs to-day. That is a privately owned railway, and it shows what is done where you have competition in private enterprise. In regard to the French Colonies it costs £2 5s. less to market kernels from the Cameroons to a European port, £3 4s. less from Dahomey and £2 18s. less from the Ivory Coast. This means that our merchants can only afford to pay £8 to the native while Belgium can afford to pay £12 or £13 and the Frenchman £10 or £11. How can trade recover with such a handicap as this? It is perfectly impossible. It is not recovering. The exports of palm kernels in 1921 were 50,000 tons clown, and the natives are beginning to be careless as to what they bring in. The position, in fact, is one of great gravity.

I take next the question of cocoa, the great export of the Gold Coast on which it is much more dependent than is Nigeria on palm kernels. It is a comparatively new industry and has grown up within times we can all remember. The average price from 1911 to 1913 was £53 10s. Recently, the price in this country has varied between £38 and £45. The cost of bringing it from Coomassie—I am speaking of the cost in the Gold Coast, including the Export Duty—168 miles, with freight at 81s. (or nearly 6d. per mile), is £13 15s. 11d. against £5 10s. 11d. before the war. Of the increase £4 13s. 4d. is due to Duty and £1 8s. to the rail charges. In addition, there is the cost of bringing it home, which has increased from £5 7s. 8d. to £6 5s. 5d. The increase is much less in that case because the ocean freight has been enormously reduced. But there has been no attempt to reduce railway charges, and what has been done in the way of reducing railway charges in the Congo, and ocean charges under a system of private enterprise, is a striking example of the difference between private enterprise and the inelasticity and rigidity of Government management. The total charge for bringing this cocoa to-day is £20 ls. 4d. against £10 18s. 7d. before the war. These prices leave the maximum payable to the native at Coomassie at £25 18s. 8d. against £42 10s. before the war.

The cocoa industry is already threatened by disease and habits of careless picking which some of the natives are adopting. Dirty and diseased pods in one district increased, between 1919 and 1920, from 38 per cent. to 82 per cent.; and the Agricultural Department Report for the Gold Coast in 1920 says that "unless farmers give attention to better cultivation the cocoa industry may be a thing of the past." That alone constitutes a grave danger to the Gold Coast, for the finances of the Colony entirely depend on cocoa.

I take shortly the case of mahogany, which pays an Export Duty of 2d. per cubic foot. It was estimated that the Duty would produce £16,000 per year. It appears to be on the whole a decreasing and not an increasing amount. The demand is poor at the present time, and the maximum payable to the native for twenty logs of mahogany to-day is £50 7s. 8d. against £131 1s. 9d. before the war. Of that difference £13 6s. 8d. is due to Duty; and it represents a Duty of 25 per cent. on the maximum payable to the native. If an enemy were asked to devise means to kill trade I do not know what surer method he could adopt than this, and I ask the noble Duke who is to reply whether the Government is not able now to announce some concession in regard to this particular item of mahogany.

I come now to my last case, that of hides, which is far worse than any of the others. At the time when the Clifford Report was drafted figures were given which show that it cost about 5d.to bring hides to this market, and that only 2¼d. was left to pay to the native. I have had figures sent to me by Messrs. Lever Brothers giving an extract from a letter containing particulars of the sale of 11,000 hides, of an average weight of 15 lbs., which brought only from 3d. to 5d., and the cost of bringing these hides here is £39 15s. 7d. per ton, as against £12 6s. 3d. before the war. Of the difference £18 13s. 4d. is due to Duty and £1 14s. 2d. to extra railway freight from Kano to the Coast. On the figures given in the Report, which shows 2¼d. payable to the natives, a strong recommendation is made that the specific Duty, if it remains specific, may be based upon an ad valorem calculation of 15 per cent. Seeing that prices have dropped since that time, and that the whole value is taken up by the cost of bringing hides here, surely some entirely different arrangement must be made, or this trade must entirely die out. None of these articles are monopolies. Palm kernels are not a monopoly, even as palm kernels, but if they were, copra is practically as useful for all purposes. The Duties to-day are, as regards cocoa, at least 18 per cent. upon what is payable to the native. They represent 25 per cent. on kernels and mahogany, and a far higher rate on hides.

I know of no similar case of crushing Export Duties upon the main articles of produce of any country in the world. You could not have such a system of finance here. You could not have it in India. Why have it there? In asking what the Government mean to do, I do not forget that the Committee reported that they are unable to recommend an immediate reduction in these Export Duties, except, of course, in some matters of detail which I have mentioned. But I must remind your Lordships again that this Committee was debarred from discussing expenditure, and I maintain that it is not enough for the Government to wait on events regarding this matter. The Government cannot possibly contemplate with equanimity the retention of such crushing imposts as I have described. These, of course, are quite independent of the Differential Duty, to which I am coming. Either internal prices must be raised or the natives will cease to produce, and bankruptcy in the Colonies will result.

There are two possible methods of dealing with this matter. The first is a rigorous cutting down of expenditure in the Colonies in order to enable lower Duties to be imposed. If ever a Geddes Committee were needed, it is needed for these Colonies. I see that one has been appointed in India, and I do not see why there should not be another to go out to these Colonies and investigate upon the spot. I do ask what is being done, and what light the noble Duke can throw on the question of the instructions which I presume have been issued by the Government to cut down expenditure in Nigeria, the Gold Coast and Sierra Leone. If the noble Duke can give any information about the Estimates for 1922–23, I shall be most grateful.

I have one or two specific questions to ask about Gold Coast finance of which I have given him notice. I take the Gold Coast because, although the position of all the Colonies is serious, I think the position of the Gold Coast is the most alarming, because of the dangers to the cocoa trade and because of the enormous debt that has been incurred in that colony. With regard to the debt, I should like to know what the new £4,000,000 loan has been spent on, because I have not been able to obtain that information. The Public Debt of the Colony increased from £3,000,000 in December, 1919, to £7,300,000 in September, 1921, and I cannot find out how the money has been spent. I notice that the Government have been making desperate efforts in the Gold Coast to cut down expenditure, became in the speech delivered by the Governor on February 27 of this year, he speaks of the original Estimates for this year, 1922–23, showing a deficit of £350,000 on recurrent expenditure and £720,000 on extraordinary expenditure, a total deficit of over a million. The cuts have brought down recurrent expenditure, leaving a favourable balance of £73,000, and the estimated extraordinary expenditure has been reduced from £720,000 to £300,000, but a final deficit remains of £228,000, which, of course, will be taken out of the balance which has accumulated in the Colony.

In these circumstances, I want to know what is going to be done about the much controverted scheme of improving Takoradi harbour. I understand that a scheme of a modified kind has been approved by the Government, which is to cost perhaps £1,500,000 or more. I want to know how much expenditure for that purpose has been approved by the Government, and whether they have considered in connection with it whether this improvement will be of much use without linking up the railways, and if so, how much will this linking up of the railways cost if the harbour is to be made effective. I also venture to ask the noble Duke if he can tell me if the projected new loan of £1,500,000—I forget whether it is for this year, or next year, or the year after—is really to be issued or not.

I come to another and a much more delicate matter. The second way of dealing with the very serious financial position of these Colonies is one that I should personally very much regret. It is a modification of the prohibition of "trade" spirits. It is only the action of France and the dire financial straits of these Colonies which compel me to venture to suggest such a possibility. The loss incurred by Nigeria on the prohibition of "trade" spirits was £897,000 in 1920, and that incurred by the Gold Coast in the same period was £361,000. These are very large figures. The history of the whole question is set out in Sir Hugh Clifford's Report, and I have no time to traverse it in detail, The facts were that at the time that Report was issued France was not carrying out the Convention of St. Germain, which was concluded in September, 1919, and the Report shows that in Dahomey in August, 1921, 123,000 imperial gallons of alcohol were introduced, and that in Togoland the restrictions, which were faithfully carried out whilst it was in British military occupation, were immediately relaxed when the French took our place. There is, of course, much smuggling up the creeks from any port like Porto Novo in Dahomey and there is much expenditure caused by the efforts to combat this smuggling.

Above all, trade is being diverted from our own Colonies to the French Colonies because the natives take their produce to places where they can obtain these "trade" spirits. Over wide territories the benefits of prohibition are consequently nonexistent, or were non-existent, owing to the action of the French, who obtain a profit on the spirits and trade which really belongs to us. I heard recently that France has put prohibition in force with certain exceptions, and if the noble Duke will give us the latest information on that matter I shall be very grateful. Matters cannot remain as they were when the Clifford Report was issued. I admit that the whole question is an extremely difficult ethical question. How far are we entitled to enforce morality at the expense of the Colonies in a way which jeopardises the very trade upon which the prosperity of the Colonies depends—I mean by the imposition of an Export Duty? I cannot help seeing that this prohibition would not have been carried out in such a hurry if the collapse in prices could have been foreseen, and I hope that in regard to this very difficult matter, upon which I feel unable to express au very definite opinion, the noble Duke will be able to tell us what the mind of the Government is.

In conclusion—I apologise for detaining the House so long—I must say a few words on the Differential Duty on kernels. That Differential Duty, as your Lordships know, is £2 when the kernels are sent to any foreign port. It is in addition, of course, to the ordinary Duty of £2. The Committee on whose recommendation that Duty was imposed sat in 1915 and 1916. Mr. Bonar Law, who was then Colonial Secretary, accepted their Report and gave instructions that it should be carried out, in 1916, but owing to the opposition aroused in the Gold Coast it was not carried out at the time this Committee sat and reported. I must remind your Lordships that there was then no general Export Duty on kernels. There the matter rested until October, 1919, when the noble Viscount, Lord Milner, was Colonial Secretary. He then insisted on these Differential Duties being put into force by legislation passed in the Colonies, if necessary by the overriding official majority. That was the case in the Gold Coast, where it was passed against the unanimous vote of the minority of unofficial members. In the debate in 1920 the noble Viscount rested his case for the defence on the assurances given to the crushing trade in this country, on the supposed benefits to the natives at the time these Duties were imposed, and on the then high price of the commodity. With regard to the benefit to the natives, I would refer your Lordships to the Report of Sir Hugh Clifford's Committee, which pricks that bubble once and for all. Paragraph 202 says the Duty has "restricted the market…not only theoretically but in actual practice." In Paragraph 208 the Committee says there is no reason for a Differential Duty on kernels when there is no similar Duty applied to copra. In Paragraph 209 the Committee says that in non-British West African Colonies there is no such Duty in force, and this fact places the producer of kernels in British Colonies at a certain disadvantage. In Paragraph 213 the Committee express the opinion definitely that this Duty is against the interests of the Colonies. As regards the high prices, on which Lord Milner defended his decision in 1920, they have now disappeared and prices are almost as low as when the Steel-Maitland Committee was appointed in 1915 to consider the matter.

Again, I say that defence to a certain extent was good in 1920. It did not matter to the natives, who thought £14 a high price before the war, if a Differential Duty were imposed, if they got £25, but it does matter now when the natives only get £8. Therefore those two defences go completely, and the only defence which seems to have any kind of bearing upon the case to-day is that of the assurances given to the crushing trade in this country. This Report, my Lords, was adopted by Mr. Bonar Law in 1916, and the noble Viscount, Lord Milner, in speaking in 1920, treated that adoption as an undertaking urbi et orbi that the Differential Duty would be imposed, because he said that on that adoption of the Report by Mr. Bonar Law certain manufacturers in this country had put down machinery for the crushing of kernels.

As to this machinery question, these manufacturers must have put down the machinery either before or after the adoption of the Report by Mr. Bonar Law. If it was before, it is clear that the adoption of the Report had no effect upon them, but if it was after the adoption of the Report, then the fact remains that Mr. Bonar Law did not enforce this policy owing to the opposition of the Gold Coast, and the matter dropped, and it was not enforced by Lord Milner until 1919. What assurance was there in a policy which was proposed and not enforced? No case has been produced of new machinery having been put down on the strength of the adoption of this Report, and the trade as a whole is against the Duty at the present time. Besides, it is really rather a tall order for a Government which has gone back on its pledges with regard to agriculture in this country, to treat this vague and shadowy outline of policy, which was not enforced by the Colonial Secretary at the time, as a sacrosanct pledge.

But I take this question on broader grounds. If there had been a definite pledge given to the manufacturers, amounting to a contract, what of the other and much more sacred and permanent form of contract—our position as trustees for the natives of the Colonies? That is the principle which was solemnly accepted by Lord Milner in the debate in 1920, and I remind your Lordships that in the recommendations of Sir Hugh Clifford's Committee there is this, that "from the standpoint of the interests of the British West African Colonies the Committee is very strongly of opinion that an open and unrestricted market is unquestionably to their advantage." Furthermore, and I think this point is final and conclusive, the policy adopted by Mr. Bonar Law is not being carried out. It is a different policy which is being carried out. The policy was that the certificate of crushing of the kernels in this country was to be accepted. Instead of that the certificate which is now accepted is the landing certificate here. The man who has landed his kernels here is at liberty next day to ship them to Hamburg, and he very often does so, and therefore any profit now does not go to the Colony for whose sake the Duty was imposed, but to the merchants and shippers of this country.

I say, therefore, that the policy adopted by Mr. Bonar Law is not the policy which is being carried out to-day. The native is penalised, and the Colony does not get the benefit. The Clifford Report says that within two to three months, in the autumn of 1921, 20,000 tons were sent to Hamburg from this country, on not a ton of which was Export Duty levied. The feeling of the Colonial Office, as expressed by Lord Milner, seemed to be that there would be something like a breach of faith, but I ask in all seriousness, are we not guilty of a breach of faith in maintaining a policy which benefits a few manufacturers and traders here and is so different from the original policy adopted by Mr. Bonar Law? That policy cannot be carried out, because you cannot earmark parcels without a system of manufacture in bond. Therefore, I think that this excuse of there being a moral undertaking falls to the ground, and I fail to understand why the Government's conscience is so tender with regard to a supposed undertaking to wealthy crushers here in this country and yet so elastic as regards the Colonies.

I hope I have said enough to convince the Government, but if there is any doubt left in their minds I would venture to make the suggestion that they should call the trade together and consult them as a whole on the wisdom of continuing a policy which I believe the Colonial Office recognises to be so prejudicial to the natives of the Colonies. After the Report of Sir Hugh Clifford's Committee this Duty cannot be continued without grave risk to the contentment of the Colonies, and I implore the Government to do away with this great injustice. It is far better to run the risk of a small outcry by a few manufacturers here, than for them to fail in their duty as trustees for the natives of West Africa.

EARL BUXTON

I think, my Lords, you will feel that my noble friend has done a public service in drawing attention to the general question of the taxation of the natives of West Africa, that the position there is too little known in this country, and that it is an advantage to them and an advantage to the Colonial Office and to the Government that these matters should receive discussion by Parliament here. It is shown that in many ways, unfortunately, at the present moment, these Colonies are suffering from heavy taxation, from heavy rates, and in other respects, but as far as I am concerned I wish to confine my remarks, which will be brief, to that part of the speech of my noble friend with which he concluded his observations; I mean the question of the abolition of the Differential Duty on palm products in the Dependencies of West Africa. All the taxation to which he has so far referred, with that exception, has been imposed with the object of benefiting time different Colonies and the natives themselves, and, though some of them possibly have been of a mistaken character, the object was to benefit the natives and not other individuals. But this Differential Duty on palm kernels is, unfortunately, in a totally different category, because it has been imposed, not in order to benefit these particular Colonies or the natives inhabiting them, but with the object of securing exclusive rights to certain raw materials, irrespective of the interests of the producer, and to exclude competition.

My noble friend, I think very wisely, has not dealt with the matter from the point of view of Protection, or Free Trade, or Preference, and I certainly would not do so, because those are very controversial questions, and I would endeavour to obtain the assent of your Lordships to the repeal of these Duties on a principle on which I think there is no controversy. My noble friend referred to the attitude of the British Government in regard to these Colonies and Dependencies for which we are directly responsible—the Dominions, of course, are in a different category altogether. I do not think it is too much to say that for many years past it has been the pride of the British Empire, and to a certain extent, I think, the envy of other countries, that we have in no sense exploited these Colonies for our own purposes. We have not drawn revenue from them, and such matters as we have dealt with in connection with them have been designed to benefit the Colonies rather than the Mother Country. That policy has been based on the broad principle that the British Government, as representing the British people here, are trustees for those Colonies on behalf of the natives. In many ways we develop these Colonies: we introduce civilisation, and in some cases we have to protect the natives against themselves. My noble friend mentioned the case of the introduction of spirits, which some people might think was to the advantage of the natives, but in regard to which we think we must protect them against themselves.

It is difficult sometimes to draw the exact line where Imperial interests and the interests of the particular Colony come into conflict. But as regards this Differential Duty on palm products there is no difficulty about it. That was specifically imposed, not in the interests of the Colony and the natives, but in the direct interests of certain traders and manufacturers. The admitted object was to divert the crushing industry from Germany and elsewhere to Great Britain, and the means adopted to secure that end was to obtain the exclusive rights to raw material, so that these kernels should be crushed in Great Britain. That is a very laudable object in itself in certain circumstances, and I have no desire whatever to impute any motives to these manufacturers and traders. They were perfectly entitled to take the line they have taken, but my point is that, if for Imperial purposes it is necessary to impose a Differential Duty of this sort, it is not to the advantage, but clearly to the disadvantage, of the particular Colony or Colonies and of the natives, and if it is done for an Imperial purpose it is the Imperial Government and the home country who ought to bear the burden and the brunt of any difficulties which may occur.

This proposal was founded on the Report of what is called the Steel-Maitland Committee which sat during the war, in 1916. That Report, while it advocated the advantages of the proposal, only made incidental reference to the question of the natives and how far they might possibly be injured by it. The Committee said that though they were rather doubtful as to how far the result of the Committee would be satisfactory, in any event it was worth taking the risk, whatever risk there might be. But that meant, as it has turned out, that it is not the manufacturers and traders of Great Britain who take the risks, but the producers in the Colony and the natives themselves. That proposal, made in 1916, was made professedly as a war measure, as noble Lords can see if they read the Report and the debate in the House of Commons.

I confess that, if I had been in England at the time, and the Government had proposed it for war purposes and on war grounds, I might have found it perfectly legitimate under the stress of war, although it might be altogether indefensible under ordinary conditions. And, indeed, I think it might have been defended then, if it was a practical measure, on the very ground on which I am now opposing it—namely, the interests of the natives—because, after all, the natives of these Colonies were as much concerned as we were in the success of Great Britain in the war, and anything which could be done to defeat the Germans was as much in their interest as it was in ours. But the irony of the position is that this proposal, brought forward as a war measure by the Government of the day, brought before the House of Commons with a view to being carried, was finally dropped by them, either on the ground of the opposition to which my noble friend has referred, or because the blockade was sufficiently satisfactory to carry out the policy aimed at. And it was only after the Armistice—or shall I say after the General Election of 1918, which completely changed the political complexion of the House of Commons?—that this proposal was revived and forced on the Colonies. And I venture to think that, if it was a doubtful policy under war conditions, there is nothing to be said for it as a peace measure.

My noble friend has effectually dealt with the question of the interests of the natives. Whatever may be the merits of this policy, I do not think any one can possibly argue that it can be to the interests of the Colony or of the native producer that the market for his goods should be restricted, and that a Duty should be imposed which prevents his getting the world price, and which restricts his opportunities of trading. It is admitted, I believe, by everybody that an Export Duty of this sort, whatever may be its merits in other respects, falls on the producer, who is thereby injured.

That general view, I think, is strongly reinforced by two facts. The first, to which my noble friend did not refer, but which I think is very important, is that this Duty was strongly objected to by the Colonies themselves, on whom it was placed, by men of the standing of Sir Frederick Lugard, Sir Hugh Clifford and others—men whom I know very well in addition to their work—who would not be prejudiced against a measure but would look at it from the broad point of view. They are men who understand, and have been responsible for, these Colonies, and if they thought that this would be a possible advantage to the Colonies or the natives in any way undoubtedly they would have supported it and not opposed it. Unfortunately, their views did not prevail and these Duties were enforced against their will and against the will of the Colonies themselves.

The second fact, to which my noble friend has referred, is the very emphatic conclusion arrived at by this Committee which reported the other day. It was a very representative Committee and its Report carefully sums up the pros and cons of both sides in a very fair and unprejudiced way. That Committee came emphatically to the conclusion that this Duty not only restricts the opportunities of the producers but leads, as my noble friend has pointed out, to a great deal of leakage of kernels which go abroad instead of coming to England, which means that the Colony loses all the benefit and the manufacturer does not gain any advantage. They emphatically condemn the continuation of this Duty, because, as they say, it unquestionably leads to restriction of the production of the kernels and is, therefore, greatly to the detriment of the natives.

Then we come to the question which, after all, is the material one, that of price. There again the Committee have gone very carefully into the question of how far this Duty has affected the price of kernels which, of course, has an important bearing on the question of production. I think there is no doubt, from the Report, that the artificial conditions which existed for some time after the war counterbalanced for the time being the super-added restrictions which were placed on this trade by the imposition of this double Duty. But the Committee are quite clear in their Report, as noble Lords will find in paragraph 201 and elsewhere, that while, during the continuance of those artificial conditions, the price in the controlled market was as high as elsewhere, since the trade has settled down the price is considerably lower, especially in Hamburg and in some of the foreign markets, than it is in the British markets. That means, of course, that the native consumer and the Colony are losing the benefit of the world price. They also say that not only did the ordinary Duty which was imposed affect the position, but that this super-added Duty has lately aggravated the position as to price and is seriously injuring the position of the natives.

That raises a very important point in regard to what the Government should do in this matter. In the debate in 1916 attention was drawn to the position of the natives, and Mr. Bonar Law, who represented the Government, stated definitely, in the course of his speech, that if it could be shown that they were being injured in any way by the imposition of this Duty steps would have to be taken to redress the evil that had been done; and he repeated that pledge on more than one occasion. Unless the Government can show—and I think after the Report of the Committee it is impossible for them to do so—that the Colony, the natives, and the trade have been receiving as good a price in the English market as they could have obtained elsewhere, I must ask them how they are proposing to carry out the pledge which Mr. Bonar Law gave on their behalf a year or two ago.

My noble friend has referred to a difficulty which apparently weighs with the Government in dealing with this matter—I will not say in refusing to repeal because I hope we may have a satisfactory answer, but in dealing with it so far and not having repealed this Duty. It is alleged, I understand, that certain Government pledges were given to the manufacturers and others that the Duty would be imposed and that it would be continued for a certain number of years. My first observation on that is that Mr. Bonar Law's pledge to the Colony and the natives was the first pledge given in 1916, whatever other pledges were given later. Therefore, if a pledge has to be carried out it ought to be carried out not at the expense of the Colony but at the expense of the Imperial Government. The Committee definitely deny that any such undertaking was given and they give their reasons in chapter and verse. A few priorities were given, but they were soon refused because it was thought there was sufficient plant to meet all the requirements of the crushing industry. In spite of that, some new mills, or whatever is the proper term for these crushing plants, were erected.

What does that mean? It means that these manufacturers at their own risk were gambling on the continuation of the war, on the continuation of high prices and on such promises as they could obtain from the Government. We are told by the Committee that one of their arguments now is that they have been handicapped, or are handicapped by the high cost of erecting their mills and the general high cost of machinery, flat the world's milling capacity is greater than the necessity at the present moment, and, therefore, that they are not making a proper profit. It seems hard and contrary to the principle which I have ventured to lay down as to the relations between the Imperial Government and these Colonies, that because these manufacturers happen to have made a bad forecast the producer on the West Coast should continue to have to pay that Export Duty in order to relieve those manufacturers of part of the burden.

I hope we may hear from the noble Duke who is to reply on behalf of the Government that, after consideration of the matter, they have seen their way to remove this Duty at a very early date. I should be sorry if they said that they must leave it on for a considerable additional period because of the position in which it will put the manufacturers if it is repealed at an early date. The worst of Duties of this description is that it is very much easier to put them on than to repeal them. Once you put them on you create a vested interest and you create claims, and promises are quoted. Experience shows that the longer you continue to allow them to exist the more difficult, instead of the more easy, does their abolition become in the end. I notice in the Report that the Committee say that one of the arguments for continuation is that a comparatively small trade in palm kernels and oil has been created, and is a very valuable thing, under present economic conditions. The longer you allow this Duty to continue this sort of subsidiary industries will be created, and they will be used as an argument against the abolition of the Duty in the end.

I see in another paragraph of the Report of the Committee a rather insidious proposal to the effect that they are handicapped in the matter of vegetable oils, and that it would be rather a good thing to put a Duty on in order to put them in the same position as the nuts. What I want to impress upon your Lordships is that it will not be easier, by delay, to abolish this Duty. The longer it goes on the more its tentacles will extend, and the more difficult it will be for the Government of the day to get rid of it. I venture to say, therefore, that the broad principle to which I have referred of the relationship between the home country and the Colonies remains, and that anything which departs from it is necessarily opposed to our general Colonial policy. If we have made a false step, that false step should be retraced, and if it can be shown that these manufacturers and others have a real claim to compensation founded on definite promises made by the Government, then I say that it is for the Imperial Government to give that compensation, and to abolish at the earliest possible moment this Duty which cannot in any possible way be an advantage to the Colonies, but., so far as one can judge, is on every ground a disadvantage to them and their trade.

THE EARL OF MAYO

My Lords, in May, 1920, I had the honour of initiating a debate on this subject. Lord Emmott has dealt so fully with almost every point connected with this subject of the Differential Duty, the Spirit Duties, Cocoa Duties, and Palm Kernels and Copra Duties, that not many points are left to he covered. The noble Earl, Lord Buxton, also dealt with many aspects of the subject, and I wish to dot the i's and cross the t's. There are probably few in the House who will recall that debate of 1920. Lord Emmott will, of course, do so, and also the most reverend Primate, and possibly some others, but we live in times when events come so quickly that it is almost impossible to keep count of anything.

At the time of that debate Lord Milner was Secretary of State for the Colonies, and I should like to quote what he said on that occasion. This is what my predecessor—not my immediate predecessor, but the then occupant of the Colonial Office—said in this Despatch of June 1, 1916, which was a Parliamentary Paper."— He referred to Mr. Bonar Law. The imposition for a period of years of an Export Duty on palm kernels, to be remitted if the kernels are brought to the United Kingdom and crushed there. The kernels were brought to the United Kingdom and the Jurgens Company started to crush them, and Van-den-Bergh's and Lever's are now crushing them. The worst of it is there are so many palm kernels in West Africa that those firms cannot crush them all, and the consequence is that instead of the native getting a proper price in a foreign market he has to pay two Duties, the Differential Duty and the Export Duty, and Jurgens, Van-den-Bergh's and Lever's cannot take the available kernels. I have been twice up and down the West Coast, and the last time I was there I stayed for sonic time in Calabar. I wonder if your Lordships realise that there are millions of tons of palm kernels lying on the ground that are never touched by anyone, and that the monkeys even cannot eat them. There is enough palm kernel oil, if it could be got, to float the British Navy. Therefore I do not see why the natives should not pick up these kernels, and have the full benefit of the produce of their country.

I believe that Mr. Bonar Law said that this Ordinance was going to be put in force. It was not put in force till 1919, and I do not think it was put in force for the benefit of the manufacturers at all, but in order, as has been said, to beat the Germans, who had practically had all the crushing of these palm kernels in their hands. It was quite right to beat them in any way that we could; but now times are changed. The war is over long ago, and why on earth should we not revert to pre-war conditions, and let there be free trade for the natives in anything they like to produce. I should like to make another quotation from what Lord Milner said when he was acting for the Department and also for the Government. He said— Unless I misconceive the position, a Preferential Duty was imposed in order to give a start to a particular industry in this country, and it was never intended to maintain it longer than was requisite to achieve that object. That was from a Cabinet Minister and one who was the Colonial Secretary at that time. Lord Milner is a man for whom I have the greatest respect, and I am sure that he had considered with the greatest care every word that he spoke.

The real effect of the continuation of these Differential Duties is that trade is hampered, and that the Revenue of the West Coast of Africa is being depleted. The policy of Mr. Joseph Chamberlain, the man who of all others realised what the riches of the West Coast of Africa were, and who began building railways there and practically opened up the country, has not been carried out. How can you carry it out when you have no free trade, and when the natives cannot put their produce on the market in a proper manner? I know this Coast. I do not suppose it is the gem of our Empire, but there is every sort of raw product to be got there—minerals, palm oil, copra, gold, cocoa, and almost every sort of thing you can imagine. I admit it is unhealthy for the white man, but the time will probably come, though I shall not live to see it, when sanatoria will be established in the hills of the interior, to which people will be able to go to recover their health, as in India they now go to the hills.

I now wish to make a reference to the meeting of the Niger Company presided over by Mr. Hulme Lever. What he said at that meeting I consider to be perfectly true. I know Mr. Hulme Lever, and I may say, incidentally, that I have no interest in either the Niger Company or in Lever Brothers. I admit that they are an enormous and rich corporation. They bought the Niger Company. They make most of the soaps that the inhabitants of the British Empire use. They have great power and their hand is over many markets. This is what Mr. Hulme Lever said at the meeting on February 23, 1922: Just as Import Duties are paid by the consumer, who in consequence thereof finds his cost of living artificially and unjustly raised, so it is equally true that all Export Duties are paid for by the producer in the country that adopts the shortsighted policy of imposing them and merely reduces the earnings of the native labourer and producer. What wonder that the native in British West Africa is becoming sullen and discontented and refusing to work to produce his native goods under unfair conditions. I am talking about palm kernels which the native does not produce. He goes out and picks them up.

The Report of the Committee on Trade and Taxation, presided over by Sir Hugh Clifford, has been alluded to by Lord Emmett and Earl Buxton. Lord Emmott has quoted the paragraph 213. Let me read that paragraph again, as it is really most important. It says:— Judged, on the other hand, from the standpoint of the interests a the British West African Colonies, the Committee is very strongly of opinion that an open and unrestricted market is unquestionably to their best advantage and consider that there is no sufficient justification for the retention of the Differential Duty. After that, what are the Government going to do? Are they going on with this extraordinary policy of allowing the Governors to spend exactly what they like? Lord Emmott has stated what the Gold Coast is spending and how much it is in debt. When they have good times they spend a great deal of money; when they have bad times they have to pay their debts. In addition to all this you are hampering the trade of the whole of the West Coast. These palm oil kernels come first to Liverpool. They are then passed on to Hamburg and sold at a good price. Who gets the benefit? No Englishman; no native. It is the foreigner who gets the benefit, and the result is that every one is disgusted. How would anyone like to be in a position of being able to pick up the produce of his own country and then be told that he must pay for it; in fact, that he must pay two Duties for it?

I am glad to hear that the French have become a little more reasonable and have put a Preferential Duty on spirits that are sold to the natives. What is to prevent them getting as much spirit as they like? I know what the trade of the Gold Coast is. Merchandise has been passed along ever since the days of Egypt and Herodotus. You can get things passed along everywhere now, as you could centuries ago. If people want a thing they get it. People take great risks in order to make money; and if the native wants spirits he will pass it along. If there is none at Timbuctoo he will get it to Timbuetoo. Therefore, I am glad to hear that the French have come to some arrangement in this matter.

I admit that the finances of the Gold Coast and Nigeria are in a very serious condition. The Spirit Duty, one of the most important means of revenue, has been taken off, and the result is that the Preferential Duty, and the Duty on other products, has not brought in the amount of revenue that was expected. I do not quite agree that they are in the nature of a vested interest. The truth is that there are so many palm kernels to be got that they cannot be absorbed by the crushers in England or in any other part of the world. You could employ a million men and you would not pick them all up. I hope the Government will take off this Differential Duty, and the sooner the better. I have been in this House for many years. There was a time when the question of Colonial progress was not much talked about. It is a fine thing for the Empire that the products of the out-of-the-way parts of it should be discussed in this House by men who know, and who wish to see the British Empire become strong, powerful and rich.

THE EARL OF SELBORNE

My Lords, as I have just come back from Nigeria, perhaps the House will allow me, briefly, to say why I agree with Lord Emmott in his opinion that the time has come to abolish this Differential Duty on palm products. Before I come to that point I should like to allude to some of the observations of the noble Earl who has just sat down. He quoted from a speech of Mr. Hulme Lever in which he said that the West African native has become "sullen and discontented" because of the extent of his taxation, and that for that reason he was no longer producing the natural products of the soil. I have great respect for Mr. Hulme Lever, whom I have the privilege of knowing, and I think that phrase must have escaped him in an unfortunate moment. I do not think there is any reasonable ground whatever for stating that the West African native has become "sullen and discontented," because of these particular Duties. Nor, so far as I could observe, is it at all true to state that he is sullen or discontented, and there is no reason that I know of why he should be.

What are the facts, and why is he not producing? My noble friend, alluding to the palm kernels, spoke as if he had nothing to do except to stoop down and pick up the kernels. That, I venture to say, is not quite an accurate statement of the case. It is true that he takes no part in producing. It is also true that nature has endowed Nigeria with the most amazing number of these oil palms; they extend over a vast tract of country in an imposing belt, and it is true that only a fraction of these palms are ever cropped at all. But I never saw him picking up the nuts from the ground. I understood that when the nuts fell to the ground they were already past their prime, and of no use for trade purposes. What he does is to go up the tree, and cut from the top of the tree the great bunches in which these nuts are found.

THE EARL OF MAYO

I admit the correction.

THE EARL OF SELBORNE

That is what he is made to do, but that is not all, because two months ago I saw vast numbers of canoes coming down the different branches of the Niger laden with these same palm kernels. It is also true that the native is not collecting in anything like the quantity that he has collected in previous years. The reason for that, I suggest, has nothing whatever to do with any argument concerning Export Duties or Differential Duties, but is that the price which he is now offered, which we in this House, of course, know to depend to a certain extent on the Export Duties and the Differential Duties, bears such a very small proportion to the price he was getting two years ago, and naturally, to his unsophisticated mind, the sudden drop in prices is inexplicable. How should he understand the reasons for the world boom and the world slump? I do not myself believe that if the Differential Duties were abolished to-morrow it would make the slightest difference to the present attitude of the native collector, because what staggers and discourages him is the enormous disproportion between the present prices, altogether apart from Export and Differential Duties, and the prices of two years ago.

Nor, if the duties are reasonable, is there, in my judgment, any injustice in charging such Duties for legitimate purposes of Revenue, because it is, I believe, literally true that the great majority of natives in this palm belt pay no direct taxes whatever. In the north and in the centre and west of Nigeria the natives are to a large extent directly as well as indirectly taxed, but the natives of the palm belt are not directly taxed, and consequently the only contribution they make to the Revenue is either in the Customs Duties, on the imports which they purchase, or in the diminution of the prices they would receive for the natural products they collect owing to the incidence of an Export Duty or a Differential Duty. While, therefore, I think it is of the utmost possible importance to see that these Export Duties are not too high and to reconsider the reasons for which the Differential Duty was introduced, I do not think that the mere fact of their existence is anything in the nature of an injustice to the native.

I cannot pass altogether without comment my noble friend's observation that the Governors were spending all they liked. This country is very fortunate in having in Sir Hugh Clifford, in Nigeria, one of the most capable and experienced men that ever governed a great British Dependency, and I cannot imagine a man of whom it would be more untrue to say that he was extravagant or reckless in his expenditure Sir Frederick Guggisberg on the Gold Coast is not a Governor of the same experience, but he is a man of the most gallant record, and I am quite sure that he would consider any suggestion that he was extravagant as a most unjust aspersion. The facts of the case are that in Nigeria and in the Gold Coast, as in Great Britain, there was a moment after the war when men thought that the boom was going to last, and when they did two things; they increased the ordinary scale of expenditure in the matter of establishments and salaries, and they took upon themselves the obligation of some very important public works. I cannot imagine public works more important, if the Colonies could afford them, but to a very large extent the Governments are already committed both in the matter of harbours and of railways, and have raised their loans and have to pay the interest on those loans.

That is the reason why a man like Sir Hugh Clifford who, as I say, is as well equipped to deal with the financial problems of the moment as any man who ever held such an honourable office, finds himself confronted with great difficulties. He finds increased salaries; an increased establishment; great charges in connection with capital expenses, and, at the same moment, the full effects of the abolition of the "Trade" Spirit Duty. It would not be possible to make two ends meet at present without an Export Duty of sonic kind, but I am sure no man has considered more carefully than Sir Hugh Clifford whether these Export Duties can possibly be reduced, because they are in their essence an evil thing for the trade of the Colony. They must operate in the direction of a diminution of that trade, and a point may very easily come where, as a matter of fact, if the Duty were reduced the Revenue would be decreased.

This brings me, in conclusion, to the few words I have to say about the Differerential Duties. I was very sorry not to hear Lord Emmott's speech. I was detained, as I informed him, by an engagement which I could not put off, but I am sure that he dealt with the subject in that thorough manner which he always shows when he undertakes to introduce such a question as this. I am not going to consider now the reasons for which these Differential Duties were introduced. We might argue for many hours in this House about the general principles on which that act of the Government was based. Nor am I at this moment going to consider the effect of the abolition of those Duties on any industries which may have been established in England in consequence of their imposition, though I admit that that is a consideration which the Secretary of State for the Colonies is absolutely bound to remember. He must observe any pledges which his predecessors gave, and, if he departs from those pledges, he must, as my noble friend behind me said, ask Parliament to compensate those who may be injuriously affected thereby.

What I want to say is that I am perfectly certain, from close observation on the spot, that these Differential Duties are doing great harm to Nigeria and the Gold Coast, because they are turning the minds of Germany, particularly, more and more to the substitution of copra for palm kernels. Where that substitution is not easily or readily secured, what is happening is that instead of buying palm kernels in Nigeria, they are buying them from the French in Senegal or from the Belgians in the Congo, because neither the French nor the Belgians have put on the same Differential Duties against the Germans, and are therefore not depriving the Germans of these kernels or preventing them from competing with the British manufacturer, but are driving the Germans to buy them from the Belgians or from the French, instead of from British subjects. For those reasons, I hope that the noble Duke, in his reply, will be able to tell us that these Duties are going to be abolished.

THE DUKE OF SUTHERLAND

My Lords, the subject that we have to discuss to-day is so wide that I hope you will pardon me if my statement is rather long. We have listened with great interest to the speeches of the noble Lords who have already spoken, and who are fully conversant with the Colonies, and more especially to that of the noble Earl who has spoken last, on account of the interesting personal information which he gave us regarding his visit to the Colony. I wish first of all to deal with the financial position of Nigeria, the Gold Coast and Sierra Leone, and after that I shall deal with the question of palm kernels.

The financial year of Nigeria runs from April 1. On December 31, 1921, the surplus of assets over liabilities was £1,328,254 and the Colony had over £2,000,000 on deposit or on easily realisable investments. The latest Estimates of Revenue and Expenditure for the year ended March 31, 1922 was:—Revenue, £4,557,401; Expenditure:—Recurrent, £5,286,000; Special and Extraordinary, £1,520,000; Loan Expenditure, £2,660,000; total Expenditure, £9,466,000. After allowing for refunds to Revenue from the proceeds of the loan of £3,000,000 raised last Autumn, which refunds are in respect of expenditure on loan works provisionally met from Revenue pending the raising of the loan, the balance on March 31, 1922, was estimated at £651,275.

The Revenue for 1922–23 was estimated at £4,721,000, but since then the ad valorem Import Duties have been raised from 12½ to 15 per cent., and the following included in the list of articles subject to the ad valorem rate:—Glassware, articles of brass, copper and iron manufacture, haberdashery, brooms and brushes, cordage, twine, candles, jewellery and plate, musical instruments, perfumery other than perfumed spirits, tobacco, pipes, prints and engravings, toys and games. A Duty of 10 per cent. ad valorem has also been imposed on corrugated iron sheets and a Duty of 15 per cent. ad valorem on provisions, which had hitherto been admitted free. The Revenue from these increased and additional Import Duties is expected to amount to about £150,000, so that the total estimated Revenue for 1922–23 may be put at about £4,874,000. The Expenditure for 1922–23 is estimated at:—Recurrent, £5,321,002; Special and Extraordinary, £671,855; total, £5,992,857.

The position caused by the sudden slump in both the import and export trade of Nigeria, coming at a time when the long period of stagnation in development due to the war had given place to a period of exceptional activity, and when the operation of the new post-war rates of salary which were forced upon the Colonial Government by the fall in the value of money, and the inability of officers to make both ends meet on the old rates of pay, was making itself felt, is no doubt serious, but the Colonial Government is doing everything possible to meet the situation without adopting panic measures, such as closing down works of development already begun, and, in many cases, half completed. The severity of the trade slump is such that it is only reasonable to hope that before the present financial year has expired, trade will be reviving. If it has not revived by the time the next year's Estimates are under consideration, further and more drastic measures will, of course, be necessary.

LORD EMMOTT

Will there be an actual deficit in 1923—an actual balance to the bad?

THE DUKE OF SUTHERLAND

Yes, a small one. Much of what appears as Revenue in the figures which have been quoted is not Tax Revenue. For instance, over £1,400,000 of the Revenue for 1922–23 is railway receipts and over £200,000 is for the transport and sale of coal from the Government Colliery. The rate of taxation in Nigeria per head of the population is still low—much lower than in the other West African Colonies; and the loan expenditure which is going on is for railway and harbour works which are essential for the development of this vast country with its 335,000 square miles and some 16,000,000 of people.

Until the collapse in trade which occurred in 1921, the mercantile interests were continually complaining of serious delays in transportation of produce, etc., due to shortage of rolling stock and locomotives and to congestion at the ports caused by inadequate wharfage and warehouse accommodation, and urging immediate action to remedy them. The Nigerian Government, in order to meet the situation, embarked on a loan programme costing over £12,500,000 for the completion of the Nigerian Eastern Railway (thus giving two outlets by rail from the interior of the country), the improvement of the Lagos—Kano Railway and the provision of adequate terminal facilities at Lagos and Port Harcourt, and new railway workshops at Ebute Metta and Enugu. These works when completed will place Nigeria in a favourable position to deal with the largely increased traffic which will no doubt spring up as soon as trade improves, and it would be a mistaken and expensive policy not to go on with them.

Apart from this sanctioned programme, which must be completed, capital expenditure is being cut down as far as possible at present, and it is clear that the Colonial Government is exercising strict economy in ordinary expenditure. Of course, a Government cannot reduce its ordinary expenditure in the same way as a mercantile firm, since it is bound to carry on the government of the country, and cannot dismiss, or reduce the salaries of, its permanent servants as a mercantile firm can with its employees.

As regards the question, raised by Lord Emmott, of the Nigerian Export Duty on hides and skins, the recommendation of the Committee of which Sir Hugh Clifford was chairman is at present under consideration by the Nigerian Government, and their views have not yet reached us, but as Sir Hugh Clifford is Governor of Nigeria as well as Chairman of the Committee the House may be certain that full consideration will be given to this matter.

To turn to the financial position of the Gold Coast, the £4,000,000 loan of 1920 yielded £3,900,000. The estimated expenditure out of this up to April 1, 1923, is:—

	£
Taso—Kumasi Railway	2,098,000
Sekondi—Kumasi Railway, relaying and deviations	1,295,000
Topographical survey	93,389
Takoradi Harbour	620,000
Survey for ditto	25,000
Accra Harbour	100,000
Survey for Central Province Railway	6,000
Total	£4,237,389

The balance of £237,389 will be met from surplus balances, which amounted on April 1, 1922, to £1,883,064. The Estimates for 1922–23 show a surplus of £143,000 of ordinary Revenue over ordinary Expenditure. Extraordinary Expenditure is estimated at £389,000, depleting pro tanto the surplus balance mentioned above. It is anticipated that the following year will show such a balance of Revenue over Expenditure as will enable a loan to be raised early in 1924, to defray the balance of the cost of the Takoradi harbour, say £1,000,000, and the cost of the projected Central Province Railway, of which no exact estimate can be framed pending survey, but which may be placed provisionally at £2,000,000.

In regard to Takoradi harbour the cost of the present reduced scheme is estimated at £1,600,000 only. This will perhaps not enable large ships to go alongside the port as the larger scheme would, but it will enable them to lie in sheltered water a hundred yards or so from the wall instead of half a mile out in the open sea. A railway is being surveyed in connection with the harbour to run through the Central Province for about one hundred miles. The cost of this is roughly estimated at £2,000,000. It is anticipated that like the existing railways it will pay from the start as well as bringing revenue to the harbour.

As regard current Revenue and Expenditure the Export Tax on cocoa does not appear to have injuriously affected the trade as, in spite of lower prices, the export at 133,000 tons was actually higher in 1921 than in 1920. As a result of the Committee on Taxation the Secretary of State telegraphed suggesting that the Export Duty on timber should be removed, but the local Government was strongly opposed to this step as it was not the Duty that was killing the trade. The high prices have caused a large number of second-rate logs to be felled, which would be unsaleable even if the Duty were removed and therefore no advantage would be gained by removing the Duty. The maintenance of the Duty is strongly urged by the Forest Department in order to provide a check on the depletion of the forests which is a great danger to agriculture.

As regards the numbers of the European staff it must be admitted that there was a tendency, in consequence of the abounding prosperity of 1920, to increase the staff and salaries above what proved to be prudent in view of the capital commitments of the Colony. Economies are now being effected. The European staff as provided for the current year is eighty-six less than for last year. In particular, in the Public Works Department there is a net reduction of forty-three in the European staff, twenty-seven in the Native Staff, and £20,000 in the total expenditure on salaries.

I turn now to Sierra Leone. Owing to the great fall in price of the chief products the finances of Sierra Leone undoubtedly give cause for anxiety. The Revenue of 1921–22 fell short of the Expenditure by £350,000, reducing the balance of assets to £141,000. As soon as the fall of Revenue became probable a campaign of economy was set on foot, and the current Estimates are framed to produce a balance of ordinary Revenue over a total Expenditure of £13,000, Expenditure having been reduced by £160,000. Further economies are, however, being effected and special efforts are being made to develop the forestry and agricultural resources of the country.

The Government realise the importance of the situation, and I can assure the noble Lord that they also realise the importance of the interests of the natives and they will do all they can to improve the financial position. But, as the noble Earl, Lord Selborne, said, the real causes of the West African financial difficulty are, firstly, world depression in trade which one day must surely revive, otherwise all our Colonies will be seriously affected; and, secondly, our philanthropic action in prohibiting import of "trade" spirits as arranged by the Convention of St. Germain. I am glad to be able to assure your Lordships that the French are now arranging to carry out their part of the Agreement and that the Decree was issued at Dakar last December bringing into force the Presidential Decree of St. Germain.

Next, I come to the question of palm kernels. The question of the Differential Export Duty on British West African palm kernels is getting to have a Parliamentary history of very respectable length. Apart from a number of House of Commons Questions, the policy of the measure has been debated on the following occasions:—In the House of Commons on August 3, 1916, when Mr. Bonar Law, Secretary of State for the Colonies, replied for the Government; on December 17, 1919, in the House of Lords, on a Motion by Earl Beauchamp, the Government reply being in the hands of Lord Crawford; in the House of Lords on May 12, 1920, when the Earl of Mayo and Lord Emmett spoke against the Duty and Lord Milner replied.

The Duty is one of £2 a ton on all palm kernels exported from British West African Colonies and Protectorates and not landed at a port within the British Empire. It originated in a recommendation made in May, 1916, by a Committee on Edible and Oil Producing Nuts and Seeds, under the chairmanship of Sir Arthur Steel-Maitland. The African oil palm, which grows wild over a large area of West Africa, produces two articles of importance. The fleshy part of the fruit outside the stone produces palm oil which is used for soap-making and as a lubricant. The stone is cracked by the native women and children and the kernel inside is exported, and when crushed produces a pure edible oil, known as palm kernel oil, and the feeding cake for animals known as palm kernel cake. The palm kernel oil is very similar to cocoanut oil, and is practically interchangeable with cocoanut oil for all purposes. Cocoanut oil and palm kernel oil form the principal "hard oils" used in the manufacture of vegetable margarine. Such margarine is a mixture of a hard oil and a "soft oil," which is usually ground nut oil or cotton seed oil, though there are other soft oils available.

Before the war the margarine industry was not much developed in this country. Maypole's were the chief manufacturers of table margarine and a number of small firms manufactured a certain amount of inferior margarine which was not used for table purposes but in the confectionery trades. The bulk of the margarine was made in Holland and the industry of crushing palm kernels to obtain palm kernel oil was centred in Germany in and near Hamburg, and the oil required by the Dutch manufacturers was sent largely in barges to Holland. Some of it was exported to this country. The crushing of oil seeds was an important industry in this country; but it was conducted more with a view to securing the requirements of the English farmer than those of the English margarine manufacturer.

Accordingly, oil seeds dealt with by the English oil seed crusher were chiefly linseed, cotton seed and other seeds with a comparatively low oil content; and the crushing of the richer oil nuts like copra and palm kernels was little developed. The English farmers preferred linseed or cotton seed cake to palm kernel cake for their animals, while on the other hand, in Germany, palm kernel cake was a popular feeding stuff which, it was claimed, improved the percentage of butter fat in cows' milk. It was also used in feeding pigs. The result of all this was that before the war the great bulk of the palm kernels exported from West Africa went to Germany to be crushed, and most of the oil seed crushers in Great Britain had little or no experience of crushing palm kernels. In 1913, of 234,208 tons of palm kernels exported from British West Africa no less than 181,305 tons went to Germany direct. About 2,000 tons went to France, about 6,000 tons to Holland, and about 35,000 tons were exported to the United Kingdom, of which probably a considerable part was re-exported to Germany to be crushed.

When the war broke out the British West African palm kernel trade was at once placed in a most difficult position. The German market was closed, few mills in the United Kingdom could deal properly with palm kernels, and the price of kernels went down from about £19 or £20 per ton at Lagos to about £9 per ton. Efforts were made by the mercantile houses to handle the West African trade, an appreciable proportion of which had been in the hand of German firms in West Africa which were now closed down, and Elder, Dempster & Company, who were of course largely interested in securing an outlet for an article which provided freight to an extent of well over 200,000 tons a year, interested themselves in securing a market for the palm kernels in England. Owing largely to these efforts and to the great demand for margarine and for oil for the manufacture of glycerine for propellent explosives, seed crushers in England began to put up new machinery, or adapt their old, so as to enable them to deal with palm kernels.

Mr. Bonar Law, in June, 1915, appointed the Committee on Edible and Oil-Producing Nuts and Seeds which in May, 1916, recommended that a Duty of £2 per ton should be imposed on palm kernels exported from British Africa which were not crushed within the Empire, "the Duty to continue during the war and for five years afterwards." This recommendation was approved by Mr. Bonar Law in his Despatch of June 1, 1916, and in asking the Colonial Governments to cause the necessary legislation to carry it into effect to be drafted, he stated that it would be necessary to review the position again five years after the end of the war, in order to decide whether to maintain the Duty or not. As during the period from 1916 to 1919 the export of palm kernels from the British West African Colonies was restricted by means of export prohibitions and so, although no Differential Export Duty was enforced, they could not be exported to Germany, nor, except under licence, to Holland, it was not until the Treaty of Peace with Germany had been signed that it became necessary to bring the Differential Export Duty actually into force; but in August, 1919, Lord Milner decided to proceed with the measure.

In dealing with the arguments put forward against the Duty on the Gold Coast, Lord Milner stated that the publication of Mr. Bonar Law's Despatch of June 1, 1916, directing the introduction of the necessary legislation to impose the Duty, must be regarded as practically equivalent to a pledge to the manufacturers concerned, which must now be fulfilled. Nigeria and Sierra Leone had passed the necessary legislation without demur. Accordingly, the Differential Export Duty of £2 a ton on all palm kernels which were exported from British West Africa and not landed at a port within the Empire, was imposed in October, 1919, the Ordinances providing for its cessation after it had been in force for five years. The original recommendation of the Committee on Edible and Oil Producing Nuts and Seeds, that the exporter to be relieved of the Duty should have to prove that the kernels had been crushed within the Empire, was abandoned owing to the difficulties of obtaining crushers' certificates, and a certificate of landing within the Empire was substituted for a certificate of crushing. It was found almost impossible to obtain a crusher's certificate and, therefore, the certificate of landing within the Empire was considered satisfactory in order to secure relief from the Duty.

The grounds on which this Differential Export Duty can be supported have practically narrowed themselves down to two. One is that it is imposed for a limited period for the good of the British West African Colonies, to ensure their having two markets instead of one competing for their produce, and to prevent the possibility of the repetition of the situation which they experienced in 1914, when they were cut off from their one market—namely, Germany. The other was that the crushers in this country were led to expect that they would have the benefit of a protective Duty of £2 a ton for five years from the expiration of the war, and that the removal of the Duty earlier would be more or less a breach of faith with them.

The objections to the Duty may be summarised as follows. I think these objections have already been dealt with, but the first is that so far as it is imposed for the benefit of the British West African Colonies, those Colonies do not believe that the measure is for their benefit and would prefer to be without it. Secondly, so far as the Duty is not imposed in order to benefit the British West African Colonies, but to benefit the crushers and margarine manufacturers in this country, it is urged that whatever may be the argument for the Colony giving preference to Great Britain by means of its Customs Duties, such preference ought to be a free gift from the Colony and not a measure forced upon it by His Majesty's Government, and that His Majesty's Government in its dealings with the Crown Colonies ought to be most careful not to use its powers to benefit interests in Great Britain at the expense of the inhabitants of the Colony.

As I have already stated, this question has been debated several times in Parliament from every point of view. Since the last debate, when Lord Milner upheld the Duty mainly on the ground that the Government was practically pledged to those who had to put their capital into the development of the kernel crushing industry in this country, the position has altered in two respects. The price of palm kernels has fallen heavily, and it is now difficult to pay a price to the natives which will remunerate them adequately for their work in preparing the kernels for the market, and the whole policy of the Duty has been examined by the Committee on Trade and Taxation in British West Africa, of which Sir Hugh Clifford was Chairman, and which reported last December. The remarks of the Committee on this question will be found in paragraphs 190 to 213 of their Report. The Report of the Committee is before your Lordships, and I do not think I need go into it except to say that the Committee reported against the continuance of the Duty.

Although sympathising with the demand—and this, I think, is the pith of the answer—that the Differential Duty of £2 a ton on palm kernels should be abolished, His Majesty's Government feel that owing to the expectations that were held out to the crushing industry in this country both by Mr. Bonar Law's approval of the recommendations of the Oil Seeds Committee and by the passing of the Ordinances in 1919 imposing the Duty for five years by Lord Milner's direction, they are not now free to approve of the abolition of the Duty without first consulting with the crushing interests concerned. For this purpose representatives of those interests and other trades interested will be asked immediately to consult with the Colonial Office to ascertain if any way can be found to abolish this Duty without unfairly treating those interests.

THE MARQUESS OF CREWE

My Lords, I merely desire to touch upon the matter which has been last mentioned by the noble Duke without attempting to cover the ground of his general reply to the Question raised by my noble friend, Lord Emmott. The reply of the noble Duke on this Question of the Differential Duty imposed upon palm kernels will not, I fear, be thought entirely satisfactory by my noble friend, Lord Emmott, or by the other noble Lords who have supported his view in this particular matter. Like my noble friend, Lord Buxton, I am very glad that this particular question has not been argued on the old ground of the fiscal controversy as a contest between Free Trade views on the one side and Protectionist views on the other. But I think it is necessary to say that if it be the considered opinion of the country that it is important to subsidise the crushing mills in this country because it is important that the margarine industry should be established here, that is a question for legitimate argument between those who favour the subsidising of particular industries and those, on the other hand, who desire to depend on free imports. If it be the considered conclusion of the country that this particular industry ought to be subsidised, so be it; but the person who must pay in that case is the British taxpayer; it must not be the African native.

The noble Duke did not really attempt to reply to the argument so plainly set out by the noble Earl, Lord Selborne, that as a matter of fact this particular Differential Duty is inflicting a sensible hardship upon the natives of two of the great West African Colonies. The noble Duke has told us that a conference is to take place between those who represent the crushing mills and His Majesty's Government in order to see what conclusion can be reached satisfying, I take it, the claims of those who are engaged in the industry. It is quite clear that those gentlemen will point, out that they were lured on, so to speak, to erect expensive crushing plants on what they conceived to be an understanding that they would have the benefit of this Duty until October, 1924, and that if the Duty is abolished before that date they will expect to receive compensation in some form or other.

I think His Majesty's Government when the conference takes place may be able to point out to them—at least some of us, I think, if we were conducting the conference would point out to them—that there is every probability, when October, 1924, comes, if the Duty is permitted to exist till then, that their demands for its further continuance will be even more insistent than they are at this moment, because in all probability they will not have been able to dominate the world market by then, and will maintain that they are still of the nature of an infant industry demanding support. We can hardly, I suppose, expect the noble Duke, or His Majesty's Government, to tell us whether, in any circumstances, compensation will be promised to these gentlemen if their claims for such compensation are admitted. I confess I wish that His Majesty's Government had seen their way to take a somewhat stronger line on this matter after the very convincing speeches that have been made by noble Lords on both sides of the House, but, as it is, we are bound, I take it, to accept the conclusion which Majesty's Government has reached, though I cannot expect my noble friend, Lord Emmott, to regard that result with great satisfaction.

LORD EMMOTT

My Lords, the form of my Notice does not give me any right of reply, and I shall not make any comment on what the noble Duke has said, but I thank him very cordially for the amount of information he has given, and for the full way he has replied to the Questions told him that I was going to ask.