EARL BEAUCHAMP had given Notice to call attention to the working of the Safeguarding of Industries Act; and to move a Resolution. The noble Earl said: My Lords, the Resolution which I beg leave to move on the question of the Safe-guarding
of Industries Act runs in the following terms—
That as the Safeguarding of Industries Act interferes with trade and increases prices, this House is of opinion that it should be repealed forthwith.
Your Lordships will notice that this is divided into two parts, one of which declares that the Act interferes with trade, and the other that it increases prices. With regard to the increase of prices, it is not necessary for me to offer any evidence to your Lordships. The Minister of Health, speaking, I think, in another place in the debate on the Second Reading, declared that the Bill would, of course, raise prices; that the object of the Bill was to increase prices.
§ I shall therefore devote such remarks as I shall venture to trouble your Lordships with this evening to that part of the question which deals with interference with trade. May I say, in the first place, that we who are Free Traders have always felt that there were two lines of defence? First of all, there was the theoretical line. We always believed that the people of this country would, on the merits of the arguments which were submitted to them, refuse to accept Protection. Under the Safeguarding of Industries Act, however, in various directions, and under certain clauses in the Budget from time to time, various methods of Protection have been adopted, and now we are forced back in connection with these Duties to the second line of defence, which is to show how it interferes with trade—the essential badness of these Duties once they are imposed.
§ In the first place, I wish to complain of the method by which, under this Act, Inquiries are conducted by the Board of Trade. The rules of the Board of Trade provide that although counsel may appear and may address the Committee no questions may be put to any witness except by members of the Committee. Your Lordships will realise, of course, that in an Inquiry into any special trade persons connected with that trade are not members of the Committee, and therefore the Committee come to it as to a strange matter, of which they have no special knowledge. Therefore, they are at sonic disadvantage in putting questions upon highly technical and abstruse points. But that is not all. The ordinary rules of evidence are in abeyance, and there is no cross- 445 examination of witnesses, which makes the evidence of a somewhat partial kind.
§ The various Chairmen behave in different ways. One Chairman always takes the line that no question whatever may be asked by counsel appearing in opposition to a Duty, either directly or through a member of the Committee. Another Chairman is always prepared to put a question on behalf of interested parties who are not allowed to ask questions for themselves. Another variation in the procedure is that while one Chairman interprets the rule that applicants may give evidence in confidence so rigidly that the opponents of Duties are kept in complete ignorance of the case presented secretly to the Committee by those applying for protection, another Chairman takes the view that evidence given in confidence cannot be treated as of equal value with evidence laid open for reply by the opponents, and many documents originally intended to be treated as confidential have as a consequence been handed in openly and subjected to examination. It is very inconvenient to applicants, and still more to those who object to the imposition of Duties, not really to know what are the circumstances in which they are expected to conduct their cases.
§ It is not surprising in circumstances such as these that there should be some very remarkable instances of delay and interference. Attention has been drawn to a number of them from time to time in the Press, and I have a certain collection here of which I shall give your Lordships a few examples. There was one of a consignment of electric lamps, in which the tungsten was dutiable. A man who went to the docks to arrange for the clearance was kept nearly the whole day. He paid 5s. clearance and had to leave a deposit of£1, and the Duty was fixed at the enormous figure of one penny. Then there were five cases of toys which were held up for six weeks because they contained two dutiable articles of the value of 1s. each. A Newcastle importer, who had paid Reparations Duty on dolls' heads on October 18, was still waiting on November 2 to pay Is. 8d. tax on glass eyes. Meanwhile, he had to pay for storage and other charges. A case that attracted considerable attention was that of the Phillips Chemical Company, who imported milk of magnesia from America. The first consignment arrived at Southampton on October 3, and it was stopped for analysis of samples. 446 After a month's delay it was found that the cases had not been opened, and that no samples had reached London. A member of the firm who inquired at Somerset House was sent to the laboratory, Clement's Inn, where nothing was known of the samples. Meanwhile, further consignments had arrived, and the goods were not released until£650 was deposited, although the Tax could not be more than£5.
§ We know how this part of the Bill, which was designed to protect the key industries of this country, seems to have been directed chiefly against children's toys. It is a matter of notorious amusement on the part of those interested in the question that time after time toys which are designed for the use of children are particularly subject to taxation. There was a package of fishpond games which was released on payment of a deposit of 2s. When the formalities were completed the package was lost. Then there was the case of face powder being shut out, and the case of toy magnets, and a further case of children's paints being held up because they were suspected of harbouring aniline dyes. There was also the case of the teddy bears. Teddy bears which have a squeak are liable to the Tax, but those with no squeak are free of Duty. Then we have the French toy bagpipes, which were stated to be subject to the Tax, whilst German mouth organs were allowed in free. There are a number of other ridiculous anomalies with which I will not waste your Lordships' time.
§ Towards the end of last year a Government concession was announced on the dutiable ingredients in toys. Where they did not exceed 10 per cent. of the whole value of the toy they were to be free, but of course that means that dolls' eyes, fishpond hooks, and the various materials brought in to make up toys in this country, are still liable to Tax. It shows how the raw material of one industry may be made subject to taxation, and how manufacture in this country is thereby impeded. I am sure we should all agree with the harassed President of the Beard of Trade who stated on one occasion that it was not always easy to say where an article begins and ceases to be a toy.
§ The Board of Trade was particularly unfortunate, I think, in regard to the first two cases submitted to the Committees which were appointed under the Act. The first was, of course, the santonine 447 case. In regard to that chemical you only extract one or two pounds from the whole ton, and the question there was whether the whole ton was to be imported from Russia, or whether the article was to conic into this country ready made up for further manufacture, and it was included in the first instance in the list of the Board of Trade. The referee decided that it was improperly included and the Board of Trade lost their case. They had, of course, briefed very learned counsel and the opponents were equally obliged to spend a considerable amount of money and to find counsel no less distinguished in order to answer those who appeared on behalf of the Board of Trade. There was, therefore, a double waste of money on the part of the Board of Trade and of the manufacturers who appeared.
§ Then we had the case of gas mantles which was the second case which appeared before the Committee. There they applied that gas mantles should be inserted in the Schedule, although they were not included by the Board of Trade. None of us were surprised that they were not included by the Board of Trade because they had been the special subject of discussion in another place, and it had been stated that as gas mantles were made by a ring who were well able to look after themselves it was quite unnecessary to include them in the list of key industries. In spite of this the referee, an official appointed under the Act of Parliament, proceeded to say that these gas mantles should in certain respects be included in the lists. It seems to me a somewhat new principle that officials appointed under the authority of Parliament should have the power to overrule the decisions of Parliament itself. It was a long hearing, and the National Gas Council were very much opposed, but in the end the referee decided that, while the gas mantles should not be specifically mentioned in the list, mechanical compounds of nitrate of thorium and cerium forming mantles or parts of mantles used in incandescent lighting, should appear therein. I believe that what happens is that in those circumstances the amount liable to taxation is something like 1s. per gross. That, again, is a case which was given against the Board of Trade. One almost hopes that they will be more fortunate on future occasions.
§ Since that time a very interesting case has come up, called the case of mucic acid. 448 It is interesting for this reason, that it was included on the ground that it was a fine chemical. Since the time when the Act was passed by Parliament a new method of manufacturing mucic acid has come into operation, and now mucic acid has become a heavy chemical. And vet., although everybody agrees that it is a heavy chemical, which can be turned out in very large quantities at a very much lower price than used to be charged, the Board of Trade and this Committee have no power to remove it from the list in the Schedule, and it still remains a fine chemical. I mention that as an interesting case because it shows how science day by day is making what are the key industries of to-day perhaps something wholly useless for the same purpose to-morrow. And the things which during the war may have been, and indeed were, of importance to us, will in the next war be of no use whatever. It is a good example of that argument which I think Free Traders have often addressed to the Government.
§ I turn now to the case of fabric gloves—a case to which no doubt the noble Lord who replies for His Majesty's Government expects me to refer. This is a matter upon which we are all anxiously waiting to know what the Board of Trade will decide, and if the noble Lord can throw any light upon the matter I am sure that we shall be very much interested. The Committee has decided that fabric gloves should be subject to a Duty, but the Board of Trade, after a long hesitation, is hesitating still. I will explain to your Lordships why that hesitation should be so prolonged. Evidence was given, although under the rules of the Board of Trade it was not allowed to stand as evidence, that the German fabric gloves are made entirely from fine yarn, spun for the most part in British mills. The material is spun in England, and sent out to Germany, where it is made into fabric gloves, and then sent back to this country. Lancashire supplies 90 per cent. of the yarn for the world's glove-making industry. Ten large firms in Manchester, sixteen in London, two in Glasgow, and nine other firms in different parts of the country, representing scores of millions of capital, signed a protest objecting strongly to the inclusion of the glove industry within the protection of the Safeguarding of Industries Act.
§ I should like to read your Lordships some of the evidence which was given by Mr. Wilkinson, the salesman of the Swan 449 Lane Spinning Company of Bolton. He said they had 332,000 spindles, employing 900 hands in turning out 60,000 lbs. of cotton per week. Of that, 70 per cent. was used as glove fabric and sent to Germany. There were 500 firms making gloves in Saxony, and one firm alone took 50,000 lbs. of yarn per annum from one mill in Bolton which meant from£100,000 to£120,000 per annum. While perhaps 2,000 hands at most were employed here in making fabric gloves, some 10,000 Bolton operatives earned their bread by making the raw material which was used by Germany, in order that the fabric gloves may come back here again. It was shown that we should lose the profits of a very considerable glove re-export trade if imports were discouraged by a tariff. Your Lordships will understand, from evidence of that kind, how anxious we are to know exactly what will be the line which will be taken by the Board of Trade, and whether they will come down definitely on the Protectionist or Free Trade side of the hedge on which they now find themselves.
There was another case to which I think I should refer, concerning the action of the Board of Trade in allowing an Inquiry to be made into the question of baths. This was an application made by the British Light Castings Association which had been condemned by the Standing Committee on Trusts. The finding of that Committee was as follows—
We are of opinion that the powers of an Association which wields such monopolistic control over an industry are so open to abuse as to make it a menace to the community: and we urge that such combinations should be brought under the surveillance of some Department of State.
There was a moment when this Light Castings Association tried to force up the price of baths in this country, and they succeeded in taking it up to 70s. Then there was a large importation of baths from Germany which brought down the price to 16s. That shows the amount of money which was, I assert, improperly made by this trust; and it makes it the more surprising that the Board of Trade should have allowed these people to bring a case, which they must have known, from the Report of the Standing Committee on Trusts, was such a bad case, before any Committee set up under this Act. It is true that the case was dismissed by the referee, and that they have not been
allowed to enjoy the protection of the 33⅓ per cent. Duty.
§ The question of the revenue is a point upon which I wish to make one comment. From October I last year to March 25 the total amount of the Duty collected was£134,235, and that includes the amounts which were paid by France, Italy, Belgium, Switzerland the United States, and Japan. And your Lordships, who will remember the discussion which took place before the introduction of the Safeguarding of Industries Act, will no doubt recall how often we were told that it was introduced in order to carry out the Paris Resolutions, the object of which was that the Alliance should be prepared to fight against the Central Powers. It is almost inconceivable in such circumstances that of the£134,235 collected as Duties, in order that the Allies might fight the Central Powers, no less than£54,000 has been paid by those who were our Allies during the war. It shows how far the Act fails in carrying out such an idea.
§ Then there is another point upon which I think we are entitled to make considerable complaint. Your Lordships will have heard that a certain number of goods have been removed from the list, and Duties were paid upon those goods from the time when the Act became effective. These goods, which were originally upon the list, were afterwards removed upon the ground that, in the opinion of the referee, the Board of Trade had improperly included them upon the list of articles, which should be made subject to a Duty. One would imagine that it would be almost a common act of justice that money improperly collected from these importers should be returned to then. The President of the Board of Trade refuses to do it and, as I understand, he says be has no power to do anything of the kind. I do not know that it would be easy to find a greater example of injustice than that money collected under regulations improperly framed by the Board of Trade, should be retained for the benefit of His Majesty's Government and the revenue of the country and not be returned to the people who paid it in such circumstances as those.
I wish also to draw further attention to the case which is made by the British Chemical Trade Association, and I do it for this special reason. Your Lordships who are familiar with this controversy will
know how common it is for those of us who are Free Traders to be told that we are only theoretical people, that business men are all anxious to have Protection, and that it is only because we ourselves live in a world apart from the common affairs of men that we are anxious for Free Trade. Therefore, a manifesto such as that to which I venture to call your Lordships' attention now is of particular value. It is issued by the British Chemical Trade Association and was printed during the current month. That Association makes the following statements, amongst others—
The Act is not even consistent, as it allows the importation duty free of many products which are manufactured in this country, whilst it penalises products not made here.
The Key Section bristles with anomalies. It allows in free certain products made by one process. Identical products made by another method are taxed 33⅓ per cent. on importation. The products of both processes are identical in every way and are used for the same purposes and indistinguishable by analysis.
The following instances are given of the way in which business is now carried on and of the difficulties which arise in carrying it on—
A firm desired to import 1 cwt. of salicylic acid, physiologically pure. It is not made in the United Kingdom, but importation is prohibited, except under licence, by the Dyestuffs (Import Regulation) Act, 1920, and is also liable to 33⅓per cent. duty on importation under the Safeguarding of Industries Act, 1921. It took the firm two months to obtain the necessary licence from the Dyestuffs Licensing Committee (who control the importation of this product which is used)—
for the purpose not of dyes but of making ointments.
It was seized by Customs who levied the 33⅓ per cent. tax and a further 20 per cent. under the Reparation Act. After about three months, during which time innumerable letters were written to the various Government Departments concerned, the firm obtained this small quantity of material worth about£8 that is not made in the United Kingdom.
In those circumstances I think I may venture to say that my claim that this Act interferes with trade is fully made out.
§ The only notice which I think His Majesty's Government have taken so far of the many complaints which have reached them from business men, practical men, is to say that the Act is not to be repealed, as we would wish it to be and as is suggested in my Motion, but that its working should be amended. That is not a suggestion which will appeal, I hope, to the 452 majority of your Lordships' House. Certainly if these are examples of the working method of Protection, we have every reason to desire that when once the people and the manufacturers of this country realise what it means they will be all the less ready to adopt any such system on a large scale in the country. Even on the small scale on which it exists now, I hope that what I have said has been sufficient to show your Lordships that the terms of my Motion are fully justified. I, therefore, beg to move.
THE MARQUESS OF CREWE
My Lords, I have no desire to cover any of the ground which has been so well traversed in the powerful speech of my noble friend, Earl Beauchamp. I merely wish to touch on one aspect of the question which, as some of your Lordships may or may not remember, I have already dealt with in the past—that is to say, the point of view of science and education, and the interference which they encounter from the Act; and from the manner in which the Act is worked. My noble friend has in general terms described this Act as an experiment which has failed, and it is only on one side that I wish to develop his argument in the same sense. I may remind your Lordships that in August of last year, when the Bill was before the House, I moved an Amendment to except from the operation of the Bill, as it then was, articles of importation for educational or scientific purposes, and the noble Viscount, now Secretary of State for India, who was at that time in charge of the Bill, fully admitted the strength of the case which some of us advanced, although he was not able to meet us by amending the Bill.
Later on, in the course of the autumn session, on November 10, I called attention to the effect of this Act and of the German Reparation (Recovery) Act in the same year. At that time the noble Viscount, Lord Peel, said that the Reparation Act was working perfectly smoothly, but he engaged to consult the Board of Education in order to see whether anything could be done, admitting, as he did, that there was a possibility of hardship on the educational side. The result was that a joint Inquiry 453 took place between the Department of Scientific and Industrial Research and a number of scientific teachers who were deeply concerned. How far that discussion and conference has led to an amelioration of the position so far as scientific institutions are concerned I am not prepared to say; perhaps the noble Lord opposite, who is himself so deeply interested in this aspect of the question, may be able to tell us something on that point. The fact remains that there still exist considerable disabilities from the point of view of those who are engaged in the teaching of science and in scientific inquiry.
I venture, therefore, in order not to take up too much of your Lordships' time, to read an extract from a letter which was received by a distinguished scientific man, who had complained of the long delay which was occupied in the repair of an important instrument necessary for his particular inquiry, which he had sent for that purpose. The manufacturers replied in the following terms (and this is an extract from their letter)—If one of your small technical instruments has to be sent to Germany to be repaired, since the Key Industries Bill became operative, it has to undergo the following procedure—that is to say, the procedure for obtaining any small goods by parcel post from Germany. I would, therefore, ask your Lordships to remember that although in this particular case it was a scientific instrument that is involved, something of the same kind would happen in a great number of other cases which would not come under the head with which I am particularly dealing at this moment.
The firm go on to say—We first make application for a Customs officer to call here to identify the instrument, which is packed in his presence for despatch. We pay the Customs 38 6d. an hour for his attendance. It is then despatched to Germany, and we presume it takes three or four days to repair. An application has then to be made in Germany for an export permit, which usually takes fourteen to twenty-one days to procure. It is then sent by parcels post to England, and usually takes twelve days. We have a case here in point. A parcel sent off on March 6 arrived in London on the 18th. We are notified by the Customs that it has arrived in London ten days later, on the 28th March, and the enclosed series of documents are sent to us to be filled in. We then make personal application at Mount Pleasant Post Office, and after interviewing three to four days individuals we pay 26 per cent. reparation duty, and 33 per cent. key industry duty, and after the lapse of another three or four days we get delivery 454 of the repair. The total time taken in repairing the article is probably three to four days, the time taken in transit to and fro from six to eight weeks, and this is called national trade progress.As I stated, this particular instance is the case of a scientific instrument which had to be repaired in Germany, but a very large part of that procedure would apply to a great many other articles.
I would point out once more that it is not merely a question, in the case of these men of science, of people who are working for purposes of abstract knowledge, even though, as we know, abstract inquiry may lead to results most valuable in application to industry, but a great many of these inquiries are directly concerned with the improvements of industrial processes, and it becomes a question for the House to consider whether it is worth while; and whether, by all the elaborate procedure under this Act, you are not doing as much harm to industry on the one hand as you hope you may be doing good on the other by encouraging in this country the manufacture of a certain number of articles which in the past, for one reason or another, have not been made here. I will not detain the House any longer, but I shall certainly support the Motion of my noble friend.
My Lords, I hope I may have the indulgence of your Lordships' House in attempting to reply to the two powerful speeches to which we have just listened, in the first place because I have not hitherto been familiar with what, earlier this afternoon, was described as the age-long contest on the subject which is the basis of the Bill; and, secondly, because of the wording which the noble Earl used in placing his Motion before the House. It was not until an hour ago that I had any communication of the exact Resolution which the noble Earl was intending to move. I knew no more than that he was going to call attention to the working of the Act, and he has done so with a blend of sarcasm and detail as to which I find it very difficult to follow him. But I cannot agree that the wording which was applied to his case by the noble Marquess—that he had proved that this was an experiment which had failed—can really be justified. I confess that it was not until I began to inquire into the working of this Act for the purpose of replying to the noble Earl that I realised the extent of the friends which this Act still has. It seems to me that it is viewed in two 455 entirely different ways, some critics saying that it goes much too far, and others that it does not go nearly far enough, and very often, when criticism is directed towards anything from two mutually destructive quarters, it may be hoped that the middle of the road has safety in it.
I should not like to pretend that I view this Act as one of the greatest that was ever passed, but at the same time I think we are entitled to look at its origin. I do not propose to refer—they have been referred to on previous occasions—to the Paris Resolutions, which were briefly mentioned by the noble Earl, because it seems to me that, dispassionately considered, they were obviously directed against our enemies, and had in view that problem only. At the same time, they did bring various problems to light from the experience of the war, and they did lead up directly to Lord Balfour of Burleigh's Committee. I think one can find in the conclusions come to by that Committee, presided over by one of the eminence and the known opinions of the late noble Lord, a basis for the principles of this Act. The Committee came directly to the conclusion (in the first part of paragraph 254) that the producers of this country are entitled to require from the Government that they should be protected in their own market against dumping. That is the basis of Part II of this Act. When the noble Lord calls attention to the working of the Act I presume he excepts from his speech Part II, because, as he is no doubt well aware, no Order has yet been made under that Part, and I could not quite understand, in listening to him, whether that in itself was a subject of complaint. I should have thought that, if the noble Earl is asking your Lordships to repeal the whole Act, he would have been glad, and would have even commended the Government for not having put into operation so far one-half of the Act.
It must, of course, be clearly recognised that whether tariff or safeguarding be good or bad for different industries, at any rate uncertainty is bad. I think the President of the Board of Trade, in another place, very pointedly expressed his own sense of that truth, and one can appreciate the desire of everyone to know, to use the words of the noble Earl, on which side of the hedge the Board of Trade are going to come in such a matter, for example, as that of fabric gloves. I wish I could enlighten him. He correctly stated the 456 position with regard to the Report—a matter, as I think he admitted, of considerable difficulty on which, at any rate, it is obvious that there are two diametrically opposed interests. I cannot say more to your Lordships than that the decision on this matter is engaging the very earnest attention of the Government, and it is hoped the decision may be announced in a short time.
The actual state of Part II, which I should mention in view of the assumption of interference of trade, is that there have been fourteen complaints referred to Committees, one or two of which are expected to be dealt with very shortly; twenty-one have been made and rejected on the ground that a prima facie case was not made out, and there are twelve more pending further inquiry. Roughly speaking, about one hundred trades, or branches of trades, have entered into communication with the Board of Trade in connection with this part of the Act. It may fairly be said that not more than one-half have reached the stage at which they can be regarded as formal complaints; they are only in the nature of inquiries. Seven reports have been made up to the end of March last. The noble Earl dealt with some of them in detail, but I need not travel over that ground again. It is much to be hoped that a decision on each will be no longer delayed.
The greater part of the noble Earl's speech was directed to that part of the Act which is in operation—namely, the key industry part. I think the noble Marquess asked whether, in view of the facts alleged, it was really worth while. I must remind your Lordships of the origin of that part of the Act. I think, if time allowed, that every heading in the Schedule of the Act could have its national importance proved by reference to the lessons of the war. The conclusion, definitely come to by the late Lord Balfour of Burleigh's Committee, was that such industries as had been described as key or pivotal should be maintained in this country at all hazards and at any expense, words which are as strong as they could be made. The Report also said—No ordinary economic rules apply to the situation of these minor but important industries. They must be kept alive by loans, by subsidies, by tariffs, or by Government contracts, or, in the last event, by Government manufacture.It must be admitted that when the Act came into operation the conditions of 457 trade were entirely abnormal, and more especially abnormal in respect of those articles covered by the Schedule. All of them were of importance to the nation from the point of view of war, and very great stocks had been accumulated in this country at the time of the Armistice.
Further, at the time of the passing of the Act there set in a period of great trade depression, and at the same time foreign competition was very acute owing to the efforts of foreign manufacturers to recover the ground they had lost during the war. The evidence at my disposal goes to show that this Act has, at any rate, done much to encourage manufacturers in this country, not only to hold on to the position they had precariously won but also to undertake new developments. Let me read the testimony of one old-established firm of chemical manufacturers writing at the end of last year. They say—For many months our factories were working short time. Had we been ruthless we should long ago have sacked large numbers of our people, but we had not the heart to do so, and as an alternative, having got rid of the minimum number possible, we kept all the rest going on short time.—As a result of the passing of the Act we have been able to put our factories on full time, and re-engage practically all the hands we had been compelled to dismiss. We have found it possible to set to work on research and experimental work on a number of new chemical products which we believe can now be profitably developed in this country under the protection of the Act. Without such protection it would simply not be worth while to go into them as the Germans would most certainly have swamped us as soon as we had developed anything which they saw was in the least profitable. Some of these new products may turn out to be saleable on a very large scale, with an automatic increase of employment for more workpeople. Several important articles, the manufacture of which we had taken up during the war, we almost certainly would have been compelled to drop as competition from France and Germany was becoming very acute, but now we are not only enabled to keep them on but are actually increasing our plant.I will trouble your Lordships with only one other report from another firm. They say—The first effect of the passing of this Act upon us as makers of fine chemicals was to establish confidence. Projects which had been hanging fire owing to the doubt which existed whether the Government would or would not actually give the necessary assistance to the immature fine chemical industry were proceeded with when the Bill became an Act. We have undertaken the manufacture of a Lumber of additional chemical substances since the Act was passed, and in many cases these are already on the market; in others—and this refers more to large scale manufa.cture—plant is in process of 458 erection and will shortly be working. We have three additional buildings at present in course of erection, two of them approaching completion. We are employing additional chemists, skilled workmen, process workers, and labourers. Both as regards research and as regards actual manufacture we have new work in hand which would not have been commenced but for the passing of the Act.There are many ether reports to the same effect, but I think those two extracts are sufficient to show that at any rate the Act has been beneficial in increasing employment and enabling new and struggling chemical industries to be developed. It is putting it too strongly to speak of the Act as an experiment which has failed.
The noble Earl, in his speech, drew attention to another point of importance—namely, the question of costs—but he has, I think, begged the question in his Resolution. The noble Marquess also drew attention to this with regard to educational institutions. I confess that were it proved that the passing of this Act had resulted, and would continue to result, in an increase of the cost of instruments to such institutions my cordial sympathy would be aroused. I said "would still result," because I think it must be remembered that the Act has not been in 'operation a long time, and like most measures dealing with industry it must take some time before its full effect can be felt. Its main object is the development and encouragement of our own manufactures. It may be that in the initial stages there will be difficulties which will not be found later on, but even now, as far as the information of the Government goes, only in a few instances has the passage of the Act resulted in an increase of price. There is evidence to the contrary, and a number of chemical manufacturers have deliberately reduced their prices in order to take advantage of the Act and create a demand. That applies not only to chemical manufactures, but also to certain classes of scientific instruments and scientific glass ware.
Another factor which must be remembered in connection with costs is that if by reducing their costs foreign manufacturers had been enabled to flood this country with these goods, and had prevented the development of manufactures here, it is practically certain that when that process had been effected the prices of the foreign goods would be immediately and substantially raised. It is true that there is still a good deal of what one might almost call prejudice against certain goods of 459 British manufacture which, as was so pointedly shown in the war, had for a long time passed into the hands of foreign countries, but it is also undoubted that very great progress is now being made, and that the quality of some of the scientific goods made by British manufacturers is undergoing a marked improvement.
For example, the British making of optical glass is now reaching a very high grade indeed, and I may perhaps be allowed to read a short extract on that subject from the Report last year of the National Physical Laboratory. It says—The manufacture of volumetric glassware was practically non-existent in this country prior to the war. During and since the war it has been developed on an extensive scale. Unfortunately many users of volumetric apparatus believe that the accuracy of British apparatus is inferior to that of German origin. From our experience at the National Physical Laboratory we are in a position to know that apparatus of British manufacture which has passed our tests is at least as good as any similar standard apparatus of German origin.After describing certain comparative tests the Report states—The results for the German apparatus clearly show that such apparatus cannot be accepted on trust, as many users appear to imagine.…The ordinary grade German apparatus has no claim to superior accuracy as compared with ordinary grade British apparatus.That, so far as it goes, cannot be regarded as other than highly satisfactory.
The noble Earl devoted certain passages, with considerable sarcasm and much humour, to the inconvenience and delays which had been caused by this Act at the Customs. There again I should like to preface my remarks by pointing out that the Act has not been in operation a long time, and that it was inevitable that its start Meant the filling up of forms and certain other formalities which were obviously inconvenient and, no doubt, caused delay. But this is inseparable from the initiation of any such measure, and is not necessarily bound up in any state subsequent to that initiation. The noble Earl made considerable play with the question of dolls' eyes and toys. They have received a great deal of prominence, possibly not unduly, but at any rate a prominence which came to an end, as the noble Earl then went on to point out, on January 1 of this year. It is true, as he stated, that if anyone brought in as separate articles some of those goods to which he referred as ingredients, they would still be dutiable, 460 but I am informed that the Treasury Order which he mentioned, regarding goods which do not contain more than 10 per cent. of the total value in a dutiable form, has very greatly simplified the working of the Act. He gave instances of congestion and of delay. All I can say is that at the present moment there are very few complaints, and, certainly speaking from the point of view of London, there is no congestion at all. That is a state which one may confidently hope has passed away.
The noble Earl then dealt with some of the cases which had been heard as the result of complaints. There have been nine decided cases in all. The noble Earl drew attention with great force to some of the difficulties, but it is a fact that three cases only have been decided contrary to the Board, while five have been definitely decided in favour of it. One case is still outstanding. There have been in all ten cases heard by the referees. The point has also been made—I do not remember that the noble Earl actually made it—that very great expenses and delays were incurred by these hearings. Only two of these ten cases have gone beyond two sittings, and three of them occupied only two hours each. The two cases that were of considerable length, and were, no doubt, expensive (though I have no actual details of that) were those of cream of tartar and carbide of calcium. In both these cases it was the complainants who insisted upon having counsel.
I think the noble Earl was slightly in error in saying that the Board of Trade brought a formidable array of counsel, and that then the complainant, unless he wished to lose his case, was equally obliged to go to a similar expense. That has not been the procedure of the Board of Trade. They have not had counsel wherever complainants have been willing to waive their introduction. They have taken the view that if the complainants are ready to state a case the Board will do the same, and the responsibility for making a complaint an expensive and lengthy affair rests therefore with the complainants rather than with the Board. In regard to the expenses of the Act as a whole, it is, perhaps, one of the few measures which have entailed no extra staff in the Ministry or Department which is carrying it out—though it has naturally meant a great deal of extra work—and only a very few additional people at the Customs.
461 The noble. Earl all the time referred to this question from the point of Free Trade and Protection, as if it were almost a test. I should just like to conclude by saying one or two words upon that. I submit that it is not really a question, so far at any rate as Part I is concerned, of different principles, but rather of a dispute as to the application of the same principles. I base that observation to sonic extent upon certain words which fell from my noble friend, Lord Emmott, on the Second Reading of the Safeguarding of Industries Bill on August 15 last, when, speaking of the part of the Bill which relates to key industries, he said—There is no controversy on protection. I do not contest that point at all. I am perfectly certain the country wants it, and demands it. Our only conflict is as to the best method of giving it.There will also be within the recollection of everyone who has followed this question the support given to the whole principle of defending these pivotal industries by the late Lord Moulton, who throughout his life was an advocate, if ever there was one, of Free Trade. A further example of my contention might be found in some words spoken by Mr. Runciman in another place in January, 1916, where he said we were placed at a great disadvantage and that never again should that happen.
Surely, it is agreed by everyone that there are certain industries the existence of which must be in the national interest, and which the experience and lessons of the war show that we should safeguard and as far as possible encourage their development. The dispute, it seems to me, is not so much upon that, but upon which industries should be selected and the means which should be adopted. The question of which should be selected was very thoroughly thrashed out by Lord Balfour of Burleigh's Committee, and I think that if one takes out article by article in the Schedule one could show that each bears an importance quite out of all proportion to its size from the point of view of national interest, and that though it may be quite true that in a future war those would not be the articles of first national importance, nevertheless, as Lord Moulton knew, one must encourage the building up of great chemical industries so as to have the chemists, who could then be turned on to the solution of any new industrial problems which arose. As to the method, I submit that the evidence which 462 I have endeavoured to lay before your Lordships shows that even in the short time it has been in operation a great success has attended, and may be expected still more to attend, the working of Part I of this Act, and I hope your Lordships will not accept the Resolution of my noble friend.
§ LORD BUCKMASTER
My Lords, debates of this kind frequently end in a common form. Someone speaks in support of the Motion, expresses his appreciation of the courtesy and skill of the noble Lord who replies for the Government, and his profound disappointment at the small success that the Motion appears capable of achieving. I do not feel inclined to depart from the common form in the few observations which I propose to make. I certainly can express sincerely my appreciation of the courtesy and. skill of the noble Lord who has just spoken, and something more. He is the first man, speaking for the Government, who has had the candour and the courage to say what was the true effect of the Paris Resolutions, and when it is remembered how widely and systematically those Resolutions have been misrepresented, sometimes through ignorance and sometimes through deliberation, throughout the country, the noble Lord will understand how thoroughly we on this side of the House appreciate what he has said.
The real case made by the noble Earl against this Act may be summarised under three heads. He says, first of all, that it does in fact interfere with industry in this country; secondly, that it does raise the price of a number of very important commodities; and, thirdly, that its operation is discriminative and therefore peculiarly objectionable to people who hold Free Trade doctrines. The noble Lord, as I understand him, replies, first of all, that all our objections must be swept on one side because this Act was dictated by the necessities of the last war, and is intended to put us in a position to prepare for the next. Now I have always thought that if the ecomonic and domestic policy of this country is to be regulated chiefly with the object of seeing how we can resist the next attack that is made upon our liberties, this country will be destroyed from within before it is attacked from without; and I am bound to say that if you are looking for the pivotal industries, meaning thereby industries the protection of which will be essential to enable you to maintain a pro- 463 longed struggle against your enemy, I say in the presence of Lord Chaplin, whose presence here we are glad to note, that the first thing you will have to protect is food. It is beyond all things the pivot upon which any future war must hang, and is there anyone beyond Lord Chaplin who would advocate on a public platform, with any chance of success, that food in this country should be subjected to a protective Duty? We know it is impossible for this simple reason, that although the Government attempted to do it in a most insidious and, as I thought, most dangerous form, the measure had not been on the Statute Book for six months before they were bound to repeal it.
I am bound to say that I regard this argument with regard to pivotal industries as one which is entirely unconvincing. You have to decide what is the pivot, and whether it is going to be the pivot on which the next event is going to hang, and you have to put that in the hands of a number of people who, with the best will in the world, are no more gifted with foresight than are the rest of us, who are quite unable to decide which these industries are. If you regard as pivotal industries the industries which are essential to the vitalisation of all other industries in the country, it is obvious that the more you raise the price of that commodity the more you must raise the price of all the other industries in the country. That appears to me to be axiomatic. The noble Lord who has answered has said that this Act, so far as he can see, in certain cases has riot raised the price. I am utterly unable to understand how any Bill which imposes 33⅓per cent. upon the importation of articles sold here in competition with our home products can possibly fail to raise prices. It was, indeed, stated when the Act was introduced in another place that that was its very object, and of course it must be its object if it is really going to seek to build up a tariff wall around industries protected at home. If it fails in that it must fail in the object for which it is introduced, and although it may be possible, in one or two special cases, to show that owing to the fact that competition is not keen or the production here is not great, there has been no material increase in prices, I believe that as a general rule the increase has been very great.
This I know, that two people eminent in the scientific world were recently giving me 464 an account of the difficulties which they had to encounter in regard to ordinary laboratory glasses. The increase of expense was immense, and the durability was in comparison far less. I am not complaining of English glass manufacturers, but for sonic reason which it is difficult to know—it may be lack of scientific training or a number of delicate and indefinable causes—English glass is not as durable as the glass made in Austria and Germany and Bavaria before the war. I believe that the wisest thing to do is to import the glass which you can use. When the noble Lord told us—and the House, I am sure, heard it with great delight—the story of the chemical manufacturer who had been able to maintain his factory because of the protection that this Act afforded him, he did not really go to the root of the matter. What you have to see is not really what has happened to that factory, but what has happened to the other industries that depend upon the output of that factory for their life.
The real difference between a Free Trader and a man who believes in this form of discriminative Protection is just this: that the Free Trader insists upon looking at the whole of the industries of this country as one. He will not consider taking them one by one and seeing what you can do to protect each of those industries. He looks with a broad glance, and he says that if you take a particular trade and point out that that trade might be encouraged and the number of people permanently engaged in it increased by putting a tariff wall about its products, you have not proved your case. You have not shown, when you have done that, that you have not even more gravely interfered with other industries and thrown even more men out of work. You have to expand your survey before you make any such answer as that, and that is what I should say to the noble Lord with regard to his chemical industry. I do not know sufficient about the industries which are engaged in using the products of that particular factory, but I should be much surprised if you could find a manufacturer who would not tell you that, if he could only cheapen the basis of manufacture today, not only would he be able to sell here at a lower price, but he would be able to face this fierce destructive foreign competition which we now have to meet, and which partly prevents us from selling our goods in neutral markets.
465 I wish to say one or two words about the Committee set up to examine into the particular industries that need protection. I imagine there is hardly a single industry in this country that would not tell you it wanted to be protected. It is human nature, and human nature does not change, whether in industry or anywhere else, and therefore I imagine that all of them think they are key industries. The only ones that can get the benefit of this Bill—and whether it raises the price of the product or not, the noble Lord himself says it is an enormous advantage to an industry to get within the compass of this protection—are those that can persuade the Committee that they ought to be there. That is the most utterly one-sided and unjustifiable form of Protection that you can introduce, and the form of Protection proposed by Mr. Joseph Chamberlain in 1903, when he wanted a universal tax upon all imports into this country, was immeasurably more just and immeasurably wiser and more sane than such a Protection as this.
And among other reasons for this: all kinds of influence must of necessity be used by the exiled industries in order to get within the gates of the Protective Paradise. They use at the present moment the perfectly legitimate influence of counsel and advocates whom they employ for that purpose. But do you imagine it will stop there? I am sure it will not. I am
§ Resolved in the negative and Motion disagreed to accordingly.466
§ certain that we have in our Civil Service a body of men as incorruptible as any public servants that ever served the State at any time in the history of the world. But I am also equally certain—and I speak as one who knows something of the way in which patronage is administered, and the pressure and influence brought to bear upon a man who has got patronage at his disposal—I am equally certain you will find, if this Act is maintained indefinitely, as I understand that the Government desire that it should be, that these will be insidious attacks made upon this fortress in order to enable industries to get the enormous advantage that they may secure if they can once get themselves put into the schedule of protected trades. It is a danger to which, everybody knows, the industries in the United States of America have succumbed, and there is no reason why we should imagine that we ourselves should for ever remain superior to the same temptations. I sincerely hope that the noble Earl will pursue his Motion. I think this House owes him a debt of gratitude for enabling us to examine the working of this Act, and I hope that if he presses his Motion to a Division he will he successful in his efforts.
§ On Question, Whether the Motion shall be agreed to?—
§ Their Lordships divided: Contents, 34; Not-Contents, 36.465
|Crewe, M.||Durham, L. Bp.||Parmoor, L.|
|Lincolnshire, M. (L. Great Chamberlain.)||Pentland, L.|
|Anslow, L.||Phillimore, L.|
|Askwith, L.||Raglan, L.|
|Beauchamp, E.||Buckmaster, L.||Saye and Sele, L.|
|Strafford, E.||Chalmers, L.||Southborough, L.|
|Channing of Wellingborough, L.||Southwark, L.|
|Allendale, V.||Denman, L. [Teller.]||Stanley of Alderley, L. (L. Sheffield.)|
|Chelmsford, V.||Emmott, L.|
|Cowdray, V.||Fairfax of Cameron, L.||Swaythling, L.|
|Devonport, V.||Hemphill, L.||Treowen, L.|
|Gladstone, V.||Islington, L.||Vernon, L. [Teller.]|
|Novar, V.||Muir Mackenzie, L.||Wharton, L.|
|Birkenhead, V. (L. Chancellor.)||Onslow, E.||Desborough, L.|
|Plymouth, E.||Dynevor, L.|
|Northumberland, D.||Chaplin, V.||Elphinstone, L.|
|Sutherland, D.||Long, V.||Erskine, L.|
|Peel, V.||Faringdon, L.|
|Ancaster, E.||Gorell, L.|
|Bradford, E.||Abinger, L.||Hylton, L.|
|Clarendon, E.||Armaghdale, L.||Lee of Fareham, L.|
|Eldon, E.||Barrymore, L.||Monckton, L. (V. Galway.)|
|Fitzwilliam, E.||Brownlow, L.||Somerleyton, L. [Teller.]|
|Lucan, E.||Charnwood, L.||Stanmore, L. [Teller.]|
|Malmesburv, E.||Clwyd, L.||Wigan, L. (E. Crawford.)|
|Midleton, E.||Colebrooke, L.||Wyfold, L.|
§ House abjourned at a quarter before seven o'clock.