HL Deb 10 February 1926 vol 63 cc95-106

LORD PARMOOR had given Notice to call attention to the British subsidy under the Trade Facilities Act to the Silver Line, Ltd.; and to move for Papers. The noble and learned Lord said: My Lords, since I put down this Question I understand there have been two subsidies, one of £150,000 and the other of just over 5,000,000 dollars. It does not matter whether there has been one subsidy or two; the point which I want to raise is equally relevant whatever the amount of the subsidy. I believe that these subsidies were given in respect of ships that were constructed in this country. That undoubtedly brings them within the provisions of the Trades Facilities Act, because that Act applies to manufactures wholly or partly produced in this country.

It is not my purpose this afternoon to go into the general question connected with the policy of the Trades Facilities Act. The question is how these ships were intended to be used. What I want to ask the representative of the Board of Trade—the Earl of Plymouth, I believe—is whether, although these ships were in truth manufactured in this country, they were to be used, and are being used, abroad in connection with what is really a foreign line; that is, in competition with British shipowners. If that is true—the noble Earl will give me information as to whether it is or not—I suggest that it is clearly outside what was really intended by the Trade Facilities Act—namely, to provide money under the guarantee of the British Government in order to promote the trade of British traders. There is no doubt that these ships are being used—I will read in a moment an extract from a letter to show that it is so—in the trade between America on the one side and Singapore and the Straits on the other. Between those two points there is a very large carrying trade by British ships. There are four well-known lines engaged in this trade. In addition to the ships of those lines there are Japanese ships and ships subsidised by the American Government. As regards the traffic concerned I am told that there is ample shipping accommodation; in fact, more than is required at the present time; but if more had been required the shipping companies in this country would have been prepared, and were quite able without Government guarantee or assistance, to supply any additional ships when the conditions of the trade rendered it necessary.

The letter that I have received comes from a British firm who have signed the letter as agents for the Roosevelt Steamship Company, Limited. I believe that the company is an American steamship company and is regarded in the trade as an American company, closely connected with another American company known as the Kerr Company. That is the information that is supplied to me, and this is the letter, written, as I say, from an. English firm who sign as agents for the Roosevelt Steamship Company, Inc.:— We have much pleasure in advising that our principals, the Roosevelt Steamship Company, Inc., are inaugurating their Straits-New York service, with the sailing of the motor ship 'Silverelm,' loading at Singapore— on a certain date. The letter goes on to say:— The motor ships already denominated for this service are named 'Silverelm,' 'Silverpine,' 'Silverlarch,' and Silvereedar,' and it is added that they are of the best and newest type. What I want to ask is whether the ships that I have mentioned are the ships that were built with the subsidy given under the Trade Facilities Act by the British Government. If they are, I wish to point out that they are being used in competition with British shipowners trading between Singapore and the Straits and America.

The letter goes on to say:—

Our principals"— that is, the Roosevelt Company— inform us that it is their intention at present to operate a monthly sailing to Baltimore and New York direct via Colombo and Suez, and they authorise us to state that in speed and regularity the service will be the equivalent of any service operating on the Straits-New York run. The main owners who are operating steamships on that run are British shipowners. I do not know what information has been obtained, but I wish to ask if it can be a right policy under the Trade Facilities Act to subsidise shipbuilding, for instance, even though the ships are built in this country, in order that these subsidised ships may be used in competition with our own large shipowning lines.

I want to put a further question. I do not know what inquiries the Board of Trade have made, and no doubt the noble Earl will tell us, but it is quite obvious that, in dealing with matters of this kind under the Trade Facilities Act, very careful inquiry and consideration are necessary. I wish to ask whether the Board of Trade has inquired of all the large shipowners who are interested in the trade that is being carried on. Has inquiry been made whether, in the first place, more ships were wanted, and, in the second place, if they were wanted, whether they could not be supplied by the shipowners themselves without any guarantee, in their ordinary industrial capacity? As I have said, our shipowners are not having a very good time industrially, and I have mentioned that they are in competition with Japan and with subsidised American traders. Surely it is an impossible policy to suggest that they should also be placed in competition with a line which is really an American line, although the ships were constructed in this country under a Government guarantee.

I do not know whether the guarantee will be called upon as regards these ships or not, but that is not the point. The point is that a special security to enable money to be raised on cheap terms has been given, if my information is correct, for the construction of ships in this country to run in competition with our own British shipowners on the line between the Straits, Singapore and, Suez on the one side and Baltimore and America on the other. I do not desire to make a speech on this topic or to go into the question of the policy of the Trade Facilities Act, but I want to ask the noble Earl broadly these two questions: Whether, as a matter of fact, these ships are not being run by the Roosevelt Company and the Kerr Company, who in substance are known as American shipowners and as running an. American line; and whether, before a subsidy of this kind was granted, the wishes of the British shipowners were consulted. I beg to move for Papers in case I should desire to say anything in reply to the noble Earl.


My Lords, in moving for Papers the noble Lord said that he did not intend to go into the general policy of the Trade Facilities scheme, but I think it is really necessary for me to make one or two observations on the general policy that is involved, because I think it has a very distinct bearing upon this particular question. Broadly speaking, the policy of the Treasury is that, when an application is made to them for a guarantee under this scheme, if, after consultation with an independent Advisory Committee, they are satisfied that the proceeds of any particular loan are going to be spent in such a way as to promote employment in the United Kingdom, then the Treasury may guarantee both the principal and the interest of that loan.

I need not go into details of the sums that have been guaranteed and expended, but I think that there are two essential facts that must be remembered in looking at any question connected with this trade facilities scheme. The first is that the primary purpose of it was to relieve unemployment; and the second point that I should like to emphasise is that when the original Act of 1921 was passed the Treasury gave very full and specific assurances that they would be led and governed by the decisions of an independent Committee of business men, and furthern ore that they would not interfere with the discretion of that Committee. This is the policy which, as I say, was initiated in 1921 and has since been followed by every successive Government, including the Labour Government of which the noble Lord was a member. Accordingly, if the noble Lord is suggesting or insinuating that the present. Government should go back upon that pledge, all I can say is that we look upon it as a pledge and that we consider that it was a pledge which had been taken by the Government of which the noble Lord was a member as well as by the present Government. I do not think that it is possible to make any alteration of policy in that respect.

Now I come to the specific case at issue. The facts regarding the guaranteed loan to the Silver Line, Ltd., are these. The loan was for a sum of £1,107,000 and, upon the recommendation of the Advisory Committee, there were guaranteed the principal and interest upon that loan. The proceeds of the loan were to be used almost entirely in the purchase of six Diesel-engine motor vessels which, I understand, were to run between New York and the Far East through the Mediterranean and the Suez Canal. These ships, of course, were to be built entirely in the United Kingdom. That is a statutory condition of any guarantee that is given. Furthermore, I am led to understand that the Committee were satisfied that these orders would not have been given in this country unless the Treasury guarantee had been given at the same time, and I think that your Lordships will admit that these orders have proved a very great boon to the shipbuilding yards on the North-East coast.

The criticisms which the noble Lord made of this guarantee were, I think, mainly two: Firstly, that there was already in all countries, perhaps, and particularly on the lines on which these ships are intended to run, a superfluity of tonnage, and that therefore a policy which in any way increased tonnage was likely, instead of doing good, to retard a return of the shipping industry to a normal state of economic prosperity. It is perfectly obvious that there is a great element of truth in that argument, but I think it must be remembered that in dealing with the question of a guarantee such as this it is impossible entirely to ignore the interests of the shipbuilding industry. The Committee were entirely satisfied that this was a sound business proposition, and that there was practically no danger of the Government having to implement their guarantee though I agree with the noble Lord that that is really not the point which he has raised this afternoon.

It is quite clear, however, that it is very difficult to reconcile the interests of shipping and the ship-building industry at the present moment, because they are not always identical, and it is perfectly right and proper that the authorities who are dealing with a question of this kind should be particularly careful to find out what effect a guarantee such as this is likely to have upon shipping. I can assure your Lordships that this is always done, and has been done in this case, but once again I must emphasise the fact that this is not the only point which they have to take into consideration. They have to consider the interests of ship-building as well, and ship-building, which is one of the greatest industries in this country, is at the present moment passing through a phase of unparallelled depression. I think I am correct in stating that at the present moment the percentage of unemployed in the ship-building industry is 37 per cent.

The noble Lord suggested that the Committee—and, after all, it is the Committee, because, as I have said, the Government do not intend to alter the policy which has always been followed of not interfering with the discretion of the Committee—have not taken into consultation the shipping people in this country sufficiently when a guarantee such as this was in question. I can assure him that the Committee do take every possible opportunity of acquainting themselves with the views of shipping people in cases such as this. They have done so as far as possible on this occasion, but I think your Lordships will admit that it really is not practicable that the details of every scheme connected with shipping should be examined beforehand by representatives of the shipping industry. It is quite clear, I think, that if that were to be done the ship-builders would have just as much right to be consulted as the shipping industry.

The second criticism which the noble Lord made, or the second inquiry that he made, was whether it was net a fact that these ships were going to be run to all intents and purposes by an American company, in competition with British lines. I can only say that the view of Committee, and of the Government, is that these new ships are not likely to interfere with British vessels. At the present moment the American group, which I gathered was the Silver Line, Ltd., loads the cargoes under its control partly in British and partly in Japanese vessels, and it is expected that these new ships will not interfere with British ships but replace the Japanese ships. That is the information which I am given. There has been on past occasions guarantees given to foreign countries without serious criticism of this kind. I am glad that the noble Lord did not raise the point, but I understand that no substance can be attributed to the argument that the main part of the capital in this company is owned by Americans, or other than Britishers, because there is nothing whatsoever in the Act, or the practice which has obtained under the Act, to prevent a guarantee being given even if all the capital is owned by other than Britishers. The only condition is that the proceeds of the loans guaranteed should be wholly spent in this country.


Wholly or partly?


Wholly or partly—I am not quite certain on that point. At any rate, that is the one condition which is absolutely essential, and the point which the Committee have to consider primarily is one of increasing employment in this country. I hope I have given the noble Lord the main facts for which he asked, and think what must be remembered is this, that it is impossible for the Government to contemplate a policy of going back upon the rules that have been laid down ever since the Act came into force—namely, that they would not interfere with the discretion of this Advisory Committee, which, as I have said, consists of men of the very highest ability and repute.


My Lords, I am not quite sure that I understood what was said by the noble Earl, but I gathered from him that the policy of the Government, and the policy of the Treasury, was to delegate to the expert Committee the investigating authority with regard to these loans under the Trade Facilities Act, and that the Treasury did not oppose, and had not at any time dissented from, the recommendations of that Committee. If I heard the noble Earl rightly I venture to think that that is a very dangerous policy for any Government to assume, whether it be the late Government or the present Government, or any other Government. The expert Committee appointed to deal with the consideration of grants under the Act is surely a Committee of business men appointed to consider the business questions surrounding the applications for the grant—primarily, of course, to ascertain after careful investigation whether there is any risk of loss to the State by an appeal being made to the Treasury under the guarantee. But all sorts of very awkward and difficult questions obviously arise with regard to these things which go far beyond, it seems to me, the duty of what the noble Earl called a business Committee—questions of very elaborate policy, affecting competition and the interests of trade not only in the Dominions but apparently in foreign countries as well—and I only rise to say with some diffidence that, if I heard the noble Earl aright, I feel strongly that the Treasury is not in a position to say, on behalf of any Government, that it has delegated the authority under the Trade Facilities Act to a business Committee.


My Lords, I thank the noble Earl for the information which he has given to us, although I am bound to say that the policy indicated appears to me to be an exceedingly dangerous one. The noble Lord who has just spoken has indicated one of the points of danger which certainly requires careful safeguarding. I do not think the Government, or the Treasury as representing the Government, can get rid of all responsibility in a matter of this kind because they have the advantage of the assistance of what the noble Earl called an independent Advisory Committee. Of course, everyone realises the advantage of having an independent Committee of that character. I do not know whether the main object of that Committee is merely to consider whether the guarantee of the Government is likely to be called on or not. I think it is quite clear that questions of very far-reaching policy are involved, in reference to which the Government for the time being and the Treasury must be responsible. I did not gather from the noble Earl that whatever independent advice the Committee might have had on questions vitally affecting the interests of our shipowners their opinion was specially ascertained on a point of this kind. The opinion which you wanted to ascertain was not, that of shipowners in general but of shipowners specially interested in this particular trade between New York and the Mediterranean, Suez and Singapore.

Let me draw the conclusions which naturally come from that statement. The noble Earl did not contend that there was any inaccuracy in the statement that ships built under this guarantee of financial assistance were to be used and were being used by a foreign firm in competition with British shipowners. He seemed to contemplate that this might be a necessary condition. I think it is a very dangerous position. In my opening statement I indicated that so far as shipbuilding is concerned the subsidy is given within the terms of the Trade Facilities Act, because under the terms of that Act you can give the subsidy or guarantee where the manufactures are to be wholly or partly produced in this country. But does the noble Earl go to this extent, even in the case of unemployment, that as against private enterprise, carried on in a normal way without any Government assistance at all, it is the right policy to give this Government assistance in such a matter as the building of ships to be run in competition with ships constructed and built by our own private shipowners? That is a very wide question, and I should have thought it was manifestly a form of unfair competition.

May I make one other matter quite clear? I do not think it is a question of giving employment in the shipbuilding trade particularly, except what I may call fictitious employment, which may be detrimental to our own British shipowners. As I am instructed, if the shipowners' interests had been consulted, if there had been the slightest need, after consultation—they have plenty of capital and means and energy, and industrial outlook—they could have built these ships. But they were not consulted; they were never asked. I am somewhat disappointed at the answer of the noble Earl because it seems to give confirmation to a practice under the Trade Facilities Act to manufacture by Government assistance a commodity, such as ships, which can be used in competition with our own British shipowners. That is a matter which requires further consideration.


My Lords, I think the noble and learned Lord hardly gives sufficient weight to what my noble friend said just now as to the main object of the Trade Facilities Act. The main object of that Act is, by means of Government assistance, to diminish the volume of unemployment and in this particular case the unemployment in the shipbuilding trade. Of course, it is not a normal form of legislation; it is not the ordinary practice of British Governments to help particular trades by Government money. And it is a very difficult system to administer. That is conceded. No one regrets more than the noble and learned Lord and my friends who sit on this Bench the existence of this formidable mass of unemployment and all the expedients which have to be adopted if it is to be coped with. It is always a choice of evils. I have always been a great supporter of the Trade Facilities Act as the least harmful of all methods to relieve unemployment. Everybody knows what mischiefs are associated with the direct "dole," but at any rate the Trade Facilities Act and the policy connected with it have the great advantage not of helping people to do nothing but of helping them to do work, and, therefore, it has not the demoralising effect of the "dole." It does on the whole tend to maintain British industrial effort and keep the population at work.

There are great difficulties, of course, associated with it. All this kind of emergency legislation is fraught with difficulties. I was much struck with what the noble and learned Lord, Lord Southborough, said on this subject. In speaking on a matter of this kind he speaks on a subject with which a long training has made him familiar. I am not prepared to say that the Government are not ultimately responsible. Of course they are. It is true we accept the advice of the Advisory Committee, and for a reason which I will give in a moment, but that does not mean that we abdicate the right of the Government to override the Committee if it is necessary. I do not go so far as that, but in choosing a channel between the various rocks which beset the administration of a law of this kind there is a great advantage in having the advice of an independent Committee.

You do not want the Government to be the object of pressure of interested parties on one side or the other. Your Lordships in all parts of the House will see to what difficulties that leads. No doubt a Minister ought to be strong enough, and is strong enough, to resist that pressure, but still, even if he conducts his office in a way which any one of your Lordships would approve, there will always be suspicions that there are interested motives if he has the unfettered choice of what particular industry or firm he will help—I do not mean suspicions in the minds of any of your Lordships, who would never for a moment entertain such suspicions of any Minister of the British Government, but I mean among less well instructed persons outside. Therefore, to have an independent Commitee is of very great use—not in order to abdicate the authority of the Government, but as the normal course by which this kind of legislation is administered. I think I have said enough to show that in these respects all that we have done is to choose the safest, of all the paths which one can pursue in administering this legislation. And very difficult they are. No one will be more satisfied than I shall be when the necessity for all this legislation passes away, but in the meantime we will do the best we can.


My Lords, I do not propose to press the Motion for Papers.

Motion, by leave, withdrawn.