Lords Sitting of 21 March 1929

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.

BUSINESS OF THE HOUSE
LORD PARMOOR: My Lords, I desire to ask the noble Marquess the Leader of the House, whether he has any further statement to make on the course of public business.
THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY): My Lords, I am under the deplorable necessity of asking your Lordships to sit on Monday if you will be so very kind. I do not think it is asking too much, considering the time of year and the near approach of Easter. We hope to take on Monday the Unemployment Insurance (Northern Ireland Agreement) Bill, Committee stage. I understand that it is not seriously in controversy. I would hope to take the Third Reading on Tuesday; if there were Amendments, the Third Reading might have to be taken on Wednesday. Secondly, the Third Reading of the Gas Undertakings Bill has still to be got through, and I think we might take that on Monday. Then there is the Unemployment Insurance (Transitional Provisions Amendment) Bill, which is just about to be presented to your Lordships. I understand that there really is no objection to this Bill, but, if there were objection, I should perhaps have to take a different course. Your Lordships will be able to judge when you see the Bill whether there is an objection to it or not. It would not be in order for me to describe it at this moment, but I think it will be found that the only objection to it from the point of view of noble Lords opposite is that it does not go quite far enough; but that is an objection they often have to urge.
LORD PARMOOR: I shall say nothing about that till we have seen the Bill.
THE MARQUESS OF SALISBURY: Then there are the Commons Amendments to the Lords Amendments on the Local
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Government Bill. I do not imagine there will be very much for your Lordships to deal with at that particular stage of the inter-Parliamentary proceedings, but there may be one or two Amendments with which the Commons are not satisfied, and which may come back to your Lordships. I hope you will allow the Government to take it on Monday in order to give additional time, so that the Bill may be ready, in all possible eventualities, for the Royal Commission which is to be on Wednesday. If there were any more discussion between the two Houses then we should want another day. I have Tuesday still in hand. I hope your Lordships will be good enough to allow us to take that stage of the Local Government Bill on Monday.
I think I said yesterday that we had to have a morning sitting on Wednesday. The usual practice of your Lordships' House is to begin the morning sitting at twelve o'clock. If noble Lords wish to begin earlier perhaps they will be good enough to let me know. Then, we think that the Royal Commission might be at three o'clock, or, if it appears during the proceedings on Tuesday that it is likely that the Wednesday proceedings will be very short, perhaps we might advance the Royal Commission.
EARL BEAUCHAMP: My Lords, the noble Marquess has been good enough to ask for an expression of opinion from me, and I would say that the course of business which he has suggested is one which is eminently reasonable. There is no reason at all why we should not meet on Monday. At this stage of the Session it is a very proper thing for your Lordships to do. Only two remarks would I make. I am not quite sure about the Unemployment Insurance (Northern Ireland Agreement) Bill not needing some little discussion, but that is no reason why it should not be put down for Tuesday. If there is any discussion I am sure noble friends of mine will be prepared to fall in with the suggestion to take it on Monday. With regard to our meeting on Wednesday, I think what generally governs our proceedings is the hour of meeting in another place. If there is to be a Royal Commission here members in another place will not like being kept waiting if we meet later.

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Therefore it is generally thought convenient that we should meet at the same time as the other House, whether that be at 11 o'clock or 12 o'clock, because it prevents their being kept waiting. I think that generally governs our proceedings.
THE MARQUESS OF SALISBURY: It is entirely for your Lordships. The Government would be quite willing to meet at 11 o'clock on Wednesday if that were more convenient. The Commons are a little longer sometimes in their proceedings than we are.
LORD PARMOOR: We shall certainly raise no objection. The earlier we meet on Wednesday the better it would be, I think.
THE MARQUESS OF SALISBURY: We will say 11 o'clock then.

UNEMPLOYMENT INSURANCE (TRANSITIONAL PROVISIONS AMENDMENT) BILL.
Brought from the Commons, read 1a, and to be printed.

DONCASTER AREA DRAINAGE BILL.
Order of the Day read for the consideration of the Commons Message of March 19.
THE EARL OF LUCAN: My Lords, on behalf of the Chairman of Committees beg to move the Motion standing in my name.
Moved, That this House do concur in the following Resolution communicated by the Commons—namely,
"That it is expedient that the Doncaster Area Drainage Bill be committed to a Joint Committee of Lords and Commons."—(The Earl of Lucan.)
On Question, Motion agreed to.
Ordered, That a Message be sent to the Commons to acquaint them therewith.
Moved, That it is expedient, that the said Committee be the Joint Committee on Railway (Air Transport) Bills.—(The Earl of Lucan.)
On Question, Motion agreed to.
Ordered, That a Message be sent to the Commons to communicate this Resolution, and to desire their concurrence.

GAS UNDERTAKINGS BILL. [H.L.]
Amendments reported (according to Order).
Clause 1:
Power of Board of Trade to make orders increasing authorised amount of share capital or of loans.
1.—(1) Notwithstanding anything in any enactment (including this Act) imposing a limit on the amount of share capital which may be raised or of money which may be borrowed by undertakers, not being a local authority, for the purposes of their undertaking, the Board of Trade may, on the application of any such undertakers and subject to the provisions of this section, by order authorise the undertakers on such conditions as may be specified in the order for the purposes of their undertaking—

(a) to raise, at any time during the period of three years after the date on which the order comes into operation, any such amount of share capital as may be specified in the order; and

(b) to borrow on mortgage of their undertaking or by the creation and issue of debenture stock any amount not exceeding the aggregate amount of the paid up share capital of the undertaking for the time being and of any premiums paid in respect thereof.

LORD BANBURY OF SOUTHAM LORD BANBURY OF SOUTHAM moved, in subsection (1), after paragraph (b), to insert "Provided that any money so borrowed either on mortgage or by the issue of debenture stock, shall (except in any case in which it has expressly been otherwise provided by a Local or Private Act) rank after any existing mortgage or debenture stock." The noble Lord said: My Lords, Clause 1 of this Bill empowers the Board of Trade to allow a gas company to borrow, on mortgage of their undertaking or by the creation and issue of debenture stock, any amount not exceeding the aggregate amount of the paid-up share capital of the undertaking. That, my Lords, as I presume you all know, is very much in excess of the ordinary power given to companies. Clause 2 of this Bill begins with these words:
"Notwithstanding anything in any enactment, undertakers, not being a local authority, may borrow for the purposes of their undertaking on mortgage of their undertaking or by the creation and issue of debenture stock any amount not exceeding one half …"
Your Lordships will see therefore that, while Clause 2 says that an amount not exceeding one half the ordinary capital

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may be borrowed, Clause 1 says that, notwithstanding anything in any enactment (including this Act) an amount may be borrowed to the extent of the whole of the share capital. That is to say, the amount which may be borrowed is doubled. The object of my Amendment is to make it clear that, if I have borrowed money from my noble friend the Marquess of Salisbury on a certain security, I shall not borrow more money from my noble friend Lord Cushendun on the same security. I think that is a simple proposition, and one which ought to commend itself to your Lordships.
When I moved the Amendment in a different form on the Committee stage my noble friend the Earl of Lucan informed me that there were already in certain Private Acts certain provisions which my Amendment, in the form in which it then was, would alter. That was not my intention in any way, and accordingly I have drawn my Amendment in a different form. On the Committee stage the noble and learned Lord on the Woolsack said that he thought that under two decisions which had been given, and which he quoted—I think I am representing him correctly—my Amendment was unnecessary. He thought so, but he was not sure. My noble and learned friend Lord Danesfort afterwards looked at these decisions—he appeared, it seems, in one of these cases—and he does not quite hold that view. He does not think that they apply. Whether they apply or not, I would ask your Lordships whether it is not far better in the interests, not only of a gas company but of all other undertakings of the kind, that this matter should be quite clear. I think it is evident that if there is any doubt people will not invest their money in the debenture stock of gas undertakings, because they will not be sure whether or not the stock can be watered after they have bought it. It is no use saying that we think that under certain decisions this cannot take place. We all know that, if there is a gentleman learned in the law and he makes an assertion, it is at least a hundred to one that another gentleman learned in the law will say that he is quite wrong and will pronounce a different opinion. I have heard this over and over again.
I cannot see that there is any harm in putting a clause in this Bill to lay
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down quite clearly an honest provision that, where a person has borrowed money on a certain security, he must not borrow more money on the same security from somebody else. I was thinking of buying a little gas debenture stock, as I happen by frugal living to have a little money to invest, but I certainly shall not do it if there is going to be any doubt. I do not want to have to go to law about the matter. I would far rather buy something else. It is really in the interests of the gas companies themselves that this should be made clear. I should like to add that I have in my pocket a letter from a noble Lord learned in the law, a member of your Lordships' House, who regrets that he cannot be here to-day to support me. I hope that I have made the matter clear, and that my noble friend Lord Lucan will accept this Amendment. I beg to move.
Amendment moved—
Page 1, line 25, at end insert the said proviso.—(Lord Banbury of Southam.)
LORD PARMOOR: My Lords, I should like to say just one word in support of the noble Lord opposite. I will not go into the difficult questions of law, for perhaps I may be one of those who are apt to differ from other opinions, but it is certainly advantageous that the matter should be made quite clear, and I think the noble Lord is quite right in wishing to make it clear upon the face of the Bill that these new debentures should rank after any existing mortgage or debenture stock. This will be of advantage not only to investors, but to the gas companies themselves. I hope that the Government will accept this Amendment.
LORD DANESFORT: My Lords, I rise to support as heartily as I can in a very few words the Amendment proposed by my noble friend Lord Banbury of Southam I do so for this reason. The object of the Amendment is to carry out the admitted desire and intention of all parties, and to make the matter clear on the face of the Bill. When this matter was before us in Committee, the noble and learned Lord upon the Woolsack was good enough to refer us to two cases that had been decided, one, I think, in the Court of Appeal, and the other in your Lordships' House. At any rate, they were authoritative decisions. I examined

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these cases with such care as I could give them, and the conclusion that I drew from them—I hope I shall not be at variance with the Lord Chancellor, whose authority is supreme—was that no principle was laid down in either of them which would govern a case such as this. In both cases the decision of the Court turned upon the language of the particular actions which were under consideration, and certainly I can discover no general principle that would govern a case of this sort. If that be so, or even if there be a doubt about it, is it not far better to put into the Bill words which will make the point quite clear?
As my noble friend Lord Banbury has said, it is in the interest of the companies themselves to know what they are authorised to do. It is in their interest to be able to state, when they publish a prospectus asking for more borrowed capital, exactly what they are allowed to do. If the Bill goes forward in its present form the companies might misconstrue the Act and issue a prospectus saying, on the one hand, that the new borrowed capital ranked pari passu with the old, in which case they would probably have an action for an injunction against them by the holders of the old borrowed capital; while, on the other hand, if they sail in their prospectus that the new borrowed capital ranked pari passu with the old borrowed capital, and it then turned out that it ranked subsequent, the persons who lent the new capital would probably be able to set aside their agreement. People would be able to say: "This is not what we bargained for; we were told that we were going to get security which ranked pari passu with the old mortgage and debenture stock, and we are not getting it." There is, at any rate, a possibility of litigation in this matter unless the point is made clear now. Accordingly I venture to ask the noble Earl in charge of the Bill to accept this Amendment, which can do harm to no one and which will make it clear what, is really authorised by this Bill.
LORD HUNSDON OF HUNSDON: My Lords, I do not like to disagree with my noble friend Lord Banbury on a question of this sort, which is a Stock Exchange matter, but I would suggest to your Lordships and to my noble friend that really the whole thing turns upon the
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terms of the prospectus. An undertaking can borrow, according to this clause, an amount up to the total paid-up share capital. When it issues a prospectus, it will have to state exactly what the position of the mortgage is, whether it is liable to be watered, as my noble friend said, or whether it is a first charge on the undertaking. I do not think it matters what is in the Bill.
LORD BANBURY OF SOUTHAM: That does not touch the people who have already lent money.
THE LORD CHANCELLOR (LORD HAILSHAM): My Lords, I have been asked by my noble friend Lord Lucan to deal with this point, which is a matter of law, and simply of law. The noble Lord who moved the Amendment said that the proposition that it embodied was that, when a borrower had borrowed from one person on a security, he must not borrow from another person on the same security. That is a proposition of law which I do not think any one of your Lordships would be disposed to quarrel with, but I should like to assure your Lordships and the noble Lord that it is wholly unnecessary to pass this Amendment in order to produce that effect; and further I hope to be able to satisfy him and your Lordships that this Amendment would go a great deal further than he at present appreciates. I explained the position on the Committee stage, and I will explain it again now, after it has been more carefully examined.
This clause is the clause which deals with the borrowing powers of an undertaking. It has nothing in the wide world to do with the priority of mortgages or of debenture issues inter se. It extends borrowing powers, but it says nothing whatever as to the priority of moneys borrowed. It has been clearly settled by the authority of this House that, when there are successive Acts of Parliament giving borrowing powers one after the other to a public undertaking, the fact that a subsequent Act of Parliament gives further borrowing powers has no effect at all upon the security of those who have lent under the powers first conferred. The case which the noble and learned Lord, Lord Danesfort, referred to last, time was a ease decided in the Court of Appeal by Sir George Jessel and others, which came to this House and

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was expressly confirmed in this House on the ground laid down in the judgment of Sir George Jessel. I do not agree that there was no principle laid down. The case was one which dealt with the priorities of a series of issues of debentures under a succession of Acts of Parliament and the priorities of the debenture holders inter se, and the principle on which Sir George Jessel decided the case, and on which he said the later Acts of Parliament did not in any way affect the priorities of the earlier debenture holders was this:—
"The argument appears to me to be without answer that the vested rights of persons acquired before the passing of the Act who either bought debenture stock or lent money on mortgage are not interfered with by the Legislature without compensation, and it requires the strongest and clearest words in an Act of Parliament before you are entitled so to interpret it as to deprive people of their property without compensation."
Applying that principle, he held that there was no interference with the priority conferred by the earlier Act.
The only difference in principle between that case and the present one that I can see is that one is a railway company and the other is a gas undertaking and I do not think that that makes any difference at all. That being so the noble Lord said that there might be difficulties if gas companies came to issue a prospectus. My Lords, a gas company could not issue a prospectus which proclaimed that debentures which were issued under an Order made under this Act were to rank pari passu with moneys borrowed under their previous debentures, if their previous powers had allowed them to borrow on such terms as to create a prior charge in favour of the old debenture holders. Supposing a company issued to the public a debenture stock charged upon the same security as their existing debenture stock, nothing in this Bill will allow them to interfere with the rights which they have so conferred upon the earlier debenture holders.
The noble Lord said: "Then why not make it plain and put it in the Bill." In the first place it is plain. I do not think a competent lawyer who studied this could possibly doubt that the law is as I have stated, and is as it is declared to be. But, in fact, the effect of putting in as a substantive enactment
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something which is perfectly apparent without that enactment is to create confusion in the law, because any Court, trying to construe an Act of Parliament endeavours to arrive at its meaning, and would be likely to arrive at a conclusion that plain words did not mean what they appeared to say, and I can see that if the proviso suggested were put in at the end of Clause 1 the effect would be this: In Clause 2 there is no such proviso, and since in Clause 1 there is power to raise further capital, subject to this proviso, while in Clause 2 you also have power of increased borrowing without such a proviso, the Court would be disposed to hold that in the last case it was intended that you should be able to interfere with the rights of existing debenture holders. That, I am sure, is a right which the noble Lord does not wish to obtain.
There is another difficulty. In the Amendment he has suggested words which, I pointed out, would affect the rights of persons interested under any Local or Private Act. Although I gave that illustration, it was not an exhaustive definition. There are a number of gas companies who act under the Companies Act, and whose powers of borrowing are contained in their Memorandum and Articles of Association. If this proviso were carried in its present form it would interfere with the right which they have of issuing further debentures. I know the noble Lord does not intend to do that, but I mention it to show that his proviso goes further than he intended, and effects an alteration in the law which he does not desire. I hope, in the circumstances, he will realise that the position is, as I have stated, reasonably plain, and that he will not introduce an Amendment which might create confusion and work injustice.
LORD BANBURY OF SOUTHAM: May I ask the noble and learned Lord one question? I understood him to say that in the judgment quoted it was said that the Act was not retrospective, and therefore, as it was not retrospective, no harm could be done. What I want to ask the noble and learned Lord is the meaning of these words: "Notwithstanding anything in any enactment." Is not that retrospective? If those words were not in I should not have had much doubt, but they seem to me to be retrospective,

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and I would be much obliged if the noble and learned Lord would deal with that matter.
THE LORD CHANCELLOR: I can only speak again with the indulgence of the House. There was nothing in the case that I cited which referred to retrospective legislation or the word "retrospective" at all. The actual words that I read were:—
"The argument appears to me to be without answer that the vested rights of persons acquired before the passing of the Act who either bought debenture stock or lent money on mortgage are not interfered with by the Legislature without compensation, and it requires the strongest and clearest words in an Act of Parliament before you are entitled so to interpret it as to deprive people of their property without compensation."
There is nothing about "retrospective" at all. The point of the judgment was that where you had an Act of Parliament which conferred borrowing powers upon a company, and a subsequent Act which conferred further powers, you were not to read the second Act as conferring rights which interfered with the rights conferred by the previous Act. All this section does is not to interfere with priorities but to increase the amount of borrowing power. It does not affect the rights of a person who has lent money upon a specific security to have that security uninterfered with by borrowing under any subsequent Act.
LORD BANBURY OF SOUTHAM: I think we are agreed upon what ought to be done and are only disagreed upon the method. As the Lord Chancellor's legal experience is very much greater than mine I bow to his superior wisdom and will not press the Amendment.
Amendment, by leave, withdrawn.
THE MARQUESS OF READING,THE MARQUESS OF READING, on behalf of Lord Melchett, moved alter Clause 3, to insert the following new clause:—
Extension of powers of purchase of residual products.
" .—(1) Any undertakers may, notwithstanding anything to the contrary contained in any Act or Order relating to them, purchase in such quantities as they think fit from any company, body or person carrying on a gas undertaking (whether with or without statutory authority) or operating coke ovens or carrying on any process of carbonisation or gasification of coal or coke any residuals arising from the
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manufacture of gas, or the carrying on of any such operation or process and products arising from a primary treatment of those residuals by such company, body or person, and may exercise in relation to residuals or products so purchased the powers which would have been exerciseable by them if such residuals or products had arisen in carrying on their gas undertaking in accordance with their statutory powers.
(2) The powers conferred by this section shall be its addition to and not in derogation of any powers conferred or to be conferred upon the undertakers by any special Act."
The noble Marquess said: My Lords, this Amendment gives rise to no disagreement. All the parties interested are agreed. It provides for the extension of powers of purchase of residual products, and I understand that the Government are prepared to accept the Amendment as it is on the Paper. Therefore, unless your Lordships desire it I will not take up more time.
Amendment moved—
Page 3, line 14 at end, insert the said new clause.—(The Marquess of Reading.)
THE EARL OF LUCAN: My Lords, it is as the noble Marquess has said. The Government are prepared to accept this Amendment, which we understand has been reached by agreement between the National Gas Council and the chemical industries. Therefore they will accept it.
On Question, Amendment agreed to.
Clause 4:
Supply of gas by undertakers to premises outside limits of supply.
4.—(1) The Board of Trade, if they are satisfied that the owner or occupier of any premises, not being within a distance of twenty-five yards from any main of the undertakers within whose limits of supply the premises are situate, desires to obtain a supply of gas from other undertakers, may, subject to the provisions of this section, by order authorise the last mentioned undertakers to supply gas to those premises on such conditions as may be specified in the order.
(2) An order under this section may contain such modifications of any enactment applying to the undertakers in respect of whom the order is made as, in the opinion, of the Board, are necessary in order to give full effect to the order.
(3) An order shall not (unless, in the opinion of the Board, consent is unreasonably withheld) be wade except with the consent of the undertakers within whose limits of supply the premises are situate and of the local authority within whose area the premises are situate.
THE EARL OF LUCAN THE EARL OF LUCAN moved to add to the clause the following new subsection—
"(4) Notwithstanding anything in this section, every order thereunder in respect of any undertakers shall be framed so as to secure that the provisions of the Gasworks Clauses Act, 1847, with respect to the breaking up of streets for the purpose of laying pipes shall apply in relation to pipes for the supply of gas by the undertakers under the order as they apply in relation to pipes for the supply of gas by the undertakers under the enactments applying to them before the making of the order."
The noble Earl said: My Lords, this Amendment is brought forward by the Government after negotiation and agreement with the railway companies, who rather feared that the Board of Trade might, under subsection (2) of this clause, modify the usual provisions as to the breaking up of roads. The Government appreciate the point of view of the railway companies and have tabled this Amendment in consequence. I beg to move.
Amendment moved—
Page 3, line 33, at end insert the said new subsection.—(The Earl of Lucan.)
On Question, Amendment agreed to.

SAFEGUARDING.
Debate resumed (according to Order) on the Motion, made by Earl Beauchamp on Wednesday, February 20, to resolve, That the available figures relating to the articles which have been given a duty under the Safeguarding White Paper procedure show that Safeguarding is a failure.
LORD STANLEY OF ALDERLEY: My Lords, this debate has been adjourned for some considerable time. It is, I think, about four weeks since we broke off our discussion. At that time I think there was some slight complaint and criticism of the narrowness of the front on which the noble Earl had attacked. It was complained that in his Resolution he alluded strictly and technically to the Safeguarding Duties so called, and did not call in aid certain other Duties which are certainly protective in character but which, from the wording of the Motion, were excluded. It was felt by some, I think, that it was hardly fair to attack the Government on Safeguarding Duties, and not give an opportunity of calling in aid other Duties which, not technically Safeguarding, had the same effect.
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I think the noble Lord, Lord Hunsdon, rather expressed a desire that we should disregard technicalities and take Duties for what they effected and not for what they were called. I am willing and ready to accept that position. But if it is accepted, I think you have to go a little further and enquire into the cause of variation in prices—what goes to make up a rise or a fall in prices. And in such an inquiry you must not look at the matter solely from the point of view of one of the elements only; but in discussing the rise and fall of prices you must look at all the elements. In support of that argument, which I think will be accepted by all, I will call in aid the arguments used in the case of the lace industry. It was urged in that connection that though it was true that the lace industry had been somewhat depressed, despite the Safeguarding Duties, yet the reason for that depression was not the Duties but the change in fashion: there was not likely to be such a demand for lace because ladies were not wearing it so much as they used. It was also contended that in addition to the change of fashion the changes which affected prices ought also to be taken into consideration.
There were also representations that when you consider the fiscal policy of the Government it is obvious that you ought to consider the case of motor cars and of silk, two large and important articles of trade which had been given tariff protection, though under different Acts of Parliament. In regard to motor cars, it is common knowledge that they received their protection under the McKenna Duties. I will not delay your Lordships by discussing the origin of those McKenna Duties or the general agreement, I think, when they were imposed that they were for war time only. They have remained. They have a protective effect, and the motor industry has undoubtedly flourished during the years since those Duties were imposed and up to the present time. If you can use the argument with regard to lace and point out that it is fashion that has changed the development of that trade and delayed it, surely we on this side are fully entitled to use the same arguments, mutatis mutandis of course, with regard to motor cars, or silk stockings, or artificial silk generally. We claim that the imposition of a Duty necessarily

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tends to increase the cost of the article on which it is imposed.
I know that the noble Lord, Lord Hunsdon, draws a distinction between what I call Protective Duties and Duties for revenue purposes. In his speech he contended that, while undoubtedly a Duty upon a commodity which is not produced in this country would increase the cost of that article it would not raise it to the full amount of the Duty. He claimed that Safeguarding did not refer to such produce at all, but only to goods which could be produced in this country to the full extent of our requirements and it was difficult to see how Import Duties could affect the price of such goods except when the Duties were first put on. He made no distinction in the case of Protective Duties that the increase is not invariable, but depends largely if not entirely upon the amount of competition by articles made in this country. I should like to deal with that point at once. We urge that a Duty placed upon an import in this country, whether it is competed with by manufacturers or producers in this country or not, has a tendency to increase the cost of the article to the consumer almost invariably, however small, or however great, the production in this country may be.
In proof of that I would instance a case which was common in the pre-War controversies of 1904, 1905, 1906, and onwards. I would take the case of the production of wheat by Germany. In Germany year by year the production of wheat varied. In some years the production was adequate for the consumption of the German people at that time. In those years obviously no wheat was imported. But seasons vary. In certain years the total production of wheat in Germany was not adequate to meet the requirements of the German people, and there was an importation varying according to the shortage. Sometimes it was as low as 5 per cent. of the total consumption, and sometimes it rose to round about 20 per cent. It was discovered in Germany—I think I am right in saying this as my recollection goes back to those days—that where there was even a small deficiency in the wheat crop the tariff imposed upon imported wheat raised the price of that wheat by the amount of the tariff, and by a small amount more because of the difficulties
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and complications involved in collecting the tariff. You cannot have an economic theory, I submit, which applies to the importation of wheat and does not apply to the importation of hollow-ware goods, gas mantles, or motor cars. If part of your supply is drawn from foreign countries and that part is taxed, however small the part which is imported, the price of the article, other things remaining equal, will rise by the amount of the tariff.
Now I submit that that is not an economic theory, but it can be reasonably proved by a very simple argument indeed. Importers abroad into this country of completed articles—importers, let us say, of hollow-ware goods, to take a concrete example—offer their goods to the importer here at a certain price. They offer either to deliver these goods through the Customs House and to pay all the charges known as c.i.f. and duty as well, or to sell f.o.b at the dock for export. Is it not perfectly clear that, when they make a price, they are bound to add all the relevant costs of importation and that if one of the relevant costs of importation is a Duty which has to be paid on coming into this country, if they undertake to deliver these goods through the Customs House, they will quote a price which would include cost of manufacture, their profit, cost of insurance, cost of freight and also the Duty? They can equally well send the goods from their factory, and charge merely the cost of production and their profit leaving the other things to be borne by the importer here.
It is quite clear that German or French hollow-ware could at the present moment be delivered in this country at a rate which would be cheaper by the amount of the Duty if that Duty were taken off. If we were to-morrow to remove the 33⅓ per cent. Duty on hollow-ware, the competitors abroad in that industry would be able to deliver their hollow-ware at a price less by the amount of the Duty. I do not think that the question whether there is a large or a small competing industry in this country would materially affect it. If the Duty were taken off, obviously the price of the competing goods would go down by the amount of the Duty. That is to say, if the Duty remains on, the price of the competing article remains up and, when the price

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of the competing article remains up, the price of the article with which it competes will also remain up. I submit that that argument is justified by facts, and is the common-sense result that one would expect to follow from a tariff. Prices are made up of various elements, and it would be economically unsound merely to look at one of the elements constituting a price and to disregard the other elements. Clearly, one of the very important elements in the make-up of a price is the cost of production, which may rapidly come down owing to improvements in the methods of manufacture, or owing to an increased demand for the article, which enables manufacturers to produce on a large scale and so to cut down on the overhead expenses or to introduce labour-saving machinery and to produce in bulk, which will reduce the cost of the individual article very materially indeed.
The noble Earl who moved this Resolution was very well justified in removing from the ambit of his discussion two very important articles which have Protection, but which belong to the class to which I have just referred. There has been, during the past ten years, a tremendous development in the production of motor cars. Ford in America was the first. He was followed by Mr. Morris and Mr. Austin in this country, and will have to be followed, in fact, by all those who produce motor cars for the many. Ford introduced mass production, and, by introducing mass production and creating thereby a large demand for motor cars, he was able to reduce the price to the purchaser very substantially indeed. We have only to cast our minds back to pre-War times to remember that a motor car was then an object of luxury to the very well-to-do. Nowadays it is a matter of necessity to all except the very poorest. That being the case, you have an entirely different condition under which motor cars are produced. You have motor cars produced in bulk, in mass, and therefore you have a very important element—an element far more important than the Duty which is imposed—tending to reduce the price which the McKenna Duty itself tends to raise. The same, of course, is true of artificial silk, an industry which did not exist ten or fifteen years ago, but which, owing to the demand for that material, has been growing year by year. So we
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claim that it would be confusing the issue if you allowed the question of the development of an industry like motor cars or artificial silk and the reduction of the cost of those two articles to be lumped in with all the other articles so as to make good your case. You are comparing things which are not really comparable. You are bringing in articles in which the price and the employment involved in their production are varying very rapidly indeed. They are two trades which are vastly affected by changes of fashion, changes in production, and greater facilities for production.
The noble Earl (Lord Beauchamp) has taken in this Resolution the articles which are strictly safeguarded, and he was justified in taking those strictly safeguarded articles, because it is by means of Safeguarding that the Government, as I understand it, intend to proceed hereafter. They are not proposing to add to the McKenna Duties or Key Industries Duties. What they do propose to do is to extend and expand the system by which Safeguarding is given. They are to extend it to trades other than existing trades, which already enjoy that Protection. They are holding that hope out to their supporters in the country and to a large number of industries. There exists in several industries the idea that if the Conservative Party come into office there will be, not a general Protection introduced at once, but a general Protection introduced as rapidly as can be conveniently arrived at by means of inquiries, and that those inquiries will be expected to give to the industries what they demand. At present they are few, and comparatively unimportant. Hereafter, we are told that, however important and however vital to the industries of this country an industry may be, that industry is to have an equal chance before a Committee of receiving the protection of Safeguarding.
We have not been told what will be the view of the Government. It will not be unfair to say that they are protecting themselves behind the Committee which is going to be set up. They say they will await the result of the inquiry to be made into iron and steel before they will express any view. They reserve, as I understand, to themselves the freedom to deal with the iron and steel industry after the Committee has reported. They have so far given no expression of view that

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if the Committee report they will give protection to iron and steel. I do not wish to misrepresent His Majesty's Government, but I think that is their attitude. That is not the view which the ordinary elector takes. The ordinary electors, who go to the poll next May or June, will, in a very large majority of cases, when they vote for the Conservative Party, be thinking of a very large extension of the Safeguarding Duties. They will be justified in thinking that, by returning a Member who supports this extension of the Safeguarding Duties, they are going to get a large extension of them; they are justified, not merely because that is the natural course which politics take in this and every other country, but by some of the speeches of members of His Majesty's Government themselves.
The Secretary of State for the Colonies and the President of the Board of Trade have both made speeches in which they have claimed that the Government will, and ought to, arrive at a system of Protection, that if they cannot arrive at it per saltum they ought to arrive at it per gradum, step by step. They are to reach what they themselves claim, without any doubt at all, is the desirable condition of things—namely, that this country should be converted from being a country in which Free Trade is the dominant economic principle into one where the Protection system shall be introduced. They recognise, I think, in their minds that it is a dangerous and difficult thing to introduce Protection in one go, but they say—I trust I am not doing them any injustice—that if will be easier to do it step by step, and that some day or other—the sooner the better, they say—we shall wake up to find that we have, in fact, got a protective system, though we have hardly been aware that, it, has been coming upon us.
The noble Lord, Lord Hunsdon, in discussing this question on the last occasion, set out to destroy two Free Trade postulates. He said:
"The first is that goods are always to be paid for by goods. If that is true there is no such thing as a balance of trade at all. There cannot be."
No Free Trader has ever claimed that goods are paid for by goods to the exclusion of all other methods of payment; but he says that there must be a method of payment, that you may find methods
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of payment by instalments, and make payments by services, and so on. I think, later on in his speech, he said he included in the question of goods all invisible imports, and asked: How can you have a balance of trade if what you claim (namely, that goods are paid for by services or by goods) is universally and entirely true? I think probably that there will not be any difference of opinion between us, though I think that exposition requires a little elucidation or explanation. There is obviously a method of buying goods and that is by borrowing the price which you pay for them, a, method which has been adopted by many countries, which was adopted by this country during the War, which is still being adopted by some of our Dominions and Colonies—the method of chalking it up, of putting it on a slate. But the fact that you borrow in order to pay for imports does not relieve you of the obligation of finally paying your debt. It does not relieve you from paying for those imports by some form of export. It may be many years before those imports are paid for. It may be that you pay off your debt by a series of exports over a number of years.
The Australian people, though they are a debtor nation, have ever since the War been importing more largely than they export. At the present moment they are still importing more largely than they export, but it is quite easy to see how that balance arises. They are paying for their excess of imports by a substantial contraction of debt in this and other countries. Every year Australia has borrowed in the London money market, in some years it has borrowed in the New York money market, and the money so borrowed must go to Australia, as it must go to any other country that borrows, in the form of goods which are purchased by the money borrowed in the country of origin; but ultimately those imports, though they appear as a balance of excess of imports over exports in the Australian figures—those articles brought into the country in excess of their exports—must eventually be paid for. The debts which Australia has contracted are in most cases debts to be repaid after a period of years, and, while the debt exists, interest has to be paid. The more Australia imports in excess of her

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exports during these years, the larger will have to be her ultimate exportation of Australian goods to this country to meet the charges, to meet interest, and to meet capital due in respect of the bargain.
So I think we may broadly say that imports are paid for by exports, though they may not be paid for in the year in which the debt is incurred—in the year in which the import is taken into the country—but sooner or later it will have to be done, unless, indeed, you come, as some Continental nations have come, to repudiation of debt. In that case, of course, the repudiation wipes everything out, and the country starts afresh. But one must take it that the normal course of business between two countries is a course in which honesty prevails, and debts are paid, and I think the noble Lord will probably agree that a State's imports and exports must ultimately balance, unless there be repudiation on the part of the debtor.
The reason we have put down this Motion regarding Safeguarding is that we are dealing with the propositions which are going to be debated at the General Election. We think it desirable to look into the results which are being effected in the case of Safeguarding Duties already granted in order to arrive, if possible, at what results may follow from an extension of the Safeguarding Duties. I think the figures given by the noble Earl are of very great importance in considering that matter. It is very difficult to disentangle all the elements which go to make up imports, but those figures do show that unless there are other disturbing elements coming in the result of the Safeguarding Duties, properly so-called, has been disappointing to the industries which are concerned in Safeguarding. But a more serious charge has been made against them, that they have been injurious to the country which has had to undergo them. They have been injurious and they will continue to be injurious because, though doubtless in a paradise of Free Trade you can grow the luxuriant flower of Protection, though the ideal state for a trade is to be protected in its industry while surrounded by all the advantages which it draws from cheap importation and cheap necessities for the workmen, for its supplies, for its raw material, the
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more you develop these little plots of Protection in your Free Trade garden the less will be the advantage derived from these things:
You come eventually to a condition where Protection is widespread, and then you find that that widespread condition of Protection deprives those who enjoy it of the advantages which they would have enjoyed if they had been the only ones to get the benefits. Surely the business of government is not to pick out a few favoured industries. The business of government is to look after the general interests of the country and see that those general interests are not invaded, and do not have their blood sucked from them by specially selected—and, it seems to me, somewhat capriciously selected—industries for the favour of a Protective Duty. Since this debate was initiated we have had a very important Report issued by a Committee of men who, as all will agree, are men of the first importance in the business world—the Balfour Committee's Report on Industry and Trade. That Report is, of course, a very measured document. It is not a production of the Cobden Club or the Free Trade Union. It is the production of persons who are not noted for belonging to a political Party, but are noted for being men of weight, of learning, of leading in the industrial world. They have enquired into the fiscal condition of this country and their Report is one which I would ask members of your Lordships' House to study with some care, for it contains much that is interesting.
I do not wish to weary your Lordships with an undue number of quotations from the Report, but there are matters to which I think I might be justified in calling your attention. In the first place, they urge that frequent changes in tariffs are injurious to the country which indulges in them. Now, you cannot have a system which involves more frequent changes than a system of Safeguarding—Safeguarding imposed for a period of time which is liable to revision, extension, contraction; Safeguarding which involves the setting up of Committees to give Safeguarding to this, that, and the other industry. A system of tariffs under Safeguarding, extended as His Majesty's Government propose to extend it after the next Election, will be a

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system under which you will have great variety and great uncertainty as to what tariffs will be imposed May I read a short passage from the Report of the Balfour Committee, which was, I think, unanimous on this point? They say:
"The Geneva Economic Conference of 1927, representing no less than fifty countries, declared expressly that one of the most formidable obstacles in the way of establishing and developing permanent and secure trade relations between countries is the instability of tariffs.' The Conference recommended that States should refrain from making frequent or sudden changes in their Customs Duties, on account of the instability which such changes cause in trade relations, and the serious difficulties or disputes which they occasion in connection with the execution of contracts already concluded."
Surely, my Lords, we who claim that we have been leaders in economic thought in the world should be reluctant to introduce into our fiscal system something which would involve us in frequent, uncertain, and even, I fear, capricious changes.
The Balfour Committee go on to discuss the question of whether you really can equalise matters between what is called the pauper labour of the Continent and our own labour. A very strong argument—perhaps stronger on the platform than in this House—has been the argument that we ought to protect our labourers against the competition of sweated labour on the Continent. It sounds attractive, but what is the result of the inquiries which the Balfour Committee made in this matter? It may be said that they are not more capable of coming to a conclusion, than you are or than anyone else is. I doubt it. I think investigations spread over four years by men who are acquainted with business conditions, who are acquainted with industry and trade in this country, deserve very careful attention from your. Lordships' House, and very careful attention from His Majesty's Government. I will not weary your Lordships with the reasons which they adduce for coming to their conclusion—it is open to everyone to read them—but the conclusion to which they come is stated as follows:—
"We are, therefore, of opinion that it is neither defensible in theory nor feasible in practice to frame our tariff policy with the object of neutralising international differ-
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ences of labour costs by means of differential Customs Duties."
If it is neither defensible in theory nor feasible in practice, then I would urge that the arguments adduced by the Committee are very weighty and very important. Surely it is really not acting fairly with the electorate of this country, and not acting fairly with the workmen of this country to lead them to suppose that such a step is possible, and that you can equalise conditions between them and their competitors overseas by imposing a tariff which will shut out the product of underpaid labour. Labour, of course, is an important element of cost, but what is important in this matter is not the wages paid but the cost of labour per unit of production.
Then the Committee deal, on page 276 of their Report, with the question of the McKenna Duties and the question of Safeguarding. They are careful not to express too confident views, and I only wish that all politicians, on the hustings and elsewhere, would use the same caution which the Balfour Committee have used in their Report, and not be too confident that they are right, when there are so many subjects on which we cannot be quite certain whether we are right or wrong. The caution of the Balfour Committee, their restraint, adds weight to their conclusions. They say:
"… the data furnished to us by the Board of Trade of the recent course of trade, employment, prices, etc., in the industries affected by these Duties"—
that is the Safeguarding Duties—
"do not, in our judgment, enable any general and definite statement to be made with any confidence as to the precise results of their incidence."
I wonder how that would look upon Conservative posters during the General Election. Yet it is possibly nearer the truth than that which is urged by any of the political Parties.
I have one more point to raise. We are at present merely dipping our fingers into the sea of Protection. We have not even gone in over our boots, much less over our heads. But the system that has been introduced is intended by many—I will not say by all—to bring us into the full tide of the protective system. If that be so, surely we are entitled to widen the course of this debate a little and to look for a moment—it must be only for a moment—at the

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results that follow from the introduction of a full protective system. We have had them argued and re-argued in the last twenty-five years, and I can add but little. But I should like to add just this. Recently His Majesty's Government, at the request of the Government of Australia, sent out four gentlemen of eminence and weight to advise the Australian people on the trend which their financial policy was taking. This advice was given in a Report, which I have in my hand, dealing with very many subjects, including the Australians' pastoral industry and their emigration policy. The Report deals also with their fiscal policy, and there are one or two paragraphs in it which, I think, are of importance as indicating the result of a system introduced, as in Australia it undoubtedly was, in order to give protection to the working man. The Report showed the natural result of such a system when pushed to the extremes to which it has been pushed in Australia.
The Report of the Duckham Mission says, on page 114:—
"We have felt much force in the oft-repeated complaint that successive increases in the tariff which affect prices and the cost of living, following upon, or being followed by, successive advances in the cost of labour as the result of decisions under the Arbitration Acts have involved Australia in a vicious circle of ever ascending costs and prices, and that this condition of affairs is crippling Australia's progress and her power of supporting increased population."
The Report also quotes reports from the Tariff Board of Australia for 1926–7, in the following terms:—
"… in some industries it is apparent that Protection is failing to protect. In so far as recent increases in Customs Revenue have been due to the collection of higher Duties imposed with the object of discouraging the importation of the appliances or commodities on which such Duties were imposed, the increased amount collected represented, in the case of goods used in manufacture, an addition to the cost if production, which indirectly increased the cost of living; and to the extent that any such increased revenue was due to the imposition of duty on commodities imported in the form in which they are consumed it represented a direct increase in the cost of living."
That is the considered opinion of the Tariff Board of Australia, not the view of a Free Trader criticising the protectionist system. It is the view of those
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who have administered and are administering the tariff policy of Australia.
You may start on a small scale but, having started, you create expectations in the minds of those who are outside the ambit of your benefactions. You create expectations of sharing in those benefactions and, when they have been shared, others come in and find that the share that they are getting is not adequate to meet competition, and they ask for more. The experience of Australia has been that tariffs are constantly increased in order to meet the requirements of the manufacturers, and that wages are constantly increased as a result. In Australia they have a system of fixing wages by arbitration which is not so largely developed in this country. After all, wages are expected to bear some relation to the cost of living. We find that wages are increased in order to meet the extra cost of living resulting from the imposition of the tariff. Wages go up, and then the margin for the manufacturer again disappears, and tariffs again go up. It is a never-ending chase of tariffs after wages and wages after tariffs—not ruinous, perhaps, to the protected industries, but ruinous to those industries which stand outside, and gravely injurious to those industries which cannot he protected. In Australia the industries protected by tariffs are sheltered industries. They can pass on the cost of their increased production to the individual consumer in Australia, for the manufacturers of Australia manufacture, one may say, solely for the Australian consumer. The exportation of Australian manufacturers is small and almost insignificant.
In this country the position is quite different. Here we have a very large manufacturing interest which depends, not upon the consumption in this country, but upon world consumption, and such a passing on of costs is impossible. It is out of the question. Our manufactured articles must compete in the world's markets and, if they are going to do so by means of tariffs, as the system grows—and it is expected to grow by supporters of His Majesty's Government throughout the country—you will hinder and constrict the ability of the English manufacturer to compete in the world's markets. If you hinder and constrict that ability, you will have struck a blow at the industries of this country

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from which it will take them a long time to recover. I ask you to hesitate long before, by your support on the platform, by your vote in this House, by the influence that you still justly, have as men of wisdom and moderation in your own neighbourhoods—I ask you to hesitate, and to hesitate long, before giving your approval to a system which, if developed, will create misery and poverty amongst a large class of your fellow-men. If you bring about inability or difficulty on the part of our manufacturers to compete in the markets of the world, they will be very poorly repaid by the security of their home market.
LORD RIDDELL: My Lords, I am not a Free Trader, a Protectionist or a Safe-guarder, but I feel it my duty to bring before your Lordships certain facts connected with the packing paper trade, in which I take a remote interest. Packing paper is subject to a Duty of 16⅔ per cent. I am informed by the Secretary of the Paper Makers' Association that the result of the imposition of the Duty has been that imports have been reduced, employment has been increased, new machinery has been installed, the price of packing paper bas been reduced, and the Government have received £650,000 in Duties. I do not propose to trouble your Lordships with figures, but I would venture to read an extract from a statement made by one of the largest paper-makers in this country. He says:—
"Comparing the year 1925 with the year 1928, our production has increased by 38 per cent., our wages paid have increased by 34 per cent., the number of workpeople employed has increased by 20 per cent., much overtime was worked in 1928, and none in 1925, and better paper is being produced, and is being sold at a less price."
I do not propose to follow the noble Lord who has just resumed his seat into the theoretical topics to which he mainly addressed himself. I venture to suggest that this question is not capable of solution on a theoretical basis of that kind and that, if we wish to obtain reliable guidance, we must look at facts such as those which I have ventured to place before your Lordships. So far as the experience of the packing paper trade is concerned Safeguarding has certainly been most advantageous. As I have told your Lordships, the manufacture of paper in this country has increased, new machinery has been installed, the price
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of paper has been reduced, and the Government has received £650,000.
THE MARQUESS OF SALISBURY: My Lords, this is the second day of this debate, and I am sure you will recognise that it has produced a number of speeches of very high merit, full of information, full of argument, and worthy of your Lordships' House. The speech which opened the proceedings to-day certainly did not fall behind the others in deep economic learning, in the theory of fiscal subjects, and in the controversies between Free Trade and Protection. As my noble friend who has just sat down said, it perhaps erred a little on the theoretical side. The noble Lord is an authority on political economy, a science with which I am afraid I have only slight acquaintance, and so far as the theory of the question is concerned I have nothing to say against the doctrines laid down by the noble Lord. I am sure that most of the text books would confirm his general theory of the effect of a Duty and as to the shoulders upon which it generally rests, but, my Lords, this question is not to be settled by theory.
In this country we are not theoretical. We look at things from a practical point of view, and that is why the short speech which my noble friend below the gangway has delivered is so valuable. He did not deal with theory. He spoke of practice. May I say, very respectfully, to Lord Stanley of Alderley, that, although his speech was most interesting, it had not, a very close bearing upon the Motion of the noble Earl. He himself said that he thought it necessary to widen the discussion, but he widened it, if I may say so, out of all knowledge, because what the noble Earl is asking your Lordships to say is that the system of Safeguarding is a failure. That is a very different matter. The noble Earl did not argue the old contentions of Free Trade versus Protection. He was more specific. He said: "Take these Safeguarding Duties, examine them, and I ask your Lordships to say that Safeguarding has been a failure."
Let me just say, in order to prevent any kind of misunderstanding as regards the general question of Protection, that the position in which the Government stand is perfectly clear. We are against, so far as the next General Election is concerned, a system of general

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Protection. We are against anything which can be fairly represented as a general system of Protection, and, specifically, we are against anything in the nature of a tax on food. That is the clear position of the Government, which I repeat, to prevent misunderstanding. That, however, is not the issue before the House to-night. The issue is whether Safeguarding is a failure. The noble Lord had evidently thoroughly read the Balfour Report, and he quoted from it, but he did not quote from it fully. He left out a most important passage when he read what the Balfour Report said about Safeguarding. It is quite true that the Balfour Report expresses itself very moderately, and the noble Lord recommended that politicians should be moderate in their utterances on the platform. Will he address that to the Leader of his Party, Mr. Lloyd George, by whom, I am sure, such advice is very much wanted?
The Balfour Report, I agree, is very moderately expressed, and they do not pronounce any very confident opinion. That is true, but the opinion which they do pronounce is wholly inconsistent with the position of the noble Earl. Listen to this passage:—
"The very inconclusive nature of the results so far attained, taken in conjunction with the absence of any substantial complaint of prejudice so far caused to other trades or to the consuming public, affords justification for continuing the experiment."
The noble Earl says it is a failure. The Balfour Report says it ought to be continued, and yet the noble Lord, leaving out that passage, has the boldness to quote the Balfour Report in support of the Motion of the noble Earl. It is clear that these moderate investigators, who are not Protectionists—I believe most of them are Free Traders, although I do not suppose they pre-judged the matter from that point of view—considered that the experiment ought to he continued. As far as the noble Lord's speech is concerned I might rest the case of the Government upon that quotation alone.
What is the object of the Safeguarding policy? It is not Protection in the true sense of the word. The object of the Safeguarding policy is to defend depressed industries which are the victims, or alleged victims, of unfair competition from abroad. It is a very limited objec-
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tive. The Safeguarding policy is an attempt to deal with what I venture to say most men will agree is a very great evil, and a very great mischief. Of course, that system of defence has to be undertaken with very careful regard to its effects outside the particular trade. However badly used a particular trade may be, we cannot afford to give it anything like fiscal defence unless we are satisfied that that defence will not react adversely upon other trades. What is called the repercussion upon other trades must be carefully regarded. But within that limit we seek by the Safeguarding policy to defend depressed trades which are suffering from unfair competition. The noble Earl says that we have failed in that attempt. I confess I was astonished at his boldness in advancing that confident proposition. After all, whether you are a Free trader or a Protectionist or whatever your fiscal opinion may be, I should have thought it was highly probable that a Duty put upon imports of a competing foreign trade would help the individual trade in this country. It does not prove, of course, that that ought to be done; but upon the face of it it is likely to help, and that indeed is what the evidence, so far as it goes, tends to show.
I am aware that the noble Earl and the noble Lord will not allow us to call in aid the other analogous Ditties which are not contained within the White Paper—the McKenna Duties and the Duties upon the key industries. Nor do I think they belong to the same class as the Safeguarding Duties; but they may be used to the extent that if you can mark that, in their case also, the imposition of a Duty helps a trade, it goes to confirm the general proposition that a Duty helps an individual trade. It does not prove, as I said before, that it ought to be imposed, but it does go to support that particular proposition. The important thing for the purpose we have in view, the helping of these particular trades—is whether we can show, on the subject of unfair competition, that we are helping them or not. Is it, in fact, in the terms of the Motion, a failure, or is it not? I do not attribute very much importance to the elaborate figures about exports and imports which the noble Earl quoted. If he will allow me to say so, he is not accurate in his figures.

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There is no blame upon him whatever; the figures are extremely difficult to get; but he was not accurate in his figures. Let me give your Lordships an example. I think he said broadly that the exports in these safeguarded articles had gone down by £1,500,000 and that the imports had gone down by £1,250,000. Both those figures are inaccurate. The exports have gone down to the extent of £400,000 only; so that he overstated the exports. But he understated the imports, which have gone down by £1,800,000. I do not attribute a great deal of importance to it, but the noble Earl does. His argument that the exports had gone down more than the imports was a convincing contention to prove his case. If that is what he relies on he must give it up, because it is inaccurate and the figures are the other way. The imports have gone down much more than the exports. The amount to which the exports have gone down is really not significant. It is in about the same proportion as the exports of other commodities in these bad times. The imports, on the other hand, have gone down in a much greater degree than the average. That, of course, was to be expected under the Safeguarding Duties.
As I have said, I do not attribute a great deal of importance to those figures of exports and imports, but I do attribute importance to the question of employment. That is what one means when one asks: Are we helping, or are we not helping, a particular trade? If it can be shown that employment has increased, well and good, trade to that extent is prospering. Therefore, those are figures which are important. I do not pretend that I am going to give your Lordships convincing figures on this point, still I will give you some figures. There are, of course, the figures quoted by the noble Lord below the gangway (Lord Riddell). I have not those figures, but I have no reason to doubt that what he told us about the paper industry is accurate, and it shows that the effect of the Safeguarding Duties has been very favourable to that particular trade. Let me take some others. The number of people employed in the lace industry has gone up to a slight extent, by 500 or 600. The number of people employed in gloves has gone up by at least 1,600, I think a little more, since these Duties were imposed. As
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the noble Lord has said, employment in wrapping paper has gone up. I have not the figures, but I have the information that a great many new works for making paper have been established since these Duties were imposed. That is all material evidence that the imposition of Safeguarding Duties has helped particular trades; that is to say, it shows that the noble Earl is wrong when he says that the Safeguarding Duties have been a failure. For that reason we shall ask your Lordships not to agree with bun in this Motion.
Let me go a step further. Have the Duties had a bad effect? Although I am not sure, I suppose it was part of the noble Earl's case that these Duties had not only failed, but had had a very bad effect otherwise. The noble Lord, I think, was at great pains to prove that if a Duty was imposed on an imported commodity the price the home market must go up. I do not pretend that by an elaborate effort: of argument that might not be shown, but on the face of it that is not what has happened. Let us take gloves. Between 1925 and 1927 the price of leather gloves has fallen on the average by from 3 per cent. to 8 per cent. So far as fabric gloves are concerned the price has not gone up; it has remained very much the saran, and has fallen in a few eases. In the case of gas mantles there was, after the Duty was imposed, an increase in price, hut that has now passed away. The price of some gas mantles is above the pre-Duty price, and the price of others is below it. Then there is the case of wrapping paper, which my noble friend has quoted. I find that representative types of wrapping paper have fallen in price since 1926 by from 4 per cent. to 12½ per cent. The same thing is true of china tableware. In certain kinds of china tableware there has been a fall of between 7½ and 10 per cent., while in other kinds there has been no change.
As I say, the noble Lord may construct an elaborate argument to show that but for the Duty they would have fallen very much more. He did not say so in his speech, but he might construct such an argument. On the face of it, all that can be said is that, notwithstanding these high Duties put on for the sake of safeguarding the home production, the prices have not gone up. On the contrary, they

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have shown a tendency to go down. The noble Lord is a theoretician, but he said he would like to look facts in the face. I offer him those facts to look in the face and to see how he explains away this—from his point of view—unfortunate result. If you Lordships put the question" How has it come about that these results have occurred?" then I suggest to your Lordships that the noble Lord and the noble Earl have not taken everything into account when they look at this thing from the point of view of theory. There are other elements in the calculation. It is one of the unfortunate things which always pursues scientific men that they always forget certain important elements in the calculation. There is the question of economy in larger output. That the noble Lord did not deal with, but it is notoriously the fact that you can produce economy by larger output because of the saving on the overhead expenses. One of the effects, of course, which is sometimes achieved by a Safeguarding Duty, if it is put on with discretion and judgment, is to increase that particular output, to use the plant to its full capacity, causing not a rise in price, but a fall in price.
Besides that, there is the psychological effect. I hope your Lordships will realise I am not arguing in favour of Protection as a general system, but I am arguing in favour of Safeguarding, the thing which the noble Lords opposite have attacked. When you look at the psychological effect of Safeguarding, you have to picture to your mind some centre of industry, which has been a thriving centre in past times, but which is subject to grave competition from abroad depending upon conditions which are unfair in the sense that there are no compensating conditions in this country, or depending on temporary conditions which are unfair. The effect may be, and indeed has been—for I am not speaking in the air—that this thriving centre has been reduced to great distress. It must be the object of all of us, if we can, to remedy a mischief such as that. The knowledge, which those engaged in the industry have, that, do what they can, they cannot compete with those unfair conditions, has a depressing and a discouraging effect upon them. It deprives them of the full use of their energies and their capacities. After all,
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our great object in these matters is to get everybody to use their capacities to the very utmost. That is the object of Free Traders and Protectionists alike. What can be more discouraging than to find yourself deprived of your trade—whether you are an employer or a workman—by conditions abroad which are inequitable from our point of view, or which are temporary, and which drive down the price to such a point that you are unable to compete? If by a careful system, after very careful inquiry, you can prevent that state of things, surely you are doing good, and not harm. I am not speaking of a permanent system. Surely, even a strict economist like the noble Lord, the sworn disciple of Mr. Cobden, would be prepared to spend a little of his economic orthodoxy in order to save a community such as I have described, just as he would invest money in any other enterprise which, though costly for the moment, might bring in a fair return hereafter.
It is from that point of view that we have to regard Safeguarding. I say, therefore, that, looked at from that point of view, we are satisfied, just as the Balfour Commission was satisfied, that this experiment ought to be continued. It ought to be continued under the strictest conditions, of course, and your Lordships will remember that in the debate upon the Address in another place and in your Lordships' House these conditions were set forth, the conditions which must be satisfied, so far as this present Government are concerned, in order that a Safeguarding Duty should be admitted. Those conditions are to be interpreted in our view by an impartial tribunal, having nothing whatever to do with the Government of the day. This impartial tribunal is to interpret the conditions laid down by Parliament as fairly as they are able and, if they are satisfied that a case has been made out, well then, let the experiment be continued. We hope and believe that in so doing we shall not really sin against any true economic orthodoxy, but on the contrary we shall be conferring a benefit on the trade of this country.
EARL BEAUCHAMP: My Lords, I feel I should be wanting in respect to your Lordships' House if I did not take notice of some criticisms made on the first occasion when we debated this Resolution and also various criticisms

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made in the country of the statement I made on that occasion. Again, there were statements made in the debate this afternoon to which I would ask leave to reply. There is the statement made by the noble Lord below the gangway in regard to wrapping paper. I am not sure that he told us the real facts of the case. They are that the average price of imported wrapping paper during the first quarter of 1926 was 24 s. a cwt. free of Duty, and for the first quarter of 1928, including the Duty, the price was 24s. 8d. per cwt. There was, however, a drop in the world's price of 12½ per cent. which the Duty prevented us from enjoying. It was the same tendency to which Mr. Churchill referred in another place when he said that full advantage did not accrue to the people of this country when there was a drop in the price of artificial silk. The maintenance of the Duty prevented us from enjoying the full results of the drop. The Duty on packing paper used in spinning was abolished because it raised the price of the manufactured article, as was stated by Mr. Cyril Atkinson, M.P. Mr. Atkinson has been himself a member of several Safeguarding Committees. There are also several other important factors to be taken into consideration. Is the quality always the same in these figures that are given? The price is almost invariably raised, but there may be a lower quality at about the same rate. We are not prepared to admit that when the price remains the same the quality remains the same.
THE MARQUESS OF SALISBURY: I admit no such distinction. The figures I gave were intended to apply to articles of the same quality.
EARL BEAUCHAMP: I am quite sure that is the intention of the noble Marquess, but I am sure that, if he will look into the technical figures of silk and glacé gloves and nappa gloves, and things of that kind, he will find they are more complicated than he realises at the present moment. The circumstances of the case are such that they will not quite hear that broad statement which the noble Marquess has made with regard to them.
I would like -to express my sympathy with my noble friend Lord Hunsdon, because on the last occasion he told us the authority of the Board of Trade is the best
814
and the only authority we have. In the course of the discussion which took place on that occasion, the statement made on behalf of the Board of Trade was this:—
* "In regard to safeguarded goods, exports have increased from £29,000 in 1924 to £38,000 in 1928."
That, of course, was a mistake. The Board of Trade statement forgot three little "0's" which ought to have gone after the figures given. It was not a case of £29,000; it was a case of £29,000,000, and of £38,000,000 in 1928. It reminds one of the occasion when an eminent statesman entered the Treasury, and, on being shown a page covered with decimal figures, asked what was the meaning of all those damned little dots. So upon this occasion the Board of Trade seems to have thought these extra millions were unnecessary. The noble Earl was good enough to send me a corrected copy to which I will return in a moment.
Meanwhile, let me say, however bad that inaccuracy was, there was something much worse in the statement made by the Board of Trade. They say in regard to safeguarded goods that the exports have increased from £29,000,000 to £38,000,000. That is wholly without foundation as is shown by the Board of Trade's own figures that they have been good enough to send me; in fact, they have been good enough to send me two copies of those figures. I will take the figures they themselves have given me, and take item No. 6 dealing with retained imports. The noble Marquess, I think, misunderstood me a little bit on this point. I am not surprised, and I make no complaint. I did not keep imports and exports together. They were not part of my argument. I took them separately. Retained imports are given here at a figure of £9,465,000 in 1924, while the retained imports in 1928 are given at £7,878,000. In this case the reduction in retained imports, I think, is probably accounted for by the increase in price, but with regard to British exports themselves the figure to which the Board of Trade made reference on the previous occasion did not include simply safeguarded figures, but included all those things which, as the noble Marquess has reminded yore Lordships, come under the head of McKenna Duties,
* See Vol. 72, col. 907. These figures were corrected for the volume.

815
which are not Safeguarding Duties, but were imposed before the word "Safeguarding" became a current word in our political controversies—motor cars, silk stockings, musical instruments, gramophones, clocks and watches.
I take once more from the figures which the Board of Trade were good enough to give me their own figure—No. 6, "Goods subject to Safeguarding Duties proper." In 1924 the exports were £5,243,000: in 1928 they had declined to £4,724,000. That is the last figure of the Board of Trade, and it justifies exactly what was contended from these Benches on the last occasion that there is a reduction in the exports, instead of there being a considerable increase, as we were led to hope would be the case from the introduction of the Safeguarding Duties. We do not pick and choose; we take all the articles to which the Safeguarding White Paper applies. In these circumstances to say that our figures, showing that there is a decrease, are hopelessly wrong, is surely a total misrepresentation of the situation, even under the figures of the Board of Trade themselves.
The noble Marquess spoke of gas mantles, to which I ventured to refer on the last occasion. He is not the only person who has criticised what I said upon the subject of gas mantles. I am interested to see that the Empire Industries Association does not deny the agreement which has been come to with the German manufacturers, and admits, indeed, that we pay tribute to the German manufacturers for every gas mantle bought in this country. "But," say the Empire Industries Association," what does that matter; look at the way our manufacture of gas mantles is going up." But the more they go up the greater is the tribute we have to pay to the German manufacturers, because we pay so much per gross upon our manufacture of gas mantles here. Now, instead of the usual slogan of the Empire Industries Association: "Let the foreigner pay," we have another slogan: "Let us pay more and snore tribute to German manufacturers." That is not likely to prove a very popular slogan when it has to be explained on various platforms.
I turn next to the question of lace, upon which a great deal of strong language was used about me by the Minister of Labour. I may say in passing
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that strong language is generally the fruit of a weak case. The Minister for Labour upon the occasion to which I refer said a good deal upon my inaccuracy, but I would venture to suggest that not even he would say I was quite as inaccurate as the figures of the Board of Trade. He did agree with me that the exports of lace from this country had decreased. He said that I ought to examine the figures of the great import market for lace in the United States. I really do not quite see how that is even directly germane to the question which we were discussing in your Lordships' House of the employment of people who were making lace in this country. The imports in lace may, or may not, be higher. That would be an interesting subject perhaps for discussion on another occasion, but if on every occasion when we are discussing exports from this country we should see what are the imports into every other country in the world, it would make our debates even longer than they are at the present time. The Minister of Labour agreed that there was a reduction in the number of insured persons employed in the trade. That means, as I tried to explain on the last occasion, that there are fewer people engaged in the trade because they do not see any hope of reviving that trade, and have tried to find employment in some other industry.
There was the other point with regard to the through bills of lading, a matter with which the noble Viscount, the Secretary of State for India, and the noble Earl, the Under-Secretary of State for the Colonies, have spoken in your Lordships' House, so also has the noble Lord, Lord Arnold. I think he has explained that the figures are legitimately the subject of controversy in regard to their bearing, as to how far they do mean a difference with respect to the exports and imports into this country; but for my own part I would say that there is nothing in this matter, or in the criticisms which have been addressed to me, which in any way invalidates the figures which I gave on the last occasion.
I turn to the question of employment. It has never been the argument of Free Traders that by giving one selected industry an advantage in trade you prevent that industry from having more employment. It is only natural, other

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things being equal, that it should have more employment. We have never denied that. What we have said, and what is proved by the figures published week by week by His Majesty's Government, is that there is more unemployment in other industries throughout the country, not wholly due to the policy of Safeguarding, but very largely due to that policy, and it is at any rate not unfair for us to say that with the increase in the Safeguarding policy of His Majesty's Government there has been also an increase in unemployment in this country. We are entitled to point out to your Lordships that these two facts do exist and that they may possibly be connected. The exact amount of connection is indeed a matter for argument.
I say once more, we do not deny that any actual industry itself may show some improvement, but for my own part I have been surprised, and I think a good many other people too, that these industries have not shown a greater increase in employment than is the case. It is of very great importance, when you are trying to persuade people to adopt the policy of Safeguarding, to be able to show, if you wish them to adopt it, that it is a success, and that it has tended to increase
exports, because, after all, the greatest market of the people in this country is to be found outside this country. We are but a small proportion of the population of the globe, and it is outside this country that we must look for our largest markets. Therefore when we find exports are going down we see what I venture to call the failure of Safeguarding. Although it may be possible to point to a single instance, or two instances, where there is increased employment, still the general increase of unemployment in this country is the matter to which we draw attention. In my opinion, my Lords, supported as I am supported by the figures which the Board of Trade have been good enough to give me dealing with these exports, and further supported as they are by increased figures of unemployment, I do not know how it is possible for anyone to cone to any other conclusion than that the policy of Safeguarding has been a failure. I shall ask your Lordships to be good enough to divide on the subject.
On Question, Whether the Motion shall be agreed to?
Their Lordship's divided:—Contents, 20: Not-Contents, 46.

CONTENTS.

Reading, M.

Arnold, L.

Sandhurst, L. [Teller.]

Avebury, L.

Shandon, L.

Beauchamp, E.

Buckmaster L.

Stanley of Alderley, L. (L. Sheffield.) [Teller.]

Buxton, E.

Clwyd, L.

Russell, E.

Forres, L.

Swaythling, L.

Strafford, E.

Hemphill, L.

Tenterden, L.

Muir Mackenzie, L.

Thomson, L.

Leverhumle, V.

Parmoor, L.

NOT-CONTENTS.

Hailsham, L. (L.Chancellor.)

Plymouth, E.

Dynevor, L.

Elphinstone, L.

Salisbury, M. (L. Privy Seal.)

Bertie of Thame, V.

Fairlie, L. (E.Glasgow.)

Churchill, V.

Gage, L. (V. Gage.) [Teller.]

Somerset, D.

Falkland, V.

Greenway, L.

Wellington, D.

Feel, V.

Hanworth, L.

Harris, L.

Bath, M.

Abinger, L.

Hayter, L.

Lansdowne, M.

Addington, L.

Howard of Glossop, L.

Armstrong, L.

Hunsdon of Hunsdon, L.

Airlie, E.

Banbury of Southam, L.

Newton, L.

Cranbrook, E.

Bledisloe, L.

Ormonde, L. (M. Ormonde.)

Denbigh, E.

Clanwilliam, L. (E. Clan William.)

Ponsonby, L. (E. Bessborough.)

Doncaster, E. (D. Buccleuch and Queensberry.)

Cushendun, L.

Remnant, L.

Lucan, E. [Teller]

Darling, L.

Riddell, L.

Mar and Kellie, E.

Daryngton, L.

Templemore, L.

Midleton, E.

Desborough, L.

Wharton, L.

Onslow, E.

Resolved in the negative, and Motion disagreed to accordingly.