HL Deb 27 March 1935 vol 96 cc364-98

LORD MARLEY rose to call attention to the terms of reference of the Royal Commission of Inquiry into the private manufacture of and traffic in arms, and to ask His Majesty's Government whether it will have the power to compel the production of Government documents, in particular those of the Contracts Departments of the War Office, Air Ministry, and Admiralty; documents relating to the trade in arms and munitions in the Board of Trade and the Foreign Office; the trade reports of His Majesty's Ministers and Consuls abroad; agreements made between Vickers Ltd. and the Electric Boat Company, between Imperial Chemical Industries Ltd. and E. L. Du Pont de Nemours and Co., and all other such agreements, and documents of the arms firms relevant to these agreements; and to the association of the armament firms with Government Departments, with individual members of such Departments, and with British representatives abroad; and to move for Papers.

The noble Lord said: My Lords, the Motion which I have ventured to put down for discussion to-day may, I regret to say, take some little time, but I feel that the subject is of such vital importance that perhaps your Lordships will excuse the spending of some time on its consideration. I do not propose on this Motion to discuss in any way the advantages or disadvantages of the State manufacture of arms. I am only going to call attention to certain disadvantages and objections in the private manufacture of arms, and while in the course of my remarks I may mention the names of one or two individuals, I want to make it perfectly clear that I only refer to them in so far as I feel that when individuals having an official position deal with private armament firms, that fact may place them in the eyes of the public in a very invidious position, in which it is desirable they should not be placed, and to avoid which is one of the ideas connection with the abolition of the private manufacture of arms.

The public in this country have been very much concerned at the lack of success of the Disarmament Conference and, generally speaking, there has been a search for the explanation of that failure. We know that the League of Nations, in Article 8 of the Covenant, expressed the feeling that there were "grave objections" to the private manufacture of arms, and since the Covenant of the League was drawn up there have been in various parts of the world a number of serious scandals in connection with the private manufacture of arms. I need only remind your Lordships of the well-known case of Mr. Shearer, who was employed by -a number of United States firms to be at Geneva, in order by his activities to wreck the Naval Conference of 1929. He succeeded very well in that and was promised, and paid, a large sum of money by the armament firms of the United States for this purpose. in point of fact, he was paid some $51,000 and then he sued these firms in the Courts for the balance of the money due to him—namely, $255,000. He actually took action against them. The Attorney-General of the United States made an inquiry, and the president of the armament firms communicated with the President and explained to him that they had in fact promised, and paid, to Mr. Shearer a very large sum of money for the purpose of bringing the Naval Conference to nought. Mr. Shearer has been at Geneva during a considerable part of the Sessions of the Disarmament Conference, and therefore it is not unreasonable to assume that he is still in that profession which he has adorned and in which he has been so successful.

A similar case will be remembered with the great armament firm of Skoda, in which case officers in the Rumanian Army were convicted of taking large bribes in order to secure that armament orders should be given by their Government to the Skoda armament firm. As a result of these and other scandals the United States of America caused a Senatorial investigation to be made in April of last year, just about a year ago. The terms of reference of that inquiry included the following words. These are extracts. The inquiry Resolution said: Whereas the influence of the commercial motive is one of the inevitable factors often believed to stimulate and sustain wars. It then mentioned that there had been a widespread demand in the United States for legislation "to take the profit out of war," and accordingly the Committee of Inquiry was appointed with terms of reference from which I make one or two quotations.

The members of the Committee were authorised and directed: To investigate the activities of individuals, firms, associations, and of corporations and of all other agencies in the United States engaged in the manufacture, sale, distribution; import, or export of arms, munitions or other implements of war and"— this is important— the nature of the industrial and commercial organisations engaged in the manufacture; the methods used in promoting or effecting the sale of arms, munitions or other implements of war imported into the United States, and the countries of origin thereof"— and this affects Great Britain— and the quantities exported from the United States and the countries of destination thereof. They were also directed: To investigate and report upon the adequacy or inadequacy of existing legislation, and of the treaties to which the United States is a party … to enquire into the desirability of creating a Government monopoly in respect to the manufacture of armaments and munitions, and other implements of war.… And, finally, they were to have power by subpœna or otherwise to compel the attendance of witnesses, to compel the production of papers and documents, and to administer oaths and take such testimony as seemed advisable.

Now the wide scope of the terms of reference of the American Senatorial inquiry was one of the reasons for its great success. But I would call attention also to the fact that the American inquiry proceeded to appoint between forty and fifty investigators, who travelled round at once under the direction of a very energetic secretary, Mr. Raushenbush, and were able to seize documents and files belonging to the firms engaged in this traffic before these files could be examined and incriminating or undesirable documents extracted and destroyed. In Great Britain there has also been widespread public anxiety—I do not think I am exaggerating when I say that. The Government at first resisted any such inquiries. In the House of Commons, both in April and June, in reply to questions, the Prime Minister said that he considered that no useful purpose could be served by such an inquiry, but after the beginning of the report of the American inquiry there was a change of view, and Sir John Simon, in November, in the course of debate, used these words: If we desire, to examine this serious problem, not by a fishing inquiry dealing with every rumour and detail that can be found about the conduct of a trade which is not confined to this country, but by an inquiry which really studied the proposal of State monopoly from the point of view of national security and the like, the Government have no reason to have any difficulties about it. On November 22, evidently a little pressed by some of the interests involved, he said that: it would be very unjust to armament firms and to those responsible people who may be connected with them, to imply that there is something in their business which essentially makes undesirable methods their practice …. At once it occurred to many thoughtful people that those two statements taken together amounted to a risk that there was going to be a hushing-up, or whitewashing, inquiry and that armament firms were to be protected. As a result there were many questions in the House of Commons, and finally on February 18 the terms of reference of the British inquiry were announced, together with the personnel of the Royal Commission. It consisted of a number of distinguished men and one woman, also distinguished. I have nothing but admiration for the splendid and lifelong work done by the Chairman of the Royal Commission, but I think it is as well to realise that he is 81 years of age, and in an inquiry demanding, if it is to be effectively carried out, immense energy, courage and hard work, it is asking a very great deal that Sir John Eldon Bankes should be expected at the age of 81 to do this very heavy work really effectively.

I do not need to quote the terms of reference. They are nothing like as wide as those of the American inquiry. The Royal Commission has at present no power to take evidence on oath, and, from the inquiries made in the House of Commons, it is not clear whether they have the power to demand documents from Government Departments and documents from private firms. One of the objects of my Question, therefore, is to find out what is the real meaning and scope of the terms of reference of this inquiry, and whether in fact the Commissioners will have power to call for and to secure these documents. The American inquiry, as I said, safeguarded itself against the previous examination and destruction of what I might call incriminating documents, or at any rate documents not favourable to the armament firms, by appointing this body of investigators. No such investigators have been appointed in this country, as far as I am aware. In the United States power was taken to subpœna witnesses. I should like to know whether our Royal Commission have any such power. In the United States they had power to enter the premises of the armament firms, and they did so and examined documents and seized files. I want to know, for example, if we can enter the premises of Vickers Ltd. and seize and examine files of that firm. I should like to know, further, whether we have the power to call for documents relating to the issue of licences for the export of arms from this country. I understand that these licences are issued by the Commercial Relations section of the Board of Trade in consultation with the Department of Overseas Trade and the Foreign Office, and this is very important, because Great Britain is far and away the largest exporter of arms in the world. We export about one-third of all the armaments and munitions of war exported by the whole of the world. According to the Statistical Year Book of the League of Nations, in 1930 we exported 30.5 per cent., in 1931, 37.8 per cent., and in 1932 29.9 per cent.

I also want to know whether the Royal Commission have the right and the power to call for documents showing the contracts placed by the Service Departments, and in this connection it is extremely important that we should bring out the relations between the private firms and the Service Departments. A great many facts have been brought out by the American inquiry which would never have seen the light of day had it not been for that inquiry, and I want to examine, for a few moments, some of those documents in order that your Lordships may be aware of the relations between Vickers Ltd. and armament firms in the United States. I have here a letter published in the United States inquiry, Exhibit No. 18, marked "Absolutely Personal and Confidential." This is from Sir Charles Craven, of Vickers Ltd., to the Electric Boat Company of the United States, and of course it is available for any of your Lordships who choose to read the report of the American Senatorial inquiry. It is dated October 7, 1927, and he says: We have just received an inquiry for one, two or three [boats] from Armstrongs, who have agreed to put in whatever price I tell them …. Armstrongs, I may say, is a so-called competitive firm with Vickers, competing with them in their tender. Vickers, then, tell Armstrongs what price they are to put in! The letter goes on: and that we should also quote for one, two or three boats from Barrow. I would keep the Armstrong price very slightly above ours, the idea being that whatever boats were ordered from either party would be built at Barrow, so effecting considerable economies. I also think that perhaps it would be worth while putting forward a tender for six boats, the total number to be built. I have had a word with the Director of Contracts at the Admiralty, who is a friend of mine and who would like this. He, I know, tried to get us the order for all five submarines last year. This letter proceeds: At the moment the two firms are not combining in any way and, therefore, if negotiations break down, Armstrong Whit-worth's will, of course, be free from us, but the tenders have not to be in until the middle of November, so we certainly should know one way or the other before then. Needless to say we do not want anything to come out about the proposed fusion until it is all clear, and I am just sending you this letter so that you can think over the situation. I have not yet procured a definite list of the firms who have been asked to tender this time. From whom does he get this definite list—from his friend at the Admiralty? I hope that the Royal Commission will find that out and let us know.

This matter was raised in the House of Commons, and we were told that there was no trace of partiality for a particular firm either on the part of the Board of Admiralty or of any official in dealing with the question. But how does that square with this statement that the Director of Contracts at the Admiralty "tried to get us the order for all five submarines last year"? The statements do not square. This is a matter in which real inquiry' is very necessary for the confidence of the people of this country. The First Lord of the Admiralty went on to say: The fact remains, however, that he [Sir Charles Craven] did use language which could be read as casting a reflection on the impartiality of the Director of Contracts … He then stated that he accepted Sir Charles Craven's assurance that that was not his intention. However, Sir Bolton Eyres Monsell sees the feeling there must be in the minds of people in this country and he states in the House of Commons: I have satisfied myself by a complete inquiry. I now offer to the House an independent inquiry into the placing of these contracts. I hope that this Royal Commission will be the independent inquiry referred to by the First Lord and that we shall get out of it all Vickers' private files dealing with this subject in order that the private inquiry may become a public inquiry and so satisfy the public. If Sir Charles Craven is right in claiming that everything that he has done has been above board, then it is up to him to place at the disposal of the Royal Commission the replies to the letters he wrote to the Electric Boat Company in America, in order to prove his good faith.

Another letter, Exhibit No. 19 of November 30, 1927, says: I have been able to obtain the enclosed information from an absolutely reliable but very secret source. What does he mean by that? What is the "very secret source" from which he has got this "absolutely reliable information"? This is the information: The only three tenders receiving serious consideration are Vickers, Beardmore's and Cammell Laird's, and we were the only firm who tendered for more than three boats. Where does he get this information from? Where is this "very secret source" which is so reliable? I hope that the Royal Commission will find that out and that we shall learn, when the Report comes to be published, what are these very secret sources from which Sir Charles Craven is able to get such convenient information in the interests of the firm he represents. He then goes on to say: The attached statement shows the state of affairs in the order of cheapness from the Government's point of view. The hitch in the enclosed is that Beardmore's are most unpopular owing to their bad progress and financial condition, and I do not for one moment think they will receive three boats. I do know that one of the important Admiralty Departments is recommending that Vickers should have four and Cammell Laird's two. This leakage of information is very peculiar, and I do not think that the country will be satisfied unless the Royal Commission really gets hold of these files of Vickers' and enquires into them.

Sir Charles Craven goes on to say to his friend, "My dear Spear," who is the representative of the Electric Boat Company in New York: When you are next over here I will show you my estimate, but you can take it from me that I knew there was going to be keen competition, and I out my price to under five per cent. profit because I felt that with your support it is up to me to get the work and starve out competitors for another year or two. For your private information, I was able to look after Armstrong's and keep them out of the picture on this occasion. That is, of course, collusion between firms alleged to be tendering for boats through an arrangement among themselves so that they will make the tenders exactly what they want. He then goes on: I am trying to arrange things with the Admiralty so that we can count as two shipyards and can, therefore, put forward two tenders, but this, of course, will be rather difficult. I hope it will be "rather difficult,'' but it appears to be easy enough to this combination of alleged competitive firms to put forward two tenders at prices they themselves arrange under which the British public are milched in order that money may be handed over to the American company subsidiary to Vickers.

Then there is the letter of September 10, 1930, Exhibit No. 20, also from Sir Charles Craven to Mr. Spear. It says: Just a line to let you know that we have received the order for the special vessel, after most difficult negotiations. With whom were those "difficult negotiations"? I still hope your company will meet me regarding the amount due to you … I cannot possibly say any more in writing, but when the long promised visit takes place we will have a talk. Why cannot he say it in writing? There must be something really serious if he cannot say it in writing, considering all he has said in writing.

On July 30, 1932, Exhibit No. 21, Sir Charles Craven writes to Mr. Carse of the Electric Boat Company: Referring to your telegram of the 25th, and to your letter of the 18th ultimo, the directors will accept £10,000 settlement of 'Thames,' 'Porpoise,' 'S.' Engines, also agree to £7,500 "names,' £3,000 'S' Boat, your tenders. We cannot now decide about possible business next March. First, may I suggest that even in code it is better not to mention any names of ships, as I am rather afraid that such telegrams might get into the hands of our clients, and it would be awkward if they asked me about our agreement with you. "Our clients"! That term presumably means the Admiralty. The clients of Vickers! It would be interesting to get from the Royal Commission an exact definition of "our clients" and why they must hide the names of ships. Later he goes on to say: I may think it prudent to make an offer to our clients for the second one of each class which I know they intend ordering in March. So he knows in July that they intend ordering nine months later second vessels! I suppose that comes from his friend at the Admiralty.

This series of letters indicates a state of affairs which is, to say the least of it, extremely undesirable. I cannot help thinking that the Royal Commission will fail unless it searches into the real meaning—I do not mean by that House of Commons questions and answers, I mean the real meaning of the sentences included in these letters. He goes on: Obviously I could offer them a certain 'bait' in price. I do not want you to think that I have made up my mind at this moment to do this, but things are extremely 'tricky' just now, and it is just possible I might think such an idea desirable. Then Sir Charles Craven went to Madrid, where Vickers have a shipbuilding yard supplying small craft to European countries. He writes on October 30 to the Electric Boat Company: I arrived back from Madrid yesterday and at once called at the Admiralty. He is very careful: he calls at the Admiralty pretty regularly. While I have been away, a good deal of technical information has been made available for my people, so I hope in a week or so to be able to requote. In other words he is going to put in a new tender based on the technical information made available. As a matter of fact I should probably have quoted sooner, but the Director of Contracts is away and I want to hand my figures to him personally. Where does he get this advance information, and why to the Director of Contracts personally?

The letter then goes on: I think the position will turn as follows:— We shall receive a firm contract for one submarine about the third week in November. At the same time we shall receive a letter telling us that the Admiralty accept our price for the second submarine on the distinct understanding that if any circumstances arise between now and say March, 1933, they can have the right to cancel the second one without any payment. All that you and I gain by the transaction in that we shall know that if the ship is built Vickers will get the order. If, on the other hand, Geneva or some other fancy convention decide that large submarines have to be abolished, no definite contract will be placed. The "fancy convention" is of course the League of Nations, of which we are Members, and it is interesting, therefore, to see the armament firms working against the League of Nations, which they call a fancy convention. The final paragraph in this letter illustrates Sir Charles Craven's interesting activities in Madrid, from which place he had just returned. He says: I had a very interesting visit to Spain. It was chiefly in connection with a large sum of money owing to my company by the Sociedad. The political situation in Spain seems very confused, but there seems to be a considerable prospect of our friends receiving orders for small craft on the pretext that they are purely defensive. With all good wishes, Yours very sincerely, (Signed) C. W. CRAVEN. We then get nearer to to-day—1933. On the 6th January, 1933, again we have Sir Charles Craven in the possession of interesting advance information. He says: …the Admiralty also promise us the order for H.M.S. 'Clyde' (another repeat of the 'Thames'), but in this latter ease they will not give us a contract until after the end of March. In other words, they will have the right to withdraw their promised order for the second ship if Geneva or any other troublesome organisation upsets the large submarines. In view of this I am not saying anything publicly about the 'Clyde,' and I would suggest that it would be wise that Spear should not let the information get into the hands of your Navy Department until after I can tell you that we really have a proper contract. We now get private information of the building programme of this country being made available for the United States Government!

This matter was raised in the House of Commons on the 14th November last. I may remind your Lordships that this letter from which I quoted was written on the 6th January, 1933. The answer in the House of Commons was: …Messrs. Vickers-Armstrong were asked to quote a price for this vessel, and on the 20th December, 1932, they received the order for her. That is curious, because on the 6th January Sir Charles Craven writes that the Admiralty would not yet give the order and had not given it on the 6th January. The discrepancy between the answer of Lord Stanley in the House of Commons and Sir Charles Craven's letter might be worth a little deeper examination by the Royal Commission. The question was raised again in the House of Commons on December 17 last. A question was put as to whether the Law Officers of the Crown had had an opportunity of examining that letter and Sir Bolton Eyres Monsell replied to the effect that he was quite capable of interpreting the terms of the letter as long as he had seen it. Nevertheless, I hope that in the reply to-day we shall have an assurance that the Law Officers of the Crown will have an opportunity of examining that letter and the documents connected with it.

The question was raised again in the House of Commons on February 20, 1935, and Sir Thomas Inskip, the Attorney-General, said: Neither I nor my honourable and learned friend have any power to cause such an investigation to be made, but I am informed by my right honourable friend, the First Lord, that, as he informed the House on the 17th December…the Electric Boat Company, of which Mr. Spear is an official, are licensors for the construction of submarines by Messrs. Vickers-Armstrong, of which Sir Charles Craven is managing director. If the Attorney-General has no power to cause such an investigation to be made, I ask, have the Royal Commission power to cause such an investigation to be made, and will they be encouraged to use that power in making such an investigation One other point in this connection is a letter from a well known and respected foreigner, Sir Basil Zaharoff, who, writing in 1925, said, in connection with some orders in Spain: The English Governent will be difficult to move in the same direction"— he means, as the United States Government, in connection with these orders— but when you inform me that your Government have given the necessary instruction to their Ambassador in Madrid"— that means the American Ambassador— I will have no difficulty in persuading the British to do ditto, ditto, ditto. Very interesting! Sir Basil Zaharoff claims to have the power either to force the British Government to follow what the United States Government do, or to be able to influence the British Ambassador in Madrid in the direction he desires. I hope that letter, Exhibit No. 32 in the United States inquiry, will be examined by the Royal Commission so that we shall know whether or not we are governed by the National Government or by Sir Basil Zaharoff in connection with these matters.

Exhibit No. 125 is also a letter from Sir Charles Craven. Again he points cut that he will be able to guide them [Vickers-Armstrong] when the final tender goes in, but only at the very last moment. He goes on to say: During the last few days by skilful manœuvring we have managed to get some of our competitors' prices in the Chilean competition put up, and so may have prevented a real price-cutting war which would have resulted in our taking the boats at a loss. In other words, these firms are now organising amongst themselves the raising of their tenders for warships in order that shareholders may benefit, in order that dividends may go up, and in order that they may have to take no boats at a loss.

On March 31, 1928, Sir Charles Craven writes in connection with a certain order: The whole thing has been most secret, and as Dawson negotiated the final con tract with the chief of the commission in London, I had to accept this ruling, that I was not even to mention the matter to you in writing, hence the message by Roberts. Even to-day we are bound to secrecy, so will you please promise me not to let your little friends from the other South American country know what is going on at present. More defrauding of other countries in connection with these tenders! The letter goes on: With regard to paragraph 4, I wish you the best of luck, and hope you may be able to knock out some of your Government dockyards. They seem to be more of a nuisance with you than they are here. That refers to the fact that there is so-called competition between Government dockyards and private firms for certain British orders.

Here is a very serious paragraph in the letter: I wonder whether you have heard that cur old friend Percy Addison is now the Director of Dockyards. I helped him all I could to get the job, and I think he will be an ideal fellow for it. It means his retirement, but it also means his having a permanent job for about ten years if he behaves himself "— If he behaves himself! Who is to decide whether he behaves himself?— and as he has no private means worth talking about, you will appreciate what this means to him. I have suggested to him that you and I, and he and Johns …should have a party and thoroughly wet the appointment the next time you are over here. That, my Lords, is very serious, because Sir Charles Craven is claiming that lie has power to get over an officer without private means, which will secure that Vickers Ltd. will have an advantage in connection with orders which they hope to receive, and that he will bring pressure to bear on this officer in order to secure advantage for Vickers Ltd. and their shareholders. That needs very serious inquiry, and I do press upon the noble Viscount that we should have an assurance that that matter will be cleared up and the honour of that officer vindicated.

In Exhibit No. 127 we have a letter to Sir Charles Craven. It is a confidential letter, again from an American armament firm, and the writer says: It is too bad that the pernicious activities of our State Department"— that is, of the United States of America— have put the brake on armament orders from Peru by forcing the resumption of formal diplomatic relations with Chile. My friends advise me that this gesture means that all contemplated orders must go over until next year. This hitch also means that we must, not delay too long in getting Aubry back on the job in Lima.

We want Sir Charles Craven's files of negotiations with the Electric Boat Company of New York and we want them as proof of his good faith. If he has nothing to hide, it is up to him to put those files at the disposal of the Royal Commission, or alternatively, it is for the Royal Commission to see that they get and examine those files. We also want details of the agreement between the Electric Boat Company and Vickers Ltd. I am not going into this agreement. I only want to say that Vickers Ltd. are not paying royalties to the Electric Boat Company for the boats they build for the British Admiralty. What they are paying is a percentage on all Admiralty orders, a very different thing. I hope that the Royal Commission will examine the agreement between the Electric Boat Company and Vickers Ltd., and that they will also examine one between Imperial Chemical Industries and Du Pont de Nemours. That is an agreement which secures the pooling of all patents, and the sending of individuals to examine all patents. That ensures that other countries have available for their use machinery, munitions and other materials used by the British Admiralty.

Now I want to say a word about the Air Ministry, and I want to call attention to the reports repeatedly made by the Select Committee on Public Accounts. The Select Committee on Public Accounts have examined the orders placed by the Air Ministry during the past eight or nine years, and year after year they have called attention to the fact that the orders placed by the Air Ministry are non-competitive orders. That means that firms are not asked to submit competitive tenders. The Select Committee called attention to this fact in 1925, 1926, 1928 and 1934. In 1934 the Select Committee pointed out that in 1932 94 per cent. of the materials ordered by the Air Ministry was ordered without any competition and they pointed out how very objectionable is that action. I want to suggest that even when tenders are called for, there is strong reason to suppose that there is collusion between the firms who are dealing with the Air Ministry, because it is a generally understood position that orders given by the Air Ministry are spread over all the firms supplying materials to the Air Ministry, so that it is immaterial whether orders go to "A" or "B." The firms divide amongst themselves those orders and secure the immense advantage in profits which noncompetitive tenders always give.

Here let me ask the noble Viscount if he will do his best to bring to the notice of the Royal Commission the fact that the only body capable of ensuring accurate judgment on whether the prices charged by these firms were fair and reasonable, was the Royal Aircraft Establishment at Farnborough. I want to know why all work on design and construction was stopped at the Royal Aircraft Establishment. The claim of the private firms was, of course, that the Royal Aircraft Establishment was guilty of unfair competition. I believe I am right in saying that to this day the Royal Aircraft Establishment is doing no design or construction, and that there is therefore no means of checking the prices charged by these firms supplying material to the Air Ministry. There is no evidence of any real competition.

Now let me come for a moment to the War Office. Here I want to mention the War Office's dealings with the firm known as the Soley Armament Company, Limited. This is a firm with a capital of £500; 490 shares are held by one man: Mr. John Ball, who is the managing director of the company. Mr. John Ball, writing to the American Armament Corporation on February, 3, 1934—this is Exhibit No. 256 in the American armament inquiry—said this: As we are really the sole selling channel for small arms, etc., which belong to the British War Office, and as we are to a very great extent controlled by the varying policy of the Government, it is rather difficult for us to enter into firm and fast agreements with other armament firms. The stocks we control are of such magnitude that the sale of a big block of them could alter the political balance of power of the smaller States, involving corresponding complications from the point of view of finance and industry.

This little firm, with a capital of £500, claims to control stocks so large that it could alter the balance of power in smaller States.

Mr. Ball then goes on to say: We would prepare to appoint you our sole selling agents for the U.S.A. and you would have the handling of all the sales to the States of Latin America only, which would be left entirely to yourselves. Arms for other destinations, such as China, or European States, could not be offered by you without our previous consent, and you would be expected to observe this rule in the very strictest manner… For your information, in confidence, the value of the stocks here under our control is approximately £6,000,000. And this Mr. Ball, who publicly announced that he could carry on his business in one room with a telephone, and is the managing director and sole shareholder in the Soley Armament Company, offers the full exclusive selling rights of £6,000,000 worth of War Office stocks to the United States for their uncontrolled sale to South America. He gives the details of the stocks. He says: The value of the stocks here under our control is approximately £6,000,000, so there is no great risk that they will all be disposed of in a short time, but you must remember that in the event of a serious war breaking out anywhere affecting British interests the stocks might be withdrawn from sale. That is something to know of. The stocks are as follows: eight hundred thousand 303 rifles, with enough spares for another 200,000—that is a million rifles; 34,000 Hotchkiss machine guns; 20,000 Lewis machine guns; 8,000 aeroplane machine guns—and so on. There are 120,000,000 rounds of small arms ammunition. There are, of course, considerable other stocks, but above are the principal items.


What date was this?


The date of this letter was the 3rd February, 1934, just a year ago. The Prime Minister, in answer to a question on this subject in another place, said: It is contrary to custom to publish the terms of contracts. I hope that the terms of contracts in this particular company will be examined by the Royal Commission. Here is a straw company given the sole selling rights—or claiming the sole selling rights—of £6,000,000 worth of War Office stores, and offering exclusive rights of sale to an American company.

Again, writing another letter to the same company on February 6, Mr. Ball says: Owing to the financial constipation all over the world it often happens that the United States require arms badly, but have no cash to pay for them. As it is far too risky to sell arms in credit in these times, some alternative has to be found, and sometimes goods or produce can be accepted in lieu of cash and the barter converted into cash over a period of time. For instance, provided that the deal was a fairly big one, we could accept coffee, rubber, timber, etc., in payment. He goes on to say: We fully understand that arms deals ore not usually done without some officials getting greased.' I think that means bribed— but if any palm oil is required, it has to be added to the price, and as our prices are at least 50 per cent, less than factory prices for the same arms, they will stand a lot of 'grease' and still be cheaper than the manufacturers' prices. He is a clever fellow, I should think. I do not know what he added for "grease," but somebody presumably got a good deal of "palm oil."

Then, as indicating the development of this straw company controlling £6,000,000 worth of War Office stocks, he goes on: Our factory in Liege, Belgium, is limited to an output of about 3,000 rifles per week, and if an order should come in while another is going through the factory, we usually try to put through a percentage of the second one in order to meet part of the second buyer's requirements, but we cannot do more than this. The Americans took this up, of course, and replied to Mr. John Ball—who lives at 8, Park Village East, London, N.W.1—on February 22: Your remarks about greasing the wheels that make the deals go around are very true, and we fully appreciate that very often oil must be added to your quotations. In this connection will you make it a point to always quote us your prices not to us c.i.f. New York unless we specifically make a different request? Then Mr. Miranda in New York receives this letter from the Company's agent in Havana: For your information, to your quotations we shall add 15 per cent., which will cover the 'graft' that is supposed to be distributed clown there among the various interested parties, and I request that this information you keep confidential and if you write to S.D. do not mention in your letters, as there is a censorship in the mail; all letters going there are opened and read and it will not do us any good if this information will be known down there. I hope this information is known "down there" now; but the point is that if the information of 15 per cent. were known down there, then somebody else would offer 20 per cent., and Mr. Miranda would have to increase his "grease" to 25 per cent. and so lower his profits.

Then, of course, we find their relationship with these Governments and here is a letter dated June 9, 1934, Exhibit 259, to Messrs. Webster and Ashton, Bolivia: Dear Sirs, On June 2 we received your cable of that date reading as follows 'Minister Defence has been informed your bombs shipment to-day embargoed. Please advise rush.' We do not know how the Minister of Defence obtained the information above mentioned, as we have enquired both from the Consul and from the Legation, and they had not notified their Government inasmuch as they were in doubt as to what was going to happen. We mention this because we are anxious that such information as reaches the Government about the movements of our material should be accurate.… 'The State Department would issue no permits, recognised no exceptions, would not attempt to interpret what is war material and what is not war material, nor would it give an opinion as to the time of action covered by the President's proclamation, that is, whether the (proclamation embodied or not sales made previous to May 28, the day of the Presidential Decree. The State Department's attitude was: Try to ship our stuff, and if the Government's agencies (presumably the Customs) block your way, hire the best lawyer available and get an injunction against the Government. There is something going to the lawyers there, but I submit that these activities of firms acting as agents to the Soley Armament Company are worth examination by the Royal Commission, to find out the exact meaning of the claims of the Soley Company to be able to export arms and war material to the South American States.

One final sentence in this connection is the affair of China, and in a letter to the American Arms Corporation Mr. John Ball says: As you are no doubt aware, China consumes a vast quantity of small arms per year, and they have bought large quantities of rifles from us,…over 100,000 in 1931–32, but have slacked off lately owing to the loss of Manchuria and the shortage of ready money in the south, i.e., Canton and Nanking. In spite of all the dreams of the idealists, who imagine that hamo sapiens is filled with honour, justice, love and self sacrifice ''— An educated man, Mr. Ball, who appears to have learned Latin at school— Japan is going to take a still larger slice of China, and comparatively shortly, while the getting is good. To place herself in a favourable position, Japan must either buy over the Soviet or fight them—and Japan will do one or the other, before attending to some more of China. Such a move on Japan's part would seriously affect the United States' interests in China, and we think that the United States would under the above circumstances support the Chinese, supply them with arms etc. In such an eventuality, something might be done with the big stocks of rifles here, also machine guns, and we think it might be very advisable for you to approach the United States Department for Foreign Affairs and the War Department and hand them a list of what stocks there are over here, informing the Departments at the same time that you are the sole representative for the United States of America.

The Japanese Naval Department, he says, have lately bought large quantities of Lewis guns, and the incendiary or "tracer" type of bullets also have been purchased. He adds: As you know, incendiary bullets are prohibited so they have become 'tracers.' What is in a name? Well, my Lords, what is in a name? It would be interesting to see whether under their licence for "tracer" bullets they are not sending incendiary bullets under another name.

I venture to think we would be well advised to have the files of the Soley Armament Company as well, and I would like to know if the Royal Commission are going to take into account in their examination whether there is a real control over the export of arms, or whether the regulations require alteration or modification. On the face of it, it looks peculiar. A question was asked in the House of Commons on February 25 of this year as to whether the Government was satisfied. The question was in these terms: Has any information reached any Government Department that satisfied it that any British firm manufacturing armaments had sought, improperly to influence the policy of His Majesty's Government or any foreign Government in the matter of armaments? The Prime Minister replied as follows:— I have caused inquiries to be made, and, as a result, I am able to say that the reply is in the negative. I hope that the Prime Minister is accurate, but I cannot help thinking that the exposures of the American inquiry do not tend to support that point of view; and I want to mention a case or two—I do not want to keep the House too long—tending to throw doubt on the accuracy of the Prime Minister's answer.

Let me take the case of Mr. A. V. Lander. He was the agent for Vickers in Turkey, and at a moment's notice he was expelled from Turkey by order of the Turkish Government on August 3, 1933. He at once created a great, deal of outcry, naturally, against his expulsion, and I think he had some reason, because he was not even permitted to pack up all his goods. After a considerable fuss the British Ambassador was instructed to go into the matter with the Turkish Government. He did so, and he sent a full report to the Foreign Office. Meanwhile, Mr. Lander had been publicly accused in various newspapers of stealing plans in Turkey and bribing Turkish officials, in order that Vickers might get more orders from the Turkish Government. It is curious that since that full report of Mr. Lander's case, obtained by the British Ambassador from the Turkish Government, was received by the Foreign Office, no single word has even been heard about the case. Mr. Lander has judiciously kept quiet. There has been no publication, and the whole matter would appear to have been completely hushed up.

The only little light we get upon it is in exhibit No. 219 in the United States inquiry, in a letter from the agent of another armament company in Turkey, this time the Driggs Ordnance and Engineering Company, of New York, who, writing to his firm in New York from Angora, says: I suspect Lander with the other members of Vickers have tried to offset the favourable attitude of the Polish Government to us. The Vickers crowd are the dirtiest opponents here. They have almost an entire embassy in number working for them, and use women of doubtful character freely. That is the only bit of light that we have of the activities of Mr. Lander and Vickers in Turkey. The letter is dated January 22, 1929, and since August, 1933, when he was expelled from the country, no further information has been available. I feel that the Royal Commission should obtain from the Foreign Office the report. on Mr. Lander's activities in Turkey, so as to see whether in fact armament firms are not attempting to influence the policy of foreign Governments through their agents. If that is so, then the Prime Minister's answer in another place was wrong.

We have a case in this country. A Lieutenant-Commander who left the British Submarine Service and was employed by Vickers Ltd. was arrested a few months later and accused of being in possession of confidential submarine plans, which he was accused of using against the advantage of this country. I refer to the case of Lieutenant-Commander Mayers. He was tried at the Old Bailey, and, taking into account various factors, he was only bound over. In connection with this case Sir Charles Craven wrote to his friend in America and said with regard to Mayers: He appears at the Old Bailey next week, and all I can tell you is that the case will be tried in, camera and that the charge is a serious one. I have very definite assurances from Lord Beatty, from the Director of Naval Intelligence at the Admiralty, and from the Chief of the Staff of the Submarine Service (who was largely responsible for my taking Mayers on) that Vickers can in no way be implicated. Even when the trial is over I do not think I shall be able to let you know the whole story until we meet. Three weeks later he writes again to America as follows: For your private information, Mayers has called me for the defence. I told the Admiralty I was afraid he would do so if they did not call me for the prosecution…I have so far received definite confirmation from Lord Beatty that in taking Mayers Vickers acted in the interests of the Admiralty, and they apologise for the trouble they have landed us into. This close relationship between Vickers and the Admiralty surely needs inquiry, and I hope very much that the Royal Commission will not hesitate to enquire into the details of this rather unfortunate occurrence.

The last word about Mayers is, I think, the meanest sentence in the whole of this rather unpleasant correspondence. This is a letter from Mr. Spear in New York to Sir Charles Craven, dated a year later. He said: I have recently received a note from the late unlamented Mayers advising me of his arrival in New York en route to Washington. The note was, of course, duly filed in the waste basket. In other words, they employ this young officer; when he gets into trouble they chuck him out, and then turn down a man whom they had employed, and for whom one cannot help feeling—and I hope the Royal Commission will discover this—that Vickers were in some sense responsible for his fall from grace.

One other very difficult personal case has recently received a good deal of publicity. That is the case of General Sir George Clive, who was Military Secretary at the War Office for four years up to June 1, 1954. While he was at the War Office, he was running a private employment bureau for officers. He is a brother-in-law of the Chairman of Armstrong Whitworth's, General Dawnay, who is also a Director of Vickers-Armstrong and managing partner in a private bank, Dawnay-Day, which controls an armament firm called the Andrews Toledo Company, which is on the War Office List. In this private firm controlling the Andrews Toledo Company the largest shareholder is Sir George Clive. When Sir George Clive was running this private employment bureau for finding places for officers applications for the employment of officers had to come to him as Military Secretary. When he left the War Office in June of last year, he continued this employment bureau for officers and ex-officers, a bureau set up by the Government, and the members of the bureau were all officers, with one exception, Mr. Piggott, whose brother was the Assistant Military Secretary of the War Office, and who recently went to Manchuria with the Barnby Inquiry Commission, Lord Barnby being also a director of the same company, Dawnay-Day.

The officers' employment bureau of which Sir George Clive was Chairman was stated by The Times, writing on this subject on December 3, 1934, to be a secret bureau. They used these words: It was realised that the experiment would soon be crushed if all retired and retiring officers of the Army were told about the bureau, and in consequence the existence of the bureau was not made public. This arises because there have been cases recently of applications by armament firms for officers on the Active List to join them as controllers of the sales of arms. Au example was the Jardine Engineering Corporation of China, who are the agents of Vickers in China, who wrote asking for an officer serving on the Active List to be recommended to them as arms salesman. The Government announced that the letters dealing with this application had been sent to the War Office, and when they were asked about those letters, they replied that the letters could not be traced. I want to ask the noble Viscount whether he will see that those letters are made available for the Royal Commission, because I do not think it is fair to expect the Royal Commission to have to fish about for these things. I think that if the attention of the Government is drawn to certain facts, it is the duty of the Government to place these files at the disposal of the Royal Commission, without application by the Royal Commission. These files are presumably in the Department of the Military Secretary at the War Office. It has been laid down as a result of a recent case, the Franks case, that a civil servant should not subordinate his duty to his private interests, nor was he to put himself in a position where his duty and his private interests were in conflict. I cannot help thinking that in the minds of the public there may be a feeling that Sir George Clive was in a difficult position in this matter, and I cannot help feeling, too, that in the public interest the Royal Commission should examine this private employment bureau and see whether there is not seine method of avoiding this sort of suspicion in the minds of the public in future.

There are a great many officers who go from important positions in the Services to the private employment of these armament firms. I have a long list here, which I do not propose to read out, of officers holding most important and responsible positions in the Admiralty, the War Office, and the Air Ministry who have left these important positions, dealing with the Ordnance Department and with the purchase of arms and [...] and have stepped straight into lucrative position in private armament firms. It is bound to lead to a feeling of doubt in the minds of the public whether it would not be best to avoid even a suspicion of good faith on the part of these ex-officers. I am sorry to have kept the House so long. I believe I am right in saying that there has been a, widespread public demand for a real and 'searching inquiry into this matter. I believe I am right in saying that there has been wide spread misgiving in the minds of the public as to the activities of private armament firms, and I must say that in my own knowledge there has been considerable misgiving at the narrowness of the terms of reference of the Royal Commission. The only object of my Question is to throw light on a number of disquieting aspects of the industry and its far-reaching and, I think I may say, dangerous ramifications, so that the Royal Commission may realise that there is a real and legitimate anxiety on the part of the general public. I beg to move for Papers.


My Lords, I had rather thought that some other of your Lordships might perhaps be taking part at this stage in the debate and I should have welcomed the opportunity of hearing what they might have to say. I must in the first place thank the noble Lord who has introduced this matter to your Lordships' House for his courtesy in having given me notice of the general lines on which he proposed to develop his case, and for the manner he has dealt with matters arising out of the subject he has chosen. I shall not be, I hope, misunderstood if I say that I cannot but think, for reasons that I shall give and reasons that are not directly connected with the speech that the noble Lord has made, it is perhaps unfortunate he should have chosen this occasion to bring the matter before your Lordships' House. It certainly was not necessary for him to initiate this debate to convince me or His Majesty's Government that this is one of the questions that arouse a very sincere and very profund feeling, as he quite truly said, in the minds of our people.

Rightly or wrongly, they, or many of them—the great majority of them, I myself would believe—conceive this question of the private manufacture of and trade in armaments to be directly connected with the great issues of peace and war on which they feel more deeply and more vehemently than upon anything else; and therefore, regarding war as they do as the greatest evil to which the nation could be exposed, and regarding it indeed as only justifiable in cases of ultimate and extreme national necessity, they are, if I interpret their feeling at all aright, disposed to regard the preparation of the implements of war as too high and too grave a thing to be entrusted to any hands less responsible than those of the State itself, fearing any intrusion into so dangerous a field of any interests less imperative than those of national security and national necessity.

I think that is perhaps not an unfair statement of what is the feeling in the minds of a great many people in this country on this whole question of the private trade and manufacture of armaments. But the noble Lord will believe me when I say that really his Question and his speech were not necessary to convince me or any member of His Majesty's Government of the reality of that feeling, and it was just the fact that they did realise the force of that feeling that led His Majesty's Government to appoint the Commission round which much of what the noble Lord has bad to say revolved. The Government were led to appoint that Commission for two reasons—first of all because, as I said, they realised the strength of public feeling, but also because they realised. what I think the general public does not always realise, the immense complexity of the problem and the issues that are bound up with it. Realising these two things, it seemed to them vitally important that public opinion should be given the opportunity to reach a. reasoned and informed judgment on these matters, and it was by means of this Commission and the inquiry of this Commission that they anticipated, and they hoped, that that opportunity would be afforded.

Before I go into more detail upon what the noble Lord said, may I make this further general observation? Were I to attempt to follow him in detail, which I do not intend to do, if he will excuse me, for the reasons which I shall give in a moment, I would, I think, probably find myself at issue with him upon part of our general approach to the question. He will forgive me if I say that there seems to me a general undercurrent, a general atmosphere pervading all his speech, suggesting that anything done, or any letter written, by any one connected with an armament firm almost certainly was open to, and ought properly to bear, a sinister interpretation. That, I think, without direct evidence or proof, is not worthy of the noble Lord and would not be an attitude worthy of this House.

I do not profess to any professional knowledge, but having perhaps some little knowledge of human nature I do not suppose myself that people who trade in armaments are very much better or very much worse than any other ordinary business men, and I do not suppose that business men are very much better or very much worse than many politicians. The truth is, I think, that human nature is not so variable a quantity as many of us are disposed to think, according to our status and position, and that we are all very much made of one mould, some more successful in resisting temptation than others, some more ready to yield than others, but all very much of the same mould, and, therefore, called upon, as I think, to judge the actions and the motives of one another with a measure of generosity that was not always evident in what fell from the noble Lord. I think that a debate initiated with the kind of speech that the noble Lord made does merit the adjective of "unfortunate" that I ventured to attribute to it at the beginning, for this reason, that I think the whole speech of the noble Lord has gone to show how really impossible it is to arrive at any satisfactory conclusion on the merits of a business so complex and complicated as this by references to quotations from A's letter drawn out, whether fairly or unfairly I cannot judge, of their context, by references to what Sir Basil Zaharoff may have written to somebody some years ago, and all that long list of isolated quotations, with their accompanying inferences—that really seems to me to be the worst of all possible methods in which to attempt to deal with a matter of this difficulty, besides being, as I think, unfair to many individuals.

That being said, I do not think the noble Lord will so far take any serious exception to my differences with him. I want, if I may, to turn to the several parts of the Question that he has placed upon the Paper and that he has developed in his speech. The first point is that in which he calls attention to the terms of reference of the Royal Commission of Inquiry into the private manufacture of and traffic in arms. He was concerned to suggest to your Lordships that those terms of reference were unduly restricted, or, if he did not go quite as far as that, I think he said that there had been considerable misgiving in the public mind that the terms were too restricted, and he was concerned to satisfy himself, if possible, that the Commission would not so interpret them. He did not quote the terms, but I am bound, in view of what he said, to remind your Lordships of what exactly those terms of reference are.

The members of the Commission are invited: To consider and report upon the practicability and desirability (both from the national and international point of view) of the adoption

  1. "(a) by the United Kingdom alone;
  2. "(b)by the United Kingdom in conjunction with the other countries of the world
of a prohibition of private manufacture and so on. In the second place, they were asked: To consider and report whether there are any steps which can usefully be taken to remove or minimise the kinds of objections to which private manufacture is stated in Article 8 (5) of the Covenant of the League of Nations to be open. And in the third place, to examine the present arrangements in force in the Limited Kingdom for the control of the export in arms and so on. I do not dwell so much upon that, because the noble Lord directed the bulk of his observations to the first two.

It is quite true that those terms of reference do differ from the terms of reference to the Commission set up by the United States Government. I am bound to say, I rather hope that our inquiry will differ from the inquiry of the United States, and that not because I wish to see a hush-hush inquiry; I am as anxious as the noble Lord to see this matter probed to the bottom in order to discover anything that is useful; but I cannot believe that it is useful, or that it is necessary to the purpose in view, to have the kind of vague, roving, suggestive, fishing inquiry as it is called, to which those terms of reference in the United States have inevitably given rise. I am bound to say, looking at it with the best intelligence I can apply to it, I cannot conceive any terms wider than these terms that would still be useful, or any useful inquiry from which these terms of reference can rightly be thought to debar the Commission from making. Therefore, although I am not sanguine, I should like to think that I had satisfied the noble Lord to some extent with regard to his first cause of anxiety—namely, the terms of reference.

He then asks a variety of questions concerning the powers of the Commission to compel the production of documents, the trade reports, the contracts placed by Service Departments, and their power to make investigations and so on. I think that it may be convenient to your Lordships if I say what I have to say on all these matters—they fall, I think, pretty well into one group—at the same time. I do not flatter myself that in this respect I shall be saying anything new to the noble Lord, who knows all that there is to know about this question; but I think that what I have to say is not irrelevant, and is, indeed, the only answer that I can make, and that is to refer him, and to refer others of your Lordships who are interested, to the very precise and careful language used by the Prime Minister in the House of Commons in answering these questions in the other place. He there said: The Royal Commission will be appointed under the usual form of Warrant giving powers to call persons before them to give evidence, to call for information in writing and to call for and examine documents. On that I make this comment, that I think he also made in similar form, that there is in fact no instance in recent times of any Royal Commission failing to secure the attendance of witnesses that it had thought fit to summon, and that no doubt for a reason that will not be at all surprising to your Lordships—namely, that if the Royal Commission sends for persons or papers and those persons refuse to come before it or papers are withheld, one can imagine no greater source of damage to their, cause than the knowledge that they had been unwilling or afraid to appear, and public opinion would not be slow to draw a conclusion if any person failed to appear and argue the case before the Commission. The Royal Commission, in the Prime Minister's words, has power to ask for papers, but it is left to the discretion of the Commission how that power should be applied and operated.

The Prime Minister went on to say that the Government meant to give the Commissioners full support in the discharge of their duties, and if the Chairman required to make any representations he would get the assistance of His Majesty's Government in the matter. I do not think that that position can be described by anyone as an unsatisfactory position. It has been made quite clear that whatever be the legal powers of the Royal Commission, they have the assurance of the Prime Minister that if they be found not sufficient, His Majesty's Government will make good the deficiency. The noble Lord thinks the Government should go further, and, if I follow his thought aright, should tell the Royal Commission what papers they ought to ask for and investigate. He referred to one or two more particular papers that he assumed to be on the shelves of Government Departments. I cannot admit that it is the duty of the Government to teach a Commission like this how to do its work, and I think it would be open to manifest objections if the Government were to attempt to do so.

The noble Lord, in his Question and also in his speech, has gone further and has mentioned by name certain cases of which he claims to have knowledge, and in the last part of his Question he has drawn attention to the association that he conceives to exist between armament firms, Government Departments, individual members of such Departments, and the representatives of the British Government abroad. Speaking with the knowledge that the Royal Commission is already doing its work in another part of this City, I am bound to say that I do not know whether those cases which the noble Lord quotes are relevant or not. I have, as a matter of fact, for my own edification been at some pains to satisfy myself that all the cases he has mentioned, if my memory serves me aright, have received the fullest investigation from the Departments of Government concerned with them. Some, as he knows, have been raised in another place, and that, I think, before the Royal Commission was set up. I am bound to say that I think that in matters which are, at this moment, sub judice, it would be quite improper for me—as I respectfully think it is unfortunate for the noble Lord—to be drawn into the discussion of the relevance of certain specific cases to the Commission's inquiry on a general question. If the noble Lord has information, as he evidently has a great deal, which he thinks would assist the Commission in their task, it is quite clearly the proper course for him to draw the attention, of the Commission to it. Therefore, my Lords, there may be some fear that the debate which your Lordships are having this afternoon, so far from assisting the work of the Royal Commission, may be in some risk of making it not less difficult than it is to-day, by the suggestions of suspicion, of doubt and of interference and so on, of which indeed there are plenty already, and which are the implications, I would suppose, of the subject into which the Commission have to enquire.

Let me remind your Lordships in a sentence or two of the position. After very long review, and, as the noble Lord pointed out, having changed their mind on the subject, the Government decided to appoint a strong Commission to enquire into this matter. They appointed a Commission under tried chairmanship, chairmanship of great experience, of which the age the noble Lord quoted is merely a paper figure in no way related to the actual capacities of the Chairman. The Government have been fortunate enough to secure the services of persons who, as I am sure the noble Lord would admit, have made good their position of quite independent citizenship, and therefore can be relied upon to pursue a perfectly independent line in this inquiry. That Commission has just started its work, and has been promised by the Prime Minister whatever powers it needs which it is entitled to ask of the Government, and which the Government can rightly be asked to give it. It is at that moment that the noble Lord comes here and invites this House, as I see it, to express an opinion on an extremely complicated subject that is, and will be no doubt for some time to come, the subject of careful and prolonged inquiry. That, I think, is unfortunate.

If the noble Lord wishes to complain that I have not answered all the points that he has brought before us, I would ask him to excuse me on the ground that if I had done so, many of his friends in another place would say that I was endeavouring to lead the Commission towards the conclusions I wished to see them reach. He will admit that it is contrary to all accepted practice that when a Royal Commission, a quasi-judicial body, is established, the subject of its remit should continue to be discussed outside. It is indeed one of the most fundamental and essential principles, I think, of our government that we should exercise a degree of respect for proceedings that are in progress and, so far as we may, restrain ourselves from commenting while they are still under discussion. I do not know whether your Lordships will agree, but on my own reading of history it certainly is true that one of the greatest dangers to which all democracies are exposed is the danger that they are constantly liable to the temptation of being satisfied with opinions based on inadequate and insecure information. The only way in which public opinion can be informed upon matters that are intricate and complex is impartial inquiry and report. That demands a degree of restraint and a degree of patience and willingness to trust your investigators that it is not always easy for democracy to give and to maintain. Yet it is just those qualities that, as I see it, are indispensable to the wise and balanced judgment on which democracy and all government must ultimately rest.

It is no doubt for those reasons, or such reasons as those, that we have always in this country attached such importance to the respect to be paid to judicial and quasi-judicial proceedings, in order that that great end—one of the great securities of government—may be respected and preserved. I hope, therefore, that it is not too much to ask noble Lords opposite to agree with us in this respect, as I feel they will: that, having had such a discussion as we have had this afternoon, and I having done my best and, as I hope I may have, in part succeeded in reassuring noble Lords opposite as to the intention and purpose of the Government, we should now allow the Commissioners to get on with their job in the full conviction that they will bring the best of their capacities and abilities to it, and that we should reserve to ourselves the right, should we so desire, to criticise them when they have completed it.


My Lords, I only want to bring before your Lordships one point in connection with the evidence given before past inquiries which may be made available to the Royal Commission. In 1918, not long before the end of the War, a Committee of Inquiry was set up into the Ordnance Factory at Woolwich, its prospects and the needs in connection with it. The Chairman was the late Mr. McKinnon Wood, formerly Under-Secretary to the Foreign Office. The Committee was appointed in August, 1918, and reported in the following March. It contained representatives of all the Service Departments—the Admiralty, the War Office and the Air Ministry—and also of the Treasury and the Board of Trade, together with two representatives of private armament firms. The evidence, as would naturally appear, is extremely relevant to the subject into which the Royal Commission is to inquire. Voluminous evidence was taken—I have seen it stated—from all the important men connected with the production of arms both as public servants and on behalf of private factories.

The Report contained conclusions on more or less the same subject as that which is referred to the present Royal Commission. It came to the conclusion that the main task was to help the Government arsenals, and did not make any proposal as to the preservation of private armament factories. It reported in these words: It is also probable that the country will insist on the production 'of all armaments being confined to Government factories; nor would the disappearance of the larger armament firms materially handicap production in the event of a serious war, since during the present War a very large number of engineering firms have been educated i n armament manufacture, and the basis for armament supply is now so broad that specialising in the future on the part of a limited number of firms will probably not be necessary for the safety of the country. But my point is a different one. The evidence given before the Committee is clearly, I should imagine, of great value to Sir John Eldon Bankes and his colleagues.

The Government have been approached with a view to the publication of this evidence, which, it appears, was not published along with the Report. On March 7, in another place, the Lord President of the Council replied in these words: It has not been possible to trace the evidence in the public records, and past members of the Committee whom I have been able to consult have the impression that evidence was given orally only, and that no record was taken. The statement the Lord President made was not a definite statement, and in view of the doubt indicated it is interesting to note that the fact of the evidence having been recorded appears to be confirmed by publications which were issued at a date very shortly after the issue of the Report. For instance, in a pamphlet called War or Peace reference is made by the writer, Mr. Gilbert Slater, to the evidence taken by the Committee. This was three years later. Some of the evidence is given verbatim in this pamphlet.

For instance, Colonel Dennis, who was Superintendent of the Gun Carriage Department, gave evidence on October 30, 1918. In his voluminous evidence he said: Woolwich was the only armament-making concern which was dependent on others for supply of steel. The supply of steel being almost entirely in the hands of the Steel Ring, competition was practically absent, and Woolwich prices were affected by being saddled with an extra profit to the firm supplying the steel, over which they had no control"— and so on. On August 22, 1918, General Martel gave evidence; he was Chief Superintendent of Ordnance Factories. It is noteworthy that in the pamphlet to which I referred I find it stated: "General Martel gave evidence reported by the Committee as follows"—and then his evidence is given verbatim. Another important witness was Mr. Roberts, who was chief mechanical engineer; he gave evidence on October 22. More than that, it is a fact that interviews by non-officials with the Committee were reported in the local Press of Woolwich, and it would be very strange if the evidence had not been formally recorded.

It seems to me that these facts justify the hesitation of the Lord President of the Council in denying the existence of the evidence, and his expression of a doubt about it. Clearly the evidence would be of great value now. Surely each of the five Departments concerned must have had the evidence. I would venture to urge on His Majesty's Government that further efforts should be made to bring the evidence to light. Surely, whether or not we think that the abolition of private manufacture is desirable, no one denies the importance of the subject. The noble Viscount who has just spoken referred to the profound feeling that the subject arouses in the country. Some aspects of the private arms trade have shocked a large section of public feeling. It seems to me that if the evidence given to the McKinnon Wood Committee were absent, it would arouse grave public concern.


My Lords, in the absence of the noble Viscount, I should like my thanks to be conveyed to him for his very full reply to my speech and the Motion which I have put down. He did all that was possible, and all that I expected that he could do in the difficult circumstances. I want to make it clear that I am not attaching blame to any individuals who are employed by armament firms. know that they are no better or worse than business men, members of the Government, members of the Opposition or politicians generally. What I am complaining about is that the results of their activities have much more dangerous effects. The activity of any man doing what he conceives to be in the best interests of the firm which employs him may, in the case of an armament firm, have tremendously serious effects for the country. That is why we have the case of individuals employed in armament firms deploring the outbreak of peace, and praying for the outbreak of war, because that would bring profits to the firms they represent in the private manufacture of arms. The matter is constantly being brought forward, publicly and privately.

I did not suggest that the Government should tell the Royal Commission what documents it ought to have. What I did suggest was that the Government Departments should offer to place at the disposal of the Royal Commission what documents they knew to be relevant. In this connection I see that in another place the Prime Minister said—I am speaking only from memory—that only (hose documents would be produced before the Royal Commission which the Government desired to produce, and if there were any documents which the Government did not desire to produce they would not be produced. That is hardly in keeping with the suggestion that the Government are only too anxious that every document should be made available.

With regard to the personnel of the Royal Commission, I have nothing to say, except that I think it would have added to the confidence of those who represent the workers in this country had there been a representative on the Commission who was what I might call, broadly, a, worker. At the same time that is a minor point, and naturally I have no objection whatever to the members of the Commission. I entirely subscribe to the tribute paid to them by the noble Viscount. It is quite clear there can be no Papers, and the noble Viscount could not have given more information that he did. It was entirely adequate, and I thank him for it, and beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.