Lords Sitting of 30 April 1936

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
SOUTH EAST CORNWALL WATER BOARD BILL.
Read 2aand committed.

COTTON SPINNING INDUSTRY BILL.
Order of the Day for the Second Reading read.
LORD TEMPLEMORE: My Lords, in rising to move the Second Reading of this Bill it will be necessary for me to detain your Lordships for a short time in order to describe to you the state of the cotton trade of this country since the War, and the reasons which have led up to the introduction of this Bill. As your Lordships are probably aware, the condition of the cotton trade has been a source of great anxiety both to the County of Lancashire and to successive Governments since the War. The industry, depending as it does to a large extent on its export trade, has been particularly vulnerable to the growth of what we call economic nationalism which has spread over so many countries since the War. A number of the largest markets which Lancashire used to supply now supply themselves with most, very nearly all, of their requirements, and in addition to that we have had a very intense Japanese competition. The result of these developments abroad has been to leave the Lancashire cotton industry with an equipment very largely in excess of present or indeed of any probable future demands. This excess of productive capacity has in its turn led to a state of very fierce internal competition between different mills for such orders as are available, and mills for the most part have been working much below their capacity. This has been both wasteful and unprofitable.
Naturally an industry like this does not attract any new capital, and there has, therefore, been created a situation in which the industry, hampered by what I can only call a dead-weight of redundant

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capacity, has not been able, and will not, we think, be able, to rescue itself from this slough of despond. Your Lordships will have some idea of the state of affairs when I tell you that in the town of Oldham alone there are, or were a very short time ago, two million spindles standing idle. If I take the production of cotton yarn, taking 100 as the basis in 1912, it is now 61. The export of cotton piece goods has fallen from 100 to 29. As against that the number of cotton spinning spindles in the United Kingdom has only fallen from 100 to 77. As your Lordships would imagine, in these circumstances much thought has been given to finding a remedy for the present most unsatisfactory state of affairs. I do not propose to weary your Lordships by going into great detail regarding the various methods which have been tried for the last nine or ten years to remedy this state of affairs, except to say that as time went on more and more attention was given in the spinning section of the trade to this problem of excess productive capacity, and the leaders of the industry became more and more convinced that as a preliminary to any healthy reorganisation of the spinning section something must be done to remedy the existing state of affairs.
I come to the year 1932 when my right honourable friend the President of the Board of Trade wrote to Mr. (now Sir Thomas) Barlow, who was then Chairman of the Joint Committee of Cotton Trade Organisations, and said that if the Joint Committee decided to prepare a suitable detailed scheme for concentrating production by means of a levy for the purchase of redundant machinery, and were able to secure for it a measure of support from the trade of a kind that would commend it to Parliament, he would be prepared to recommend to the Cabinet that legislation needed to give authority for the collection of the levy should be introduced. The actual scheme which the Joint Committee prepared did not prove acceptable at that time to the trade, but as I have already said, the feeling was growing that the first step towards reconstruction must take the form of concentration of production by the elimination of surplus capacity, and after a preliminary investigation by a Committee of the Federation of Master Cotton Spinners in 1933 and the early part of 1934, a Committee was appointed under the Chairmanship
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of my noble friend Lord Colwyn, whom I am glad to see in his place, to prepare a scheme. This Committee reported in October, 1934, and recommended the scheme on which the present Bill is based. A ballot of cotton spinners in Great Britain was then taken on the Colwyn scheme, and in February, 1935, His Majesty's Government were asked to prepare legislation.
This Bill which we are discussing this afternoon was actually introduced into the House of Commons in the last days of last July but, as your Lordships are aware, the late Parliament came to a somewhat sudden and premature end and the Bill in the last Parliament never got beyond its First Reading. It was, however, introduced again in December last, it was read a second time in another place on February 4 last, and it reached your Lordships' House at the beginning of April. Now let us look at the ballot of the cotton spinning industry taken at the end of 1934. The figures showing the result were very carefully scrutinised by the Board of Trade, and scrutiny of the ballot papers and other relevant documents revealed that firms controlling 27,750,000 spindles were unconditionally in favour of the proposals while firms controlling 8,750,000 spindles were opposed to them—a majority of more than three to one.
EARL PEEL: Would the noble Lord kindly tell us the total number of spindles entitled to vote?
LORD TEMPLEMORE: I thought some noble Lord might ask that question and I have figures here. I think it would be best to given them in this way. There are 47,000,000 spindles altogether in the industry. In the original ballot the owners of 23,500,000 voted unconditionally in favour, the owners of 7,500,000 supported the proposals conditionally, and just over 8,750,000 voted against the scheme. The owners of 4,250,000 spindles who accepted the proposals conditionally subsequently withdrew their qualifications and so finally there were unconditionally in favour 27,750,000. I am bound to add that the owners of 8,000,000 spindles—representing about 17 per cent. of the industry—did not vote at all. I hope those are the figures which my noble friend wants.
EARL PEEL: Some of them. We will have some more later.
LORD TEMPLEMORE: On this result, and having regard to the welcome given to the Bill by other sections of the cotton industry, the Government were fully satisfied that the introduction of the Bill was justified. It has been suggested in certain quarters that the operation of natural laws should be allowed to continue and should itself suffice to bring the productive capacity of the industry into line with demand, but experience has shown that this is a long and wasteful process. We consider that if Lancashire has to wait for the present war of attrition within the trade to be fought to the bitter end, other countries and other industries will seize the opportunities which might otherwise bring back prosperity to this great industry. The Bill provides a means whereby the process of dealing with redundant plant can be carried through speedily and in an orderly manner, which will not sacrifice efficient plant because it happens to belong to a firm in financial difficulties. The main object of the Bill is the purchase and scrapping of a considerable number of redundant spindles, by means of a levy on the remaining spindles. The levy is, of course, compulsory and there are certain requirements for the supply of necessary returns of spindleage, and such matters. These are the only elements of compulsion contained in the Bill—there is no limitation of production, there is no prohibition of new enterprise and there is no interference with the liberty of the cotton spinner to run his business on his own responsibility.
If your Lordships turn to the Bill you will see it is divided into three parts. The first three clauses deal with the establishment of the Spindles Board to administer the scheme, with its powers, and with the setting up of an Advisory Committee to assist the Board. Your Lordships will find details regarding the quorum, proceedings, salaries and other matters connected with the Spindles Board set out in the Schedule on the last four pages of the Bill. Clauses 4 to 13 are the financial clauses, and they set out in some detail the powers of the Spindles Board as regards borrowing; regulations regarding the spindles levy, which is to be found in Clause 5; the obligation of the Board of Trade to make good deficits in the Spindles Board revenue and expenditure
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account, which is to be found in Clause 10, and to make advances if they are necessary to avoid any default on the loan obligation of the Spindles Board. Clauses 14 to 23 are the miscellaneous provisions, including the rendering of returns, the restrictions on disclosing information obtained under the Act, penalties for false returns and matters of that kind.
This in rough outline is the Bill which I have endeavoured to explain as well as I can. I have purposely not gone at any length into the various provisions, but if any noble Lord should wish for information on any clause I know that my noble friend the Secretary of State for Air will be ready to give it when he winds up this debate. It is a Bill which, as I have tried to show, has a decisive majority of Lancashire opinion behind it, and I can assure your Lordships that without that opinion it would certainly not have been worth while for His Majesty's Government to introduce this Bill. I notice with some regret that during the last few days two of my noble friends have put down Motions to reject this Bill, and the noble Lord opposite, Lord Sanderson, has a Motion to refer it, if it is read a second time, to a Select Committee. To deal with the noble Lord opposite first, I can only say this in anticipation with regard to his proposal—of course, he has not spoken yet, and I do not know what he is going to say—that His Majesty's Government consider that this question has already been given a great deal of thought and has been discussed at great length. Matters concerning the state of the cotton trade have been discussed, certainly out of Parliament, for the last nine or ten years. This Bill has been on the stocks since February, 1935; it has been before this Parliament and the last for eight months, and His Majesty's Government could not at this stage consent to the reference of the Bill to a Select Committee, a device which indeed they would really consider simply to be a plan for delaying the Bill and possibly killing it.
With regard to my two noble friends behind me, of course I have no complaint; they have a perfect right, if they think the Bill is a bad one, to put down a Motion to reject it. But I would ask them, and I think we are entitled to know, what is their alternative if we kill the Bill this afternoon. I am very much

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afraid their attitude and the attitude of those who voted against the proposals in Lancashire really amounts to an attitude of sitting still and not doing very much—a course of action, or inaction, which His Majesty's Government cannot contemplate in the present serious state of the industry. None of us, unless he has a family or business connection with that great County of Lancashire, can have any idea of the hardships and the terrible devastation in huge areas which have overtaken this once great trade. I see my noble friends Lord Derby and Lord Peel both in their places and the noble Lord, Lord Colwyn, on the Cross Bench. They could, and I hope they will, describe far more graphically than I can the state of affairs, now so long drawn out, in the County of Lancashire and in this once flourishing industry.
I would never presume or dare to give advice to your Lordships. I have not been in this House anything like long enough. But I do think, and I am bound to say that I think, that this House would incur a somewhat serious responsibility if your Lordships were to kill this Bill to-day, considering the state of opinion in the trade and in the County of Lancashire with regard to it. I know that any right honourable friend the President has done all that he can by interviews, by correspondence, and by meetings both public and private, to find out the true state of opinion in the County and in the cotton trade. As a result he is satisfied, and His Majesty's Government are satisfied, that both the opinion and the needs of the cotton industry justify them in proceeding with this Bill, and, in fact, that it is their duty to do so. In the opinion of the industry, an opinion shared by the Government, this Bill should bring about a healthier condition and so pave the way to the recovery of trade. It was on these grounds that my right honourable friend introduced this Bill and conducted it through another place, and it is on these grounds that I ask your Lordships to assent to it this afternoon.
In conclusion, may I read you a few words, which ought to appeal especially to noble Lords opposite, because they are words used by the Clynes Committee, which was set up in 1930 under the Presidency of the right honourable gentleman the member for Platting (Mr. Clynes), who was then, I think, Home
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Secretary. The Committee said these words in the course of their Report:
" Lancashire must choose. She can lose her trade, she can reduce her standard of wage and living, or, perhaps, she can keep her trade and her wage standard by reducing costs and improving methods."
My Lords, Lancashire has chosen: she has chosen this Bill, and she asks the Government to help her by passing it into law. I ask your Lordships this afternoon to assist us to help her by passing the Second Reading of this Bill, I hope without dissent, but, if my noble friend insists on going to a Division, then by a large majority. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Templemore.)
THE EARL OK MANSFIELD THE EARL OK MANSFIELD, who had given Notice that on the Motion for the Second Reading he would move, That the Bill be read 2a this day six months, said: My Lords, every member of your Lordships' House and every right-thinking person in the country must have every sympathy with the plight in which the cotton trade of Lancashire has found iself practically ever since the War. That plight has been due in some measure to over-capitalisation and other follies perpetrated soon after the War, but also in much greater measure to the tremendous and unfair foreign competition which Lancashire has had to attempt to meet in various markets, both at home and abroad. It is not my intention to take up your Lordships' time this afternoon with a dissertation as to whether the late Government could or could not have done more than it did to prevent this unfair competition. All that I wish to say is that those of us who do not like this Bill, who are suggesting to your Lordships this afternoon that it should not at any rate yet become law, are anxious about one thing only: that something should be done which will really be of assistance to Lancashire, not only to the mill-owners but still more to the mill workers. Unemployment and all the consequent evils that follow thereon have been only too rife and rampant for the last fifteen years in that great County.
I have listened very carefully to the speech of the noble Lord who introduced the Bill this afternoon, and I must confess that, while he professed the utmost confidence that this Bill would be successful

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in removing a great part, if not all, of the ills that the Lancashire cotton trade has to face to-day, he did not seem to me to give any reason for this over-sanguine belief. I suggest to your Lordships that before you accept the principle of a Bill which is designed to reduce the possibility of production, you should investigate it much more closely indeed, because surely to assume that there is not going to be any chance of any expansion worthy of the name in the next few years in one of our great industries, is really the doctrine of despair. It seems to postulate that we have lost our trade for good and all, and even if we do not accept quite such a gloomy view, surely one is justified in asking what will happen if, owing to foreign competition, we lost another section of our trade and are again faced with a new problem of superabundant spindles. Will not the same position have to be faced all over again, and shall we not have to have a fresh Bill to reduce the number of spindles legally at work to even a more exiguous figure? I cannot see that this Bill is going to be a permanent cure for that. Furthermore, if we do succeed in reducing the number of excess spindles to what is supposed to be a reasonable number, what is to happen if for some reason there is some recovery in the industry? How is the industry to deal with the fresh trade which it will be called upon to absorb? Either there is going to be kept a certain reserve of spindles which can be brought into operation—which is hardly in accordance with the principle of the Bill—or the unfortunate industry is going to find itself totally unable to take advantage of the new-found prosperity.
Then there is the question of whether Lancashire as a whole really desires this Bill. With great respect to the noble Lord who introduced it, I understand that some of my noble friends, who know the details of the cotton industry far better than I can pretend to do, question the accuracy of the figures regarding spindles that he gave. There is also this point, that there seems to have been a very considerable amount of misapprehension among those who voted, or were asked to vote, when the ballot was originally taken. Many thought that refraining from voting was tantamount to disapproval, and they had no opportunity of rectifying that error. Furthermore it is alleged, and apparently with good
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reason, that the proposals upon which many voted when the ballot was taken were not the proposals which are before your Lordships to-day.
The noble Lord spoke of the impossibility of obtaining new capital at the present time, owing to the large number of surplus spindles, but for what is this new capital required? It is surely for the purpose of building more mills and introducing more spindles. I hear a murmur of dissent. If it is not for that purpose, then I presume it is for the purpose of bringing the mills up to date. If that is so, then the best thing the Government can do is to make cheap money available for the efficient mill-owners, who are able to make a living or even to avoid loss, because one of the most serious objections to the Bill as it stands is that you are asking the efficient members of the industry to contribute a sum of £2,000,000 towards keeping the inefficient mill-owners in existence. That is not a system of finance which I think can be considered as sound in any way whatsoever, from whatever angle it is considered. Surely if these mills which are now on the verge of bankruptcy were to be allowed quietly to disappear and suffer the penalty of their inefficiency or over capitalisation, it would be better than asking the mills which have managed to survive one of the most difficult periods in the history of this country to assist in keeping their inefficient rivals on their feet. From all the evidence it would appear that the mainspring behind the Bill is the ill-starred Lancashire Cotton Corporation, a body which seems to have devoted a great deal of time, energy and money to endeavouring to set the industry upon its feet, unfortunately without the slightest success.
Then there is the very important question of the workers in the industry. I fear that their interests are going to be very seriously affected by this Bill if it is passed in its present form, and should your Lordships, after all the arguments which you will hear against the Bill, still be of opinion that it should be read a second time, to-day, I hope you will also be of opinion that it should be referred to a Select Committee before it comes into operation. We are asked, to-day, to take a step of the utmost importance. It is quite true that it is vital to the industry as a whole; that the prosperity

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of thousands and the livelihood of hundreds of thousands depend upon it. There is, therefore, all the more reason why its provisions should be examined very carefully before you agree to allow it to pass into law. I suggest that the noble Lord who introduced the Bill has not been able to prove in any way that it is in its essence a good Bill, or will even carry out what it professes to do. If I could be assured that unemployment would be greatly alleviated by this Bill; if I could be assured that we are really going to see more employment and better wages; and most of all, if I could be assured that we are not going to see good money taken from the efficient mill-owners and handed over to the inefficient mill-owners, then I should be only too willing to withdraw my opposition to the Bill. I do not intend to inflict myself upon your Lordships any longer, because many noble Lords who have greater knowledge of this subject than I have are going to speak. I hope that very careful attention will be paid to the points which will be brought forward, and that unless you are perfectly satisfied that a good case is made out for this Bill you will be chary of passing it, in view of the fact that many persons believe it will do the industry more harm than good. I therefore beg to move.
Amendment moved—
Leave out (" now ") and at the end of the Motion insert (" this day six months ").—(The Earl of Mansfield.)
LORD SANDERSON: My Lords, my noble friends and I are very much interested in this Bill because it embodies what seems to be a somewhat despairing effort on the part of the Government, which believes in our present industrial system, to bolster up an industry which under private enterprise has almost reached a state of collapse. This is not of course the first attempt of this kind which has been made by the present Government. We have had agriculture and shipping, and now cotton. The cotton industry is in many respects a very typical capitalist industry. It is based on private enterprise, and its fundamental motive is profit. It is highly individualistic and extremely competitive. But since the War it has been seized with a creeping paralysis, which has extended and gradually become worse, and which, if something drastic is not done, may prove almost fatal to the industry.
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The industry has made several attempts to reorganise itself from within, but they have all failed. The collapse of the industry of course is not by any means entirely due to those who are responsible for it. The owners of the industry are not responsible for the loss of many of its markets. It could not prevent the Indian tariff, and it could not prevent the rapid development of the cotton industry in Japan with the aid of cheap labour. But it is doubtful whether it has done all that it could for itself. It has not done much towards gaining fresh markets. Its marketing system is very weak, and it has not done all it could in the home market. The machinery of the industry itself is old-fashioned. These are things which it has not done for itself which it might possibly have done in recent years. In the boom just after the War the industry was enormously over-capitalised. I suppose that when the slump came it might have recovered by ordinary economic processes, as the methods of production became cheaper. Improvements in the methods of production might have enabled the better firms to drive out the weak, which is a sort of ordinary process in industry.
The noble Lord who moved the Second Reading mentioned that the possibility had been suggested that it might recover by what I might call natural causes even at the present time, although—quite rightly I think—he thinks that is not likely to be the case. But he did not mention what I think was one of the main causes why the industry could not recover by means of natural economic processes after the War, and cannot recover now by natural economic processes, and that was due to the intervention of the banks, which lent very largely to weak firms and helped to stimulate the boom and prevent the contraction of the industry in the slump. The industry as a result is still suffering from that period of reckless competition and from the strangle-hold which the banks obtained at that time.
The Labour Party have for years urged that the industry should be taken over and publicly owned and controlled and thoroughly organised from top to bottom. We have also for long advocated the nationalisation of the banks, so that we could have more control over the way money is lent. It is obvious, I think,

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that the money lent by the banks at the time of the cotton boom in many cases should not have been lent. We have also advocated for a long time a capital investment board, so as to try to ensure that capital flows into the industries where it is most needed and where it is likely to do most good to the community, and not merely where it is likely to earn the largest rate of interest. We have had since the War, with the exception of three years, I was going to say Conservative, but I will say anti-Socialist Governments in power—there can be no quarrel with that description, I think. And so our plans have not been accepted and no attempt has been made to carry them out. But we think that, had they been adopted, the cotton industry would be in a much more prosperous position to-day than it is. I know, however, that there is no use harping on the failures and the omissions of the past, except perhaps as a warning for the future, and we realise that our proposals will not be adopted now. Therefore we have to consider what is to be done, if anything can be done, for this industry at the present time and under the present industrial system.
That brings me to the Bill. If anything can be done for the industry it should, I think, be done on a big scale, and the industry should be dealt with as a whole. This Bill merely tinkers with one section of the industry. The industry, as your Lordships know, consists of many different sections—the carders, the spinners, the weavers, all the finishing sections, and the marketing section. This Bill only deals with the spinning section. All the other sections are ignored. I know that the President of the Board of Trade said in another place that if this experiment succeeds he proposed to go on and deal with the other parts of the industry, until, I suppose, the whole industry is dealt with. But how long is that going to take? Two or three years are allowed for the buying up of the spindles, and the whole scheme is to take fifteen years—that is, until the £2,000,000 which is to be advanced is repaid. Fifteen years is a long time to wait before you start on another section; even three years is a long time to wait. I think that if the Government wanted to deal with the question in steps it would have been far better to deal
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first with marketing. The whole marketing system of the industry is, I understand, extraordinarily weak.
We have some hundreds of merchants, all doing small amounts of business, with no real close connection with the productive side. They stand rather aloof from the productive side, whereas in Japan most of the marketing is done by a few very large organisations—three, I believe—who are closely connected with the productive side and who are able to deal in very large bulk, which apparently we cannot do. That, I believe, is one of the main reasons for the great success of the Japanese industry, and it is helping to increase the competition. It seems to me that the question of marketing should have been taken in hand at a very early stage at any rate. Then, of course, there is the question of machinery. I understand most of the machinery is by no means up-to-date. I have seen it stated that the average age of the machinery in the industry is about forty years, which is pretty old, and there is no doubt that new and more up-to-date machinery is required. Again, most of our competitors have adopted the ring spindle, which we are only adopting very slowly indeed, although the ring spindle is more suitable for the kind of cloth most in demand. I think something should be done to deal with these three matters—with the marketing question, with machinery, and with spindles. It would have been far more helpful to do that than to have this particular Bill, which only deals with redundant spindles.
I come now to one or two details of the Bill. First of all, the whole thing appears to be extraordinarily speculative. It may succeed to some extent, it may succeed altogether, but, on the other hand, it may completely fail to do what is wanted. I think it is quite likely it will fail. The whole procedure is highly speculative. Take the ease of the spindles. How do we know how many spindles will be offered for sale? There is no compulsion in the Bill, as the noble Lord has said. It is left entirely to the mills to decide whether they will offer their spindles for sale or not. How do we know they will get anything like the 10,000,000 spindles it is hoped to get? Then again—another important point—are we quite sure that the weaker mills, and not the more advanced mills, will sell their spindles? There is a

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possibility that you will not cut out the weaker mills by this method, because some of the old mills did not apply to the banks for finance during the boom. They were able to carry on, and they have now become rather obsolete. Some of them may be family businesses willing to carry on in a slow sort of a way, and as they are not under obligations to the banks they have no inducement to sell.
Some of them may not come forward at all, and these may be some of the most obsolete mills in Lancashire, whereas more advanced mills, which are for the most part under obligations to pay back their debts to the banks, will have pressure put upon them by the banks to sell in order that the banks may recover as much as they can of their loans from the wreckage—money which they ought never to have lent. The banks will use their influence rather strongly in the direction of encouraging mills to come forward and sell their spindles, and these, as I have said, may be some of the better mills and not the weaker ones. It would have been far better if a Commission were set up to go into the whole question and discover which are the weak mills. That Commission should have compulsory powers to buy out those which turn out to be mills which are really redundant and a handicap to the industry. That would have been far better than this haphazard method of allowing the mill-owners to come forward and sell what spindles they feel inclined to sell. Again, there is nothing whatever that I can find in the Bill about prices. How much is the Spindles Board going to pay for these spindles? Anything that the owners like to ask, or how much?
There is also the question of the effect on the price of cotton cloth. How much will this levy affect the price of cloth? It may affect the price of yarn and so go through all the industry, and ultimately increase the price of cotton cloth and so make it more difficult to meet foreign competition. It is said that the levy is not very heavy, but a very small amount may creep through the whole industry on to the finished article and have a fairly big effect. I do not know, but many manufacturers in the industry, who should be qualified to speak, seem to think that the effect of
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the levy may be a rise in the price of the finished article, and that, of course, would defeat the object of the Bill.
Now I come to a very serious point, and that is that the working people are not mentioned in the Bill at all. The men and women without whom the industry could not be carried on for another day are not mentioned in the Bill. Why should not there be a representative of the working people on the Spindles Board? Why should not one of the three members be a representative of trade unions? Then again, I should like to see two representatives of the working people on the Advisory Committee. There is to be one, I know, but I think there should be two. Much more serious than that is the point to which the noble Earl referred just now—namely, that there is no mention of compensation to the working people who are thrown out of the industry under this Bill. It seems to me an extraordinary state of things to propose to compensate the owners who voluntarily reduce their work or go out of work altogether, and not to compensate the working people who involuntarily are thrown out without a penny, except the unemployment pay to which most of them, of course, have contributed. Your Lordships must remember that these people have spent years and years of their lives in training to become really accomplished spinners. It is very skilled work, I understand. They perhaps begin as piecers and then become winders, and it takes many years to be come a really competent spinner in a responsible position. Many of these people will be turned out of their work, and the kind of skill they possess will be quite useless in any other industry. I cannot imagine that any one with any sense of justice would think it right to compensate the employers and throw the working people out on to the scrap heap, so to speak.
I may be told this. As the industry improves some of the mills will be working full time instead of half time, and they may increase their staffs; the people thrown out may be taken on and become employed again. I have heard it said that the Bill will not cause any increase of unemployment. That I do not believe, I am afraid, but if that is going to be the case the matter of compensation will be a very small one and will not be a thing to worry about. As the Government have

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been so lavish with "doles" to industries like the shipping industry and agriculture and sugar and so on, it would not be much to ask for a small grant towards helping these working people over a short period after they are thrown out. I may be told that there is no precedent. I may be told that working people are being thrown out of industry all the time, and that they have the "dole" But they are not thrown out by Act of Parliament, and surely to throw a lot of people out of work by Act of Parliament is quite a different thing from their being driven out by the play of the ordinary economic forces in industry.
I may be told, again, that there is no precedent for compensating working people. That may be true, but there are precedents for compensating salaried employees. You have it in the Local Government Act of 1929. And it is quite a common thing for commercial firms, when they have to part with their employees, to give them bonuses or pensions. That is constantly done in the case of salaried employees, and I cannot see why a hard-and-fast line should be drawn between the salaried classes and the manual workers. I very much hope that the Government will reconsider this question, and that they will be able to tell me that if I put down an Amendment in the Committee stage they will accept it. I think that that concession would be a very generous gesture on the part of your Lordships, and we know it would be highly appreciated by the working people of Lancashire.
My noble friends and myself cannot possibly vote for this Bill because it is regarded as entirely inadequate to meet the situation. We regard the results which are claimed for it as highly speculative, and we think it is unjust to the working people, but we shall not vote against the Bill because we never do vote against the Second Readings of Bills which come to your Lordships' House from another place, for reasons of which your Lordships are already aware. I appreciate what the noble Lord, Lord Templemore, said about my moving a Motion that the Bill be referred to a Select Committee of your Lordships' House. There is a strong opposition to the Bill in Lancashire and elsewhere which the noble Lord has perhaps rather under-rated, and I think there is room
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for further inquiry. I shall therefore feel obliged to move, as indicated on the Order Paper, that the Bill be referred to a Select Committee of your Lordships' House when the time comes.
THE LORD PRIVY SEAL (VISCOUNT HALIFAX): My Lords, I am afraid it is necessary to ask your Lordships to interrupt the debate for a few moments in order that a Royal Commission may sit to give the Royal Assent to the Army and Air Force (Annual) Bill. The debate will be resumed as soon as that business is completed.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The following Bill received the Royal Assent:
Army and Air Force (Annual).
House adjourned during pleasure.
House resumed.

COTTON SPINNING INDUSTRY BILL.
Second Reading debate resumed.
LORD COLWYN: My Lords, I was the Chairman of the Committee which had to deal with this question of spindleage. It was properly appointed and held its position by the authority of the great cotton industry. The position of Lancashire, as your Lordships know very well indeed, has been a very serious one for a long time. Masters and men have suffered, and the, people have borne their suffering with a splendid heroism all through that time. They have faced practically the destruction of a great and magnificent trade. The exports of piece goods before the trouble arose, before the slump, were over 6,000,000,000 yards a year, of which no less than 2,500,000,000 yards went to India and 700,000,000 yards to China. To-day the figures of the total exports are 2,000,000,000 yards, of which India takes less than 600,000,000 and China 8,000,000 yards. You can see the position of Lancashire with an export trade such as that. The whole trend of the trade has changed. In some of the markets in which we used to sell there

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are tariffs against us, and the only way in which we can get our materials into those countries now is by bodily taking our machinery there and developing. It is a tragedy if we have to take our spindles and looms and our bleaching works and printing works and put them in countries for the sake of the interest that we should get on our money.
That is the smallest part of the whole business; the greatest part is the people employed in these places who are pacing the streets of the towns and villages from which these works have had to go. So you are facing a position to-day in which you see a great and magnificent industry being destroyed. People say to me sometimes, when I am discussing this matter with them, "Oh, let the natural laws proceed "; which means, of course, the law of the survival of the fittest. The way in which those natural laws have worked for the last two years is that cotton mills have been sold at prices amounting to one-tenth, one-fifteenth and one-twentieth of what they cost. When people say," Let the natural processes go on ", it means that the bankers or whoever owns a mill are compelled to sell it; a group of men come in and raise sufficient money to buy those spindles at a low price, and become at once the competitors of all the people who are already existing and doing their business faithfully. So that mill comes into the market at a price of one-tenth, one-fifteenth or one-twentieth of what it cost, and the competitors round about it begin to sell at a lower price; prices are cut again, and another man fails. The survival of the fittest has produced some terrible sorrows in the last few years and has proved to be an utter failure.
The alternative is that which is proposed in this Bill. Not only are we faced with this trouble, but we are faced with another very serious condition: the development of a great country across the sea, Japan. The individual workman in that country has developed more power and capacity in the last two years than any other workman in the world, and Japan is now sending material into every country to which we are shipping at a price with which it is impossible for anyone to compete. Only a week ago there came from Japan right into Lancashire materials which were 40 per cent.
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cheaper than any we could possibly produce. This Bill was framed after the Committee had discussed and decided what they wanted. By the way, when the Committee was appointed a lot of people said that it would never succeed. I had letters saying that the cotton people were the worst people in the world to join at anything and it was no use bothering about them. But we did get together; some of the ablest men in the whole of the industry got together, passed a report and brought before the President of the Board of Trade the results of our discussion. That result was arrived at unanimously by all these men, some of whom had joined the committee with views totally different from those for which they voted afterwards. So we got this report and presented it to the Board of Trade, who promised to do what they had said they would do.
The Bill is the result of this arrangement of ours, and I want you, my Lords, to vote for it, because there is a little chance of its doing some good. I do not say it may do very much, but there is a chance of its doing some. If you do that for Lancashire, you will make the hearts of many of those people fill with joy to-day. We also want you to vote for it because, although it may be only a small matter, as you think, now, there are grave principles involved in this little Bill. There are now five or six great trades waiting for your vote to-day, so that the same thing may be carried out in industries that are subjected to terrible disturbances like those of our industry. I do not want to go into any figures with your Lordships. I do not want to say anything more, except that I come from that County of Lancashire, and that sitting near me is the noble Marquess (the Marquess of Salisbury) who represented Lancashire once as a Member of Parliament. I think he will vote for this Bill to-day because he has a warm place in his heart for Lancashire. We have come to ask you to vote for this Bill that the Government have introduced, to vote for it straight and strong with a full belief that you are doing something for a trade which has been harassed and worried and has lost immense sums of money.
What is the position of the shares in this trade? To-day the shares of the principal Bleachers' Association stand at 5s. 6d.; they were 80s. The shares of the Calico Printers stand at 7s. 3d., though

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they were 40s. The Bradford Dyers shares stand at 7s. 10d. to-day; they were 63s. The shares of the Fine Cotton Spinners and Doublers are 6s. 3d.; they have been 66s. and more. These figures represent a lot of capital, but the loss of the livelihood of the men who are working in these trades is more important than the loss of the share capital. You have to face, it, however. We want you to take a broad and generous view of this matter. The noble Earl referred to the relative positions of the efficient and inefficient concerns under the Bill: I want to tell you that he need have no anxiety on that score. But do not look at the thing in a niggling way. I want you to take a broad, generous and big view for the sake of a trade which has been a glorious trade in times past, something valuable to the country and something which has done magnificent work for the County I represent. Therefore I have come this distance to beg your Lordships to support this Bill and send it triumphantly on its journey to the Statute Book.
LORD PHILLIMORE LORD PHILLIMORE, who had also given Notice of a Motion for the rejection of the Bill, said: My Lords, I rise to support the rejection of this Bill. I wish I could say that I did this on behalf of the Government—I certainly do it in the true interests of the Government. I have considerable anxiety as to the odium that may attach to a Government which puts forward, under whatever pressure, a whole series of Bills of this nature. You have only got to look at the leading article in The Times, to-day, to see how the Herring Industry Bill, another of these Bills, which attempted to scrap redundant material, and which tried to introduce a species of rationalisation, has fared, and how little it has pleased the persons for whom it was intended. It is a great advantage to me to speak immediately after the noble Lord who has done so much public work, and who has been so impressive, if I may say so, that he has been able to bring the Lancashire cotton spinners to agree, although by a comparatively small majority, to the scheme which he put forward. I know very well that this debate, in fact I can see quite clearly that this Bill, is going to turn, if the Government can have it so, entirely on Lancashire.
I have no special knowledge, of course, of the cotton industry—no more than the
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greater number of your Lordships—but I have been connected with an industry, and am still connected with an industry, which was faced with exactly the same difficulty of redundancy of units. We did not come to Parliament. We did not exact any levy which was compulsory. We came to our own arrangement, and we reduced what was a 40 per cent. redundancy to a fair working figure. That trade is now prosperous and has been for some years. We did not do it all at once.
A NOBLE LORD: What industry is it?
LORD PHILLIMORE: Flour milling. We went through the same period of cutthroat competition. It never occurred to us, I am glad to say, to come to Parliament. But we achieved what this Bill sets out to do. This is not a Lancashire question. Certainly it is not a purely Lancashire question. The President of the Board of Trade, in introducing this Bill, referred to it as a new kind of legislation, and we have just heard from Lord Colwyn that it is intended to follow up this Bill, with all its policy of restriction, monopoly and licence, in no fewer than six other sections, at any rate, of the cotton industry. Neither can we say that this kind of limitation Bill has not already been tried under the auspices of this and the previous Labour Government. After all, what was the Coal Mines Bill? What was the London Passenger Transport Bill? What is going to be the Sugar Industry (Reorganisation) Bill? What, as I have already observed, has been the Herring Industry Bill? All these Bills are characterised by certain distinguishing features. In every one there is the same attempt to fashion monopoly, disguised, perhaps, under the name of rationalisation. In every one there is the same system either of licensing, or quotas, or assessments, and in every one there is a distinct tendency to restraint of trade and a limitation of production.
Those are the features of a decadent country. That is a defeatist attitude, and I trust your Lordships, however much you may be moved by very true and harrowing pictures of Lancashire, will not judge this question on Lancashire grounds but on the general grounds of policy, bearing in mind that this new Bill, this new kind of legislation, as the President of the Board of Trade announced it to be, is going to be

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followed up by other legislation, all tending towards the limitation of production and the restraint of trade. When you come to the Sugar Industry (Reorganisation) Bill, you will find words to the effect that notwithstanding any Act which there may be to prevent restraint of trade that Bill is to operate. This Cotton Industry Bill is of immense importance to the country. We may very easily get to a state where, possibly not on Socialist lines but possibly on something nearer Fascist lines—I myself, of course, advocate neither the one nor the other—we shall find that the great trades of this country are being placed in monopoly positions, where inventiveness, originality, youth and energy will cease to have their proper play.
Do your Lordships realise how difficult it is, to-day, with mass production and rationalised industry up to a point, to find adequate foremen—people who will take responsibility, people who will go out to a job and can be trusted to carry it through? Do you realise that this attempt to shackle trade is as old, at any rate, as the seventeenth century, when Charles I had a monopoly of pin-making, which brought him in £16,000 a year, and that it took the latter half of the seventeenth century and a large part of the eighteenth to get rid of those shackles? The noble Lord may be under the impression that the Government were returned to power with a mandate to do this kind of thing. I venture to suggest that that is a mistake, and I do not apologise for speaking rather widely on this subject. The Government were returned in 1931, with a very distinct mandate to deal by tariffs with foreign competition, and unfair foreign competition, with our trade, and I hope there is no question in any one's mind to-day that the Government policy in that respect has not proved to be triumphantly right. What was the gravamen of the charge against foreign countries? Why did we depart from old-established principles? It was because we could not get a fair deal with the foreign countries. They themselves left us at a permanent disadvantage because they manipulated their commerce to our disadvantage. That is a totally different thing from the kind of limitation which is being attempted to be introduced by this and other Bills.
Here we have a limitation directed against certain of our own people. There
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we established by means of our new tariff system a countervailing system by which at any rate we could get fair play in the trade of the world. Neither, I hope, will the series of Agricultural Acts be considered to be on the same footing as the commercial and industrial Acts to which I have just drawn attention. In the case of the agricultural industry we started off with the factor which made assistance to that industry necessary. What was that factor? You had a minimum wage which you had forced on that industry—quite rightly too. But, faced by that factor in the industry, you were obliged to subsidise and to foster the industry, which otherwise could not have paid the wages.
So much for the general questions which this Bill provokes. Now as to the particular questions. The figures are considerable, but on these points I am going to ask the noble Lord who introduced the Bill with so much mastery and ease a few questions, to which I hope he will give me a reply. The first question I should like to ask him is not an original one. It is this. Supposing every African native in our Dominions and Colonies bought a new pocket handkerchief once a year, how many of these spindles would be brought back into work? That is an easy question, the point being that either these spindles are obsolete and ought to have been on the scrap-heap years ago, as I believe in many cases is the fact, or they are potential instruments for the production of wealth. The figures are perfectly simple. In 1932 there were 51,300,000 spindles; by 1936 they dropped to 45,800,000. That is a drop of 5,500,000 in those few years without the aid of any compulsory levy. And this Bill intends, if it works, to reduce them in the course of another fourteen years to something like 35,000,000 spindles. That will be achieved by a compulsory levy of £2,000,000 on the trade, which all firms alike will have to pay, but which represents on a standard unit of 100,000 spindles, that is to say, on an ordinary cotton spinning mill, a levy of £500 per year.
Now there is common agreement on certain facts, and I must say, with all due deference to the noble Lord whose scheme this is, I cannot understand how he reconciles these facts with the remedy which he has proposed and which, I regret to see, the Government have

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adopted. It is a, matter of common agreement that a great number of the spindles in the Lancashire cotton mills are obsolete and were insufficiently depreciated when these companies were making money. I believe it to be true that certain of the spindles still in place in the mills date as far back as the year 1890. It is entirely agreed that in many cases the capital of these companies was very heavily watered in the fictitious boom that took place after the War. When we hear those figures as to the various cotton trades which the noble Lord has quoted, we must remember that that boom was an artificial boom, and unjustifiable to some extent, which the President of the Board of Trade, I believe, went so far as to describe as some kind of a financial ramp.
I think it is a matter of common agreement, and indeed the noble Lord who has just sat down pointed it out, that the main difficulty of the trade to-day is that they cannot sell their goods cheap enough. The noble Lord told us that he had recently seen some product of Japan which was 40 per cent. cheaper than we could make it. Now, how far does this Bill go in making it possible for us to produce cheaper cotton yarn, and in consequence cheaper cotton cloth? The noble Lord who introduced the Bill skated rather lightly, I thought, over that part of his brief. I did not think he was very convincing, neither do I think, having read all the debates in another place, that any one who spoke on the Government side was at all convincing as to how costs were going to be actually reduced by the operation of this Bill. Because, mind you, either these spindles which are going to be bought are already son the scrap-heap, that is to say, sealed up and not being used, and not usable; or else they are usable. If they are usable, then of course it is difficult to see how the acquisition of usable spindles, not now being used, and adding them to firms whose output is below what they would wish it to be, is going to cheapen cotton yarn all over the industry. In fact, the argument of overheads, which is the argument, I understand, that is put forward to justify this scheme, will not carry us more than a very small step towards cheapening the price of yarn, and I doubt myself from what I have heard whether it can carry us even a very small step.
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It is a matter of common agreement that it is foreign trade that we have lost. It is a matter of common agreement that of the cotton spinners affected some 25 per cent. are not engaged in the foreign cotton piece trade, that is to say, are not spinning yarn for the foreign cotton piece trade. They are firms which may be selling their cotton yarn to be woven and used in, shall we say? motor tyres. In fact, of course, cotton is used in any one of hundreds of industries. It is also a matter of common agreement, that a certain number of firms, quite apart from those 25 per cent.—which is no small proportion—are holding their heads above water. I believe we have in this House to-day a noble Lord who is concerned with something like 8,000,000 spindles, whose firm or whose combination is managing to hold its head above water. In fact, the substantial opposition which there has been in the cotton spinning trade to this Bill makes it clear that there are a number of firms who are managing, in spite of this foreign competition, to hold their heads above water, and those are the firms which are going to pay an extra £500 per year per standard unit, as help, if you please, in competing with the Japanese.
The noble Lord who introduced the Bill very properly asked if there was any alternative policy. Well, it is of course, if I may say so, a request which you could hardly expect to be made to a person in my position, who knows so little about the industry itself, but I am told that there is an alternative policy which would be useful. That is a policy which would support, not the "dud" firms, not the over-capitalised firms with obsolete spindles, but the active firms, the firms who are just holding their heads above water, and that policy would, I understand, be inaugurated by cheap money being made available to them. A good deal has been said about the state of opinion in Lancashire. I suppose it is well known that the Federation of Master Cotton Spinners only supported this scheme by thirty-nine votes to thirty-three—not a very large majority. I suppose noble Lords who have followed the debates in the other House will have noticed that from other trades as well as from the cotton spinning trade there is a good deal of opposition to this Bill—for instance from the cotton machine making trade.

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Another point that has been touched upon is the question of ring spindles and mule spindles. Whether I am using the right words or not, the ring article will, I understand, produce 50 per cent. more per unit of time than the mule. I am told that the great bulk of the spindles, and especially those which will be affected by this Bill, are mules. Therefore it may well be that having reduced the number of mule spindles, the rest of the industry will put in increasing numbers of ring spindles, and so far from the total result being a limitation of production, we may get a higher production and in consequence more acute competition than ever before. I am told by my Lancashire friends that they would not so much mind this Bill if it put a bottom to the industry, but in their opinion it does not.
THE EARL OF DERBY: My Lords, may I intervene for a very few minutes just to speak from the point of view of Lancashire, but with no claim whatsoever to represent Lancashire? I only speak with the knowledge that one gains from, I hope, a certain amount of intelligence and very constant contact with everybody that I possibly can put myself in contact with in the County. When I speak to-day I do not speak with a knowledge of the industry itself. The last speaker has some knowledge of it and the speaker before him had some knowledge of it. I have left that to my noble friend Lord Colwyn, who has a more intimate knowledge of the industry probably than anybody else in this House. He can speak with an authority which I think nobody would deny in the County of Lancashire. The last speaker, if I may say so, said one thing with which I cannot agree. He said he wants to prevent the odium of this Bill falling on His Majesty's Government. This is a Government Bill only in the sense that the Government have introduced it and have found time to have it properly discussed. The Bill itself is the Bill of the industry. This is not a case of the Government imposing it on the industry; the industry is demanding it from the Government. I hope your Lordships, therefore, when you are making your decision as to which way you will vote, will remember that this is the demand of the industry itself.
With regard to the vote for or against the scheme, there are figures given, and
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the figures, as usual, always differ. My friends who support the Bill tell me how many voted for it, and my other friends who are against the Bill tell me how many voted against it; but the owners of nearly 28,000,000 spindles have expressed themselves unconditionally in favour of this Bill compared with the owners of 8,750,000 spindles who voted against the scheme. It is only fair to say that it has been urged that this 8,750,000 should as a matter of fact, be 11,000,000. Even then, the majority in favour is 28,000,000 to 11,00,000, and it seems to me that there is a sufficient majority to justify the Government taking up the Bill for an industry which, as Lord Colwyn has said, never seems to be able to agree about anything.
I do not want to go through too many figures concerning the industry. You have had some of them given to you before. Since the War the production of cotton yarn in Lancashire has fallen by more than one-third. The export of cotton piece goods has fallen even more. Meanwhile, the number of spindles available and competing for this greatly-reduced trade has only fallen by less than one-quarter. Having far more spindles in existence than there are orders to keep employed, spinners have been for many years what are called "weak sellers" Every buyer in the market knows that if one spinner will not accept whatever price he is offered for his yarn, some other spinner can be found who will do so. Consequently prices have been accepted which, in many cases, show a substantial loss and which, at best, do not allow any provision for the repair and replacement of machinery. That cannot go on. It has been recognised by the industry for many years that something drastic has got to be done to prevent the whole industry falling into the ruin in which, unfortunately, so many mills have already fallen. In addition, this means that the amount of work that is available is far too little for all the spindles. The result is that mills are obliged to work part time, and everybody knows how extremely extravagant it is to run mills for half-time. It is essential, therefore, that you should, if possible, make these half-timers into full-timers by eliminating all that is weakest in the trade.

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The industry has tried for many years in different ways to put itself on a firm basis. I shall not go into the various expedients that have been put forward, but, one and all, they have failed. At last it was left to the industry to create a Committee, of which my noble friend Lord Colwyn was Chairman, to try and see if they could not produce something which, in the opinion at all events of the majority of the industry, would put the industry on a sounder footing than it is at the present moment. This scheme was submitted to the Government. The Government had promised some years ago that if a Bill could be brought to their notice which showed that it had the support of the majority of the industry they would be prepared to help it through. They would be prepared, in other words, to do for the industry what the industry was asking them to do. The result is this Bill to which your Lordships are now being asked to give your consent.
I would like to say just one thing about Lancashire. I know a lot of people blame Lancashire in this matter, but, believe me, it is not Lancashire's fault that there has been this failure in the industry and this terrible amount of destitution that has come from that loss of trade. It has come from the competition that arose chiefly during the War when our own people were working short-handed and working on Government orders to help the troops, and to help this country generally in the great crisis of that period. During that time other countries were building up competitive mills against us and now, having got a firm footing in those countries which we were not able then to supply, they are able, with long hours and the payment of wages that none of your Lordships would ever consent should be given to British workmen, to hold those markets against us. We have lost on all our foreign markets. I am not as a rule pessimistic, but I do feel that to regain the markets as they were before the War is impossible, and what we have to do is to see as far as we possibly can that we hold the markets that we have. To my mind the only way by which we can do that is by reducing the cost of production.
NOBLE LORDS: Hear! hear!
THE EARL OF DERBY: I quite agree; but to my mind the first way in which you must reduce the cost of production is to cut out all the dead wood, get rid of those mills which are redundant and can never be made to pay, mills that are obsolete and ought to disappear altogether. In that way you are able to give those mills which are working and can continue to work that power to borrow money which will be given to any mill that can show it can work at a profit. Can your Lordships conceive money being loaned to mills that are being run, and are bound to be run, at a great loss? The consequence is that every day, every hour, the machinery in many of our mills is deteriorating more and more, and unless something is done to make the whole of the machinery that is working thoroughly efficient I do not see how we can hope to compete against other countries.
I have very little more to say to your Lordships. I am not going to review all the various expedients that have been tried. I am not dealing in any detail with this Bill but only trying to prove to your Lordships that it has been introduced at the request of the industry itself. May I mention the names of three gentlemen whom I happen to know personally and who were all opposed in the first instance to this Bill but have now come forward in active support of it? If you ask any man in Lancashire who knows Lancashire at all he will tell you that the names of these three gentlemen, Mr. Wiggins, President of the Federation, Mr. Lee, of the Fine Spinners Association, and Mr. Pilling, of Joshua Hoyle and Sons, are the three names that really stand for the cotton industry. Those three gentlemen were opposed to the scheme, but they now see that it is the right and the only way to deal with this problem. They have in fact come over and are now enthusiastically supporting the Bill.
Something has been said about compensation for displaced labour. Alas! a great deal of labour is already displaced. I think I am right in saying that something like 5,000,000 spindles are idle that never will be anything else but idle, and those who once worked them have been thrown on the labour market. At the present moment many of those who are earning some wages are only earning part-time wages. We want to give to many of the mills the opportunity of working

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full time. My own idea is that when we do that we shall find that a great many of these men who are now working half-time will be taken into mills that are working full time, and in that way I sincerely hope that unemployment will not be increased. I do not myself think that it will, but my opinion is worthless. I can only give it as my opinion. I would also like to mention one other thing for your Lordships' consideration. At the present moment we have got in Lancashire an Industrial Development Board. We are doing everything we possibly can to take over some of these obsolete mills and fit them for other industries. That is being done throughout the whole of the County, and I am glad to say with a great deal of success. In that way we are doing something towards the employment of those men who, some fear, will be displaced by this Bill.
Lancashire very often complains that successive Governments do nothing to help her. I think in many cases that is a justifiable complaint. On this occasion, I think there would be far more bitter complaints if, when this House is asked to do something which they believe will be for the benefit of their industry, the House should refuse to give them its cooperation. I do not for one minute claim that this is going to bring a new heaven and a new earth in Lancashire, but I do honestly believe that the passing of this Bill will give new hope to many who are beginning to get hopeless. I have been asked: Have you got an alternative? Well, an alternative has been suggested. I would not like to criticise it because one does not realise how far that proposal would go, but I am certain of this, that in the mind of the industry itself and, if I may say personally, in one's own mind, there is no alternative to this scheme. That is why I ask your Lordships to pass this Bill, believing as I do that if you do so it will be in the very best interests of the County of Lancashire.
EARL PEEL: My Lords, I think I ought to preface the observations which I desire to offer on this Bill by saying that I am to some small extent interested in the subject and have a negligible financial interest. I need hardly say that does not affect my judgment of it in the very slightest. I perhaps may be guilty of some degree of temerity in placing my
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views and those who are with me against the authority of my noble friend Lord Colwyn and the great authority that my noble friend Lord Derby justly and rightly exercises in the County of Lancashire, and I hope that anything I may say will not be taken as criticism of him or of what he says.
The first point I should like to mention is this. He says this is not a Bill forced upon the industry by the Government; it is a measure that comes and grows out of the native soil, as it were, of his own County. He suggests that your Lordships should pass it because it comes from Lancashire. That is an extraordinarily good reason in the case of my noble friend, I agree, but I submit that it is not quite the attitude which your Lordships ought to take up. In my humble judgment there have been far too many cases in the last few years of arrangements or agreements or contracts being made between a particular industry and, say, a Government Department, and of these people coming to Parliament and saying: "You have no business to alter an arrangement of this kind. What is it to you? It has been fixed up and your amendments can only damage it. You have got to register this Bill. You have got to put the seal of Parliament upon it." I protest vigorously against that doctrine. I say that it is the duty of this House and the duty of another place to exercise judgment upon the principles involved in any such scheme. I say that we are bound, as my noble friend Lord Phillimore said, to look at it from the point of view of other industries and of the country generally, quite apart from whether or not it is approved by the majority in Lancashire. We have to consider whether this is a suitable measure to be placed on the Statute Book and whether the principles involved ought to be endorsed by your Lordships.
The proposal has been introduced to us with the support of the general trade of Lancashire, but I am going in a moment or two to analyse that position because there are certain points connected with it which I desire to present to your Lordships. I submit that before you accept the decision of a trade, which is going to put what I can only call penal taxation on a large part of that trade, you should be quite certain that you have not only a majority but a substantial

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majority—I should say a majority of two-thirds or three-fourths—in favour of that policy. I am very unwilling to say anything in criticism of the cotton spinning trade of Lancashire. If your Lordships will allow me to mention it, my own family owes everything to the cotton spinning trade of Lancashire. It is about two hundred years since my great-great-grandfather first set up his mills in the town of Bury. Therefore, I naturally look with the greatest affection and respect on that great trade.
I know well the contrast between the time 30 years ago, when I sat as the representative of one of the divisions of Manchester, and the position in which the trade is now. I know something of the appalling misery and suffering brought into thousands of homes in Lancashire by the decay of this great trade. I certainly would say nothing that was harsh or severe or unsympathetic towards those who have suffered and those stout hearts that have gone down under the pressure of adverse circumstances in this trade. I am not going to follow my noble friends in their sketch of the causes that have led to it—I think they are only too well known—but at the same time I am bound to say that whether lack of finance or any other reason is responsible for a great deal of the adversity, those reasons do not account for all and perhaps not even for half of it. A great deal of the ill-success of Lancashire in the export trade to-day is due to the fact that new machinery has not been put in as quickly as it ought to have been put in. At the present time mule machinery is about double the ring spindles established in the mills of Lancashire. I am well aware that for certain counts of cotton you really want mule machinery but for a great many counts you do not. If up-to-date machinery had been established in the mills with a little more prescience the trade would not be, I think, in the deplorable condition that prevails in so many cases to-day.
We must examine, quite calmly whether the principle on which this Bill is founded is a good one. It may be that you may think the principle is bad but the necessities are so great that you must follow it. The main principle, however you disguise it—and it was very skilfully, I will not say disguised but glossed over by my two noble friends—is that you are
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going to take £2,000,000 mainly from the prosperous people in the trade and give it to those people who, if it is not right to say that they have failed, have at any rate not been so successful as the others. I ask your Lordships to consider whether it is good in a great competitive trade to say that those who have shown foresight and have made sacrifices in the past, who without being paid have destroyed hundreds of thousands and even millions of spindles, should now be called upon to contribute to those who have not shown the same foresight. Are you going to lay it down as a principle of trade that people, if they are not successful, should receive a contribution from those who are successful, so that they need not show the same keenness or the same competitive energy as they would if they had to depend on their own unassisted activities?
Let me examine the effect that this may have on the trade. We have had an eloquent appeal from the noble Lord, Lord Colwyn, and we have had a passionate appeal from the noble Earl, Lord Derby, who put before us the names of eminent men in Lancashire who were once against the scheme and now support it—I suppose converted by his eloquence. I am one of those incorrigible people who prefer argument to authority. I really cannot be told that because eminent persons are in favour of this therefore I must submit other opinion and other arguments to that authority. I have not heard a single argument to show that you are going to give any assistance to the trade of Lancashire by this scheme. I hope I do not speak with undue arrogance, but I do not think that the scheme has been properly considered and properly set out. I want to ask one or two questions of the Government to which I hope to get a more lucid answer than has been given so far in other places and to other questioners.
I hesitate to make exact statements about numbers of spindles, because I agree with the noble Earl, Lord Derby, that these figures alter and multiply and divide in the most extraordinary way, but I think it can be said that 9,000,000 or 10,000,000 spindles have been put out of action in the last eight or nine years. The first point I ask is this: Has the locking-up, the non-use, of those spindles been of any value to the trade? It is a very pertinent question because, after all,

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the experience of the future must be modelled on that of the past, and we are entitled to know—and I have asked this question of the Board of Trade and never got any answer—whether the abolition for practical purposes of those 10,000,000 spindles has enabled the rest of the trade to produce more cheaply, which, as the noble Lord rightly said, is the sole question in our great contest with Japan. I can get on that point no answer.
Let me apply that point, if I can. This question of rationalisation has often been discussed. People say, and my noble friend Lord Templemore said in that pleasant, genial, all-covering method by which he slides over difficulties and avoids perplexities—I wish I had his mind to deal with the problem in the same way—that this rationalisation in some trades has been useful and practical. No doubt it has, but it has mainly been useful, as far as I have examined it—and I have done so in a good many cases—in trades that deal chiefly with the home market, and with trades of comparative simplicity in the production of their articles, where there is some possibility of measuring the actual market that you will get, the amount of things you have to produce, and your forces of production in comparison with that amount. But I submit that no such policy is possible or practicable with a trade like the spinning trade of Lancashire, which depends, as noble Lords well know, on its export trade, about which we are talking and not about anything else. I fail to see how—and I will examine that point in a moment—this method of rationalisation is going to lower the price of your commodities in the world market, which is really the only matter under discussion and which affects the question of whether the Bill will be a success or a failure.
First of all, what is this money going to do, this £2,000,000 that is drawn so impartially from the just and the unjust, from the successful and the unsuccessful, and, may I add, from a number of other people—I shall deal with that point later—who have nothing whatever to do with this market? First of all, there are admitted to be, I think it is, 6,000,000 "dud" spindles—if I can use such an unparliamentary word—or a little more. Very well: you have £2,000,000 of money to play with, and, of course, to start with
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you have these 6,000,000 spindles. Now I do not know exactly how this Board is going to operate, because whenever we ask any questions about it—
A NOBLE LORD: Five million.
EARL PEEL: I am so much obliged for another figure: thank you so much! Whenever we ask any questions about what the Government are going to do, they always say: "We do not know; we leave that for the Spindles Board." It is a very convenient and leisurely method, but I think we ought to know upon what principles they are going to act. Obviously, as everybody who has these useless spindles will want to get something for them, and as their value now is purely scrap, will they not all come forward with a rush to this Board and say: "Oh, let us have this £2,000,000 "? And how are we going to have these "dud" spindles priced? I have heard it said at 3s., 4s. or 5s., and I suppose they will have to buy them. If it is to reduce redundant spindles, the Board cannot say they will not take them. They cannot say that; they must buy them. If they buy them for 3s., 4s. or 5s., it is quite clear to your Lordships that you have already got rid of at least half, and perhaps more, of this £2,000,000.
Is there anybody in this House who, whether he understands the cotton trade or do not, will say that the scrapping of these locked-up spindles can possibly be of any advantage to the trade or lead to cheaper production? It is impossible, of course, that it can do so. Well, then, I do not know how they are going to proceed with the working spindles. But a very ingenious argument has been produced by—I use the words "the Board of Trade" because, of course, they have dealt with this business most. I am not charging the Government, naturally, with having any particular knowledge of this Bill, but what they say is: "Well, they keep the cost of the five or six million spindles." That is obvious; you cannot avoid it. Yes, I think they do produce an argument; I had almost forgotten it, it seems so absurd. They say:" These five or six millions of spindles are lying in darkness, but if the price of yarn goes up they will all spring into action and lower the price again." Well, I wish they could, because if I know one thing I know this with certainty: that if you raise the

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price of yarn you will simply lose more of your foreign markets. The whole question is price and nothing else.
But, my Lords, can you imagine that people are going to start their own spindles again without capital? Do you think that any of the banks, after the way in which they have been hit and the money they have lent in Lancashire on cotton spinning, will put up a pound? Do you think that those poor people, thousands of them, who lost so much money in the 1920–1921 boom, will lend again; that you will get from private sources any money to start up these spindles? Of course you will not; the idea is quite ridiculous. There is another idea, with which I will deal and which the Board of Trade suggested: that you will be able to raise the price of yarn. They have not pressed that argument very far, because of course they soon realised that nothing could be more deadly than to raise the price of yarn. It is quite clear, therefore, that those two arguments are answered by one argument: that the one deadly, destructive thing to do for the industry is to raise the price of yarn.
Now let me take what I call their last outpost: "Ah!" they say," but if you have a mill which will take 400,000 spindles, they are running their 400,000 spindles at three-quarter time; buy up 100,000 of those spindles and these gentlemen will be able to run their 300,000 spindles at full time." I never heard a more simple argument addressed to people who knew nothing about a business. Do they suppose that, if they had been able to do it, they would not have done it already? Do they suppose that any manufacturer in his senses would not, if he could, scrap 100,000 of his spindles and run the other 300,000 at full-time? Of course he would; he would have done it already. He is doing it already if he can. If, on the other hand, his mill is such a balanced unit, and if his machinery is so intermingled, as it were, in its successive parts of production that he cannot keep one part idle, he will find exactly the same difficulty if he comes and tries to sell some of those spindles to the Board; he will find that the difficulty of separation is unsurmountable.
The technical difficulties of any result coming from this Bill are, it seems to me, almost insuperable. But I think that
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the whole fallacy of this business has come from a wrong picture which has been drawn of the position of the trade. They say: "Destroy your 10,000,000 spindles." I assume "destroy," because this remarkable Board can not only scrap, but can also sell. The only limitation on it is that it cannot sell abroad. I do not think that is necessary, because I do not think that anyone will want these old spindles. That, however, is a matter over which I pass. The assumption is that there is a given quantity of orders and of work coming from abroad which can be divided among the existing spindles when you scrap your 10,000,000. I believe that to be a complete fallacy. The fact is, looking at the past, that unfortunately it is true that where we have scrapped spindles in this country they have been replaced by spindles in Japan. The reduction of spindles here will, I am afraid, only have the effect that more spindles will be made and used in another country. The truth is that in a trade of this kind, as I am sure many of these distinguished persons in the cotton industry know perfectly well, it is a matter of extraordinary difficulty to adjust your production to your consumption, and as regards undercutting, if you have work for 34,000,000 spindles, and you have got 36,000,000 spindles, there will be very nearly just as much undercutting of price as if you had a surplus of 10,000,000 spindles. Believe me, my Lords, this is wholly a case of hopeless defeatism, and the method which is so much advocated and supported with so much emotion and sentiment rests upon a fallacy—upon a picture of trade which does not really exist.
I confess I can see very little, if any, assistance that, with this great disturbance and levy, will be produced by this Bill. Noble Lords may fairly say that this £2,000,000 so expended must go somewhere. It will go somewhere. It will of course go largely, if not mainly, into the pockets of the creditors of these businesses. I am very glad that creditors should be paid—I am all for their being paid—but surely it is rather hard that they should draw this portion of their frozen credits from the pockets of those who have been successful in their businesses. Surely no money was ever lent, and no goods were ever supplied, by the firms concerned, on the assumption

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that they would not only be able to have the security of the particular business, but also would be able to draw upon the pockets of other businesses connected with the trade? It is said that the amounts are rather small. It is said that they are only £500 per unit of 100,000 spindles. I am sure your Lordships are aware of the very close margins of profit to which you have to cut your business in those foreign markets, and if it is said that it is only a percentage of a penny spread over so many pounds of yarn, and so on, I say: "Yes, but it is a very substantial amount in the general working expenses of a firm, and why should they pay it at all?" The Board of Trade, if I may say so, have shown what has been called in this matter remarkable skill in the technique of minimisation.
Let me deal quite briefly with two or three minor points which bear on the general business. I suppose it may be assumed—it is assumed—that this business is of value to the trade, and that the people who contribute may possibly get some help out of it. Will it be believed that there are no fewer than one-fourth of the spindles employed in spinning which have no interest whatever in this so-called cotton export trade, and can get no advantage from it whatever? The reason is that they make yarns for themselves, they use it for their own weaving, and sell it after weaving in certain markets which are in no way competitive of the markets which we are discussing. I put it to the Board of Trade that these firms should be exempt, and they said that it was exceedingly difficult to have these businesses exempted. After I was able to show them that it was not a difficult matter to get these 25 per cent. of the spindles exempted, they said it would affect the finance of the scheme, and that more money would have to come from the other businesses. I entirely agree with that proposition, but it seems to me that if you are trying to drag into a scheme, and make contribute, this 25 per cent. of the spindles in order to make a proper scheme, it is a very severe criticism of the scheme itself that it cannot be worked unless persons who have no interest in it and gain nothing from it are compelled to contribute.
There is just one point further. I am sorry to have kept your Lordships so long, but the matter is rather difficult and intricate. It is as to that ballot which was
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taken on the question of who were in favour and who were not. I complain generally that the ballot was taken in a very irregular manner. I say, first of all, that the ballot papers sent out asked the persons who received them to say whether they were in favour of the proposals. The receivers of the papers naturally thought that if they were not in favour they need not say anything. There are representatives of millions of spindles who have never voted. They ought to be at least taken into account. I say, also, that although November 10 was supposed to be the closing day of this ballot yet, although it was a secret ballot, the ballot was kept open for another three months. I am sure my noble friends will not deny that. I say further that a letter was written to many firms to say that it was "only when the final form of the rules of the Cotton Spinners Association, and the schemes for dealing with surplus capacity are submitted and approved, that any firm will be committed to them." I say further that a promise was given by the Prime Minister himself, I think in June last, that before the matter became law it would be submitted to the trade. I naturally interpret those words to mean that the trade would have an opportunity of voting on a second and better conducted ballot. That promise was never fulfilled, and never carried out in that form.
Summing up, then, my objections to the Bill as shortly as possible—I pass by, if I may, the really very harsh arrangements by which, if a man improves his spindles and has substituted ring spindles for mules, he is penalised—I oppose the Bill on four general grounds. In the first place I oppose it because, as I have said, it places a penalty on successful business in order to reimburse the unsuccessful. Secondly, by no argument I have yet heard, certainly in this House or indeed elsewhere, has it been shown that the cotton trade could be assisted by these defeatist methods. Thirdly, I oppose the Bill because, in order to assist the scheme, financial aid is called in from those who can reap no possible advantage, but only disadvantage, from it; and fourthly, because it stereotypes existing methods and tends to paralyse all forms of improvement. I object to it, too, because it holds out to other countries and to our competitors the point that we are weakening in the contest of

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cotton competition. It suggests that, in the boxing phrase, we have thrown our towel into the ring, and I for one refuse to be associated with a measure so variously composed of irresolution, defeatism and despair.
LORD MELCHETT: My Lords, with some regret I find myself in disagreement with the noble Earl who has just spoken, because I usually agree with him. I must say I think that, so far from this Bill having been presented and constructed on the basis of a wrong picture of the industry, the noble Earl himself has not really grasped some of the essential facts upon which the Bill is based. The noble Earl has complained that the provisions of the Bill will do nothing to cheapen the manufacture of yarn. I do not agree. Manufacture by units which are working whole time is well known to reduce costs. The noble Earl has complained that the Bill will do nothing to help the manufacturers to reduce their prices in the export trade. But he totally neglected the fact that it will do something, and probably a good deal, to enable them to raise their prices in the home market, and 40 per cent. of this trade is for the home market and only 60 per cent. for abroad. I think he would have led your Lordships to believe that this was an industry of which the whole of the business was for the export market. But I disagree with the idea that the Government cannot rightly intervene to assist a scheme of rationalisation where the industry has failed to bring it about.
The noble Earl said that if these things could be done, if idle machinery could be bought up, it could be done by the industry to-day, it did not need the Government's assistance. That has not proved to be the case. It has been proved over a long period that the industry is totally incapable of rationalising itself, and that is why I am prepared to support the efforts of the Government to rationalise it. I am not going to say that I approve in every respect of the methods the Government have adopted. I do not. I think it is a profound mistake—I have said so in this House before—for the Board of Trade, who have none of the necessary machinery for so doing, to try, in conjunction with the industry, to construct a Bill, and then to bring it before Parliament, not as a Government Bill but as a Bill which the industry wants and
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which the Government are going to support. It does not seem to me to be any real method of dealing with big industrial changes. I have said before, and I want to repeat this afternoon, that I believe that the only way in which the Government will ever satisfactorily deal with these problems—of which this is only one, and typical of many more to come—is to set up a tribunal before which the whole of this matter can be threshed out, a tribunal which can take evidence upon oath, so that when it comes to Parliament we shall not have the noble Earl telling us one set of facts and another noble Lord telling us another set of facts, and both admitting that they have never been able to get their figures to agree. Surely we can do better than that. Surely we can arrive at better statistics.
Then, when that has been done, the measure when it is introduced should be a Government measure, introduced with the full authority and support of the Government. The Minister in charge should be able to say with certainty that in the view of the tribunal which had investigated the matter and in the view of the Government of the day the Bill is right for the industry, and will not adversely affect other industries, and, above all, that the interests of the working men in the industry have been taken care of. No opportunity under the present procedure is given for the trade unionists or the workmen to organise in any other way to put their point of view forward. There is no machinery for other industries to represent their side. There is no appeal from the official to the Board of Trade. I think it is a most dangerous precedent, and I hope that it will not be repeated.
But when it comes to the question of supporting this Bill or opposing it, I am perfectly convinced that this Bill should be supported. It is a real and true attempt at rationalisation, and even if the methods adopted are not the best methods it is impossible at this time of day to turn the whole process back now to set up a tribunal, to start a new inquiry, and to cause delay in this vital matter. This measure should be supported, and I myself intend to vote for it. I do hope, however, that on future occasions when measures of this type are brought before the House other means will be adopted, and I should like

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to hear the Minister who is about to reply say that the Government will adopt other means on future occasions.
THE SECRETARY OF STATE FOE AIR (VISCOUNT SWINTON): My Lords, we have had an interesting and very informed debate on this Bill, which is one of very considerable importance, not only to Lancashire but I think to the country at large. Certainly I make no claim on behalf of the Government that this Bill should be given a Second Reading unless the Bill is right. My noble friend Lord Peel needs to address no admonition or appeal to me, to charge me to make a proper case for the Bill, and to suggest that we are saying that So-and-so has asked for the Bill, that he represents a large authority, and all that this House is invited to do is to register its approval of some view which has been expressed, however authoritatively, by people outside Parliament. That is not at all the case which the Government make for this Bill; but it surely is important when you are dealing with a Bill the whole object of which is to do something to help a great and unfortunately depressed industry, to see what the best people in that industry, the successful people in that industry, think and state as their considered view of what is the best way of helping it.
It is in that way that men like the noble Lords, Lord Colwyn and Lord Derby, have spoken this afternoon. It is unnecessary for me to say that there you have two men who have done perhaps more for Lancashire than any other two men in the County. Lord Colwyn is a man who has been associated with the industry all his life, to whom that industry and all that is best in it owe perhaps more than to anybody, and who has spent years now in trying to advise and to help Lancashire in a practical way out of its difficulties; and Lord Derby's association with everything that concerns the good of that County is well known to every one of us. You have got a great mass of opinion in favour of this Bill. I do not cite it as a sort of authoritarian principle—that you have got to take it—but I do say that to a jury of reasonable men here, who have to decide whether or not this is a reasonable thing to do for the trade, it is rather important to consider that three-fourths, broadly speaking, of this trade is in favour of it, and only
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about one-fourth of it is against it. I shall not say to within a fraction how many people actually are in favour of it or not. The most careful review has been made of all the votes that were cast and, broadly speaking, I do not think there is much doubt that for one person who voted against it three people voted for it.
As to the statement that this Bill is slightly different from the scheme on which these people were asked to vote, I will say at once—and your Lordships ought to know it—that the Bill as introduced is more favourable to the objectors, because it eliminates certain things to which they objected, than the proposals against which they voted. But when I am seriously told by one of your Lordships that we must count as voting against this measure all those people who refrained from casting a vote at all, that really is, if I may respectfully say so, not sensible. One knows exactly what happens in these cases. Everybody whips. People like Lord Colwyn and others, who favour the scheme, naturally do their best to get people who are interested in it to vote for it. I am sure that opponents like Lord Peel with his interest in the Bill, both personal and general, of which he has told us, would equally try to get people to vote against it. This always happens, and it is quite reasonable and natural. It happens in your Lordships' House that, however much you whip, there are always a certain number of people who are not sufficiently interested in the thing either way, and who fail to turn up to vote. It would be indeed a remarkable claim for us to make in this House that every Peer who abstained from voting for a measure was to be counted as voting against it. We must really deal with these propositions as we deal with all the practical propositions—namely, count the people who vote for and those who vote against, and not pay very much attention to those who do not take the trouble to cast a vote one way or the other.
EARL PEEL: Following the noble Viscount's argument, is he going to deal with the question of how the actual ballot was taken?
VISCOUNT SWINTON: I was not proposing to deal with that, but I will say that I am certain everybody in Lancashire who took part in the ballot knew perfectly

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well what they were voting for, which is more perhaps than can be said for some ballots which have been held in this country. They are pretty shrewd people in Lancashire, and they cast votes with the same common sense that most of us use when we give votes. I shall take next the points, very fairly put in summary, which my noble friend Lord Peel made in opposition to this measure. He said this levy is put upon the successful in the interests of the unsuccessful. That is an amazing picture to give of the Lancashire industry as it exists today. What that suggests is that you have got 70 per cent. of the people making lots of money in the cotton industry and you have got some "dud" firms who, most of them, are out of business already and the rest of them ought to be out of business; and you are going to put a penal levy on the successful, in order to give a "dole" or compensation to the unsuccessful, who are either out of business already or are rapidly going out of business. If that was the situation in the cotton industry, Parliament would not be troubled with it at all. But that is not the position.
The position in the cotton industry surely is that very few people are making any money at all. Really efficient firms which have a knowledge as great as that of any of their competitors in any land and who are as expert are carrying on to-day at a loss, and what is vitally necessary is to get this industry on to a fair basis in which not the inefficient firms but the efficient firms can carry on and make a profit. That is why these efficient people are in favour of putting this levy upon themselves in order that the industry may be able to set its house in order. The noble Earl said it cannot help. I have no personal knowledge of the cotton industry, although I have a good deal of indirect knowledge of it through having been for six years President of the Board of Trade. I think I was responsible for getting started that first coming together of all the different interests—manufacturers, merchants and trade unions, who came together and worked year after year on this Joint Committee. If having got that started was some small contribution, I am glad to have made it.
I may say in reply to my noble friend Lord Mansfield that I am not one of those
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who sat idly by and did nothing. I was responsible for introducing the quota for Japanese goods the whole way through the Colonial Empire, which has quadrupled already the exports of Lancashire to the British Colonies. Therefore, the noble Earl certainly cannot charge me with callousness in this matter, or with not being anxious to do any constructive thing that could be, done. But I do join issue with him when he says that this putting Lancashire's house in order, this getting the industry on to a sound basis, when its productive capacity and its output can be reasonably synchronised, is not going to help. All my business experience flatly disagrees with that. The noble Lord, Lord Phillimore, who supported the rejection of this Bill did not, I think, object to rationalisation in the way of bringing production into line with demand, for he said that in his own industry—the very successful milling industry which, incidentally, does not have to meet quite the same competition as the cotton industry—they have set their house in order. He boasted that his industry had reduced its capacity for producing, by collective action, by 40 percent. I am very glad. When he does that in the milling industry it is statesmanship, but when the majority of Lancashire asks Parliament to help it do it in the cotton trade it is defeatism! It cannot be high statesmanship and good business and sound sense in the milling industry and at the same time be defeatism and immoral and incompetent in the cotton industry.
But it is said—and I think this really was his objection to this measure—it is not what I may call the limitation of output idea that is wrong. It is that it is all right if an industry does it voluntarily, but it is immoral and rather wicked to get Parliament to help the industry to do it. I may claim to be a fairly consistent follower of sound Tory principles, and my memory, like my allegiance to the Party, goes back even further than the noble Lord's does. Surely nobody can suggest that putting a compulsory levy on an industry is contrary to Tory principles. Let your Lordships cast your minds back to the Licensing Act introduced by Mr. Balfour, as he then was, in the House of Commons and piloted by my noble friend Lord Salisbury, a member of the same Government.

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That Act, for which two distinguished members of that family and two of the best Tories who have ever lived were responsible, was a measure which, without consultation or any question of a two-thirds majority, put a compulsory levy upon every publican in this country, in order that out of that fund compensation might be paid to the people whose licences were suppressed. That having been a good sound Tory Act of Parliament and having been carried on, I must say, by every Parliament and every Party in every Government ever since, nobody can say that it is very immoral or very contrary to good Tory doctrine.
It was also said that it was wrong—and I think this is rather a Committee point which I shall be glad to deal with in Committee—in making this levy to put it on people who have no direct interest in the matter. This is the sort of case that is put: Here is a firm which manufactures cotton, it uses it itself in another of its businesses, you ought not to put the levy on that firm because it will get no advantage.
EARL PEEL: I am sorry to interrupt, but may I add, a further step than that is that it is sold in a market which is in no way in competition with the ordinary cotton market.
VISCOUNT SWINTON: I think it is exactly the same point. That is not, if I may say so, a fair way of putting it, and I will tell the noble Earl why. These people have spindles which are exactly the same as and constitute part of the aggregate spindleage of the trade. They, therefore, are in fact contributing by their spindles to the excessive number which there are in the aggregate in the trade at the present time. They are cotton spindles and they are manufacturing cotton. If they were not manufacturing themselves in their subsidiary company for their main manufacturing concern, linoleum or whatever it is, they would then be buying cotton yarn from one of the spinners in the trade. Exactly the same position came up over the Coal Bill where it was said that a man who owns a coal mine ought to be able to produce an unlimited amount if he is to use it in his own steel works. I think they are so to speak in pari materia. I think also it is an advantage when you are manufacturing
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yourself and find it convenient to manufacture yourself something you would otherwise buy. You are interested in having a stable market and a stable price for the commodity in order that you may not be manufacturing at a disadvantage as compared with one of your manufacturing competitors who goes and buys his yarn in the open market—and a very uncertain and fluctuating market. Those are the reasons, which I have given out of courtesy to my noble friend, why I think this is a sound proposition. It will very properly have to be dealt with if any Amendment is moved in the Committee stage of the Bill, but it is, I submit, a Committee point, and does not go to the fundamentals of this Bill.
Then the noble Earl, Lord Peel, said we ought not to do this because it is a confession of weakness to competitors all over the world. I do not think it is anything of the kind. I do not believe foreign countries will in the least regard it in that way. I think that one thing that does hearten foreign competitors is to see an industry sagging, unwilling to set its house in order, unwilling to combine firm with firm. If, on the contrary, they see a trade led by agreement in the industry, combining together and deciding on what they think is a sound business policy then I think foreign countries have a much greater respect for that industry. That has been our experience in foreign competition in a number of industries when they have set their house in order. It was said that the alternative is to give them cheap money. I suppose that means that the Government should give them cheap money. But there is no lack of cheap money in this country to-day. There is cheap money if this industry is sound. In any industry Lancashire will have no difficulty in getting cheap money if it is a sound object of investment. I am perfectly certain that the only way to attract that cheap money into Lancashire is to get the industry to put its house in order, to see that the market is not weak, to get down to a proper level of production now, and then, as the chance of increasing markets comes, to get that capital to introduce new and improved machinery and to come into the business with a new heart. If you can put your house in order like that you will not want Government money. You will find cheap money coming in the ordinary way.

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Lastly, there were the criticisms addressed by the noble Lord who spoke from the Labour Benches. I really could not quite make out whether he was in favour of the Bill or not. I cannot conceive either he or his Party being opposed to it. Let me take an analogous case, that of coal. They have always said that the miners have a perfectly just demand that the coal industry should put its house in order, that you should produce efficiently, that you should eliminate the redundant, inefficient undertaking, that you should get a proper selling organisation, and so on; in fact, that you should rationalise the coal industry. They have said that they have a right to demand that, and that it is perfectly right and reasonable. Parliament indeed has given its help in that direction. But what has that meant? It has meant just the same as here. It does mean concentration in the most efficient units. It means the most efficient way of running the business in order that you may reap a greater reward; it means that by producing more cheaply through running your business more efficiently, you may get a larger volume of production and of sale. Indeed, in the very pamphlet which Sir Walter Citrine wrote about the cotton industry, he emphasised in more than one passage the great importance of getting rid of the redundant spindles, of getting production on to a sound basis.
The Motion which the noble Lord, Lord Sanderson, quite definitely wanted to support
was a Motion to send this Bill to a Select Committee. He did not want it sent to a Select Committee, your Lordships will observe, in order that we might really go into the merits of this Bill. The arguments he used were, that the Socialist policy which would save the cotton industry was the nationalisation of the banks in order to compel them to lend money, and the nationalisation of the cotton industry in order that it might set its house in order. I really do not think that we need to send this Bill to a Select Committee in order that we may there debate the nationalisation of the banks or the cotton mills. We may disagree about this Bill, but surely we do not require to ascertain new facts about it. We are very competent in this House to take it in Committee, with men such as those who have spoken to-day giving their constructive and valuable criticism. If the Bill is sent to a Select Committee what is to be inquired into? The position here is that, if this Bill ought to be amended, it can be done in the ordinary way in Committee by men of constructive ability. Already we have been a terribly long time in getting this Bill on at all, and, now that it has been put forward, whatever we do, do not let us put any further delay in its way.
On Question, Whether the word "now" shall stand part of the Motion?
Their Lordships divided:—Contents, 48; Not-Contents, 9.

CONTENTS.

Hailsham, V. (L. Chancellor.)

Exmouth, V.

Gainford, L.

Halifax, V. (L. Privy Seal.)

FitzAlan of Derwent, V.

Greville, L.

Hereford, V.

Hampton, L.

Northumberland, D.

Monsell, V.

Harris, L.

Swinton, V.

Howard of Glossop, L.

Bath, M.

Hutchison of Montrose, L.

Amulree, L.

Jessel, L.

Cavan, E.

Balfour of Burleigh, L.

Kinnaird, L.

Derby, E.

Bingley, L.

Luke, L.

Feversham, E.

Boyle, L. (E. Cork and Orrery.)

Marks, L.

Lucan, E. [Teller.]

Melchett, L.

Midleton, E.

Carnock, L.

Rankeillour, L.

Munster, E.

Clwyd, L.

Remnant, L.

Onslow, E.

Colwyn, L.

Rennell, L.

Plymouth, E.

Doverdale, L.

St. Levan, L.

Stanhope, E.

Eltisley, L.

Strathcona and Mount Royal, L.

Elton, L.

Elibank, V.

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

Templemore, L.

Wolverton, L.

NOT-CONTENTS.

Mansfield, E. [Teller.]

Fairfax of Cameron, L.

Lamington, L.

Peel, E.

Hastings, L.

Phillimore, L. [Teller.]

Killanin, L.

Shute, L. (V. Barrington.)

Ashton of Hyde, L.

Resolved in the affirmative and Amendment disagreed to accordingly.
On Question, Bill read 2a.
LORD SANDERSON LORD SANDERSON had given Notice that, in the event of the Bill being read 2a, he would move that it be referred to a Select Committee. The noble Lord said: My Lords, in view of the figures of the Division just announced I do not move the Motion standing in my name.
Bill committed to a Committee of the Whole House.

ELECTRICITY SUPPLY (METERS) BILL.
Order of the Day for the House to be put into Committee read.
LORD ELTISLEY: My Lords, I endeavoured to make clear the purpose of this Bill in the debate which took place on Second Reading on March 24. I do not wish to weary the House with a further disquisition on the objects of the Bill, but in view of the lengthy nature of the Amendments on the Order Paper perhaps I ought to remind your Lordships that during that debate I undertook that Amendments should be introduced in Committee to make clear certain points which were said to be left in doubt by the Bill as it stood. I beg to move that the House do now resolve itself into Committee.
Moved, That the House do now resolve itself into Committee.—(Lord Eltisley.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL OF ONSLOW in the Chair.]
Clause 1:
Appointment of examiners, etc.
(3) The Electricity Commissioners may prescribe the fees to be paid to meter examiners by any consumer or the undertakers as the case may be in respect of the certifying or examination of any meter. Provided that any fees taken by a meter examiner being also an officer of the Electricity Commissioners appointed under subsection (2) of this section shall be paid by him into the fund established by the Electricity Commissioners under subsection (3) of Section twenty-nine of the Electricity (Supply) Act, 1919.
(4) Meter examiners appointed under this Act shall have the powers and duties in relation to meters which are conferred or imposed on electric inspectors by Sections thirty-six, fifty, fifty-one and fifty-seven of
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the Schedule of 1899 and any corresponding provision and such powers and duties shall cease to be exercised by electric inspectors accordingly, and the said Sections fifty, fifty-one and fifty-seven and any corresponding provision shall have effect in relation to meters as if references to a meter examiner appointed under this Act were substituted for references to an electric inspector.
LORD ELTISLEY LORD ELTISLEY moved, in subsection (3), immediately before the proviso, to insert, "and may prescribe different fees in relation to different areas." The noble Lord said: The first sentence of subsection (3) reads:
" The Electricity Commissioners may prescribe the fees to be paid to meter examiners by any consumer or the undertakers as the case may be in respect of the certifying or examination of any meter."
The purpose of the manuscript Amendment I have handed in is to meet the case of certain areas in which special circumstances may arise to justify an alteration in the fees prescribed by the Electricity Commissioners. I beg to move.
Amendment moved—
Page 1, line 22, after (" meter ") insert (" and may prescribe different fees in relation to different areas ").—(Lord Eltisley.)
On Question, Amendment agreed to.
LORD ELTISLEY LORD ELTISLEY moved, at the beginning of subsection (4), to insert "Subject as hereinafter provided." The noble Lord said: This Amendment and the other two Amendments in line 8 and line 11 are all drafting Amendments, consequential upon the insertion of the new proviso to the subsection.
THE LORD CHAIRMAN: With your Lordships' permission, I will put the three Amendments together.
Amendments moved—
Page 2, line 4, at the beginning insert (" Subject as hereinafter provided ")
Page 2, line 8, leave out (" and any corresponding provision ")
Page 2, line 11, leave out (" and any corresponding provision ").—(Lord Eltisley.)
On Question, Amendments agreed to.
LORD ELTISLEY LORD ELTISLEY moved to insert at the end of subsection (4):
" Provided that this subsection shall, in its application to the Administrative County of London, have effect as if for the words ' fifty-one and fifty-seven ', in each place where those words occur in this subsection, there were substituted the words ' and fifty-one ' ".
The noble Lord said: This proviso is put in to deal with the point that has been raised by the London County Council and has been agreed with them. Under the Bill as originally drafted all the powers originally conferred on electrical inspectors by Sections 36, 50, 51 and 57 of the Electric Lighting (Clauses) Act, 1899, relating to meters—such as, for example, inspection, testing, certification and examining—will in this Bill be conferred upon meter examiners. The City of London and the County of London are not, however, themselves electrical undertakers and are not likely to become so; in fact I believe that the London County Council are debarred by Statute from becoming electrical undertakers. They have appointed electrical inspectors in the past, and under this Amendment they will retain the right, which they have now had For many years and which they have exercised, of themselves appointing electrical inspectors.
Amendment moved—
Page 2, line 14, at end, insert the said proviso.—(Lord Eltisley.)
On Question, Amendment agreed to.
Clause 1, as amended, agreed to.
LORD ELTISLEY LORD ELTISLEY moved, after Clause 1, to insert the following new clause:
Apparatus for meter testing etc.
.—(1) Subject as hereinafter provided, it shall be the duty of any authorised undertakers to provide, and to maintain in proper condition, such suitable apparatus as may be prescribed or approved by the Electricity Commissioners for the examination, testing and regulating of meters used or intended to be used in connection with the supply of electricity by those undertakers, and to afford to meter examiners appointed under this Act all necessary facilities for the use of the said apparatus for the purpose of the exercise and performance of their powers and duties in relation to such meters as aforesaid:
Provided that the Electricity Commissioners, if satisfied with respect to any authorised undertakers that any such apparatus provided by some other person is available for the purpose of the examination, testing and regulating of such meters as aforesaid, and that satisfactory arrangements have been or are about to be made for the use of the apparatus for that purpose by the said undertakers, may by order direct that this subsection shall not apply to those undertakers; and any such order may be revoked by a subsequent order of the Commissioners without prejudice to the making of a new order.
(2) Any two or more authorised undertakers may with the approval of, and shall if required by, the Electricity Commissioners
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enter into any carry into effect arrangements—

(a) for the provision of such apparatus as aforesaid by one or more of the parties to the arrangements for the use of the parties thereto, or any of them; and

(b) for the examination, testing and regulating, by the party providing any apparatus as aforesaid, of meters used or intended to be used in connection with the supply of electricity by the other parties, or any of them;

and may enter into, and carry into effect, arrangements for the repairing and reconditioning, by any party to the arrangements of meters used or intended to be used in connection with the supply of electricity by the other parties or any of them.
Any such arrangements as aforesaid shall be made on such terms and conditions as may he agreed between them or, if the arrangements were entered into in pursuance of a requirement of the Electricity Commissioners on such terms and conditions as may, in default of such agreement, be settled by the Commissioners.
(3) So long as there are in force any such arrangements as aforesaid for the provision of apparatus by any authorised undertakers those undertakers shall have the same duties under subsection (1) of this section in relation to the meters which they are required by the arrangements to examine test and regulate, as they have under that subsection in relation to meters used or intended to be used in connection with the supply of electricity by the undertakers themselves.
The noble Lord said: I will not weary the Committee by reading the new clause, which is a very lengthy one. I should just like to add these words in support of it. The certification and testing of new meters, and also the certification and testing of existing meters, within the next ten years are contemplated by a later Amendment and will involve the setting up of efficient testing stations and apparatus for equipping those stations. Now it is proposed by this Amendment that undertakers who have already power to do so without further authority—and many of them have already in fact done so—should be placed under a duty to provide meter testing apparatus. It is also proposed that, in order to avoid any unnecessary duplication of individual stations, which would probably result if every undertaker built a station for himself, undertakers should be given a power to enter into arrangements for the common use of central testing stations. It is contemplated that central testing stations will be set up in suitable areas and used by all the undertakers who are giving supply in those areas.
Amendment moved—
Page 2, line 14, after Clause 1 insert the said new clause.—(Lord Eltisley.)
On Question, Amendment agreed to.
Clause 2:
As to existing meters.
2.—(1) An existing meter shall notwithstanding anything in any Act or Order to the contrary be deemed until it is disconnected and removed to be and always to have been an appropriate meter duly certified for the purposes of Sections forty-nine to fifty-nine of the Schedule of 1899 and of any corresponding provision.
(2) For the purposes of this section the expression "existing meter" means any meter installed at the date of the passing of this Act or at any time after that date but before the appointed day on the premises of an ordinary consumer for the purpose of ascertaining the value of the supply.
LORD ELTISLEY LORD ELTISLEY moved to leave out Clause 2 and insert the following new clause:—
Transitional provisions as to existing meters.
2.—(1) Subject as hereinafter provided, every meter to which this section applies shall be deemed for all purposes to be a proper meter for ascertaining the value of the supply, and the register of any such meter shall be evidence, but not conclusive evidence, of that value, and the Schedule of 1899 shall apply in relation to any such meter as aforesaid as if it were a certified meter within the meaning of that Schedule:
Provided that Section fifty-seven of the said Schedule shall not apply in relation to any meter to which this section applies.
(2) This section shall apply to every meter installed on the premises of an ordinary consumer for the purpose of ascertaining the value of the supply, being a meter which has been installed on those premises for that purpose before the appointed day (except any meter which is a certified meter within the meaning of the Schedule of 1899, or is the subject of a special agreement between the consumer and the undertakers), but shall cease to apply to any meter at the time when it is first disconnected and removed after the beginning of the appointed day, or at the expiration of ten years from the beginning of that day, whichever first occurs, except in so far as it may be material to adduce the reading of the register of the meter as evidence of the value of the supply in any previous period.
(3) In this section the expression "the value of the supply" has the same meaning as in the Schedule of 1899.
The noble Lord said: This Amendment is designed to remedy the existing position under which the majority of the six
736
million existing meters are not certified. It is impracticable to have all these meters certified forthwith, and the cost of so doing would fall heavily on the consumers, as I explained when I moved the Second Reading of the Bill recently in the House. Clause 2 of the Bill was criticised by the noble and learned Lord, Lord Roche, in a debate which took place on the Second Reading of the Bill, on the ground of its retrospective effect. As a result of that criticism the clause has been redrafted in the form in which it now stands in this Amendment. Its effect is to make any existing meter evidence, though not conclusive evidence, of the value of the supply; so that, while the meter is not in the same category as a properly certified meter, which, by Section 57 of the 1899 Act, is conclusive evidence, these meters which have not been certified and which are now installed are nevertheless to be taken as evidence of the value of the supply which the Court may accept in any proceedings instituted by the undertaker for the recovery of an amount due for electricity. Lord Roche has been called away and is unable to take part in this debate and say a word in support of this clause, but the clause has been approved by him and I have his authority to say so in moving this Amendment.
Amendment moved—
Page 2, leave out Clause 2 and insert the said new clause.—(Lord Eltisley.)
On Question, Amendment agreed to.
Clause 3:
Definitions.
3. In this Act unless the context otherwise requires—
" The appointed day" means the first day of January nineteen hundred and thirty-seven;
" Corresponding provision "means a provision corresponding to the provision of the Schedule to the Electric Lighting (Clauses) Act, 1899 (as amended by any subsequent Act), in relation to which the expression is used and contained in any Act or Order relating to the supply of electricity which does not incorporate the said Schedule.
LORD ELTISLEY LORD ELTISLEY moved to make the definition of "appointed day" read as follows:
" ' The appointed day ' means such day as the Minister of Transport may by order appoint."

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The noble Lord said: This Amendment has been introduced in order to afford sufficient time for the completion of all the administrative details necessary in connection with the appointment of these new meter examiners.
Amendment moved—
Page 2, line 28, leave out from (" means ") to the end of line 29 and insert (" such day as the Minister of Transport may by order appoint ").—(Lord Eltisley.)
On Question, Amendment agreed to.
LORD ELTISLEY LORD ELTISLEY moved to leave out the definition of "Corresponding provision" and insert:
" (2) Any reference in this Act to the Schedule of 1899 or to any provision of that Schedule shall be construed as including a reference to the corresponding provision of any Act or Order which does not incorporate that Schedule or that provision thereof, as the case may be."
The noble Lord said: This is a drafting Amendment designed to avoid the repetition of the expression "corresponding provision" throughout the Bill.
Amendment moved—
Page 2, leave out from the beginning of line 36 to the end of line 5 on page 3 and insert the said new subsection.—(Lord Eltisley.)
On Question, Amendment agreed to.
Clause 3, as amended, agreed to.
Remaining clause agreed to.

MILITARY MANŒUVRES.
THE UNDER-SECRETARY OF STATE FOR WAR (LORD STRATHCONA AND MOUNT ROYAL)THE UNDER-SECRETARY OF STATE FOR WAR (LORD STRATHCONA AND MOUNT ROYAL) rose to move, That an humble Address be presented to His Majesty, praying His Majesty to make an Order in Council under the Military Manoeœuvres Acts, 1897 and 1911, a draft of which was presented to this House on the 11th day of February last. The noble Lord said: My Lords, this Resolution is in the usual terms, and, if it is agreed to, the draft Order will be laid before His Majesty in Council as soon as possible after the King's reply to the Address is received. It is proposed to apply the Manoeuvres Acts for a period of three calendar months from 15th July over an area comprising parts of Surrey and Sussex, the major portion of the area
738
being in Sussex. The 1st Cavalry Brigade, 1st and 2nd Divisions of the Aldershot Command, and the 10th and 12th Infantry Brigades from Shorncliffe and Dover respectively, will train in this area during the period 27th July to 19th September. No tanks will take part in this training, as the 1st Tank Brigade will train on Salisbury Plain, but the Royal Air Force will co-operate. In August the 2nd Division will carry out an exercise set by the General Officer Commanding-in-Chief, Aldershot Command. The 1st Division, in conjunction with the 1st Cavalry Brigade, the 12th Infantry Brigade and attached troops, will take part in an exercise directed by the General Officer Commanding-in-Chief, Aldershot Command, between 14th and 19th September. Approximately 20,000 troops will train in the manoeuvre area. I think it will be for the convenience of your Lordships if I state that a map showing the manoeuvre area has been placed in the Library and copies of the draft Order in Council are available for noble Lords in the Vote Office. I beg to move.
Moved, That an humble Address be presented to His Majesty, praying His Majesty to make an Order in Council under the, Military Manoeuvres Acts, 1897 and 1911, a draft of which was presented to this House on the 11th day of February last.—(Lord Strathcona and Mount Royal.)
On Question, Motion agreed to, and ordered accordingly: the said Address to be presented to His Majesty by the Lords with White Staves.