COTTON SPINNING INDUSTRY BILL.

HL Deb 19 May 1936 vol 100 cc1070-122

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Templemore.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF ONSLOW in the Chair.]

Clause 1:

The Spindles Board.

1.—(1) With a view to the elimination of redundant spinning machinery in cotton mills in Great Britain, there shall be established a board (which shall be called, and is hereafter in this Act referred to as, "the Spindles Board ") having such powers as are conferred on them by the following provisions of this Act.

EARL PEEL moved, in subsection (1), after "Great Britain," to insert: a poll of the owners of cotton mills in Great Britain shall be taken forthwith and, if the owners of not less than three-quarters of the spindle capacity of all the spinning machinery in cotton mills in Great Britain, voting in such manner and form and within such period, as is prescribed by the Board of Trade, are certified by the Board of Trade to have voted in favour of the establishment of a board having the powers specified in this Act, then

The noble Earl said: This Amendment, which stands in the names of four of my noble friends as well as my own, must be read with the further Amendment at the top of page 2 of the Marshalled List, to insert a new subsection. The intention of this Amendment is that before the measure comes into force a poll shall be taken of the owners of spindle capacity, as it is called, in such a manner as the Board of Trade may prescribe. A report is to be made by the Department as to the result of that poll, and if it is found that three-quarters of those owning the spindle capacity have not voted for the establishment of the Spindles Board "this Act shall cease to have effect," as provided in the proposed new subsections.

I do not think that, on the point of principle, there ought to be any great objection on the part of the Government. The President of the Board of Trade lent rather a sympathetic ear to this proposal. May I quote what he said in Standing Committee in another place on February 13? He said: I should hold a different view about this Amendment if I could get an assurance from the honourable member for Mansfield (Mr. Charles Brown) that if a new ballot were promoted and there were a 75 per cent. majority in favour he would withdraw his opposition to the Bill. If the honourable member would do that, it might modify my view. It is quite clear, therefore, interpreting this Parliamentary language of the President of the Board of Trade, that if the honourable member concerned withdrew opposition to the Bill the President would look with a favourable eye—I think I may say—upon such an Amendment. The honourable member concerned was perhaps not quick enough to take up the challenge and no doubt the matter then passed off.

The opinion of the trade in a question of this kind is obviously of the greatest possible importance, because admittedly the Government took this measure up, as it were, and introduced it in another place largely influenced by what they held to be the opinion of the trade on that subject. I do not think that my noble friend would deny that. Let me say one word only about the 75 per cent. Other noble Lords may have views upon the precise majority required, but I think everybody would agree that when in a trade you establish a taxing authority, as you are proposing to do here, and when compulsory levies are to be made from the whole of the trade, in such a case, anyhow, a bare majority should not be sufficient to establish that right. Moreover, I should like to quote the authority of a very important committee of the Federation of British Industries, of which Sir James Lithgow was the chairman, which said that in schemes of this class certainly not less than 75 per cent. should vote for the scheme. There is therefore high authority, not only from the Federation of British Industries but also from the President of the Board of Trade himself, as to the necessity in cases of this kind of establishing a substantial majority in the trade in order to secure that the rest of the trade should be compulsorily bound.

Some of your Lordships may say: "Yes, but you have already had a ballot in the trade." There was no doubt such a ballot conducted some time ago, at the end of the year 1934, a year and three-quarters ago. I would submit, first, that there has been a great deal of change of opinion since then and the details of the measure are now far better known than they could possibly have been known at that time. I should like also to suggest that if you have a ballot of that kind it should certainly fulfil three qualifications: first, it should be impartially conducted; secondly, it should not be managed by interested parties: and thirdly, when a final day is settled for the conclusion of the ballot, the voting should not be re-opened. If you examine the history of the way in which this ballot was taken you will find that not one single one of these rules was observed; every one of them was broken. I am going to submit that, whatever might have been the result of this ballot, it was not conducted in a way which would have secured a fair decision as to the view of the trade.

I do not quite know why, but two sets of ballot papers were issued, with one of which I am dealing to-night. I think, incidentally, that having two sets of ballot papers about two different things is rather confusing. As regards this matter with which we are now dealing, the reply was printed: "I am in favour of the proposals put forward by the Drafting Committee and the Resolution relating thereto passed at the meeting of the General Committee of the Federation on 9th October, 1934." The papers had to be returned—both the one in which I am interested and the other about a cotton spinners' association—not later than November 10. But the ballot paper was issued in rather a remarkable form. It was not clear what you should do if you opposed the scheme, although it was clear what you should do if you favoured the scheme. It appeared to be the inference that if you were against the scheme you did not vote at all, and it was on this interpretation that no doubt a very large number of the owners of the millions of spindles who were supposed to be included in the ballot did not vote. I think that part of the idea was this: many of them thought that it would be ineffective altogether, because the idea had prevailed that unless 80 per cent. of the owners of spindles supported the scheme it would not come into action. That is the first point I make about the starting of the ballot. I submit that if you have a ballot you ought to state quite clearly on the ballot paper how you vote, "Aye" or "No "; "Aye" for the scheme and "No" against it.

Moreover, I have to state that those who were conducting the ballot were not impartial people but were the people who were themselves promoting the scheme, a very remarkable way of conducting an impartial ballot. The ballot was not going too well, and on November 3, 1934, the secretary of the Federation addressed rather a remarkable appeal to the voters. May I read his words? He said: I need hardly remind you that it is only when the final form of the rules of the Cotton Spinners' Association and the scheme for dealing with surplus capacity are submitted and approved that any firm will be definitely committed to them. They wore told, therefore, in authoritative language by those who were conducting the ballot and by those who were responsible for the scheme, that at that stage they were not bound at all. Is that a fair way of conducting a ballot: to tell voters that they will not be bound by the scheme, but afterwards, when the poll is declared, to tell them that they were bound by the scheme? I cannot think that anybody could support a method of that kind.

Not only that, but November 10 was fixed as the date of the closing of the ballot. Was the ballot closed then? No! I understand that the supporters of it did not think that a sufficient number of people had voted, or were not voting the right way, and actually the ballot was not closed until December 18, a month after the date fixed. I am not quite sure whether I know on what authority that ballot was extended. Very odd methods were used in order to discover who voted for and who voted against the scheme. May I quote from a letter written by a gentleman called the liaison officer, who, I understand, acted for the Federation. He says, referring to an answer: …you have marked it as ' No.'…I enclose a new form "— they are most indefatigable people; if you vote against they will not accept it, and send a new form— and shall be greatly obliged if you can see your way to answer in the affirmative, but with a proviso that the capital required for the scheme should he provided by the Government. This will at least have the effect of showing that you are in favour of the scheme but that you, like certain others, consider that the Government should come to the assistance of the industry.

The answer to that letter was as follows: Yes, provided that all the capital required to purchase the surplus spindleage is supplied by the Government… I do not call that a very enthusiastic acceptance, or a very definite acceptance, of this scheme. The answer goes on: …if we have to contribute financially to any scheme for this purpose, our answer is definitely ' No '. I may assume, I think, now that they have to contribute to this scheme, that their answer would be definitely "No." It would be very interesting to know whether these gentlemen are put down as answering for or against. I only put this correspondence forward in order to ask whether any one of your Lordships can say that that is a fair way in which to conduct a ballot. I submit that it was not, and although much of its management might have been clever on the part of the supporters, it cannot be considered as an impartial ballot, to obtain the impartial views of the trade.

I have here a report in The Times of June 25, 1935, of a speech by the Prime Minister, which was made some seven or eight months after this so-called ballot was taken. What are the words he uses? He says: In the same way we have promised to introduce a Bill, and a Bill is now in draft, to deal with the surplus spindles in the spinning department. Then there are the important words: That will be submitted to the industry, and, if thought desirable, will be passed into law. It is quite clear why those words were spoken by the Prime Minister. They were spoken after this ballot had been taken. If the Government were satisfied with the ballot I do not know why they should have wanted to have another one; but it is clear that they were conscious at that time that there was much dissatisfaction in the trade at the way in which the ballot had been taken, and that the Prime Minister considered that the matter should be again submitted to the industry. Of course the words "submitted to the industry" could only mean, and were understood by those who had taken part in the ballot to mean, that at the proper time a ballot would be taken. I submit that your Lordships should give effect to that undertaking of the Prime Minister and accept this Amendment, which would carry out that pledge.

I have only two further observations to make. Objections have been raised, I think, in another place, that the taking of this ballot would delay the operation of the measure. It would delay it, but I think I may say that the ballot could easily be carried out in a month, and as the levy is going to last for fifteen years, it may well be fair to sacrifice a month in order to ascertain the opinion of the trade now that all the facts are before them, all the details of the Bill are prepared, and they know-exactly what they are voting about. I think, if I may make this appeal to the Government, that it would be a very great advantage to the trade itself, and to the future satisfactory working of the trade, if any sense of bitterness were removed as to the way in which that ballot was taken, and if any indecision as to the feeling of the trade were removed by a ballot such as I propose, conducted not by one of the two parties to the ballot, whether for or against the scheme, but impartially, under the auspices of the Board of Trade.

May I put this last point? It is clear that we may have other schemes of this kind. If we are to have them it is well to set fairly any precedent, and to show that in this case there is no doubt about the matter, and that the opinion of the trade has, as far as it is possible to do so, been obtained in an impartial manner. I therefore strongly urge upon the Government that they should follow the opinion, or the conditioned opinion if you like, of the President of the Board of Trade, and that they should get rid of all this discussion and division of opinion, and soreness and bitterness, by accepting my Amendment and holding a fair and impartial ballot, in order to decide what really is the opinion of the trade. I beg to move.

Amendment moved—

Page 1, line 9, after (" Great Britain ") insert: (" a poll of the owners of cotton mills in Great Britain shall be taken forthwith and, if the owners of not less than three-quarters of the spindle capacity of all the spinning machinery in cotton mills in Great Britain, voting in such manner and form and within such period, as is prescribed by the Board of Trade, are certified by the Board of Trade to have voted in favour of the establishment of a board having the powers specified in this Act, then ").—(Earl Peel.)

LORD SANDERSON

We on these Benches think this Amendment is a very reasonable Amendment, and if I may say so I think the noble Earl has put a very strong case for it. There seems to be little doubt that the ballot was conducted in an unsatisfactory way, and after all the majority obtained was not very large. I also gather that a good part of the majority consisted of people who voted with qualifications at first, and afterwards came in. That was rather unsatisfactory, and it is surely a mistake to force a law on people who think they are being treated unfairly, whether rightly or wrongly, and afterwards have a grievance. It would surely be better in the circumstances if another ballot were taken. It would not cost very much and, as the noble Earl has said, it would not take more than a month. I think that the Bill, if it were passed, would then start under much more favourable auspices than it will if it is forced through in face of a great deal of feeling in the cotton trade. We on these Benches therefore support the Amendment.

VISCOUNT BERTIE OF THAME

The circular letter written by the Federation of Manchester Cotton Spinners, referred to by my noble friend Lord Peel, was probably written under a misapprehension, but it was none the less misleading as events turned out, and therefore the only fair thing to do is to have a fresh ballot. There is one question which I wish to ask Lord Templemore, of which I have given him private notice, and that is, if he will tell the Committee what the state of the poll was at the time when it was extended in the extraordinary way that it was extended.

LORD PHILLIMORE

I think there is very little in reality that parts the Government from us, and my desire is only to see implemented the principle which the Government themselves laid down when they introduced this Bill. The noble Lord who is in charge of the Bill was the first to say that this was a Bill which has a decisive majority of Lancashire opinion behind it. He said he could assure your Lordships that without that opinion it would certainly not have been worth while for the Government to introduce it. The noble Earl, Lord Derby, whose speech necessarily had so profound an influence on your Lordships, was careful to say: 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 when you are making your decision will remember that this is the demand of the industry itself. And the Secretary of State for Air used words very much to the same effect. Now quite simply we are asking that this principle, which the Government accept and indeed lay stress on, should be made sure.

I do not suppose the Government themselves would ever use this particular precedent again, nor this particular method by which the verdict of the Lancashire cotton industry was attempted to be obtained. We are promised that this Bill is the forerunner of other Bills dealing with the cotton trade. Is it to be believed that in each section of that industry so unsatisfactory a method of obtaining the opinion of the trade will again obtain? I cannot believe it. Only last night in another place the Government announced their preference for voluntary action on the part of the industry under discussion, and with that object I understand they are introducing clauses to postpone the effective working of that Bill in the hope that voluntary action will take them further. Even supposing we are wrong in thinking that a two-thirds majority is not available for the present measure, we are asking, as the noble Earl, Lord Peel, pointed out, for nothing more than a short postponement of the action of this Bill, a far shorter one than is contemplated in the case of the Coal Mines Bill.

There is another set of reasons which I think was perhaps not fully brought out on Second Beading. During the boom years of the Lancashire cotton trade—comparatively boom years at any rate—from 1926 to 1930, the proportion of active spindles to the whole number averaged only 84 per cent. At the present time, we are told, only 37,000,000 spindles are required for the production of the yarn that can be sold and there exist 48,000,000, 3000,000 of which are permanently stopped and 4,000,000 of which are necessary for spare parts for the running of the industry. In other words, out of the 45,000,000 spindles available no less than 82 per cent. are already in active use, as against 84 per cent. in the boom years, quite apart from those required for spare parts. Now what does this show? It shows that this redundancy, which it is the object of this Bill to remove, has been eliminating itself, possibly by drastic and sad steps but it has been eliminating itself so effectively that at the present time at least 82 per cent. of the possible spindles are in active operation. For the sake of eliminating another 4,000,000 or 5,000,000, possibly 10,000,000 spindles, is it wise not to take the true opinion of Lancashire industry, revised up to date in the light of the better trade that is now available, and therefore to accept the proposal of the noble Earl for a further ballot?

LORD FAIRFAX OF CAMERON

I rise to support the Amendment which has been so ably moved by my noble friend Lord Peel. The original Committee which was appointed to prepare a scheme to be submitted to the Colwyn Committee was in considerable disagreement. At one of its meetings it was moved and seconded that the redundancy proposals should be eliminated from the cotton control scheme. The Chairman of the Committee, realising that if this proposal were carried it would wreck the scheme, declined to put it to the meeting and immediately adjourned. He thereupon got in touch with the Bankers' Industrial Development in London, and as a result two of the members of that Committee went to Manchester and persuaded the mover and seconder to withdraw their motion temporarily. If these measures had not been resorted to, I am of opinion that the scheme would never have reached Lord Colwyn's Committee.

The Federation of Master Cotton Spinners, when pressing firms to vote, made the following statement in their letter of November 3, 1934—Lord Peel has already road it, but it is so important that I venture to read it again: I need hardly remind you that it is only when the final form of the rules of the Cotton Spinners' Association and the scheme for dealing with surplus capacity are submitted and approved that any firms will be committed to them. I, unfortunately, have been associated with the cotton industry for about eighteen years, and our position is that we did not return the forms which were sent to us for the purpose of voting because we considered the whole system was in a preliminary or nebulous stage and would have to be reconsidered. As a matter of fact, the accountant of the Federation of Master Cotton Spinners, who was receiving the ballots, telephoned pressing us to send in our reply. We asked him which he would rather have—our reply against the scheme or no reply at all. He said: "Certainly, if you are voting against the scheme then I would rather have no reply." It is generally supposed that those who are conducting a ballot should be unbiased, and it would therefore appear very curious that those in charge of this ballot should have been so prejudiced in favour of a scheme.

In view of the statement of the Federation of Master Cotton Spinners which has been referred to, we who oppose the Bill feel we have not received proper treatment. I am certain that there are many other firms that took the same view of the matter as we do, and who should be given an opportunity of registering their votes in a proper constitutional manner. We are not asking much, as this vote need not take more than a couple of weeks. It would only take three or four days to send out the forms, and they could be returned within ten or fourteen days. If they gave those in favour of the Bill their 75 per cent. of the total votes cast, we would be quite willing to withdraw our opposition, although we entirely disagree that the Bill is a panacea for the troubles of the cotton trade. It is only fair to your Lordships' House that you should be satisfied before passing this Bill, which we are advised is a Spinners' Bill, that there is evidence that 75 per cent. of the trade is in favour of it. I am of the opinion that this is most important, as the present Bill differs so radically from the scheme on which the trade originally voted eighteen months ago. In support of my contention, and in spite of the fact that it was considered a formal ballot, the accountant to the Federation, after the expiration of the period for voting, continued to solicit replies in favour of the scheme from both sides, and I expect many firms changed their minds thinking they would be given another opportunity of registering their votes in view of the Federation's letter of November 3, 1934.

It is generally admitted that the total number of spindles in Lancashire to-day is about 42,307,000, which, if converted into mule equivalents, is approximately 47,829,000, of which 3,180,000 are in mills that have been closed down and 4,000,000 are estimated to be permanently out of employment, as the noble Lord, Lord Phillimore, has already told your Lordships. It really appears, therefore, that there are only about 36,000,000 to 37,000,000 spindles necessary, if running full time, to produce 1,140,000 lbs. of yarn, which is the total estimated requirements of yarn for all purposes. If these figures are correct—and I have every reason to believe they are—there is only a redundancy of 7,000,000 spindles, and if the trade improves as it is doing at present these may easily be required. If you take the Joint Committee's figures up to date, you see that they report that during February and March, 1936, running mills ran 87 per cent. of their spindles as compared with only 73 per cent. when the scheme was mooted in 1934; so that basing on 87 per cent. of running, there would be little or no saving for a firm to run 100 per cent. if they had to pay a levy for doing so. In other words, the levy would rob the firm of practically all the advantages of concentrating on 100 per cent. production.

The prices of raw materials throughout the world are gradually improving, with the result that many countries which produce raw materials are enabled to purchase more cotton goods, their power of purchasing being largely governed by the prices at which they can sell their raw materials. Personally, I am of the opinion that if there has to be a levy, it would be far more constructive to use it for assisting the export trade rather than for breaking up spindles. I submit that there is no pressing need for this Bill, and certainly not so pressing a need as not to be able to give the firms in the cotton trade the opportunity of having a formal ballot. I hope that, in view of the various arguments which I have advanced, His Majesty's Government will be able to see their way to accept the Amendment.

THE SECRETARY OF STATE FOR AIR (VISCOUNT SWINTON)

This Amendment quite plainly asks your Lordships to reverse the decision which you gave by a very large majority on the Second Reading a week or two ago. The decision which your Lordships then took to give a Second Reading to this Bill clearly implied three things. In the first place, it implied that the House was satisfied that there was a sufficient weight of opinion in the cotton trade behind the Bill to justify your Lordships in that vote. Your Lordships obviously were equally satisfied that the Bill was right in principle. I am not going to follow the last noble Lord in his speech which, if I may say so, would have been more appropriate to the Second Reading. Another thing—I am sure I speak in the recollection of the Committee—that was very much in your Lordships' minds was that there had been quite enough delay in this matter, and that if this Bill were to be passed the sooner it was passed the better. Neither the Government nor this House would have been justified in giving a Second Reading to the Bill by a large majority unless they had been completely satisfied, as indeed the majority of your Lordships were satisfied, on these points. Therefore, this is largely an attempt to reverse that decision.

It is suggested that the ballot was not reasonably conducted. This was not a ballot under the Ballot Act in an election. Lancashire has been in the habit of taking ballots almost ever since there has been a cotton trade. I have no doubt at all it was taken in the manner to which Lancashire was accustomed. I have no doubt, equally, that the very shrewd men in the cotton trade knew exactly what they were voting upon. Indeed, I was not greatly impressed, and I doubt whether your Lordships were, with the argument advanced by the noble Lord, Lord Fairfax, who took so little interest in whether he cast his vote for or against that he said: "Well, which would you like ma to do, to give no vote or to vote against? "If that was all the interest which the noble Lord took in a ballot which was greatly exercising the people of Lancashire, I do not think he really is entitled to come here and ask that a further ballot should be taken in the trade.

My noble friend Lord Bertie asked what was the effect of keeping the ballot open and my noble friend Lord Peel asked why it was done. It was kept open for a longer time in order to meet the very point which the noble Earl, Lord Peel, himself made, that it was desirable that as many people as possible should have the full opportunity of voting, and to reduce the number of those people who, if they desired to vote, had not cast a vote at all. It made no difference to the general proportion of people who were for or against the scheme. What it did do was to reduce the proportion of non-voters in November, I think it was, when the ballot would ordinarily have closed. A good deal has been said about whether votes were really given for or against the proposals. That question having been raised, the Board of Trade themselves made a full scrutiny of every paper which was filled up, and the President of the Board of Trade authorises me to state that the Board of Trade take full responsibility for the figures that 27,750,000 spindles voted unconditionally in favour of the proposals and 8,750,000 spindles voted against. There were a certain number of people who did not take the trouble to vote at all, but there is no foundation, I am assured, for the suggestion that people ever thought there was going to be a second ballot. Any documents which may have accompanied the ballot paper made it clear that if the Colwyn Committee was satisfied—and the noble Lord, Lord Colwyn, is here in his place—there was enough opinion to justify the trade in going forward to ask the President of the Board of Trade to implement his undertaking, then upon that voting the Committee would go to the President and would ask him to introduce the legislation.

Let me add this. I did reply to my noble friend last time that any changes which were made in the Bill, as distinct from the proposals put forward, were changes—and I defy anybody to contest this—which were in favour of and not against the objectors to the Bill. For instance, the levy was at a lower rate than anybody expected at the outset. There were also one or two other points which I need not go into now. There is no doubt the voters in Lancashire understood quite well what they were doing. Many of your Lordships have fought contested elections earlier in your lives. We have all of us at every election had a number of very good reasons why we lost the election. The electors, we would say, had not really understood the issues, and things of that kind. Few of us were inclined to accept what is generally the real reason—namely, that the voters wanted to vote for the other fellow and not for us. I venture to submit that a large number of the trade quite understood what they were voting about, and that they voted in favour of this proposal. I invite your Lordships to reject this Amendment and to adhere to the decision which you came to upon the Second Reading.

VISCOUNT BERTIE OF THAME

I asked the noble Viscount to give to me the state of the poll. He has not given me the state of the poll. When I asked for the state of the poll I meant the figures, which have not been given. The noble Viscount also suggested in his speech that former ballots have been taken in Lancashire, and that the issues have been well understood, but were those former ballots extended in the way that this was?

VISCOUNT SWINTON

I am sorry I did not give the figures but they were given on the Second Reading. On the 10th of November, the figures were: in favour 21,384,682; against 7,138,280; total of votes, 28,522,962. Then, as I said, the fact of carrying the ballot on did not materially alter the proportion of the vote. What it did do was to give people a further opportunity to record their votes, and the totals then rose to the following: 27,750,000 in favour, 8,750,000 against.

VISCOUNT BERTIE OF THAME

There is one other question. A moment ago I asked the noble Viscount if former ballots in Lancashire had been extended in the way this one was.

VISCOUNT SWINTON

I do not know, but I say at once that if there is any question whether people have had plenty of opportunity to vote it seems to me quite a reasonable thing to extend the time and let people cast their votes.

VISCOUNT BERTIE OF THAME

Even at Parliamentary elections?

EARL PEEL

Will your Lordships allow me to say one word in reply to my noble friend who has defended the Government? I do not think he was very enthusiastic about the way in which some of this ballot was taken. He rather brushed the thing aside generally, and said in effect that whatever the method of the ballot may be we pretty well know what the opinion of Lancashire is. I wonder if we do. That is exactly what we want to know. The reason I have brought this Amendment forward, and I hope your Lordships will support it, is that, when these things are done, they should be done properly, correctly and in order. The noble Viscount says that a great many of us have stood for contested elections. So we have. Can any noble Lord say he stood for any contested election in which a ballot was taken in this manner? If a ballot was taken in this manner I can imagine the indignation that there would be on both sides if we were able to bring forward such evidence as we have put forward in this case. I deeply regret that the Government have not thought fit to put an end to all this difficulty and bitterness by accepting this ballot, which would only take, as I said, three or four weeks.

There is one very significant silence on the part of the noble Viscount. I gave a quotation from the speech of the Prime Minister in June, 1935, in which he said that these proposals were to be submitted to the trade. That was the pledge definitely given and, I am sure, given because there was a good deal of dissatisfaction at that time with the ballot that had taken place a year before. On that the noble Viscount has nothing to say.

VISCOUNT SWINTON

I beg pardon. I am very sorry I did miss that point. It is perfectly clear what the Prime Minister meant. The Prime Minister meant that if the Lancashire trade came forward and asked for this Bill, a Bill would be drafted, and that the Bill would be shown to these people who had been responsible for coming forward. That is the simple meaning of what the Prime Minister said. There is no ground for any suggestion that any pledge was broken by the Prime Minister. The Prime Minister is just as much opposed to having any second ballot as any member of the Government. I speak for the Government as a whole.

EARL PEEL

I am very glad that the noble Viscount has referred to this matter. I was afraid he was leaving out the answer altogether. All I can say is that that is the way in which the promise was taken. No one would have been satisfied if the Bill had been merely presented to those persons who were promoting the Bill. It ought to have been presented to the whole mass of the voters who, surely should have had the opportunity of pronouncing upon it. I do not wish to keep your Lordships longer but I think I really must trouble you to go to a Division in order at least to set, if we can, a second precedent, and in order that your Lordships may assure yourselves that these

LORD TEMPLEMORE

There is a drafting Amendment to this clause. I beg to move.

Amendment moved— Page 1, line 10, leave out (" which shall be called and is ")—(Lord Templemore.)

Clause 1, as amended, agreed to.

Clause 2:

Power of Spindles Board to acquire and dispose of spinning plant, etc.

2.—(1) Subject to the provisions of this section, the Spindles Board may, during the period of two shears beginning on the appointed day, acquire by agreement—

1. (a) such premises and land used, or appropriated for use, for the purpose of the business of a cotton mill, and such machinery and other things whatsoever in or on premises or land used, or appropriated for use, for that purpose, as the Board consider it expedient to acquire with a view to the elimination of redundant spinning machinery in cotton mills in Great Britain, and
2. (b) such easements or rights in respect of land or water as appertain to, or are

methods are not to be adopted in the future for founding Bills or ascertaining the feeling of the trade.

On Question, Whether the proposed words shall be there inserted?

Their Lordships divided:—Contents, 12; Not-Contents, 52.

CONTENTS
Peel, E.	Askwith, L.	Illingworth, L.
	Fairfax of Cameron, L. [Teller.]	Lawrence, L.
Bertie of Thame, V. [Teller.]		Phillimore, L.
	Hampton, L.	Sanderson, L.
Ashton of Hyde, L.	Hare, L. (E. Listowel.)	Strabolgi, L.

NOT-CONTENTS
Hailsham, V. (L. Chancellor.)	Onslow, E.	Colwyn, L.
	Plymouth, E.	Conway of Allington, L.
Halifax, V. (L. Privy Seal.)	Rothes, E.	Denman, L.
		Doverdale, L.
Northumberland, D.	FitzAlan of Derwent, V.	Elgin, L. (E. Elgin and Kincardine.)
Somerset, D.	Leverhulme, V.
	Monsell, V.	Gage, L. (V. Gage.) [Teller.]
Aberdeen and Temair, M.	Swinton, V.	Gainford, L.
Zetland, M.		Greenwood, L.
	Amulree, L.	Hutchison of Montrose, L.
Abingdon, E.	Annaly, L.	Mottistone, L.
Cavan, E.	Bayford, L.	O'Hagan, L.
De La Warr, E.	Bingley, L.	Rayleigh, L.
Derby, E.	Boyle, L. (E. Cork and Orrery.)	Remnant, L.
Hardwicke, E.		Rennell, L.
Iddesleigh, E.	Carew, L.	Rochester, L.
Lucan, E. [Teller.]	Carnock, L.	Shute, L. (V. Barrington.)
Macclesfield, E.	Clanwilliam, L. (E. Clanwilliam.)	Sinclair, L.
Midleton, E.		Stanmore, L.
Munster, E.	Clinton, L.	Templemore, L.
		Wolverton, L.

On Question, Amendment agreed to.

enjoyed with, land which the Board propose to acquire under paragraph (a) of this subsection;

and the powers conferred by this subsection are hereafter in this Act referred to as "purchasing powers."

(2) At any time before the end of the period mentioned in the preceding subsection, the Board of Trade may, on the application of the Spindles Board and with the consent of the Treasury, make an order extending by one year the period during which the purchasing powers of the Spindles Board are exercisable.

(4) The Spindles Board may dismantle, break up, sell or otherwise dispose of any property, rights or interests acquired by them under this section, and may maintain and repair any such property if and in so far as it appears to them to be necessary so to do for the purpose of disposing of it:

Provided that the Board shall not cause any machinery or parts of machinery acquired by them under this section to be removed from Great Britain, and shall not dispose of any such machinery or parts of machinery unless they have satisfied themselves, so far as they reasonably can, that the machinery or parts will not be removed from Great Britain.

LORD STRABOLGI moved, at the end of subsection (1), to insert: Provided that such powers shall not be exercised unless the Board of Trade are satisfied that the property to be purchased is that of an undertaking which is financially solvent.

The noble Lord said: The Amendment that stands in my name, which I put down in consultation with my noble friends, is self-explanatory. It is very similar in effect to the Amendment standing in the names of two noble Lords opposite, Lord Phillimore and Lord Fairfax. I hope that the Government reply will be different from the one given on the last Amendment when the noble Viscount the Secretary of State for Air said that, your Lordships' House having given a majority for a Second Reading, that meant in effect that the Bill must not be amended or improved. I submit that that is a novel Parliamentary doctrine. It is one that I have not previously met with in the course of my Parliamentary career.

My Amendment, I should have thought, would have appealed to those who support the principle of the Bill. It does not in any way affect the principle of the Bill, and is, I believe, an improvement. The object is to prevent the money of the more efficient, more prosperous and solvent section of the industry being used to buy up or bolster up the credit of bankrupt concerns. I am informed on very good evidence indeed that since this Bill was published sharp gentlemen in Lancashire have been buying up bankrupt concerns with a view to recouping themselves with a handsome profit out of the levy and compensation. I am informed that the sharp gentry stand to make a good deal of money; I am told that they are going to do very well out of it. It would be bad enough if this were Government money that was being distributed in this way to these sharp gentry, but this is the money of the more prosperous and efficient sections of the industry. Surely your Lordships would wish to prevent that sort of sharp practice succeeding? Furthermore, the money that is paid in compensation for undertakings that are insolvent will obviously go to the creditors and will not find its way back into the industry for modernisation and improvements. It would be lost to the industry for ever.

It is notorious and, indeed, has been admitted by the President of the Board of Trade in the most public manner, that a great deal of speculation took place in the cotton industry in the so-called boom years. It has been referred to by the noble Earl, Lord Derby, the noble Earl, Lord Peel, and others with a very intimate knowledge of the cotton industry. There was a great deal of speculation; the capital was watered; concerns were handed over to people who did not understand the management of them and who quite deservedly went bankrupt. Since the proposal of this Colwyn Committee's scheme, many of the concerns that would have been scrapped altogether have been kept alive in the hope of getting compensation. I submit to your Lordships that this is on a wrong principle. When this matter was in Committee in another place a similar Amendment was discussed, and Mr. Dodd declared in resisting the Amendment—he was supporting the Government, and apparently has a professional connection with the trade and a great deal of knowledge—that of 389 mills of which he had made a survey, 118 had credit balances and 271 had debit balances. That, however, I submit, is not the same thing as being insolvent. I want to protect the prospering, continuing section of the industry from having to pay for definitely insolvent bankrupt concerns, and I submit that my Amendment would be an improvement to the Bill without striking in any way at its principle. I hope, therefore, that your Lordships will support the Amendment.

In the pamphlet that was issued on July 17 of last year by the drafting committee it was openly admitted that the creditors would share in the benefit of the scheme and that in many cases the creditors were the banks. I am not here to make any sort of attack on the banks, but I think that the banks were parties to the financial speculation of which I have spoken and which has been described and condemned by the President of the Board of Trade and others. I believe it is a fact that the banks were parties to this descent upon Lancashire by certain company promoters and people of that sort from the City of London, who were very largely to blame for its subsesequent plight and difficulties. Surely, in a Bill that is designed to reduce redundancy, to reduce the industry to manageable proportions, it is not right that these outside financiers—speculators in some cases—should stand to gain, and still less these gentry who have deliberately bought up bankrupt firms in the hope of getting something out of the levy and making what they call, I believe, a "killing," which will be a burden on the efficient section of the industry. I beg to move.

Amendment moved—

Page 2, line 25, at end insert the said proviso.—(Lord Strabolgi.)

LORD TEMPLEMORE

As the noble Lord opposite has said, this Amendment and the Amendment standing in the name of two noble friends of mine can really be taken together, and if it is convenient to the Committee I will speak now. Of course they, if they desire, can speak again and ask mo questions when I have sat down. The noble Lord opposite found fault, apparently, with the answer given by my noble friend the Secretary of State to the Amendment of the noble Earl behind me, because he said that, your Lordships having taken a certain line and given a certain decision on the Second Reading, therefore we are bound to vote against the Amendment of the noble Earl. Without saying that this Bill ought not to be amended at all—of course I do not think that—nevertheless, in the circumstances I think that the reply of my noble friend was perfectly right in that case.

To return to the Amendment of the noble Lord. I thought—and after hearing the noble Lord speak I am sure—that the idea behind this Amendment is to prevent the operations of the Spindles Board from affording compensation for the loss of capital arising out of the speculation which took place in the cot ton industry in 1020. It is common knowledge that in 1920 financial speculation was rife in the cotton spinning industry, and that mills were bought and sold at prices considerably in excess of their proper values. As a result mills were left carrying capital far greater than the cost of their replacement value, capital which had no relation at all to their earning power: a figure of from £4 to £6 per spindle was by no means uncommon. But all this belongs to the distant past and has little or no bearing on what is happening in Lancashire and the difficulties now. I venture to say that the Spindles Board will be paying on an average for the spindles they acquire, not £4 or £6, but 5s. per spindle—less than one-eighth of the present-day cost of replacement. The Board will acquire a great deal of plant from derelict concerns at considerably less than this figure of 5s. Mill-owners can always, of course, obtain the scrap value of their mills—1s. or 2s. per spindle, or whatever it may be, according to the state of the scrap metal market—and it will be for the Spindles Board to decide, in the case of each mill offered to them, whether or not the interests of the industry will be served by making some small additional payment over and above the bare scrap value in order to get rid of the uneconomic competition of the mill.

With regard to the noble Lord's Amendment, I would venture to say that it would entirely defeat the object of the Bill. As far as I can see, if the Amendment means anything, it means that the Board should purchase and scrap the efficient concerns that are doing profitable business and providing steady employment for their operatives. I cannot think that the noble Lord prefers that these firms should be put out of business and leave the field to less efficient firms.

EARL PEEL

I could not catch what the noble Lord said. Would he mind repeating his last sentence?

LORD TEMPLEMORE

I cannot believe that the noble Lord would prefer that firms doing profitable business should be put out of business, as they would be if the Amendment were carried, and leave the field to less efficient firms. The object of the Bill is to cut out the dead wood in the industry; the Amendment, on the other hand, would preserve it at the expense of the sound timber. The spindles of the financially derelict mills constitute the main obstacle to reorganisation and re-equipment of the cotton spinning industry. Whether they are running spasmodically or whether they are stopped, they are in a position to enter the market whenever there is an improvement in the demand for cotton yarn. Financially desperate, they may accept orders at hopelessly uneconomic prices, and so, spreading the production of yarn over a still greater number of units, destroy the possibility of steadier employment and more economic utilisation of machinery for the industry as a whole. While these mills remain to constitute a threat to the rest of the industry, the industry will always fail to attract the new capital which it must have if it is to reorganise and re-equip. For these reasons, my Lords, I cannot accept the two Amendments in question.

LORD PHILLIMORE

This question was discussed at some length in another place, and Amendments were brought forward in rather a different form, if I have read the proceedings aright. It was suggested that the Spindles Board should not be allowed to pay more than a certain amount for spindles belonging to insolvent firms. I gather from what has been said that it will not be the intention, and we hope it will not be the practice, to pay more than a certain amount over scrap value. In other words, the Government might have accepted the Amendment put forward in another place, which does place a limit upon what may be expended for what I may call bankrupt spindles. The Government, no doubt moved by a sense of its great majority and autocratic powers, refused to consider such an Amendment as that. Therefore it seemed good to certain of us to move the Amendment again in a simpler and more convenient form, by which the levy which is going to be made on firms, which are after all active firms, should not be used to buy up not only dead wood but rotten wood, so rotten that it cannot be used again. I think it is not in dispute that there are in the trade already in Lancashire three to four million spindles belonging to bankrupt firms, which—I will not say cannot, but are wholly unlikely ever to come into operation again.

What are the Government proposing to do? They retain power to buy these spindles, in order to pay bankrupt firms rather more than they would have been paid in the open scrap market. They are not going to do it with Government money, and, of course, not with the bankrupts' money, but at the expense of the rest of the trade. It seems to me a most remarkable procedure, and more discouraging to the proper conduct of business than anything one can imagine. I do not know whether noble Lords appreciate that it will not only be spindles but land and buildings. Some of the buildings will be out of date, heavily mortgaged, and quite useless for modern cotton production. The truth is that machinery for scrap is worth about 2s. per spindle, and anything over that is making a present to the bankrupt concerns at the expense of active members of the trade. I hope that the noble Lord who moved the Amendment will obtain better success than we did, and I shall support him in the Lobby if he desires to take a Division.

LORD STRABOLGI

I should like to exercise my right to point out that the noble Lord who spoke for the Government did not deal with the main argument that I ventured to present. He spoke of the days of 1920, and said that that was an old story, and that the rampaging and speculation of those days can be forgotten. I am talking about what has been happening in the last few months. In the last few months these gentlemen have been running round buying up derelict concerns, with the intention of doing well out of them now that this Bill has been presented. I received that information as recently as yesterday morning from a gentleman who is in favour of this Bill, and I want to prevent these speculators from making money in 1936, not in 1920. There is just one other comment. I may be wrong, but I have always understood ever since this Bill was born that its object was to reduce redundancy. I submit that you do not reduce redundancy by buying up and compensating derelict, closed-down mills which it is most improbable can ever come into production again. If the Bill is intended to reduce redundancy, you need every penny raised by the levy. I see that in the estimates of the Committee itself it is stated that there are 7,250,000 spindles in the closed mills. If you do not support this Amendment a great deal of the levy will be misused, and will not go to the reduction of redundancy. Therefore I hope your Lordships will support the Amendment.

On Question, Amendment negatived.

LORD STRABOLGI moved, at the end of subsection (1), to insert: Provided that in exercising such purchasing powers the Board shall not without the consent of the Board of Trade acquire more than fifty per cent. of spindles, whether working short time or not in any area to be defined by the Board of Trade.

The noble Lord said: This Amendment breaks entirely new ground, which was not, as far as I am aware, discussed at all in another place. It is put down at the request and with the support of my noble friends in this House, and of my Party in another place. The object is to give a discretion to the Board of Trade—it is not mandatory but it is discretionary—to prevent the formation of new distressed Special Areas. Where you have a district the greater part of the employment of which depends upon one or two big mills, if you close down the whole of those mills you do much more than throw the operatives in those mills out of work. You ruin the shop-keepers, you cause great distress to all the ancillary trades and all sorts of people who are directly or indirectly de-pendent on the custom of those operatives. The First Lord of the Admiralty will remember the great arguments we used to have about the redundancy of Chatham as a naval dockyard. It was not only the dockyard but the hospital—

THE FIRST LORD OF THE ADMIRALTY (VISCOUNT MONSELL)

Sheerness.

LORD STRABOLGI

And Chatham too. But, apart from strategical and economic reasons, there were all sorts of social reasons against closing down the industry of a particular district. I want to give a discretionary power to the Board to say: "In this case you will create too much distress in this particular area, and you had better look elsewhere and find your redundancy in another district." There is another consideration. In parts of Lancashire, I am informed, the coal mines have been doing very badly as well. They are in the same areas as the cotton mills that are also doing badly, and if you add to a distressed industry of coal mining a distressed industry of cotton you will create very widespread distress. For these reasons I hope that this very reasonable Amendment will be accepted.

Amendment moved—

Page 2, line 25, at end insert the said proviso.—(Lord Strabolgi.)

LORD TEMPLEMORE

After I had replied to the last Amendment of the noble Lord opposite, I think he thought I had rather skated over his points and had not given him a proper reply. I assure the noble Lord it is the last thing I wish to do, either then or ever, and I have got a very full reply to this Amend ment, which I regret very much that His Majesty's Government cannot accept. The Amendment as it stands would do just what we do not want to do: it would prevent the Spindles Board from acting at its own discretion. It would prevent the Spindles Board from acquiring more than one-half of the spindles in any particular area, it being left to the Board of Trade to decide what the areas should be. I think the noble Lord said that, if the Amendment were carried it would prevent serious unemployment in isolated villages which are solely dependent on a few cotton mills or on a single mill. But very few cases of this kind could, I think, possibly arise. Over 90 per cent. of the cotton spinning industry is grouped within a few miles of Oldham and Bolton. The vast majority of the operations of the Spindles Board will be concerned with these two areas, and taking each of the areas as a whole there is no possibility that the purchases of the Spindles Board will amount to anything like 50 per cent. of the spindles in the areas. Over the industry as a whole the purchases will probably not exceed more than from one-sixth to one-quarter of the total.

The large majority of the mills with which the Spindles Board will be concerned will be in districts containing scores, if not hundreds, of mills, but it would be highly undesirable to prevent the Board from accepting offers of sale from mills outside these districts. The uneconomic competition of the mill is not in any way lessened by the fact that it may be remote from the ordinary centres of the industry. The Amendment is an attempt to graft on to the Bill an entirely new principle and to hamper the Spindles Board with conditions that have no bearing on their primary function. That function is not to reorganise or plan the distribution of the industry but to put an end to the war of attrition that is sapping the vitality of the industry. The casualties of this war in mills and in operatives have not been confined to any particular area or to any particular percentage in those areas. One has only to think of the town of Mossley, which was mentioned by the noble Earl, Lord Derby, during the Second Reading, where all the cotton mills have been closed down by internal competition in the industry. The object of this Bill is to put an end to a process which can only result in town after town and village after village going the way of Mossley. In the particular instance of Mossley, however, there have been attempts to attract new industries of the kind to which Lord Derby referred on the Second Reading of the Bill, and these are fortunately bearing fruit. Where this cannot be done the matter can best be dealt with by means of the Ministry of Labour training and transference schemes. It is in these directions rather than by fettering the powers of the Spindles Board that the true solution of the problem raised by the Amendment will lie. I regret that the Government cannot accept the Amendment, which hampers the Spindles Board which we are setting up and goes quite contrary to the spirit of the Bill.

LORD STHABOLGI

I am much obliged to the noble Lord for the very full reply he has given, and I want to take the opportunity of saying that I really was not complaining; I was trying to help him on the last Amendment. I pointed out that he had omitted what I thought was an answer to a very important argument. I do not propose to put your Lordships to the trouble of a Division.

On Question, Amendment negatived.

LORD SANDERSON moved, after sub-section (2), to insert the following new subsection: ( ) The Spindles Board shall make provision for the payment of compensation to cotton operatives who in consequence of the exercise by the Board of their purchasing powers, lose their employment or are deprived of an opportunity of obtaining employment.

The noble Lord said: When I spoke on the Second Beading of this Bill I devoted a good deal of my speech to the question of compensating the working people of Lancashire who might suffer from the results of this Bill when it became an Act, and I expressed the hope, I think courteously, that the Government would consider an Amendment of the kind that we have before us now, if I put it down, and that they would be able to accept it. No answer was given to that question in the reply of the noble Viscount, Lord Swinton. In fact, the whole question, which to us is a very important one—the question of compensating workers—was never mentioned at all by the noble Viscount in his reply. I hope that may have been due to the fact that the Government wanted time perhaps to discuss this question a little more, and if that is so I hope that they have made up their minds to accept this Amendment to-day.

We ought to remember that there are human beings concerned in this industry besides machines, and throughout the Bill, as far as I can remember, there is not a single mention of the men and women who are working in the industry—people who are bound to suffer by the loss of their livelihood if this Bill passes in the form in which it stands. Of course I may be told that there will be no unemployment as a result of the Bill. Well, it is said that there are 10,000,000 redundant spindles, and those have to be got rid of. It may be said that perhaps 5,000,000 of them are not working now. That may be so, and perhaps another quarter of the 10,000,000 may be working part time. That also may be so, but even then there will be a quarter of the 10,000,000 spindles working, and people who are working those spindles now will be thrown out of work when they are bought up by the Spindles Board. It may be said: "Oh, no, the industry will be so prosperous after this process of buying up the spindles has gone on that the unemployed workers will be absorbed by the mills which are left working in the industry." Well, I do not believe that myself, and at any rate, if it is the case, it will take time before this prosperous period appears. Why not compensate these workers, at any rate during the transitional period at the very least?

Then I may be told that there is no precedent for compensating displaced working people in the case of a change like the one that is contemplated. That may be true, but there are plenty of precedents for compensating people who are earning salaries. We have the Local Government Act, 1929, for instance, where that was done, and it is a common practice in commercial and industrial undertakings to compensate salaried officials such as bank clerks and the like who are often given bonuses and pensions. Many of these Lancashire people who will be displaced will be the technicians of the industry, highly skilled men who have spent years of their lives in attaining to the posts they now hold as minders, overlookers and so on. They very much correspond to some of the officials in other industries. They are quite as skilled in their particular line as bank clerks and local government officials, and there seems to be no reason why they should not be compensated. I should go further and say that all the workers who will be displaced should be compensated.

I know I shall be told that the Labour Party when in office in 1930 did not offer compensation in the case of the Coal Mines Act of that year. That is true, but they ought to have done so. I give the Government that point, but because the Labour Party failed to do what is right in that ease is surely no reason why the present Government should do wrong in the present case. I do not mind much about creating precedents. After all, precedents have to be made some time, and why not make one now? I shall be told that many of the workers have already been displaced in this industry by ordinary economic forces, and have received nothing but their insurance benefits. Why, therefore, should the workers who may be displaced under this Bill be treated in a better way than the workers who have been displaced by ordinary economic forces? My answer is that these present workers are going to be displaced by Act of Parliament. That is quite a different thing to displacing people by ordinary economic forces. Lots of mill-owners who, if left alone, would be displaced by economic forces—they certainly would go bankrupt, many of them—are going to be paid for their spindles. Working people who are going to be driven out of the industry are not going to be paid anything for the loss of their means of livelihood. I say that is unjust. I hope very much that the noble Viscount will tell me he can accept the Amendment and I hope your Lord-ships will support it. I beg to move.

Amendment moved—

Page 2, line 31, at end insert the said subsection.—(Lord Sanderson.)

VISCOUNT SWINTON

I did not deal with this point on the Second Reading because the noble Lord had made it plain that he proposed to raise it in the appropriate way by an Amendment on the Committee stage. In passing, let me say that a proposal to compensate somebody who was deprived of the opportunity of obtaining employment would obviously be a hopelessly unworkable thing. No one could conceivably arbitrate or assess a matter of that kind. I shall deal with it rather on the broad merits of the case of somebody of whom it could be said—and there certainly would be very few cases—that he is unemployed by reason of the fact that a particular mill has been shut down. What are the merits of this case? The whole justification of the Bill is that it will create conditions in this industry which will make for better trade and better employment. It certainly will not, even in the first moments, diminish employment in the aggregate, and if the scheme works even half as well as those who have fathered it hope, it certainly will increase employment in this industry. Observe, my Lords, that when you take this industry, it is not like the coal mining industry, which is spread over the whole of the land, and in which concentration, say in the Midlands, may hit pits in South Wales. If ever you had an industry that is largely localised, it is this spinning industry in the Bolton and Oldham areas. Therefore, if men are thrown out of work in one mill and employment is improved in another, it is going to happen in a district where it is extraordinarily easy for men to get by train, from one place to another. It is an industry where transfer is incomparably easier than in any of the other industries where rationalisation has been proposed.

Compensation in the way the noble Lord has spoken of it is really an erroneous expression. It is not that you are buying up businesses here and amalgamating them. All that you are going to do is to buy, and buy as cheaply as you can, the redundant spindles, to stop these spindles from working. Many of these spindles, as has been obvious from the debate, are spindles which are not in work at the present time. You have got to get rid of them in order to prevent them from coming in intermittently and weakening the market in the hopeless way they do. In a case like that what ought to be the State's policy? Surely it ought to be the line of policy which we are carrying out—the two-fold policy of a great, wide and, I think, not ungenerous measure of unemployment insurance for people who are thrown out of work, coupled on the positive side with schemes for creating conditions in which the trade may become more prosperous. Indeed, the whole justification of this Bill is that you are going to create conditions of that kind. That being the broad policy which every Government has followed, with greater or less success, surely it would be very unreasonable to put by Statute a particular obligation upon an industry which is trying to set its house in order and leave entirely free all those industries which are not making any effort to rationalise or improve their position by collective action?

The noble Lord said—and it was very relevant—that when the Labour Party were responsible for bringing in a Coal Mines Bill they included no provision of this kind. He said they were wrong; at the time he said they were right; but when you cease to have responsibility you become, perhaps, more liberal in your outlook! If ever there was a case where such a proposal would have been reasonable it was that case. There you were, in fact, proposing to amalgamate undertakings. You were giving a full price to the undertakings which you took over. You were displacing men in one pit or one district who might very likely be unable to obtain employment for some time. The noble Lord's Party and his Government deliberately thought in that case that it was not right to introduce an obligation of that kind. Just the same specious case could have been made for it which has been made by the noble Lord here. I venture to say to him, with all respect, that if, where the case was much stronger, where there was a great deal more money involved, his own Government deliberately decided that it would not be right to put such an obligation on an industry, it is not reasonable for him now to come and ask for it in this case, where there is a very limited amount of money, where there is no amalgamation, where compensation is on a very limited scale and for a very limited purpose. In such circumstances I suggest that it is not reasonable to press this particular Amendment at this time.

LORD STRABOLGI

I think just a few words are called for in reply to the very adroit speech which the Minister has made. It is true that the Labour Party did not provide compensation in the Bill which has been mentioned, but I think the noble Lord is not unaware of the circumstances of the Labour Party at that time. The Labour Government was in a hopeless minority in the House of Commons. I think the real masters were the Party of the noble Lord now on the Liberal Benches, Lord Rhayader. We could not move in that matter with out the consent either of the Conservatives or the Liberals. When they combined against us the situation was in tolerable.

VISCOUNT SWINTON

You did not try it.

LORD STRABOLGI

I want to remind the noble Viscount of his own better record in a much earlier Bill, the Railway Bill. He was not then adorning the Government Bench, but he was supporting the Coalition Government which brought in a Railway Bill in which compensation was provided for when so-called redundant lines were closed down. The railwaymen were duly compensated then. For that reason we think there is a very good case here. This is very important. We are told that you intend to scrap under this Bill, I think it is 10,000,000 spindles, and the calculation is that that affects 30,000 operatives. That is very serious indeed. I confess that I cannot really make out what the Government's policy in this matter is. At one moment they tell us that this Bill is to reduce redundancy—in that case you are bound to increase unemployment—at the next moment they say: "Oh, no; you are only going to scrap spindles that will never turn again, and that will not affect employment." They cannot have it both ways.

I am afraid we shall have to trouble your Lordships to divide on this question, because it really is a matter of principle. I am going to quote to your Lordships what is going to be said if you refuse this request. I have here a document prepared by the Committee that is opposing the Bill on behalf of, I think, 16,000,000 spindles headed by Sir James Lithgow and the noble Lord, Lord Melchett, and a number of other prominent industrialists. This is what they say on this point: The Bill enables the Socialists— that is, ourselves— to argue that whereas they would only interfere in the interests of the masses, the present Bill interferes in the interests of the few "— that is, the bankers and the shareholders. This is the opinion of the noble Lord, Lord Melchett, and Sir James Lithgow, and we are certainly going to say this—can you blame us? "There is great compensation for the speculators who have bought up idle mills that will never work again; the shareholders are paid; the bankers are paid; but the poor operatives, in the words of the Air Minister, have the unemployment insurance to fall back on for a certain time. They can take tramcars and go and find jobs in the next town." Thank you for that argument; we shall use it.

VISCOUNT BERTIE OF THAME

I do not wish to say anything offensive to the noble Lord opposite, but surely it is a

On Question, That Clause 2 be agreed to?

EARL PEEL

On Clause 2 I should like to ask a question which I should have asked on the Amendment of my noble friend Lord Fairfax if he had moved it. I gave notice of this question to the noble Viscount. It is as follows: Sub-section (4) of Clause 2 says: The Spindles Board may dismantle, break up sell or otherwise dispose of any property. So that the Spindles Board are quite free, as I understand it, to sell machinery,

waste of time to go to a Division on this when noble Lords know they will be defeated here, and that, even if they won here, the question of Privilege would be raised in the other place.

LORD STRABOLGI

No.

VISCOUNT BERTIE OF THAME

Certainly; it is a money provision.

LORD STRABOLGI

No.

VISCOUNT BERTIE OF THAME

I apologise. I am wrong.

On Question, Whether the proposed new subsection shall be there inserted?

Their Lordships divided:—Contents, 7; Not-Contents, 54.

CONTENTS
Amulree, L.	Hare, L. [E. Listowel.) [Teller.]	Sanderson, L.
Arnold, L.		Strabolgi, L. [Teller.]
Faringdon, L.	Rochester, L.

NOT-CONTENTS
Hailsham, V. (L. Chancellor.)	Bertie of Thame, V.	Dunmore, L. (E. Dunmore.)
Halifax, V. (L. Privy Seal.)	FitzAlan of Derwent, V.	Elgin, L. (E. Elgin and Kincardine.)
	Goschen, V.
Northumberland, D.	Leverhulme, V.	Fairfax of Cameron, L.
Somerset, D.	Monsell, V.	Gage, L. (V. Gage.) [Teller.]
Wellington, D.	Swinton, V.	Hampton, L.
	Trenchard, V.	Hastings, L.
Zetland, M.		Illingworth, L.
	Annaly, L.	Jessel, L.
Cavan, E.	Ashton of Hyde, L.	Phillimore, L.
De La Warr, E.	Barnby, L.	Rankeillour, L.
Derby, E.	Bayford, L.	Remnant, L.
Lucan, E. [Teller.]	Bingley, L.	Rennell, L.
Macclesfield, E.	Carew, L.	Ritchie of Dundee, L.
Munster, E.	Carnock, L.	Rockley, L.
Onslow, E.	Clanwilliam, L. (E. Clanwilliam.)	Sinclair, L.
Plymouth, E.		Stratheona and Mount Royal, L.
Radnor, E.	Colwyn, L.
Rothes, E.	Conway of Allington, L.	Templemore, L.
Scarbrough, E.	Doverdale, L.	Wolverton, L.
Stanhope, E.

Resolved in the negative, and Amendment disagreed to accordingly.

because I presume machinery is included in property. The only limitation on the Board is that they may not sell any of the machinery so acquired, whether spindles or ancillary machinery, outside the United Kingdom. Apparently they can sell inside the United Kingdom. The question I want to put to the noble Viscount the Secretary of State for Air is whether it is not rather inconsistent with the general object of the Bill. As he said, the object of the Bill is the buying of spindles to prevent them working, but under this clause the Board can buy them and sell them. They may buy spindles at 5s. each and sell them, say, at 3s. each. They would be bought by some spinner who, having acquired them at that cheap price, would presumably add them to his own machinery and be able to compete successfully with—undercut if you like—other spinners not so fortunate in getting machinery so cheaply. Is that really intended? It docs seem rather inconsistent with the general idea of the Bill. I can understand that they should dismantle and scrap and break up spindles, but I do not understand why they should sell them subject only to the limitation that they should not sell outside the country.

VISCOUNT SWINTON

I am very glad to answer my noble friend's question. It would appear, put in the way my noble friend put it, that there is some inconsistency here. The object of the Bill is to get rid of whatever is the proper number of spindles—10,000,000, 12,000,000, or whatever it may be—and there is quite wisely a clear direction that the greatest care must be taken that they are not sold outside the country so as to stimulate foreign competition. What will happen in the ordinary course is that spindles will be scrapped, but there is a possibility that the Board may be offered spindles which are in fairly decent condition. They might then find that there was some firm which wished to give up spindles which were in bad condition and should obviously be scrapped, and it is not unreasonable that in such a case the Board—which, after all, will be managed by the trade itself which will know best how to run its own business—should not be precluded from selling these rather good spindles as a sort of part exchange for worse spindles which they would scrap. It is in order not to deprive them of that power, which might be convenient for the trade, that the clause has been drafted as it appears in the Bill.

EARL PEEL

I am much obliged to my noble friend for the answer he has given, but nevertheless it does seem to me inconsistent with the idea of the Bill that people should be able to buy these spindles cheap and compete with others.

Clause 2 agreed to.

Clause 3 [The Advisory Committee]:

LORD TEMPLEMORE

There is a drafting Amendment to this clause. I beg to move.

Amendment moved—

Page 4, line 26, leave out (" thereof ") and insert (" of the Committee ").—(Lord Templemore.)

On Question Amendment agreed to.

Clause 3, as amended, agreed to.

Clause 4 agreed to.

Clause 5:

The spindles levy.

(3) If, at the beginning of the second or any subsequent levy year, the total spindle capacity of the spinning machinery in all cotton mills in Great Britain of which any particular person is the owner exceeds the spindle capacity, as at the beginning of the appointed day, of the spinning machinery in all cotton mills in Great Britain of which that person then was, or has, at any time since, been, the owner, except—

1. (a) any cotton mill of which he is not the owner at the beginning of the said year, and in which, at the time when he ceased to be the owner thereof, there was any spinning machinery, and
2. (b) any cotton mill of which he has become the owner after the beginning of the appointed day, and in which, at the time when he became the owner thereof or when any other person previously became the owner thereof after the beginning of that day, there was no spinning machinery,

the amount of spindles levy which, in the case of the first-mentioned cotton mills, is payable for the said year in respect of the said excess shall, in lieu of the sum which would, apart from this subsection, be so payable (hereinafter referred to as "the ordinary levy "), be the sum produced by multiplying the ordinary levy by the number of levy years which will have elapsed at the end of the said year, less the total sum (if any) already paid by virtue of this subsection in the case of those cotton mills.

(4) If, as respects the cotton mills of which any particular person is the owner at the beginning of the second or any subsequent levy year, there is no spindle capacity, as at the beginning of the appointed day, which can, in relation to that person, be taken into account for the purpose of the last preceding subsection, the amount of spindles levy which, by virtue of subsection (2) of this section, is payable for the said year in the case of those cotton mills shall be increased by the total sum which would, by virtue of that subsection, have previously become payable by way of spindles levy in the case of the cotton mills if the spinning machinery therein at the beginning of the said year had been therein at, and at all times since, the beginning of the appointed day, less the total sum (if any) which has already been paid by way of spindles levy in the case of those cotton mills:

Provided that if any of the said cotton mills was a cotton mill at the beginning of the appointed day, then for the purpose of ascertaining whether any, and, if so, what, deduction is to be made under the preceding provisions of this subsection in respect of sums already paid by way of spindles levy, no account shall be taken of any sum which has accrued due by way of spindles levy in the case of that cotton mill before the first occasion after the beginning of the appointed day on which any particular person became the owner of the cotton mill at a time when there was no spinning machinery therein.

LORD PHILLIMORE moved to leave out subsections (3) and (4). The noble Lord said: The more I look at this Bill the less surprised I feel that the noble Viscount the Secretary of State for Air was so anxious to stifle the free discussion and examination by your Lordships of its particulars. He said to your Lord-ships: "You have swallowed the whole nasty dose at one draught on Second Reading. Why are you troubling now to look at the even more unpleasant ingredients?" I quite agree with him. The more I look at this Bill the more ingredients I find which are opposed to all sound principles both of business and everything else. At any rate your Lord-ships will not fail to find that this particular Clause 5 does, in the words of the Parliamentary Secretary of the Board of Trade in another place, constitute—I think this was his phrase—a new introduction into English industrial practice. In other words, nothing so egregious has ever been done before. The object of my Amendment is to strike this new and very unfortunate introduction out of the Bill. I want to get rid of the back levy which the Bill imposes upon new entrants into the cotton industry. Under the Bill if I or some more intelligent person invents a wholly new machine which would revolutionise the cotton industry and I introduce it into a mill ten years hence, I shall have to pay back levy for the whole of that ten years. I should be severely fined for the want of success of my predecessors in the trade. If, to come a little nearer to probabilities, I introduce ring spindles instead of mule spindles, I should equally be fined for doing so. What an encouragement to new activities, new brains and the resuscitation of the Lancashire cotton trade! This principle, I submit, will end in killing English trade and English inventiveness, English energy and English enterprise. I hope I have put the matter clearly before your Lordships, and I hope you will not agree that this principle shall be introduced into our life.

Amendment moved—

Page 6, line 1, leave out subsections (3) and (4).—(Lord Phillimore.)

VISCOUNT BERTIE OF THAME

No doubt the noble Viscount will make out that this levy is very puny, but I think that a gentleman who wrote in the Economist hit the nail on the head when he said this: Many a formidable problem can be made to appear puny if it is shifted to a new and enlarged setting or focussed from a different angle. One of the chief tasks of statesmanship to-day is to make a fifty per cent. outrage on liberty look like a one per cent. voluntary offering on the part of the victims. If he says that, I think the answer is contained in the passage which I have read.

VISCOUNT SWINTON

I was really going to deal with the whole thing on its merits. I am the last person to stifle discussion, and I always love the noble Lord's interventions, because they enable us better to appreciate the real merits of the Bill. What the noble Lord said is, really, that this is a very wicked clause, because, if a man comes in later on during the fifteen-year period, he has to pay a levy. There is one argument in favour of the noble Lord's proposal, and that is a parable in the Scriptures; but what he is asking up to do is to give the man who comes at the eleventh hour into the vineyard a preference over all those who have borne the burden and heat of the day. I do not think that is at all a reasonable proposition. If this scheme succeeds, if it succeeds in getting a balanced production and stable conditions in the industry, it will be the very success of this scheme, by those stable conditions and balanced production, that will bring in new capital. Why should the man who reaps that advantage and comes in late have a preference over all the established firms who have been paying this levy in the past? Surely the only fair thing to do is to put the new entrant, who decides to come in when the scheme has proved itself, established itself and brought success, and the old-established firms in the cotton industry who have been paying a levy all these years, on an equality. That is all the Bill does, and I hope that your Lordships will not assent to undue preference.

VISCOUNT BERTIE OF THAME

The noble Viscount drew a false simile from the Bible, because the eleventh-hour man got the same reward as those who had worked all day.

LORD BARNBY

May I ask the noble Viscount what the levy would amount to? Is it not possible that those in charge of the Board would be able to insist that the buyers of spindles that revert into use after being bought by the Board shall only be allowed to have them on condition that they break up an equivalent number of spindles to that which they buy from the Board?

VISCOUNT SWINTON

That is a Committee point, I think, on an earlier clause. I am not quite sure whether it would be—though I think it would be—in the power of the Board to impose any conditions they like in an indirect way. They are not obliged to buy anybody's spindles unless they decide that it is good business to do so, and therefore indirectly, no doubt, they could achieve whatever conditions they thought fair.

LORD BARNBY

That is to say, if a machine passes through the Board's hands, they shall be able to insist that the purchasers of the machine shall break up an amount of spindles equivalent to that which they buy.

VISCOUNT SWINTON

Certainly.

EARL PEEL

I am not quite sure that my noble friend has given a perfectly fair account of this system of entrance and preference. He asks, why should these firms have a preference if they enter into business nine or ten years hence? I was going to put it the other way: why should they have this heavy penalty? Why should they be fined, as it were, ten times the amount of the payment made by the other firms? These firms are not waiting about for three, four, five, or six years in order to enter the business at a favourable opportunity. They have, perhaps, been responsible for some new invention, some new way of spinning cotton, and so on, which will be of great value. I want to give an actual case that has come to my notice. There are a good many yarns now being experimented and worked which are not merely cotton but are a combination of cotton, jute and other fibres. I have in my hands here a letter from a firm who are spinning a new yarn which is about 80 per cent. jute and 20 per cent. cotton. If an arrangement of that kind is made five or six years hence, to manufacture a new invention which may be of very great value and has a composition which is 20 per cent. cotton—I believe that, according to the definition clause, 1 or 2 per cent. would make it cotton and therefore subject to the levy—surely it would be very hard, and not at all conducive to activity in invention, that you should penalise those people by the number of years that have elapsed since this particular levy was started. That is a complete accident. Why should they be penalised to this extent? I am not asking for a preference for them, but I say that, because a firm starts ten years hence, it is going to pay ten times the amount of the levy that it would pay if it started now. I cannot see the fairness of this provision at all. I also agree with my noble friend that these Biblical references of the noble Viscount's are rather confusing, because, as everybody knows, you can preach all sorts of sermons on the same text.

LORD STRABOLGI

May I ask for guidance on this matter? Is it not the intention of the Government in the future to make the cotton industry a closed corporation?

VISCOUNT SWINTON

No.

LORD STRABOLGI

And that anyone who comes into it will have to pay this fine? That is how I read the Bill. It is very complicated, but I rather gathered that that was the noble Lord's intention.

VISCOUNT SWINTON

It is not a case of paying a fine. The Bill establishes a levy on the cotton industry. What it is proposed to do is to make this absolutely equal on every person.

LORD STRABOLGI

If in fourteen years' time the noble Lord and I invent a wonderful new method of Spinning cotton and want to exploit it for the good of the country, have we to pay fourteen years' back levy?

VISCOUNT SWINTON

Yes, just as, if I am in the trade and having been paying fourteen years' back levy, I am probably more likely to make an invention. It is more likely that the people who have fourteen years' experience will make these progressive discoveries if they are in the trade than that the noble Lord will who is not. It is a bit unfair, if I am in the cotton trade all my life and am bound to pay a levy for fourteen years, that I should be at a discount compared with the noble Lord, who has the luck to hit on an invention and comes into the trade for the first time.

TEE EARL OF RADNOR

At the same time, I cannot help feeling that the argument is very poor. I do not understand the cotton trade, but it appears to me that the man who has been in the cotton trade for fourteen years has been earning

Resolved in the affirmative, and Amendment disagreed to accordingly.

Clause 5 agreed to.

EARL PEEL moved, after Clause 5, to insert the following new clause:

Saving for manufactories not in competition with the cotton trade.

"6. Nothing in this Act shall apply to a mill which is by this Act declared to be a cotton mill but which is shown to the satisfaction of the Spindles Board to be carried on as ancillary to a business manufacturing goods other than cotton goods and the products of which are used exclusively in that business and are not sold in competition with the trade in cotton yarn or cloth."

The noble Earl said: The effect of this new clause is that certain industries which may make, use of spindles would be exempted from the operation of the Bill, because they in no way compete in the cotton industry. The general principle of the Amendment is this. This scheme, according to its supporters,

some money to pay his levy, whereas the man who starts with the new invention has to pay fourteen years' back levy but has not had the opportunity to earn the levy. It is nothing more or less than a fine, and to my mind, knowing nothing of the cotton industry, it appears to be simply a check on all progress.

On Question, Whether subsections (3) and (4) shall stand part of the clause?

Their Lordships divided:—Contents, 38; Not-Contents, 15.

CONTENTS
Hailsham, V. (L. Chancellor.)	Onslow, E.	Doverdale, L.
	Plymouth, E.	Elgin, L. (E. Elgin and Kincardine.)
Halifax, V. (L. Privy Seal.)	Scarbrough, E.
	Stanhope, E.	Gage, L. (V. Gage.) [Teller.]
Northumberland, D.		Hutchison of Montrose, L.
Somerset, D.	FitzAlan of Derwent, V.	Jessel, L.
Wellington, D.	Goschen, V.	Luke, L.
	Swinton, V.	Middleton, L.
Zetland, M.		Remnant, L.
	Barnby, L.	Ritchie of Dundee, L.
De La Warr, E.	Bingley, L.	Rochester, L.
Derby, E.	Carew, L.	Strathcona and Mount Royal, L.
Lucan, E. [Teller.]	Carnock, L.
Macclesfield, E.	Clanwilliam, L. (E. Clanwilliam.)	Templemore, L.
Midleton, E.		Wolverton, L.
Minister, E.	Colwyn, L.

NOT-CONTENTS
Peel, E.	Ashton of Hyde, L.	Hastings, L.
Radnor, E.	Conway of Allington, L.	Phillimore, L. [Teller.]
	Fairfax of Cameron, L.	Rhayader, L.
Bertie of Thame, V. [Teller.]	Faringdon, L.	Sanderson, L.
	Hampton, L.	Strabolgi, L.
Arnold, L.	Hare, L. (E. Listowel.)

is to the advantage of the trade, and presumably of those who contribute to this fund which is levied for the benefit of the trade. The objects claimed for the Bill are that it will reduce undercutting, perhaps may raise prices and get more money for the products of the industry, or again, it may lead to better manufacturing by the lowering of overhead charges. I would submit that those who, even though they may use spindles, can get no advantage, but can only reap disadvantage, from this Bill, should be exempted; in other words, that those who do not sell in the cotton market, but in other markets unrelated to the cotton market, should be exempted.

Perhaps I may give one or two examples of this—corset cloths, horticultural shadings, imitation furs, lamp and candle wicks, and other matters of that kind. I should add that my Amendment places a very sharply defined limit on the exemptions. Your Lordships will see that three barriers must be surmounted before exemption can be accorded to a particular industry. It must be a cotton mill which is shown to the satisfaction of the Spindles Board to be ancillary to a business manufacturing goods other than cotton goods, the product of which must be used exclusively in that industry, and must not be sold, and is not sold, in competition with the trade in cotton yarn or cloth. One criticism has been made on this Amendment by the Board of Trade in another place. They say that this Bill ought to apply to all the trade, and therefore must include specialties. Now I do not want to exclude specialties, but to exclude anything that can be called a specialty which is not in the trade at all. If it is in the trade at all it should contribute under the terms of this Bill. Again, if any of these conditions are broken that business would have to contribute at once. For instance, if a business, instead of spinning solely for its own use, should go and sell yarn in the market, at once the condition would be broken and it would become subject to the levy.

There are two objections that have been stated to this. One is that if you make some exemptions the remaining firms will have to pay more, and I agree that that is so; but I do not think these firms which are going to get an advantage (so they say) from this levy ought to diminish their own burden by dragging in levies from firms and businesses which ought to be exempted and can get no advantage out of it. Another difficulty that was raised was this: "Oh, but how are you going to define these particular businesses?" I agree it might be difficult to define them in an Act of Parliament, but I have set up in my Amendment those three barriers or hedges which they will have to jump before they get exempted. They will come before the Spindles Board, that Board will decide whether or not they should be exempted, and the decision of that Board, I suggest, should be final. I certainly do not want this question to go to the Courts, and therefore I suggest that the decision should be final. It has been said, again, that they ought to pay their contribution because if they did not spin this cotton themselves some other firm would spin it and would have to pay some levy on its spindles. I do not know what might happen if some- thing is quite different from what it is at present, but I am basing my case on the present condition of the trade, and I have said that if anybody goes into the market and sells he loses his exemption.

Why is it that these firms spin their own yarn? It is very largely because these are not the class of yarns that are mostly made in the market, and because they must be assured themselves of getting the particular yarn which they want for their own business, and of which they really are the judges. They do not compete with, or under-cut, the great cotton market in any way. If they go into that market at all it is as buyers, and not in any way as sellers; and clearly, if they do not sell in the market, they can get no advantage and they do not undercut. If they go into the market as buyers, they may suffer because the price may be raised by the fruitful and useful operations of this Bill. I submit therefore that firms which can comply with these conditions, difficult conditions I agree, should be exempted if they can establish them before the Spindles Board. The general principle—and I think it is a fair principle I lay down—is that only those should pay into the pool who have some chance of taking something out of the pool. If they have no chance, as these firms have not, I submit that they ought to go free. I hope therefore that the Government will grant this exemption which does not go in any sense to the root of the Bill. As my noble friend, I think, said on the Second Reading, it is a Committee point, but it is an important Committee point.

Amendment moved— After Clause 5, insert the said new clause.—(Earl Peel.)

LORD STRABOLGI

I think this is a very reasonable Amendment and has been very reasonably argued. May I quote another case with which I am familiar—the cards for carding cotton? The card makers make their own cotton backing, and if you put up the price of cards by charging a levy on them, you indirectly hit the very people you want to benefit. Further, if you really want to spread the levy why have not the Government put a levy on the flourishing artificial silk industry that does compete with cotton? I do not understand why you should levy on the card makers and linoleum makers.

EARL PEEL

Linoleum makers do not use cotton.

LORD STRABOLGI

What is it, jute?

EARL PEEL

Jute.

LORD STRABOLGI

I apologise. I quoted the only case I knew intimately—card making. There they do use cotton, and I think it is unfair to levy upon them.

EARL PEEL

I do not want to disturb one of my supporters.

VISCOUNT SWINTON

This Amendment, which is quite a reasonable one, I agree, to raise on the Committee stage, poses an interesting conundrum: When is a cotton spinner not a cotton spinner? The noble Earl, Lord Peel, would like us to say he is not a cotton spinner when another industry in which he is interested consumes the cotton which he spins. I really do not think that that is a very reasonable conclusion at which to arrive. The principle is quite a fair one to quote. It is this. A man spins cotton, but he says: "I find it convenient in another manufacturing business to use all the cotton which I spin. Provided I use the result of my spinning in another business I ought to be exempt from the levy." Let me make it quite plain to your Lordships that we must try this as a principle. I believe it will be quite impossible in equity or in practice to set up these hedges about which my noble friend has talked. Either we are going to exempt cotton yarn which is used in a man's own manufacturing business or we are going to put a levy on all cotton that is spun. If you treat it in that way as a principle—and it is the only way in which in practice you would find you could treat it—you are going to cover an enormous field.

I am informed that there are at least 150 firms, manufacturing one commodity or another, who use yarn spun in mills which they own. The result is that even to-day you would have to exempt from the levy something like a quarter of the total spindleage which there is, and nobody knows how much this may develop in future. With new developments it may become more and more to the interest of firms to acquire their own spinning mills. I am perfectly certain that if this Amendment were carried it would become enormously to the interest of manufacturing firms to acquire their own spinning mills and thus get out of the levy. Therefore if we did that we should simply be driving a coach and four through the whole structure of this Bill. Is it reasonable to break down the structure of the Bill in this way? I submit that it is not. There is no doubt that these spindles, whether they are owned by an independent firm merely engaged in the operation of spinning or whether they are owned by some large or small manufacturing concern to which spinning is subsidiary or ancillary, form part of the aggregate total of spindles in the whole of the spinning industry, and they contribute towards the redundancy which it is the object of this Bill to abolish. Of that there can be no question.

EARL PEEL

Yes.

VISCOUNT SWINTON

Then I will tell the noble Earl why. He manufactures yarn for his own firm. If he is not a manufacturer of yarn, if he does not own his own spinning mill he will go out into the market and buy that cotton yarn from one of the other mills in the trade, and his spindleage therefore has a direct effect on the general fortunes of the trade. I say more than that, and I think anybody with general business experience would bear this out: Even where you manufacture your own semi-manufactured material like yam you have an interest in there being a steady and firm market. Your competitiors buy in the open market. You want to be able to buy your semi-manufactured material at the same price as they do. You want therefore a firm basis and a steady market, and it is directly to your interest, if you are yourself an owner of spindles, to see that the market in cotton yarn is steady and firm. I therefore repudiate the suggestion that there is no interest to the owner of an ancillary business in seeing this scheme through.

I do not rest that on just my own judgment, though I think any impartial man—and I am looking at this quite impartially—would come to that conclusion. I think it fair to say to your Lordships that there are tremendous concerns in the same position—great firms like Coats, which was mentioned in the debate on the Second Reading, and Tootal, Broadhurst and Co., and Dunlops, who are enormous users of cotton yarn. I understand that all these three firms and many others—although if Lord Peel's argument is right they have no interest in this matter at all—consider this is a sound proposition for the trade as a whole, and I am instructed by the Board of Trade to say that they have expressed their active support of this principle, and would be very sorry to see this Amendment carried. I hope, therefore, the Committee will reject it.

EARL PEEL

I was very much interested in the skill with which the Government used one argument one moment and another argument another moment, although they were contradictory. The whole of the argument on which the Second Reading of this Bill was based was to the effect that this levy was only a very small percentage on each pound of cotton, and it really can make no difference. Now, when the Government are arguing the other way, the noble Viscount tells us that it would be clearly to the interest of other businesses to build up their own cotton business. They cannot be right in both these respects. There is this one question at issue, and that is this contribution to redundancy. The noble Viscount says: "Oh, these firms, if they did not make it themselves, would go out into the market and buy it." But the very reason that they make it themselves is that it is very difficult for them to go out into the market, because these are special grades which are not very much made and which it might be difficult for them to get.

The suggestion that an ancillary business should be exempted if it contributes

only to the main business is, after all, an old principle. For instance, in the case of the Coal Mines Bill, an Amendment was moved that those coal mines which were owned or controlled by steel businesses and so on should be exempted from the quota and the provisions of the Bill. I agree with that and, curiously enough, the most vigorous support of that principle was given by the noble Viscount himself in the House of Commons only five years ago. Even now in the Coal Mines Bill that has been introduced in another place, and which has given rise to certain criticisms, the same principle has been followed, and the reorganisation, I understand, is not to apply to those coal mines which are controlled or owned by steel or other businesses. Therefore I would suggest to the Government that the principle is not at all so clear as the noble Viscount suggests, and that the mere fact that there are a number of other firms or industries which might manufacture for themselves, or which now do manufacture for themselves, is really no reason for making them contribute towards a business with which they do not compete and to make a contribution of which they can reap no advantage to themselves. That is the whole case I put forward for exemption, that those who pay shall gain something and those who can gain nothing shall not pay.

On Question, Whether the new clause shall lie there inserted?

Their Lordships divided:—Contents, 10; Not-Contents, 41.

CONTENTS.
Peel, E.	Arnold, L.	Hare, L. (E. Listowel.)
Radnor, E.	Fairfax of Cameron, L. [Teller.]	Phillimore, L.
		Rhayader, L.
Bertie of Thame, V. [Teller.]	Glenravel, L.	Strabolgi, L.

NOT-CONTENTS.
Hailsham, V. (L. Chancellor.)	Plymouth, E.	Doverdale, L.
	Scarbrough, E.	Elgin. L. (E. Elgin and Kincardine.)
Halifax, V. (L. Privy Seal.)	Stanhope, E.
		Gage, L. (V. Gage.) [Teller.]
Northumberland, D.	Gosrhen, V.
Somerset, D.	Monsell, V.	Hampton, L.
Wellington, D.	Swinton, V.	Hutchison of Montrose, L.
		Jessel, L.
Zetland, M.	Ashton of Hyde, L.	Rankeillour, L.
	Bayford, L.	Remnant, L.
De La Warr, E.	Bingley, L.	Rennell, L.
Derby, E.	Carew, L.	Ritchie of Dundee, L.
Lucan, E. [Teller.]	Carnock, L.	Rochester, L.
Macclesfield, E.	Clanwilliam, L. (E. Clanwilliam.)	Strathcona and Mount Royal, L.
Midleton, E.
Munster, E.	Colwyn, L.	Templemore, L.
Onslow, E.	Conway of Allington, L.	Wolverton, L.

Resolved in the negative, and Amendment disagreed to accordingly.

Clause 6 agreed to.

Clause 7 [Funds of Spindles Board]:

LORD TEMPLEMORE

The Amendment in my name to this clause is a drafting Amendment.

Amendment moved— Page 9, line 4, leave out (" for which they are available ") and insert (" of defraying spindles expenses ").—(Lord Templemore.)

On Question, Amendment agreed to.

Clause 7, as amended, agreed to.

Clauses 8 to 13 agreed to.

Clause 14:

Returns and statistics in respect of cotton mills.

14.—(1) Subject to the provisions of this section, the owner of every cotton mill in Great Britain shall, within one week after the beginning of each levy year, send to the Spindles Board, in such form as the Board may prescribe, a return showing the spindle capacity, as at the beginning of that year, of all the spinning machinery (if any) then in the cotton mill.

If any person fails to send to the Spindles Board in accordance with this subsection a return which he is thereby required to send, he shall be liable on summary conviction to a fine not exceeding one hundred pounds, and to a further fine not exceeding fifty pounds for every day on which the failure continues after a written demand for the return has been served on him by the Board: and if any person being, or acting on behalf of the person required by this subsection to send a return to the Board, sends, or causes or permits to be sent, to the Board for the purposes of this subsection a return which he knows, or could reasonably he expected to know, to be incorrect in any material particular, he shall be liable, on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding one hundred pounds or to both such imprisonment and such fine.

(3) Within one week after the beginning of each of the consecutive periods of six months during which the purchasing powers of the Spindles Board are exercisable, the owner of every cotton mill in Great Britain shall, subject to the following provisions of this section, send to the Board, in such form as they may, with the approval of the Board of Trade, prescribe, a return showing the extent (if any) to which spinning machinery has been operated in the cotton mill during the six months immediately preceding that period, and, if any spinning machinery was operated in the cotton mill at any time during those six months, the quantity of the yarn which was, during those six months, produced in the cotton mill hy means of that spinning machinery.

If any person—

1. (a) fails to send to the Spindles Board in accordance with this subsection a return which he is thereby required to send, or
2. (b) being, or acting on behalf of, the person required by this subsection to send a return to the Board, sends, or causes or permits to be sent, to the Board for the purposes of this subsection a return which he knows, or could reasonably be expected to know, to be false in a material particular,

he shall be liable on summary conviction to a fine not exceeding fifty pounds, and (in the case of a failure to send a return) to a further fine not exceeding ten pounds for every day on which the failure continues after a written demand for the return has been served on him by the Board.

VISCOUNT BERTIE OF THAME moved, in subsection (1), to substitute "fifty pounds" for "one hundred pounds" The noble Viscount said: This clause constitutes a new offence. Whenever I have moved Amendments to other Bills to in-crease penalties I have always been told that they are vindictive. I do not want to use quite that term in reference to this clause, but it really does seem to me rather preposterous that such very heavy fines should be inflicted. Under this subsection penalties of one hundred pounds and fifty pounds per diem are put in for failing to send a return to the Spindles Board showing the spindle capacity in a cotton mill. Under sub-section (3) a return showing the extent to which the spinning machinery has been operated during the previous six months is required to be made, and in that case, for failure to send a return or for sending a false return, the offender is liable to a fine not exceeding fifty pounds and five pounds for every day on which the failure continues after a written demand for a return has been served on him. It is difficult to see why the penalty should be heavier in one case than in the other. I admit that under subsection (1) a person can also be imprisoned. It is a serious offence to send in a false return, but while I am on this subject I should like to have my noble friend's attention to a suggestion I have to make. It is that he should move on Report an Amendment to leave out the penalty of imprisonment for failing to send a return, because I think imprisonment is rather a stiff order for such a failure.

Amendment moved— Page 14, line 29, leave out (" one hundred ") and insert (" fifty ").—(Viscount Bertie of Thame.)

LORD TEMPLEMORE

My noble friend did me a great injustice in suggesting that I was not attending to him. I was paying the greatest attention, as I always do, to his observations and to those of all your Lordships. I regret I cannot accept this and the following Amendment in my noble friend's name. He will understand that these penalties are maximum penalties, and it will be for the appropriate Court—after all the Spindles Board is not the Court—to decide, within these upper limits, on a suitable penalty for a particular case. His Majesty's Government consider that it is really necessary to have severe penalties for deliberate gross default in a matter so vital to the scheme as the return of spindle capacity of the machinery. It is on this return that the whole system of the levy will rest, and unless prompt and accurate returns are obtained the scheme cannot possibly function. There will be no difficulty whatever in rendering the return. It will not be a complicated document, and the information it seeks can be supplied in a few minutes. As regards the request that the noble Viscount made that I should consider the omission of certain words on Report, I will certainly consider the suggestion, and if I am advised that it is possible, I will do so. I cannot accept this Amendment.

VISCOUNT BERTIE OF THAME

I certainly shall not trouble the House to divide on this. I think on the whole I shall withdraw the Amendment.

Amendment, by leave, withdrawn.

VISCOUNT BERTIE OF THAME had on the Paper an Amendment in subsection (1), to leave out "continues" and insert "is found by the Court to have continued." The noble Viscount said: I am not going to move this Amendment. I had the privilege of seeing the noble Lord's advisers this morning. They pointed out to me that the offender must go before the Court, and that the Spindles Board have not the power to impose a fine. Therefore I do not move the Amendment.

THE LORD CHAIRMAN

I have a manuscript Amendment from the noble Lord, Lord Templemore, to move on Clause 14, page 14, line 33, to leave out from the first "person" to "in" in line 38, and insert "knowingly or recklessly makes in any return required by this subsection to be sent to the Board a statement false." In order to save the Amendment of the noble Viscount, Lord Bertie, which comes next, I will put it in the form that the words—

VISCOUNT BERTIE OF THAME

It will not be necessary to save my Amendment because I accept the one which has just been referred to.

THE LORD CHANCELLOR (VISCOUNT HAILSHAM)

By permission of the Committee I will move the Amendment that has just been referred to. It is to meet the point that my noble friend Lord Bertie desired to cover by his Amendment on the Paper. In the Bill as drafted the penalty was incurred if any person made a return which he knew, or could reasonably be expected to know, to be incorrect. My noble friend Lord Bertie thought that that was imposing too heavy an obligation, and he desired to leave that out, and to put in instead "if any person knowingly or recklessly" made such a return. We thought that the wording of the noble Viscount's Amendment was not quite satisfactory. We propose to accept the principle of what my noble friend desires, and if your Lordships accept the Amendment which I am about to move, the clause will read: …if any person knowingly or recklessly makes in any return required by this subsection to be sent to the Board a statement false in any material particular, he shall be liable, on summary conviction "— and so on. I think that is an improvement. It certainly is a mitigation of the penalty, because now the offence has to be wilful or reckless, whereas, as the Bill was drafted, it had to be wilful or negligent.

Amendment moved— Page 14, line 33, leave out from the first (" person ") to (" in ") in line 38 and insert (" knowingly or recklessly makes in any return required by this subsection to be sent to the Board a statement false ").—(The Lord Chancellor.)

VISCOUNT BERTIE OF THAME

I should like to thank my noble and learned friend the Lord Chancellor for the very fair way he has met the point with which I wished to deal.

On Question, Amendment agreed to.

THE LORD CHAIRMAN

There is another manuscript Amendment which has been handed in: Page 15, line 32, leave out from the beginning of the line to "false" in line 37 and insert "knowingly or recklessly makes in any return required by this subsection to be sent to the Board a statement."

THE LORD CHANCELLOR

This is a consequential Amendment in paragraph (b), in subsection (3). I beg to move.

Amendment moved— Page 15, line 32, leave out from the beginning of the line to (" false ") in line 37 and insert (" knowingly or recklessly makes in any return required by this subsection to be sent to the Board a statement ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

VISCOUNT BERTIE OF THAME

I am instructed by the noble Lord's advisers that I should move the next Amendment.

Amendment moved— Page 15, line 38, leave out (" a ") and insert (" any ").—(Viscount Bertie of Thame.)

On Question, Amendment agreed to.

Clause 14, as amended, agreed to.

Clauses 15 to 17 agreed to.

Clause 18 [Offences committed by corporations]:

VISCOUNT BERTIE OF THAME

This is a drafting Amendment to this clause which I understand is accepted by the Government. I beg to move.

Amendment moved— Page 17, line 13, after the second (" be ") insert (" proceeded against and ").—(Viscount Bertie of Thame.)

On Question, Amendment agreed to.

Clause 18, as amended, agreed to.

Remaining clauses agreed to.

Schedule:

LORD TEMPLE-MORE

There is a drafting Amendment in the Schedule. I beg to move.

Amendment moved— Pago 20, line 30, leave out (" thereof ") and insert (" of the Board ").—(Lord Templemore.)

On Question, Amendment agreed to.

Schedule, as amended, agreed to.