Lords Sitting of 11 November 1936

Preamble
The House met at a quarter before four of the clock, The EARL OF ONSLOW on the Woolsack.
VISCOUNT ALLENBY.
Dudley Jaffray Hynman Viscount Allenby, having succeeded to that title on the death of his uncle Edmund Henry Hynman Viscount Allenby, by virtue of a special remainder contained in a Patent bearing date the 7th day if October, 1919—Was (in the usual manner) introduced.
LORD CAUTLEY.
Sir Henry Strother Cautley, Baronet, K.C., having been created Baron Cautley of Lindfield in the County of Sussex—Was (in the usual manner) introduced.
LORD WARDINGTON.
John William Beaumont Pease, Esquire, having been created Baron Wardington of Alnmouth in the County of Northumberland—Was (in the usual manner) introduced.

THE SHIPPING INDUSTRY.
LORD LLOYD LORD LLOYD rose to call attention to the shipping industry, and to move for Papers. The noble Lord said: My Lords, while I offer no apology to your Lordships for bringing the grievous plight of British shipping yet once again before your Lordships' House, I should like to ask your indulgence if in the manner in which I present this difficult and complex case I make too much draught upon your time and your patience. I am not a shipowner, nor interested in the shipping trade except as any citizen of this country must be, and therefore I cannot bring to the consideration of this subject either the knowledge or the freshness of presentation that somebody more familiar in his daily life with the question might bring.
In His Majesty's gracious Speech from the Throne the following words occur:
"The position of the shipping industry is receiving the careful consideration of My
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Ministers, with a view to deciding what measures are required to secure the maintenance of a Mercantile Marine adequate for the needs of the country."
The object of my Motion which is on the Order Paper to-day is to ascertain from His Majesty's Government how much longer the process of preparation is likely to take and when rather prolonged reflection is likely to give way to long-needed but energetic action. Twice last summer had occasion to remind your Lordships' House how for many years past we have had repeated assurances from the Government of their intention to take action, and repeated acknowledgments of the gravity of the situation. May I repeat once again, as I have before in this House, what Mr. Neville Chamberlain said:
"We are not going to see British ships swept off the face of the ocean, and one way or another we mean to defend ourselves."
My Lords, we are seeing, and the Chancellor—alas!—is seeing British shipping swept off the face of the Baltic. British shipping has recently, since I last addressed your Lordships, been swept off the face of the Pacific, and it is in rapid process of—I do not think the word "extinction" is exaggerated, but certainly of elimination, in the Japan-Bombay trade.
We had another statement from the President of the Board of Trade two or three years ago, in 1933, when Mr. Walter Runciman said:
"I can tell my right honourable friend that we are taking into account the disabilities under which they"—
that is, the shipowners—
"are labouring, and we shall if necessary take steps to see that they get fair play within our Imperial trade."
I could read any number of declarations from His Majesty's Ministers. Again, Mr. Walter Runciman said a year later:
"I do not want to use the large stick, but we have to make it clear that if foreign countries are going to treat our shipping unfairly we shall know how to put them on an equal footing."
The object of my Motion, I repeat, is to ascertain when the Government are going to know how to put them on an equal footing.
I do not think there could be any dispute as to the gravity of the situation. The shipping industry is still undergoing a dramatic and a dangerous decline. I do not want to burden your Lordships with many statistics, but the increase of

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foreign shipping since 1914 is phenomenal. It has been quadrupled in the United States of America; Japan, Greece, Italy and Norway have doubled their tonnage; Sweden, France and Holland have very nearly doubled theirs. On the other hand, whereas we had 50 per cent. of the gross tonnage of the whole world before the War—or rather, at the beginning of the century, in 1900—we now have only some 26 or 27 per cent. of world tonnage, although world tonnage has increased by over 40 per cent. We now have 2,000 fewer cargo-carrying ships on the trade routes of this country than we had in 1914. We have 45,000 fewer seamen afloat. Two thousand million pounds have been spent in foreign subsidies to shipping against our trade. That, and a great deal more with which I will not weary your Lordships, is enough to show you how dramatic is the position.
Of course, while there was a stupendous increase in foreign tonnage during the War and in the boom that immediately followed the War, there has been a decline in world tonnage since 1931. The important thing to note is that the decline has been definite in the case of Great Britain, whilst foreign countries have scarcely suffered at all; that is to say, in the United Kingdom, in 1931, we had 20,000,000 odd gross tons, and in 1936 17,000,000 tons, a reduction of 3,000,000. Whereas we have gone down 3,000,000 tons in the last four or five years, the rest of the world has gone down less than 2,000,000 tons, 1.74 million tons; and as compared with 1914 while our Empire tonnage has actually declined the tonnage of the rest of the world has increased by 83 per cent.
That shows how very serious the situation is. And, of course, as a result, foreign competition has increased in its intensity, and the foreign share in our United Kingdom trade has risen from 34 per cent. in 1929 to nearly 42 per cent. last year. I will give your Lordships one or two examples—only one or two. Take, first of all, not Empire shipping but United Kingdom shipping. I will come to Empire shipping in a few moments. Let us take, for example, because it is an easy example and near home, what has happened to British shipping in the Baltic Russian trade. If you take the number of voyages made in the Russian timber trade in the last six months, January to June of this year—which I
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take because they are the last figures available—it was 85. Of those voyages Russian ships did 49, other foreign ships did 36, and British ships did none at all! That timber was being bought by us from Russia and yet we did not carry one ton if it to these shores. It is perfectly true, and I believe the noble Lord who will reply for the Government will tell us, that the Soviet Government have chartered rather more British shipping during the first five months of this year as compared with British shipping chartered previously, but they only did so in trades where they could not possibly help themselves, where Russia has insufficient suitable tonnage and is compelled to rely upon British or foreign sources.
In this connection there is need to look a little further afield. We need to look at the Russian Trade Agreement and see what effect that Agreement is having indirectly upon our trade. Russia, as your Lordships know, buys very little from us while we buy a great deal from her. The figures were given in Parliament yesterday, and show in a two-year period—I do not know why that period was chosen—that whereas we bought £51,000,000 of goods from Russia, Russia only bought some £9,000,000 of goods from us. That is a situation which would seem to have no advantages, but it has one advantage, and it is one which should be used by His Majesty's Government with regard to the shipping industry. If we are Russia's best customer, and if our trade is so valuable to her and her's of such comparatively small value to us, that puts His Majesty's Government, especially in the case of a trade like Russia's, where freights and shipping are run by the Russian Government, in an absolutely safe position to demand from the Russian Government that a large proportion of the goods which we buy from Russia should come to this country in British and not in foreign bottoms.
I will not weary the House with all the long prophecies which were made at the time of the Russian Trade Agreement in 1924. I was a critic of that Agreement, and I remember that it was on the ground that the balance of trade was so very unequal. I expressed entire concurrence with the Government in coming to a trade agreement, if that agreement provided for some arrangement by which Russia would redress the

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grievous adverse balance which then menaced our trade and commerce. I remember the noble Viscount, Lord Snowden, on the Front Bench giving me an assurance that, whilst they could not compel this, they would certainly do everything in their power and had little doubt they would succeed. Mr. Runciman put it even more strongly in the House of Commons. He prophesied that there would be the very same kind of thing that Lord Snowden, hoped; and Mr. Colville, who I think was Parliamentary Secretary to the Board of Trade at the time, was jovially confident, and in winding up the debate on that Agreement he said:
"We are confident that the Agreement will place our trade and shipping with Russia On a better footing than it has been at any time since the War."
The situation to-day which I have just described, when we do not ship a ton of Russian timber, which is bought and paid for by ourselves, is a sad commentary on the high hopes of that Agreement.
In addition to that, I am informed that British passenger and cargo liners have been practically completely ousted from the Russian trade, and I have actually been asked not to give the names of the business houses which have suffered from these events, so fearful are they that they may be ousted from the shreds of trade which remain to them. It is a terrible thing that these things should be so. Leaving the Russian trade aside, let us come for a moment to what I think are called the Near Continental trades. There the entrances and clearances—that is, the ships that bring the imports and those that take the exports—are as follows:—British tonnage (I am comparing 1935 with 1929): entrances, 16 per cent. decrease; clearances, 31 per cent. decrease. The corresponding foreign figures are 23 per cent. increase in entrances, and 7 per cent. increase in clearances. These figures show that there is a heavy and grave diminution in British tonnage in these Near Continental trades as well as in the Baltic trade.
One could, I am afraid, multiply the examples which I have just cited to you. And in this connection may I remind your Lordships of a resolution which was unanimously passed on July 16 by the Empire Trade Committee representatives of the Association of British Chambers
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of Commerce, the Federation of British Industries and the Chamber of Shipping of the United Kingdom. I think your Lordships will agree that you could not get a higher authority than those bodies for a matter of this kind, and they spoke in the very strongest language. They said:
"The Committee is gravely concerned for the future of British shipping in the face of subsidies, monopolies, reservations, discriminations and other nationalistic acts designed by foreign friendly nations to transfer employment from British to their own ships; and the Committee urges the Government of the United Kingdom to take full advantage of the willingness of the Dominions to pursue a policy of determined support for British shipping, and for the preservation of existing services, in the face of action by foreign Governments which places British shipping at a disadvantage, and to give in all treaty arrangements special attention to the protection of the Mercantile Marine—"
on which, as we all know, depends the safety of our country. That is a very important declaration. I do not remember another one passed by the three bodies in question in such very strong terms. That alone would be sufficient reason for asking the Government to bestir themselves in this matter.
I ought to have said, if your Lordships will excuse me for reverting to the subject, that the grave reduction of our shipping in the Near Continental trades which I have just described has taken place, as in the Russian case, just where there is a large adverse balance of trade—where we are much more important to the countries we are dealing with than they are to us. In this trade, again, we have the thick end of the stick, if I may use the expression. We are in a magnificent position to say to those countries: "If you want our large market, then please ship your trade, or a proportion of it, in British bottoms." There never has been an easier case. Supposing the adverse balance were not on our side it would be very much harder for His Majesty's Government to lay down conditions. In this case the way is open to the Government to take action. I do not suggest for a moment that the whole ease is as simple as this—it is most complex—but I do suggest that in this particular case action could be taken advantageously, and with little fear of reprisals.
The Chamber of Shipping has given me much valuable information on this

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matter. What is it that the Chamber of Shipping desire the Government to do? The first thing that they desire, I believe, is the continuance of the tramp subsidy. When I spoke last I pointed out that the tramp subsidy was inadequate, that it had in some cases scarcely paid the depreciation on the ships. None the less, the tramp subsidy has done a very great deal of good, and I should like to acknowledge to His Majesty's Government that I think I underrated, last time I spoke, the good it had done. The more I have learnt of it the more is the contention borne out which the Government made in answer to me last time that, although it is by no means everything—and I think not nearly enough—the subsidy has done something, and something important, to save the tramp industry. At any rate it saved the tramp industry from collapse. It has, I think, prevented large transfers of tonnage to foreigners, and it has increased the employment of British crews by at any rate something like 2,000 men. All these are things which I am perfectly certain the shipping industry would wish to acknowledge and to thank the Government for.
Yet, none the less, the subsidy is a very small one. It is £2,000,000. When the Secretary of State for India replied to me he spoke with bated breath, refusing my argument that more should be done by saying it would take no less than £21,000,000 to compete against all the subsidies that foreign Governments were giving. To me that seemed a tiny sum compared with the value of the industry, and yet the sum of £21,000,000 was mentioned as being beyond the powers of the Government to give to save this industry. We have to remember now that the £2,000,000 that was given has not the same value as it had then. I do not say that in a cavilling spirit, but it is a matter we have to remember that owing to the restitution of seamen's cuts in wages, changes in the manning scales and shorter hours, as well as revision of officers' and engineers' wages, the actual value of the tramp subsidy has been cut into. I was given an example—perhaps not a fair example, though I was given it in perfect good faith—of a 4,000 ton ship which received under the tramp subsidy scheme £1,500, and the increased running costs of which under the headings I have just given amounted to £750; so that in that case nearly 50 per cent. of the value
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of the tramp subsidy has disappeared. In any case the industry only asks that the tramp subsidy should be continued. I should like to use that as a text. The success of that subsidy is surely a good reason why His Majesty's Government should intervene still further and in a wider area for the salvaging of the shipping industry as a whole. If this subsidy had been a failure I have little doubt His Majesty's Government would have quoted it as a reason why they could do no more. They cannot do so in this case.
The second thing that I think the shipping industry would desire His Majesty's Government to do is to give a definite lead at this particular juncture in regard to the shipping crisis in the Pacific. I do not wish to repeat what I said in July in your Lordship's House when I brought the question of the grave situation in the Pacific to your attention, but your Lordships will remember that, briefly, the situation was that there were two British lines running in the Pacific, one a New Zealand line, the Union Line, running to San Francisco, and the other tie Canadian-Australian Line, I think it is called, running between Australia, Fiji, and Vancouver. I ventured to describe to your Lordships on that occasion how dire was their plight. These ships were being run off their trade routes by highly subsidised American competition of various kinds. There was a construction subsidy often, there was a running subsidy often, and there were these Coastal Trading Acts which gave a tremendous advantage to the Americans, Acts which we did not have. Although we allowed American ships to do coastal trade between New Zealand, Australia, and Fiji, yet our ships were not allowed to do any coastal trade between Hawaii and the American coast. All this no doubt will be present in your Lordships' memory, and I do not want to go back on it.
I ventured to prophesy on that occasion that if His Majesty's Government did not come to the rescue of those lines, and come swiftly, they would break down and, once having been allowed to stop, it is very hard to resuscitate them. Alas, what I prophesied then has actually come true—that is to say, the line to San Francisco has, I am informed, ceased to Junction, having been driven off the seas. Mr. Neville Chamberlain has seen British shipping swept off the Pacific. One

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vessel has been already sold and, I understand, the other is in process of sale. The Canadian-Australian Line is still hanging on in the hope of something being done. At that time His Majesty's Government informed us that they were going to refer the whole question, or had referred the whole question, to a Shipping Committee. I asked His Majesty's Government why, if it were necessary and advisable to refer this matter to a Shipping Committee, it had not been done years before, and I said that further delay would be very grave. It was in June of this year, I believe, that the matter was referred to the Imperial Shipping Committee. We were informed by the noble Viscount the Leader of the House that the Committee held its first sitting towards the end of June. On July 30 the Secretary of State for India told us that the Committee—we had no doubt about it—were deliberating; and on November 11, to-day, we have as yet no sign of the Report at all.
I have heard rumours that the Report has actually been delivered and is being sent out to the Governments concerned. I do not know if that is true, and I hope the noble Lord will be able to tell us something. What I am anxious to press His Majesty's Government to agree to to-day is that when this Report does emerge from the hands of the Imperial Shipping Committee, it should not be merely sent out to the four Governments concerned for them to discuss with each other interminably and at great length, because it is very difficult for Governments so situated as the four in question—Canada, Australia, New Zealand, and Fiji—wide distances apart, working under different authorities, with very different and divergent interests, to come to a common conclusion unless there is active and determined leadership on the part of one, and that one must be, I think, His Majesty's Government.
At one moment my noble friend the Leader of the House went so far as to tell us that it was not primarily a United Kingdom concern. I demurred very much, I remember, at the time to that statement. I ventured to ask him to correct his view and to remember that it must be a matter of primary interest to the United Kingdom because here the ships are built, here the insurance is carried out, quite apart from all the other semi-military reasons which make this
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country the natural leader of the Commonwealth of the Empire. At a later stage the Government took a less definite view, and the Secretary of State for India, when he announced that this matter was being submitted to the Shipping Committee, used words which I have not got here but which certainly indicated that the Government did think it was some concern of theirs. I do hope that the Government can give us a very definite reply in this matter. What we think appropriate is that the Government should at this moment come to a definite conclusion as to what assistance they can give in this matter of Pacific shipping and what they think can immediately be done, and to let the four Governments concerned have this information at the same time as they receive the Imperial Shipping Committee's Report, for only in those circumstances does it seem likely that they will be able to come to a common agreement and come to the rescue of the last remaining line in the Pacific.
The last matter which I would like to bring before your Lordships in which Government assistance seems urgently necessary to the shipping community is the whole question of the Far Eastern-Indian shipping trade. This is a subject which is far too long and too complex to attempt to deal with in any one speech without unduly wearying the House. I certainly have not mastered the subject in the time at my disposal sufficiently to warrant me in taking up your Lordships' time to-day, but I do propose, if your Lordships will allow me, in a week or two's time, to raise this matter specifically, because it is so grave and so urgent. Meanwhile, I only want to give a very brief outline of it and to invite His Majesty's Government to tell us what they can do, how they envisage so grave a crisis, and ask them to be prepared to give your Lordships entirely full information when the matter is raised in a week or two's time, I hope in more competent hands than my own, but at any rate in somebody's hands.
In the Far Eastern trade—I am speaking only very generally—the British lines concerned are the British India and Indo-China Steam Navigation and the P. & O. Line. There may be other less important lines, but I am only dealing very generally with the main lines. On the other hand there are the Japanese

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lines—the Nippon Yusen Kaisha, the Osaka Shosen Kaisha, and one or two lesser lines. Up to about the year 1911 the whole of the Calcutta-Straits-China-Japan trade was entirely British. In 1911 the Japanese, with the N.Y.K., entered into this trade at highly cut rates and they used the War period to consolidate the position they had begun to win just before the War. In 1918, at the end of the War, when they had really established themselves fairly strongly, they forced their way into the shipping ring, what is known as the Conference, and got one-third of the trade. Almost immediately after that, by a series of measures which I do not quite like to characterise, yes, I think I will characterise them as what we should hold to be definitely unfair methods of competition, they forced their way more and more into the Conference and forced the hands of the Conference. I hope I am not wearying your Lordships; my only excuse is the enormous importance of this question to the Empire.
NOBLE LORDS: Hear, hear!
LORD LLOYD: I am speaking a little also so that the public may understand this matter, and I hope I shall not weary your Lordships. When they started competing the division of sailings at this stage of which I am talking was 72 to the British lines and 48 to the Japanese. Under the current Conference Agreement the ratio of sailings is, to-day, British lines 72, Japanese lines 60, with a total of 132 sailings. But it is pointed out to me, and I am sure your Lordships will see at once, that 132 sailings in the existing condition of the trade is very much more than the trade requires, and as the Japanese lines refuse entirely to agree to a rationalisation, the British companies are perpetually, as your Lordships will see, forced into the position of admitting more Japanese lines into the Conference and thereby reducing their share. Why? Because the Japanese, at any moment, when they wish to get a bigger share of the Conference, threaten that they will quit. What is the difference between the British position and the Japanese under that threat? The Japanese know that if they quit the Conference and start a rate war they have the whole power and the whole finance of the Japanese Government and all the
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traders in Japan at their back. The British, on the other hand, know that they have to rely entirely on themselves without any assistance, without any organised trades behind them. Of course, in such circumstances, there is no doubt who is the winner. The British owners cannot face such a rate war, so that on each occasion the Japanese are successful and they force further participation. As soon as that new participation has been acquired the same game begins again. The result has been quite terrible.
Let me sum it up. I would like to give your Lordships much more detail because the more detail that is given the more terribly dramatic it is, but there is no time to go into great detail. I would like, if I may, to develop that point on another occasion. The present position of the Bombay-Japan traffic, which not many years ago was entirely British, is now to the extent of over 80 per cent. in Japanese hands, and the Japan-Bombay traffic is 89.2 per cent. Japanese. I said at the beginning of my remarks that something like the elimination—I did not quite use the word "extinction"—of our trade in the Far East was occurring, and I think your Lordships will agree now that you have heard the facts that I did nit exaggerate very much. I ask you further to consider that India and the wealth of the Straits Settlement are, as it were, on the right side of the barrier, that we hold the riches of the whole of the Indies in our hands, that it is a very far cry from Japan, and that yet we, the greatest maritime nation in the world, with all India at our back, with all its wealth, with its vast population, have lost its trade. We have lost its interest and we have lost it to the Japanese, an island as remotely far away as we are ourselves. It is the most dramatic and epic story of failure—and I hope His Majesty's Government will not take it as disrespectful if I say—and gross neglect on the part of Government that I have seen on a great economic matter in the whole of my life.
I do not specially mention His Majesty's present Government, but that any Government, any series of Governments for the, last fifteen or twenty years could have stood by and watched this situation growing, and that a great Empire with every economic leverage in its hands should have allowed this to take place is indeed a tragic and a terrible

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occurrence. We have not yet begun, in my judgment, to reap the full fruits of our neglect. I could go on but I refrain. If I were to do so I should be getting nearer to my own ground or ground that I used to know very well in Western India. I cannot begin to go into that, but what I have already said will enable you to imagine the absolute despair of the shipping companies. I am not an apologist for the shipping companies, have not a share in one of them, but think we will all admit that the British Shipping lines know their business as well as any shipping lines in the world. One does not say that merely in a jingo spirit. It has been proved over and over again that given anything like equal terms there is no foreign Country that can hold a candle to us. There is no other shipping power which can run ships more cheaply, more economically and more efficiently than our shipowners. Yet, without any assistance from the Government, no one can stand up to two thousand millions of subsidies levied purposely to attack and deprive the British maritime industry of its world-wide supremacy.
I come for a moment to the Persian Gulf. Here it is only beginning. In the old days I used to be a great deal in the Persian Gulf, and indeed I wrote a Bluebook for His Majesty's Government on the trade of that area. I was very young then. I used to know it well. I remember with what jealousy His Majesty's Government regarded the first German ship that had, as we thought then, almost the effrontery to enter the Persian Gulf. We remember the declaration of Lord Lansdowne on the Persian Gulf. We remember the equally powerful declarations of Sir Edward Grey. We are going to lose all this unless His Majesty's Government bestir themselves and bestir themselves in a ratio quite different from anything they are doing now. No doubt the noble Lord who replies will take credit to the Government for their efforts in the tramp subsidy. Let me tell him that that is only touching the fringe of this question. No doubt the tramp subsidy is a good thing and we congratulate His Majesty's Government upon it and hope they will continue it, but it is not a scientific study of the remedy that is required to deal with a deadly disease. It is only a momentary and a tiny palliative. I hope
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the noble Lord will remember that when he takes satisfaction over the tramp subsidy.
We lighted the Persian Gulf, buoyed it and cleared out piracy. We have done everything in those waters. And who profits to-day? Japanese tonnage is entering there. Percentages are misleading, because the figures start from nothing, but Japanese tonnage entered and cleared at Bushire in 1934 amounted to 3,500 tons and in 1935 to 50,000 tons. That is a percentage of increase of something like 1,300. In the case of many countries that would not be very dangerous. It would be the starting figure, a sudden jump from nought to something. But in the case of the Japanese that kind of ratio is apt to sweep swiftly on. If the Japanese attack a trade and we do not defend it they get it. Our clearances have only just kept their heads above water. I do not desire to enter into old controversies on the Indian question, but quite apart from that it is perfectly certain that if you lose traffic in these waters you will find within a few generations that you have lost India and the East Coast of Africa. These areas are strategically and economically bound together. That is why I lay such stress on the trade in the Persian Gulf.
I have finished except to say that in the face of shipbuilding subsidies and operating subsidies—in the case of Japan a new subsidy of 220,000 yen was voted a few days ago—assisted by low wages, currency depreciation and preferences of every kind, there is no hope of British shipping being able to compete unless the Government adopt a well studied and comprehensive policy of protection in one form or another. In all these cases British shipping is now helpless. Only firm Government action can restore British shipping to its original position. Mr. Neville Chamberlain, whose words, in my judgment, carry as much weight as, or more weight than, those of any man in this country by virtue of his position and Iris handling of our finances, has said that he is not going to allow British shipping to be swept off the seas. He will have to hurry very much and the Government will have to hurry if those words are not to be idle and vain. I implore His Majesty's Government to tell us, if they can, what they are going to do; to tell its, if they will, why it is that year after

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year, with these facts in front of them, they can only "consider" what to do and can only touch the fringe of the problem. There may be admirable reasons why they cannot do more. If so the country is entitled to know why the position is allowed to go on all these years while industry is starved and people are ruined and our military position is threatened. It is a position which I suggest your Lordships cannot tolerate without grave protest or, at any rate, a request for full information from the Government. I beg to move.
LORD STRABOLGI: My Lords, I am quite sure none of your Lordships will complain of the noble Lord's persistence in this important matter and personally I would like, if I may, to congratulate him on the forcefulness of his speech. Certainly it is not for me to complain if a distinguished member of the Conservative Party finds it necessary to indict His Majesty's Government in your Lordships' House. I am afraid they are deserving of indictment in this matter. My noble friends have asked me to put our point of view before your Lordships' House. It does not differ very much from that of the noble Lord, Lord Lloyd. In the Labour Party we recognise the absolute necessity of a prosperous and efficient Mercantile Marine. In the old days of free trade the British Mercantile Marine flourished, but to-day there is protection for this industry and that industry, and, as I have said before, having once started this policy of protection you will have to go on and subsidise or protect other industries. Next week there will be a request for further protection for agriculture. You cannot stop once you have started.
Speaking as an unrepentant Free Trader I am bound to say that we are now reaping the rewards of a false policy and a false doctrine, although I admit that we are not alone altogether to blame in this country. If you cannot get a prosperous Mercantile Marine by one means—in the old days it was achieved by the efficiency of British shipowners and the efficiency of British seamen, referred to by the noble Lord—you must do it in another way. Either you must give protection and subsidies to shipping, as other countries do, or, as my noble friend Viscount Bledisloe said the other day, the State itself must assume responsibility for the necessary merchant
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shipping for national defence, for economic defence and the general carrying trade. There is the choice. We cannot expect the present Government to do more than they are compelled to do in the latter direction. Therefore, if subsidies are necessary to preserve British shipping from being swept off the seas, we shall have to face up to that policy.
I was very much struck by the figure of £2,000,000,000 given by the noble Lord, Lord Lloyd. I am sorry he is not in the Chamber at the moment, and I should like to know if the Government can reaffirm that figure. I take it that the figure refers to subsidies of every kind by all foreign nations over a series of years. My attitude in this matter is reinforced by some very interesting statements in the Third Report of the Tramp Shipping Administrative Committee. If I may I would like to draw your Lordships' attention to one or two statements in that Report. We have given certain assistance to tramp shipping, but the figures given in this Report dated last September show that British tramp shipping is still losing ground. Shipping flying the British flag has diminished between last January and last July. This is a Command Paper and from it I take these facts regarding foreign-going tramps. We had on January 1 last, 895 ships flying the Red Ensign of a gross tonnage of 3,437,000. On July 1 last, the number of ships had decreased to 869 and the total tonnage to 3,368,000. I understand that the noble Earl, Lord Cork and Orrery, will intervene in this debate later and I think he will agree that at the present time the shipping we have available would not be sufficient to tarry on essential trades in time of war. With the change of harbours for strategical reasons and the extra freight required in time of war the ships flying the Red Ensign, which are all you can really rely upon, would be insufficient for the country's needs in that emergency.
The Mercantile Marine is essential for the life of the country and the survival of the country as an independent State. British shipping is barely sufficient for its purpose to-day. With the altered conditions in war it would be insufficient, end it is going down both in numbers and tonnage. The reasons have been partly described by the noble Lord who introduced this Motion and partly stated by

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the Committee. This is what the Committee said:
"Having regard to the continued restriction in the volume of world trade occasioned by trade barriers and extreme economic nationalism,"
and so on. They wind up by saying:
"Prosperity can only, return permanently to shipping with the restoration of international trade (exports and imports) upon which the industry depends."
There is the lesson plain for all to read, that if we and the others engage in this mad economic nationalism—and I am sure we shall be supported by the noble Lord leading the Liberal Party at the present moment—shipping and everything else suffers. I hope I have explained our policy in the Party. We view this matter with the gravest alarm and we should like to see the Government doing something more. I should like to reinforce the noble Lord's plea for a lead to the rest of the Empire in this matter, to the other Dominions, and I hope that the Pacific Committee Report, which I understand is ready—I dare say it is a matter of courtesy to wait until the other Dominion Governments have had it, and I hope it has gone by air mail—will be published as soon as possible.
Now, my Lords, I want to refer very briefly to another matter, and that is the welfare of the men. There is not much unemployment, according to the reports at the moment, among white seamen, but how many have we lost in these years of depression? Seamen of the Mercantile Marine are the most necessary reserve for the Royal Navy, and we not only need sufficient seamen but we need what we used to call prime seamen—that is, men of good stamina, skilled in their profession and suitable for use as reserves for the Navy in time of war. To get those men, to attract the right type of young men to the Mercantile Marine, the conditions must be suitable, and I am glad to see that we are making some progress, in that direction. There has recently been sitting at Geneva the International Shipping Conference of the Labour Office of the League of Nations, and it has reached a number of very important conclusions. I should like to take this opportunity of congratulating the delegates of the British seamen on the conclusions reached, but I cannot congratulate His Majesty's Government
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on their attitude at that Conference. They were thoroughly obstructive and reactionary, and I am sorry to say that the Government of India was almost as bad as His Majesty's Government; not quite, but there was not much to choose between them. I am glad to see the Secretary of State for India in his place. The real blame lies, of course, on Whitehall.
These Conventions included improvements in the hours of work and the manning regulations. Those were compromises. The seamen's representatives did not get all they wanted, but they got something very valuable. And, my Lords, you will be aware that the representatives of all nations were there—the British Dominions, the United States of America, the Scandinavian Powers, whether they are members of the League of Nations or not, all are members of the International Labour Office, and were all represented there. When the voting took place, the only Government delegation which voted against these Conventions for improved hours and improved manning were the representatives of His Majesty's Government and of Japan. Britain and Japan were in the minority. This time India voted for the improved conditions, and I should like to congratulate the Secretary of State on that fact.
Then, with regard to the Conventions for the minimum requirements of professional capacity in officers, the only Government delegations voting against them out of, I think, thirty-one Governments represented, were His Majesty's Government, India and Japan. Another Convention was for annual holidays, with pay, for officers—I am sorry to say not yet for seamen. The British Government did a very bold thing then: they abstained from voting, and the Japanese were the only Government to vote against the Convention. Sickness insurance for seamen, as everyone knows, is a most important matter. I am sure that the noble Lord, Lord Essendon, knows its importance. Lines like his have their own arrangements, but this Convention is to make it international and universal. This was the only Convention for which the British Government voted—the only one—and the Indian Government voted for it too, I am glad to say. Another Convention laid down the lia-

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bility of shipowners in case of injury or death at sea; the only Governments voting against it were His Majesty's Government and the Finnish Government.
I say to your Lordships that that is a very black record, and now that His Majesty's Government have been well voted down by the Dominions, the United States and the other Powers—including the Russians—I hope that they will accept their defeat and that they will ratify. I would invite the noble Lord, who will presently, I am sure, make one of his informative and courteous replies, to inform your Lordships whether it is intended to ratify these Conventions, and if so, when. They are of great importance to seamen. And may I say to the noble Lord, Lord Lloyd, and to others who say that the shipping subsidy is not so valuable now because of improved wages and hours of work of seamen and so on, that these are Conventions to raise the standard of all shipping, and if they are carried through and if the Japanese are bound to abide by them, as they will be if we all ratify them—morally bound, anyway—that will reduce one of the advantages which he said that the Japanese have in their cheap labour.
One other suggestion that I make to His Majesty's Government is in regard to the agreements of the National Maritime Board. This is another body which deals with the all-important human question of the men. It is most unfair to good shipowners—the majority are good, I admit—that they should come to agreements with the National Maritime Board and abide by them and that a minority of "blacklegs" amongst the shipowners, if I may use that expression, do not observe the National Maritime Board agreements. I again take this opportunity, as this matter of shipping is under discussion in your Lordships' House, of impressing on His Majesty's Government the necessity of making the National Maritime Board a statutory body and its findings obligatory on all shipowners. That action would be welcomed by the good shipowners, the officers, the men, the pilots and all the others who are entitled to sit on the National Maritime Board. If you do that you will improve the status of the men and the conditions of their employment, you will attract a good type of young British lad into the Mercantile Marine, and it will be a career
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that he will be proud of, and it will help the prosperity and safety of the country.
LORD ESSENDON: My Lords, when I saw that my noble friend Lord Lloyd had this Motion on the Paper to-day, I felt, as one interested in the shipping industry, that it was incumbent upon me to come here and listen to the words of wisdom which I had no doubt would fall from his Lordship's lips. I have not been disappointed in that expectation. The shipping industry is profoundly grate-fill to Lord Lloyd for the interest he takes in its affairs, and we are glad indeed that we have so powerful, so sincere, and so able an advocate. Lord Lloyd has travelled over a great amount of ground this afternoon and I do not propose to follow him in all the points upon which he dwelt, but I wish to make a few remarks which it occurred to me as he made is speech that I might appropriately make.
In the first place my noble friend referred to the gracious Speech from the Throne, in which reference was made to the fact that something was going to be done to help the shipping industry. We in the shipping industry of course presume that that Speech means what it said. The most satisfactory conclusion—or one satisfactory conclusion—that we draw from the Speech is that it will inevitably mean a continuation of the tramp subsidy. The tramp subsidy has done a great deal of good, but what the tramp shipping companies earn, even with it, probably only represents depreciation. They make nothing for interest, and your Lordships will no doubt remember that under the Subsidy Bill there is a safeguard by which if freights ever get back to the 1929 level the subsidy ceases to exist.
But, of course, in addition to the tramp section of the industry there are other sections which will require assistance. The noble Lord has dealt with the most important one, and the matter has already been debated in this House—the question of shipping in the Pacific. The Report of the Imperial Shipping Committee is now awaited. It is supposed to be already prepared. I have not the slightest idea what is in the Report, and I have no right to anticipate what is in it; but I would say this, that the Australian and New Zealand Governments have already given a lead in this important

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matter, and that encourages us to hope that the Imperial Shipping Committee's Report will be a favourable one. I should like to urge upon His Majesty's Government, if that Report is favourable, that they should lose no time in coming to conclusions as to what they intend to do, and should submit those conclusions to the four Dominion and Colonial Governments concerned. It is very important that that should be done promptly, because we all know that the service between Canada and Australia and New Zealand is likely to come to an end if nothing is done, and it is unthinkable that that service should cease to exist.
In addition there are a number of other liner trades whose wants require careful consideration. The noble Lord, who dealt with some of the different trades, referred to Russia and gave a great deal of statistical information about that. Our difficulty in dealing with Russia is this. In the ordinary way the shipowner has to rely upon propaganda, experience, and the efficiency of the equipment he provides for giving his services to the merchants of the world, but in the case of. Russia, where you have the whole mercantile marine controlled by the Russian Government, it is impossible to do anything of the kind. It can only be done by the British Government stipulating for a certain percentage of the trade of Russia with this country being carried in British ships. The noble Lord referred to the trade between North European ports and this country. There again discrimination is being used to the detriment of British shipping. The only statistics which I had intended to impose upon your Lordships were the figures which Lord Lloyd has given you as to the reduction of clearances and entrances of British ships, and the increase of clearances and entrances of foreign ships. I would say that those particulars apply to the years 1929 to 1935.
There is one matter to which I would like to make reference, and which has not been referred to by the noble Lord. That is with regard to the difference between visible imports and visible exports. In the periodical survey which Sir Robert Kindersley prepares I think it was stated that the estimate of deficiency between visible exports and visible imports this year was probably £300,000,000. In the ordinary way that
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has to be made up by the shipping services, the banking services and money invested abroad. As your Lordships know, the cost of freight is included in the imports into this country, and therefore any revenue earned by British shipping helps to reduce that difference between visible imports and visible exports. It is obvious that if something is done to help the shipping industry it will help the invisible exports by increasing the amount that British ships will earn. A few years ago, we earned a large part of that deficiency—namely, £200,000,000—but now I understand the amount is only about £70,000,000. Any help given to the shipping industry will help to restore that balance.
The noble Lord opposite made a very broadminded speech in support of what Lord Lloyd said. He cannot expect me to agree with everything he said. I do not agree with him as to the Geneva Convention. We shipowners do not want to see wages and manning used as a battledore and shuttlecock, and I am glad that the British representatives voted against the Convention. We are able to compose our differences reasonably and sensibly. Only recently the cuts were restored and a definite agreement arrived at. The noble Lord questioned a remark made by Lord Lloyd with regard to foreign subsidies. I think Lord Lloyd referred to the whole of the subsidies that had been granted. The annual amount, I think, is something like £6,000,000 direct subsidies paid by foreign countries. I do not think there is anything else said by the noble Lord opposite to which I need refer. I do not want to encroach upon the duties of the noble Lord who will reply for the Government.
Lord Lloyd did refer, of course, to the question of Japanese competition. That is getting a very serious matter. The Japanese are paying subsidies and building ships which will enable them to deal with four times their own trade. British shipping is just about sufficient to cover the whole trade of this country and its Dominions, and there is a fear that in the course of time the Japanese may transfer their activities from trade in the Far East to European commerce. The noble Lord referred also to the question of India. I am not clear whether the trade agreement between India and

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Japan is concluded. If it is not I urge the Secretary of State to see that something is done to help British shipping between India and Japan. I sincerely hope it is not too late. In conclusion I would like to say that the shipping industry is profoundly grateful for the assurance given that their interests will be looked after, and is looking forward confidently to the fulfilment of that promise.
THE EARL OF CORK AND ORRERY: My Lords, after the speeches to which we have listened I feel diffidence in taking up more of your Lordships' time. Lord Lloyd introduced his subject in an eloquent and powerful speech which I cannot hope to emulate, and I will merely proclaim myself as a very enthusiastic supporter of him in his crusade. Lord Strabolgi was good enough to refer to me, and I entirely agree with what he said, but if I may do so I would put it in stronger language and say that we are now in a desperate position from a maritime point of view. I confess I find it difficult to understand how a. British Government which two years ago started to go into the question of rearmament should so entirely neglect what the whole question of defence must largely depend upon—namely, our Mercantile Marine. It is like building the facade of a castle without sound foundations and without anything behind it, which is then generally known locally as somebody's "folly."
During last September I spent some time in visiting certain lesser ports on the East Coast in the height of the timber season. It was very interesting and very pleasant to see the ports so busy, and the scene was quite gay with all sorts of variegated colours of bunting—the flags of foreign ships. In one basin I did find nine foreign ships and two British, but that was the highest proportion I observed in eight ports which I visited. I had a talk with the master of one of these ships, who had just brought some timber from Finland. He was very bitter about what was going on around him. The second ship, I may mention, was in the Kara Bay trade, which is one of those trades in which the Russians are ready to have British ships. He wound up by saying: "Well, what can you expect when the General Post Office imports its telegraph poles in foreign bottoms?" I have not had time to verify that statement, but if it is true I am
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quite sure that that state of things has not the approval of ale Postmaster-General. I do not wish to pursue this subject now, but if that was a true statement one cannot but have some sympathy with the masters of those ships. Being simple seamen, they cannot understand why, with all this timber bought from the Baltic nations, who have no alternative market elsewhere, British shipping cannot have at least 50 per cent. of the carrying of it to these shores.
I should like to say a little about the coastal shipping of this country, which is rather apt to be overlooked. The coastal trade is in a somewhat difficult position in that it forms a part of the internal transport of the country, and therefore is in competition with the roads and railways, so largely helped financially by the Government, and it is also part of the shipping of this country and as such in competition with foreign vessels trading on these coasts, which they are of course free to do. A considerable number of foreign ships take advantage of that right. When this is pointed out it is generally answered by the statement: "Oh, the foreign vessels working on our coasts only amount to 1.4 per cent. of the coastal trade." That may be true, but it requires qualification. In the first place, if it is true it has increased very largely, because two years ago it was only 0.8 per cent. But as a matter of fact that trade is very regional. It takes place almost entirely on the East, South, and South-West coasts, and there it rises to a very much higher figure than 1.4 per cent. Then again, it is not the industry as a whole which suffers from this foreign competition, it is the coastal tramp industry which suffers. The coastal liners are hardly affected.
The value of the coastal shipping to this country is so great that it deserves far more attention than it ever receives. In the first place, there is the question of employment. It is not always realised that even the smallest ship gives employment not only to the shipbuilding and marine engineering trade, but to those connected with the fuel, the marine instrument and optical instrument trades, and all the trades which fit out the ships with curtains, linen and woodwork, etc. Foreigners who come to trade on our coasts do not bother to buy their stores in this country they buy them in their own. They buy their own fuel in their

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own country, and they go back to their own country when they want to refit or repair. The coastal trade is to the Mercantile Marine very much what the small craft are to the Royal Navy. In the coastal craft every man is forced to learn his work—"to hand, reef and steer" naval parlance. Recently it was alleged that British coasters were manned by foreigners. Our laws certainly only require the officers to be British subjects, and there is a ship at this moment at Gravesend—at least she was there three days ago—with a crew of nine unnaturalised foreigners; but happily that is an exception. When this statement was published the Coastal Trade Development Council circularised a great number of coastal shipping owners. Some fifty papers were sent, out on this question and 44 per cent. replied that their men were 100 per cent. British.
As an alternative method of transport in peace time the coaster is, of course, well known as a cheap and easy means of conveying cargo, and a considerable amount of agricultural produce of this country, both sugar and wheat, is carried by coastal vessels. There are a number of noble Lords in this House, with whom I desire to associate myself, who are in favour of the storage of food in this country, but if ever the time comes for distribution of the food so stored, which will be in time of war or of great internal unrest, you may well find that railways and roads are not available. The small coasters will then be in great demand. In the strikes of 1921 and 1926 many small vessels of the Royal Navy were used to distribute food. There is one great advantage about the sea for this purpose. You cannot render the sea impassable by dropping bombs; a bomb drops into the sea and two seconds afterwards there is nothing to mark the spot. That cannot be said of permanent ways or arterial roads. Nor can the sea be drenched with gas, while the light draught of coasters renders them almost safe from mines. These small vessels can poke up waterways and get what they have to distribute into ports which no enemy would waste time in attacking. There is another great advantage of these small coasters. In wartime the turn round of a ship from overseas would be of very great importance. These small coasters could go alongside, ship their cargo straight out of the hold of the deep sea
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ship, and so expedite the turn round of the ship and the distribution of its cargo.
It would be possible to go on a long time, but I fear to weary your Lordships. It may be that in the interests of the shipping industry as a whole it is undesirable to afford any protection to coastal shipping by flag discrimination. But surely it is not impossible to introduce some sort of rules and regulations which will at least make it possible for our coastal shipping to compete on equal terms and which will prevent any cargoes ordered by the Government or any public body or private firm which receives Government help being carried in foreign bottoms. In 1935 the late Lord Beatty, then President of the Coastal Shipping Development Council, circularised local authorities in coastal areas asking for their co-operation along these lines, seeking to secure British support for British ships. The replies indicated a very large measure of support. Forty authorities expressed willingness to insert some form of protective clause in all their contracts. Many others expressed sympathy, and others did not answer, which does not argue that they were not in sympathy. But 21 said definitely that they would take no such action. I suggest that they should be made to do so.
Your Lordships will have noticed only last week that the London County Council has been employing foreign vessels to bring granite from Cornwall up the Thames to build a new Chelsea Bridge. It is quite certain that a vast majority of ratepayers do not want their money spent in that way, to the detriment of British shipping. The reason given was that there were no suitable British vessels available at that time. I do not suppose that the lady who gave this reason, the Chairman of the General Purposes Committee of the London County Council, knew anything about it; probably the chartering of the vessels was a thing with which she was not concerned. But the fact was not as stated. There were British vessels available, or vessels that might have been made available. One of the largest owners of coastal tramp shipping in this country told me personally that he volunteered to supply the vessels to the London County Council. It may interest your Lordships to know that at this moment foreign ships are loading Dorset clay in Poole Harbour to be conveyed to the

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Potteries. Part of these cargoes is to be used for turning out Coronation mugs, and the children will have the satisfaction of knowing that the making of these mugs has benefited foreign ships to the detriment of our own. Hundreds of the men and scores of the ships will be required for national service if ever we are at war again. Those hundreds of men and scores of vessels can only be made available if British firms will support British shipping, and I submit that British coastal vessels are entitled to receive that support. We cannot rely, in our coastal trade, on foreign assistance in wartime.
Certain remedies have been proposed. I shall not go into the difficult question of flag discrimination, but it has been suggested that licences might be introduced and that traders shipping goods in foreign vessels should be required to say why they are shipping their goods in these vessels instead of in British vessels. Apart from that, there are several other suggestions for assisting coastal shipping. For instance, under the Coal Mines Act small vessels burning coal and working on our coasts have to pay the higher inland rate instead of getting coal at the export rate of which all other shipping gets the benefit. But I will not go on; I am detaining your Lordships too long. I hope the noble Lord who replies will be able to assure the House that the interests of coastal shipping will not be overlooked while the Government are "deciding what measures are required to secure the maintenance of a Mercantile Marine adequate for the needs of the country."
LORD MELCHETT: My Lords, I feel that the seriousness of the situation revealed by this debate makes it unnecessary for me to apologise for continuing it a little longer. I think we are all deeply grateful to the noble Lord who opened the debate with such an eloquent and exhaustive speech. I wish for my part to direct a few observations on this matter from a rather different angle to those which have been made so far. I want to speak not as a shipowner or from the shipping point of view, but from the point of view of a shipper of goods—British goods in British bottoms. The various industrial concerns with which I am connected spend far more than one million pounds a year with the British shipping industry in exporting goods
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from this country to other parts of the world. The shipping industry is of vital importance to us, and we view with the very gravest misgivings the constant deterioration of the position of British shipping. It is having its effect not only on the mere question of suitability or availability of ships to carry goods, but also upon the general commercial situation in the countries to which our trade goes.
The reason why foreign countries have indulged in enormous shipping subsidies is not merely for the pleasure of running ships on the sea. They have done so be cause, having very carefully observed the great success of this country in fostering export trade and building up a worldwide trade, they noticed that when a shipping line comes into a port and delivers goods, each ship establishes a certain commercial connection with that port and penetrates, as it were, into the commercial life of that country. There is no other possible way of doing it, and for that very simple reason, if for no other, foreign countries have realised that if they are to build up a world-wide export trade they have got to base it on a mercantile marine. For some obscure reason, which I myself am totally unable to fathom, this country has allowed itself to be driven back in this one essential of its export trade, and at a time when Ministers are continually telling us that what we need is a greater export trade and that we must have more exports. That seems to be a curious contradiction of policy that I am at a loss to follow.
It may be held that this competition of subsidies which is so virulent and violent is something to which Great Britain cannot stand up. When I observe the successive Budgets produced by the Chancellor of the Exchequer I cannot say that, compared with the Budgets of same of the countries that are driving us off the seas, there is any evidence to make one believe that we cannot stand up to it. The Italian Government, for example, spends enormous sums on subsidies, as the noble Lord who spoke earlier in this debate knows very well, but I do not know that their budgetary position is such that they can afford to do a great deal more than we can. We are constantly being informed that various other countries are on the point of bankruptcy; yet the position is that

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we are being driven back and they are going forward, and I do not think any one denies that fact.
It seems to be assumed that this Japanese competition is something which cannot be met. That is not so. You can meet Japanese competition, but you have got to meet it with vigour and determination. You can drive back this infiltration, but it costs a lot of money to do it. The Japanese, like other people, do not go into business for amusement. They go into business to make money, and if they are faced with determined and violent opposition they, as a rule, seek some other way of expanding their trade or move in another direction. I am convinced that if the British shipping companies were adequately supported this constant infringement, particularly by Japanese shipping, on, I will not say our traditional right, but on our shipping trade, would diminish and in time cease.
There is one reason in particular why I am anxious to press His Majesty's Government this afternoon to give us some pronouncement on this matter. It is a point that has not been mentioned so far during the course of this debate, but it is very important in regard to this matter. Freights are rising. Shipping rates are going up in almost all the markets of the world at the present time, and I do hope that that will not be taken as an excuse or a justification on the part of His Majesty's Government for once more doing nothing in this matter. It does not make the slightest difference to the general position if there is a general rise in freights. The subsidies that other countries are giving to their shipping will be just as effective and, if they are not, these subsidies will be increased. There is only one way in which this matter can be dealt with, as the President of the Board of Trade and other Ministers have acknowledged, and that is by supporting British shipping with Government money. The longer you delay the more you will have to spend and the less you will get for it. That is a business axiom in a matter of this kind that cannot be overlooked. There are certain things in national affairs as in business affairs that are essential, and the Mercantile Marine of this country is one of the essential matters. Sooner or later you have got to do it, and the longer you wait the worse the situation
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will become. To use a medical simile, it is much easier to get a strong man fit than a weak man, and you get him fit more quickly.
In commercial matters there is a certain biological coherence which is destroyed when your trade is taken away or when it goes back. I will draw your Lordships' attention to what I may call the law of substitutes. Once a substitute has been used, the tendency is for that substitute to continue to be used. It is another way of expressing the axiom that it is very hard to get your business back once you have lost it. That is what is happening in British shipping, and it has been happening for years. People have learned to use foreign ships. People who, before, would not travel on foreign ships because they believed they were not safe have now used Japanese or Italian shipping, and have found they can perfectly well get from one destination to another on them. All that accustoming of the world to the use of foreign ships means something that is irretrievably lost. You will never get it back, and the longer you delay the worse that situation will become.
I think that the opinions that have been expressed this afternoon from responsible quarters show the anxiety of the country in regard to this matter, and I certainly hope we shall not have a speech in reply which will only give excuses or a history of what the Government have done in the past. We are grateful for what has been done in the past, but what we are anxious to know is what will be done in the future, and how soon it will be done. I feel in this matter that the very roots of our system of government are challenged before the world. We are faced on all hands by countries who have abandoned their democratic systems and who seem to be able to do incredible damage to one of our vital industries. I hope the Government this afternoon, and in their future actions, will show that that is by no means the case, and that under a democratic system we shall be capable of withstanding the onslaughts of any country as we have been in the past.
LORD TEMPLEMORE: My Lords, at the outset of my remarks I should like to thank my noble friend on the Cross Benches (Lord Lloyd) for being so good as to inform me by letter and on the

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telephone this morning exactly what he was going to raise this afternoon. He has spoken, as usual, with great force and knowledge, and I am quite sure that your Lordships will agree that any question of this kind raised by the noble Lord, with the great experience of the different offices he has held and the many parts of the world in which he has served, must excite interest not only in your Lordships' House but also in the country. The noble Lord was really, for him, quite kind to His Majesty's Government. He did attack a little not only this Government but also, I think, Governments that have gone before, for what they had done or had not done in this matter. I make no complaint of that whatever. The noble Lord or any other noble Lord has a perfect right to come here and attack the Government on this or any other subject. But, equally, I have a right in replying to defend the Government.
I should like to start by pointing out one or two things which the Government have done during the past year or so, if I shall not weary your Lordships by so doing. I would point out that this subject was gone into by my noble friend the Secretary of State for India on July 30 last, but I have some further up-to-date figures which I should like to give to your Lordships. These show that some improvement has taken place during the last year in regard to British shipping. In the worst part of the slump in July, 1933, there were laid up 788 vessels or a total of 3,207,000 tons. In October, 1936—that is last month, and these are the latest figures—the number of vessels laid up had been reduced to 160 vessels of 629,000 tons. Taking account of the reduction of tonnage in the British Register, that equals 1,200,000 more tons of shipping in commission than in 1933. I think the chief credit for those figures is due to our old friend the tramp shipping subsidy.
As your Lordships may be aware it was my duty early this year and last year to introduce the Bills for granting that subsidy. I think we may say that those Bills, which now are Acts, have answered their purpose to a very large extent; in fact I think my noble friend on the Cross Benches acknowledged that they had done so, although he rather poured scorn on the small sum of £2,000,000. I must join issue with my noble friend on one thing. It really astonished me to hear a Tory
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like himself talking in a light-hearted way about a sum of £21,000,000 as if it were quite a small sum. We remember what Mr. Gladstone and Sir Michael Hicks-Beach said about profligate finance, and I do not think anybody ought to talk about £21,000,000 as if it were a small sum. I personally regard it as a very large sum indeed. If I thought my right honourable friend the Chancellor of the Exchequer and the Cabinet regarded £21,000,000 in a like manner I should seriously have to think about transferring n y allegiance.
The subsidy, as I have indicated, has been already successful. In order to reinforce that I would refer your Lordships to pages 10 and 11 of Command Paper 5291 in which the Tramp Shipping Administrative Committee say what a help that subsidy has been. In regard to that I have an announcement to make, and this I think answers the first question which my noble friend put to me. About an hour and a half ago my right honourable friend in another place, in answer to a question by Colonel Sandeman Allen, made the following statement:
"The Government propose to submit proposals providing for the payment of subsidy not exceeding £2,000,000 in respect of the year 1937, subject to the same general conditions as apply to the present year. These conditions provide for the decrease or disappearance of the subsidy if the average level of freight rates for the year approaches or passes that of 1929. The industry will be expected to make its plans on the definite assumption that no subsidy will be paid after the end of 1937."
These proposals will presumably be embodied in a Bill early in the new year.
I think the result of the British Shipping (Assistance) Act, which gave this tramp shipping subsidy, has been to put more ships on the sea and to enable the industry to hold its own. I will not put it higher than that. But it would be dangerous to assume a continuation of improved conditions for an indefinite period. And here one of the difficulties is encountered. In order to get a prosperous industry you require a balance between the amount of tonnage available and the shipping space required, and those conditions do not yet, I regret to say, obtain. Foreign Governments, as your Lordships are aware—indeed it has been pointed out this afternoon by the noble Lord, Lord Essendon, and the

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noble Lord who spoke last, Lord Melchett—still maintain their attitude towards subsidies and other artificial methods of stimulating their merchant fleets. The great difficulty about this whole question is in what the noble Lord opposite called "this extreme economic nationalism" which has encouraged foreign Governments to develop their mercantile marines and encouraged them to develop their coal trade or other trades in competition with this country. That is the great difficulty which faces this Government, and which would face any other Government that tried to meet such a situation. In this connection His Majesty's Government hope that by improving foreign relations—they are even now trying to get a Five-Power agreement, which will only be one means—foreign trade will improve. That improvement, if it comes about, will also improve matters for the shipping industry. To take a concrete instance, His Majesty's Government hope that the recent Trade Agreement with Italy, which was signed only a few days ago, will not only improve relations between the Governments of the two countries but will be of considerable assistance to British shipping.
My noble friend who raised this question dealt with Russian trade in the Baltic and one noble Lord who spoke after him said that we had experienced great difficulty there. That is true, but in connection with that I should like to say that since the Trade Agreement with Russia was signed in February, 1934, the total use of British shipping by Russia appears to have increased to some extent. The amounts expended by Russia in the chartering of British ships are credited to Russia under the Agreement as a set-off against British purchases of Russian goods and the amount so credited increased from £1,442,000 for 1934 to £1,470,000 for 1935. The Russian chartering authorities have stated that they chartered 794,000 tons of British shipping in the first five months of 1936 as compared with 666,500 tons in 1935. That may not be a very large improvement, but it is a step in the right direction.
The next question dealt with by my noble friend was the position of Pacific shipping. Your Lordships will remember that a statement about that was made by
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my noble friend the Secretary of State for India during the debate on July 30 last, and you will be aware that the whole question was referred to a body called the Imperial Shipping Committee. The Report of that Committee has just been received. The position is that the Chairman of the Imperial Shipping Committee sends the Report to His Majesty's Government in the United Kingdom and to the Governments of Canada, Australia and New Zealand through their respective High Commissioners. I understand that that Report is going out to the Dominion Governments by air mail and arrangements will be made for the simultaneous publication of the Report at an early date. When I say an early date I mean an early date. I hope it will be not more than two or three weeks at the outside.
At the same time I am authorised to say that His Majesty's Government, who have been considering this matter even before the receipt of the Report, will not wait to be approached by other Governments. They will formulate their views as soon as they have considered the Report and will send them to the other Governments in the hope of reaching an agreement. During the debate in July my noble friend on the Cross Benches found fault with my noble friend the Leader of the House because he said that this is not primarily a United Kingdom question. I am not going to repeat that, but I will put it in this way. I will say that it is a matter in which we must move with the Dominions. We are only primus inter pares but that does not alter the fact that the Government will, as far as they can, take a lead in the matter, and we hope to get an agreement in a not unreasonable period of time.
My noble friend also raised the question of Japanese competition. I am afraid I have not got very much to say in reply to that except that as far as His Majesty's Government are concerned the shipping lines only brought specific problems to their notice during the late spring of this year. Of course this is a very large question.
LORD LLOYD: I am sorry to interrupt my noble friend, but does he mean to tell the House that the Government had no real cognisance, officially or un-

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officially, of the state of affairs between Japanese and British shipping until this year?
LORD TEMPLEMORE: Of course, I did not mean that. They must have known, because as the noble Lord said it has been going on for many years. What I said was that the Government had no official complaint until the spring of this year from the shipping lines concerned. As the noble Lord is bringing up this special matter a few weeks hence I think perhaps it would be better if I left it now. I turn to the speech of my noble friend opposite, Lord Strabolgi. He found fault with His Majesty's Government for not ratifying the International Labour Conventions for regulating shipping conditions. I should like to reply to that under various headings. As regards hours and manning the Convention goes beyond the agreements reached only this summer by the National Maritime Board, which is the Whitley Council of the shipping industry. Until the Government see how these agreements work they would be reluctant to force new conditions on the industry which has so recently succeeded in reaching agreements agreeable to both sides. In regard to holidays with pay the Government followed the line followed in the general conference on holidays with pay in June last. They could not support a convention but they would support a recommendation to encourage steps to extend the provision of holidays with pay and to stimulate further consideration of the problem. As regards professional capacity the Government would have accepted a general recommendation, but the Convention is too detailed and goes too far. As regards the welfare of seamen in port we voted for the recommendation, and as regards the minimum age of employment at sea we voted for the Convention.
LORD STRABOLGI: Would the noble Lord he kind enough to reply to the question whether this Convention is going to be ratified?
LORD TEMPLEMORE: I am afraid I cannot at the moment give a definite reply to that question. If the noble Lord will allow me I will let him know later. I think the noble Lord, Lord Essendon, raised the question of the Pacific shipping, to which I have replied, and the question of the Russian shipping,
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two matters which were also raised by the noble Lord who moved this Motion. The noble Earl who sits on the Cross Benches expressed anxiety concerning whether there would be sufficient men to man the ships in war, and I think he expressed the opinion that we should be very short of suitable seamen. I do not know whether your Lordships listened to a broadcast two or three nights ago by Admiral Sir George Chetwode, who was lately commanding the Reserves at the Admiralty. He gave a very interesting broadcast on November 6, which was published, in some of the newspapers anyhow, on November 7, and in which he gave it as his opinion that, owing to the numbers of the R.N.R. and the numbers of fishermen and people who had served in the Navy in the late War, there would be no difficulty in getting all the men we wanted, at all events for the first year of a war. I do not know which is right, the noble and gallant Admiral or Sir George Chetwode, but that is what Sir George Chetwode, who presumably has had experience, who war commanding the Reserves at the Admiralty and who ought to know about this question, gave as his opinion, and it will probably carry a good deal of weight with your Lordships.
With regard to the rest of the noble Earl's speech, I am afraid I have no information supplied to me about the case he brought up of the telegraph poles being imported in foreign ships, or about the foreign crew in the ship on the Thames, but this debate will go to my right honourable friend the President of the Board of Trade, and he will no doubt have inquiries made.
THE EARL OF CORK AND ORRERY: I do not want to interrupt the noble Lord, but, as regards the foreign crew, I said that this was allowed by our law.
LORD TEMPLEMORE: I am obliged to the noble and gallant Earl: I had misapprehended what he meant. Then we had the speech of my noble friend behind me, Lord Melchett, and a very interesting speech it was, delivered from an entirely different point of view. I must confess that I have not really had time to consider it, but it appeared to me to open out a rather appalling vista for future Chancellors of the Exchequer if they were to go in for practically

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unlimited subsidies, as I think he almost advocated. But if the noble Lord will excuse me, I am not prepared to deal with that particular question, and I will not further refer to it now. I think I have now dealt with all the questions which were raised by my noble friend and other noble Lords.
LORD LLOYD: May I interrupt? I would not do so except that I gave specific notice to the noble Lord, at some pains, I am afraid, to him and also to myself, to beg His Majesty's Government on this occasion to give us a very clear reply to questions which I think I have now put for the time in your Lordships' House, and to tell the House and the country what it is that prevents His Majesty's Government from taking effective action in the matters about which I have been complaining over this long series of years. I have no right to do more than ask a question at this juncture, but we have given you instances of our Near Continental trade and its collapse, we have given you instances in which our whole Russian timber trade has been allowed by His Majesty's Government to be shipped entirely in foreign bottoms. There may be admirable reasons why His Majesty's Government cannot take action: all I am venturing to submit to His Majesty's Government is that it is high tine the country knew what those reasons are. To go on year after year, debate after debate, and get no answer to those important questions is naturally very discouraging to those who are interested in the shipping industry and know the importance of its case. I apologise to the noble Lord.
LORD TEMPLEMORE: I was not going to leave that important question alone.
LORD LLOYD: I thought you said you had answered all the questions. I am sorry.
LORD TEMPLEMOBE: I did say that, but I was about to add this in answer to the noble Lord: The whole of this question of shipping is exceedingly complicated, and His Majesty's Government are of the opinion that the whole question must be dealt with to a great degree piecemeal, such as giving the tramp subsidy, the scrap-and-build scheme, and other schemes which they have brought
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in during the last few years when they have been in office. As I have said, I have tried to do my best to answer the questions, and if, as your Lordships may think, I have dwelt too much on the difficulties of action, it is only in order that these difficulties may be understood by the House and in the country. The noble Lord referred at the beginning of his speech to the paragraph in the gracious Speech from the Throne. His Majesty's Government adhere to that paragraph. They will leave no stone unturned in order to stimulate and bring back British shipping to what it used to be. I am sure that this debate in your Lordships' House this afternoon will have shown what the feeling of your Lordships and of the country is in the matter, and will have done a great deal towards helping them to come to, I hope, satisfactory conclusions on all the subjects which have been raised.
LORD LLOYD: My Lords, I do not want to intervene for more than a few moments to thank the noble Lord for his speech and for trying to meet many of our questions. I recognise to the full the difficulties for any Government spokesman answering for a case outside his own Department, and it was for those reasons that I did my best, not only this morning but also before that, to acquaint the noble Lord with the substance of the specific inquiries I intended to make so that he might inform himself from the President of the Board of Trade or the Department concerned. I must confess that in one or two respects I think we are still left very short of information which we have repeatedly, and I venture to say with great patience and, I hope, courtesy, pressed for from His Majesty's Government in a purely legitimate way. I think it is really not treating your Lordships' House with quite the candour and the courtesy with which His Majesty's Government ought to treat you, if I may venture to say so, to put us in the position of having to persist, year after year, in asking the Government for information on a matter in which the country is really interested and the vital importance of which no one disputes for a moment.
May I touch on one or two points? The foreign subsidies question was mentioned by my noble friend who has replied for the Government, and he seemed

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aghast at the idea of my treating £21,000,000 as a small sum. Questions of money are, like many other things in the world, relative. It is a large sum if you were to put it in your pocket, but in dealing with a matter like the shipping industry it is a trifling sum, and I say so advisedly. After all, it is not a specific sum. How much of that money does the noble Lord think would come back to us in a thousand invisible ways: not in any visible form but in an increase of our imports, in an expansion of the shipbuilding industry, in increased trade—in any kind of trade, as Lord Melchett has pointed out, in that penetration of export that the shipping industry is so particularly calculated and able to exert? Even if the whole of that £21,000,000 were spent, again I say it is a trifling sum to restore almost the most vital industry in this country. How many £21,000,000 are you going to spend upon your defences to-day? Scores of £21,000,000, and if £21,000,000 can restore what is almost the most vital and important of your defence interests it is a very small sum, With regard to the amount of foreign subsidies, I think Lord Essendon mentioned £6,000,000 as the annual total, but I have always been given the working figure of £30,000,000 to £40,000,000.
LORD ESSENDON: I do not know whether I made it clear, but I meant the United States alone paid £6,000,000.
LORD LLOYD: It is at any rate a very much larger sum than the £6,000,000 referred to by the noble Lord, which he now explains was only paid by the United States. I welcome very much the definite declaration from the noble Lord that the Government are in the matter of the Pacific going to take a definite lead, and there can be no question of what that means. I am sure that that statement will give the very greatest encouragement both in the Dominions and at home. I am afraid I cannot welcome quite so much the announcement which he made with regard to tramp subsidies. I have no doubt that the industry will be glad to know that it is going to be continued, but I think it is very unfortunate indeed that the Government should have made the qualification which they did, unless I misunderstood them, that the industry must prepare
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itself for the discontinuance of that subsidy in possibly a year's time. It is the one kind of rider which will deprive this next year's subsidy of very much of its value. Almost the most important thing in a matter of this kind is to kill the hopes of your competitors, and if they know that they have only to go on for on year almost the whole value of the year's subsidy will be lost. The statement might even involve the collapse of the system of freight co-operation which has been started. Even if the Government had it in mind that they might not continue the subsidy after another year, I do wish they could have kept it to themselves.
As regards Russia, my noble friend told us, what I have already mentioned, I think, that the Russians have chartered more shipping this year than in the previous six months, but only shipping which they were compelled to charter. I still want to know why His Majesty's Government take no action with regard to the big bulk of trade where we have the whip hand, and where any action by His Majesty's Government will produce an immediate result. I am very puzzled—I did not hear the broadcast—to know exactly what Admiral Sir George Chetwode meant by what he appears to have said on the question of manning. We have a very distinguished Admiral of the Fleet present who, I think, would also be surprised, but I have made some study of the manning question and I do not myself hear from the fishing fleet and industry that the conditions there are anything but very bad. We know that the number of seamen has declined enormously. I have been informed by one of the best shipping authorities that the number of merchant navy sailors who would be available for the Fleet in time of war has enormously diminished. I know that boys are coming in very well, but they take years to train. I am afraid that the manning question is one of the gravest features of the Mercantile Marine position; but I hope the noble Lord is right.
He tried to cheer us by saying that the Government could give us no reasons for the delay, because they wanted to act in a piecemeal manner. We know that too well, but we would be quite satisfied if the Government would tell us which piece and what they are going to do about it.

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Because they tell us no piece we feel discouraged. I am afraid the Government are beginning to realise, in matters of direct defence, to-day, the enormous difficulties and cost of neglect in peace. I am afraid that in matters of the Mercantile Marine that bitter lesson is going to be learned soon, and that because of delay and neglect, in both direct and indirect defence matters they will have to place upon industries a weight which they cannot possibly bear. The chances of recovery therefore are very much diminished, and of course the cost is going to be enormously increased. I can only say in conclusion that we are very grateful to the Government for one or two declarations, to-day but I still go away profoundly uneasy and disquieted without knowledge of any inherent and definite programme which the Government could now have announced for dealing on a business basis with the decline in the primary industry of this country. I should like to raise the Japanese and Far East question on another occasion, if I may do so. Meanwhile I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

CONSOLIDATION BILLS.
THE CHAIRMAN OF COMMITTEES (THE, EARL OF ONSLOW): My Lords, I beg to move the Motion which stands in my name, which is to constitute a Joint Committee of both Houses for examining Consolidation Bills.
Moved, That it is desirable that all Consolidation Bills in the present Session be referred to a Joint Committee of both Houses of Parliament.—(The Earl of Onslow.)
On Question, Motion agreed to.
Ordered, That a Message be sent to the Commons to communicate this Resolution, and to desire their concurrence.

BUSINESS OF THE HOUSE.
THE LORD PRIVY SEAL (VISCOUNT HALIFAX): My Lords, I beg to move that the House do now adjourn, except for judicial business, till Tuesday next.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at half past six o'clock.