§ LORD MOTTISTONE rose to move to resolve, That in the interests of National Defence and in order to reduce unemployment in the distressed areas of Durham and South Wales steps should now be taken to set up plant in those areas for the purpose of obtaining oil from coal. The noble Lord said: My Lords, I regret to have to invite your Lordships' attention to a matter of such great national interest at this late hour, but I had been 428 informed by the officials of this House, as indicated by the Lord Chairman, that this would be a day on which this Motion would come on as first Order. I regret the fact that it comes on so late, but I promise to be brief and I hope that we may have an important discussion on a matter which is, as I shall endeavour to show, of vital interest to the safety of the State. This question has often been debated in this House, but I venture to bring it before you now because it seems to me that four new facts have arisen. I told the Prime Minister, and the Minister for the Co-ordination of Defence, that I proposed to raise the matter, and I told them the lines on which I would proceed. This will enable me to be brief, but will cut out, as I hope, from our discussion many subjects of great importance which are really not germane to this Resolution which I venture to propose.
§ I hope that the noble Lord who replies for the Government will realise that those of us who are interested in this matter do not want to be put off with any vague statement about a Committee sitting, because we know all about the Falmouth Committee, but we do think—and it is a great body of opinion—that something definite ought to be done, and announced now. And I will tell your Lordships why. Here are the four new facts. The last, unfortunately, is only a new fact in that it is a continuing bad fact. The first fact is that the Government have, so far as I know, for the first time accepted the view that it is vital to the defence of this country that we should have home-produced oil. I have some right to speak on this matter because it was just on thirty years ago that I was appointed by the then Prime Minister, Mr. Asquith, to investigate the problem of interception of our supplies in time of war. The Committee sat in secret for long time and came to certain conclusions, which I have been told were of some value when the Great War began seven years later. So I do know about the interception of supplies, because I was Chairman of a Committee who could get expert information on this vitally important matter to the fullest degree. Moreover, I was a member of the Cabinet, as was my noble friend Lord Gainford, when it was decided that the Government of the day should embark upon the enterprise of getting more oil for the British Navy in the interests of defence, and, as 429 your Lordships remember, not long before the War the Anglo-Persian Oil Company was formed with Government support. That is my excuse for delaying your Lordships on this vitally important matter.
§ The new fact is that, speaking for the Minister for the Co-ordination of Defence. Sir Thomas Inskip, Lord Apsley said. in starting the bore-hole in Sussex, that it would relieve the Government of great expenditure in the way of creating underground storage, which, after all, might not be safe against armour-piercing bombs with delayed fuses, and in arranging for the development of vast tankers which might even have to be submersible it order to evade the vigilance of enemy scouts. And in other sentences he pronounced the decision of the Government that it was vitally necessary to the safety of this country that we should have more home-produced oil. So they have decided to bore for oil, but of course that will be a lung time in having any effect. In the meantime there is any quantity of coal. I am told by experts, of whom there are many here, that it is not untrue to say that there is coal enough—and oil and coal are, of course, the same thing; one is liquid and the other solid carbon—for hundreds of years under the soil of this country, only waiting to be got.
§ Of course, the Government are obviously right in so saying. Foolish people try to make maxims about war. For instance, I have heard them say that if you have command of the sea everything can he brought in, and if you have lost command of the sea you have to surrender at once. That is the most foolish doctrine. Nothing is absolute in war. It is an affair of degree. Perhaps your Lordships may remember that after the most decisive naval victory, I suppose, in the history of the world, the victory of Trafalgar, the sinkings of English ships went on for the whole of the rest of the war, and almost in increasing degree. A hundred years later we again asserted the supremacy of our naval power in all parts of the world, so much so that the gallant German Navy for the last years of the War never were able to get out, and engage us to any effect. Nevertheless, as in the case of the war against France, so in the case of the war against Germany, although we had asserted our naval power to the highest degree, sinkings and captures went on in ever-increasing numbers. Those of your Lordships 430 who may be interested in it will find in the library of the Imperial War Museum a most interesting account of the continued sinking of our ships after the victory of Trafalgar. What this means is that, however many ships you have, and however well directed they may be, there will always be a danger of the interception of supplies. And, as every form of armed defence, including ships, mechanised guns, tanks, and aeroplanes now depends upon oil—in which of course I include petrol and oil derivatives—the Government are quite right to say it is vital for us to have home-produced oil. That is the first point.
§ The second new point is that astonishing strides have been made abroad in the production of oil from coal. I see in his place the noble Lord, Lord McGowan, who knows more about this matter I suppose than almost any man living, and if your Lordships hear him you will no doubt be greatly enlightened. I hesitate to give figures in his presence, but I had the advantage of some information from Government sources, which I gratefully acknowledge, and from German Government sources which, although they did not want to tell me all about it, did give me certain facts. From these sources and from conversations that I have had with Lord McGowan I think it is true to say that, leaving out all the other countries which have decided it is important for them to have an adequate supply of oil, on which their defence forces depend, in the case of Germany, already after only a few years, they are providing just under two-thirds of the petrol required. The German official who gave me the figures very courteously said: "Of course, one cannot exactly say what the cost of it all is, because what weighed with us was not only the strategic consideration—the fact that we might have our supplies cut off, and modern Armies and Navies depend upon oil and its derivatives—but also the fact that our unemployment was more acute than yours, and it was of enormous advantage to us." He gave me some figures about the amount of employment which was given as the result of their decision to make oil from coal—very remarkable figures, figures which, if we could duplicate them here, would certainly mitigate, if not almost entirely solve, the problem of the unemployed miners, to which I will come presently.431
§ The Royal Commission on Coal—and I really do charge the Government and previous Governments with having been lax in this matter—said years ago that they hoped it was possible, by getting oil from coal, to render this country to a large extent independent of imported oil supply for the Army, Navy and Air Force. Since then—and that is years ago—I regret to say that His Majesty's Government, which I support but which I must criticise for this laxity, have found that what is everybody's business is nobody's business. I say to my noble friend who leads this House that when I talk to soldiers and sailors of eminence they say, especially the sailors, "Of course we should be immensely safer if we had a large supply of home-produced oil." The soldiers say the same. The Air Force men naturally must say so to an even greater degree. I speak to members of the Government, as I have done for the last three years, and they say, "Of course it ought to be done," I even speak to the Treasury who very rightly watch carefully every item of expenditure. They say, "Of course it ought to be done." But nothing is done, and it is high time it was done. If it is of vital necessity for other countries to safeguard their supplies on which their ships, their men, their guns, and their aircraft act, it is even more important for us, for new changes have arisen with regard to our oil supplies coming through the Mediterranean which put us in a rather worse position than we were in before.
I must be allowed to quote the opinion of two men. I have only consulted on this matter people of acknowledged eminence, but one I must speak of, now no longer with us, to whom this country owes much for the start in this matter—I mean the late Lord Melchett. When we decided to go into the Anglo-Persian business, Sir Alfred Mond, as he then was, said to me: "Well, you are quite right but, mark my words, before long you will have to get your supplies from your own coalfields, otherwise you may find you are defeated in the next war." That was a very far-seeing thing, and after the War, as you know, he asserted it again and again. If the present Lord Melchett speaks in this debate he will no doubt tell us how much at heart his father had this matter. He was quite
convinced—and he told me so not long before he died—that if we did not safeguard our oil supplies we should be defeated in war. Another man, taking quite a different angle, who is, I suppose, one of the greatest experts on the whole coal problem, and whom I knew very well at the end of the last War when he was a leading man in the Ministry of Munitions, of which I was the Vice-Chairman, said something the other day which I noted especially. He told me about it himself before, but speaking the other day—I took this from The Times—he said that last year he touched on the question of the production of oil from our own coal resources:
The events of the past year had only served to strengthen his conviction that the encouragement of such an industry was of vital importance to this country.
You get a volume of opinion using the words "vital importance," which no Government can or ought to ignore. If Lord McGowan speaks and says the same—I do not know whether he will, but I expect he will—then the opinion is really overwhelming, and for obvious reasons.
§ The Government have announced, as I may tell the House I urged upon the late Prime Minister two years ago for quite different reasons, that they propose to spend £1,500,000,000 in the next few years—a gigantic sum—on armaments. Of course, I cordially approve of that. It is the wisest thing that could possibly be done. It makes for peace every time. Most of our countrymen agree on that. But a very odd thing happens about this rearmament. It is quite obvious, as I have said already three times—one cannot say it too often—that all the ships, all the aeroplanes, all the artillery, and all the tanks depend upon oil. But when you come to the question of whether you are going to get this oil at home or not, a sort of mental aphasia—I might almost say lunacy—seems to spread over their minds. They say, "Ah well, that is different. That is not an economic proposition."
§ I put this to two members of the present Government, and they both said to me, when I had finished the short exordium, that they were very glad they had not to reply. Let us imagine we are looking at a man-of-war. I say of the super-structure: "It is all steel. Where does that come from?" The Govern- 433 ment spokesman says, "That comes from home." I say, "Could not you get it cheaper abroad?" He replies, "Of course we could at the moment get it very much cheaper from Belgium and elsewhere, but nobody but a lunatic would do that because for a man-of-war you must get it at home." I look at the guns, and say, "Where do you get them from?" He replies, "At home." I say, "Surely you could get them much cheaper at Creusots? Do you not get them there?" He replies, "No, that would be the act of a lunatic. In time of war we should not be sure of having them." Then I look at the machinery, and say, "Where does that come from?" He replies, "Of course we make it at home," I say, "Could not you get it cheaper abroad?" He replies, "Of course we could, but nobody but a lunatic would do that, because you could not be sure of getting it in time of war." Then I say, "What are all these compartments underneath?" He replies, "That is the propelling power which happens to be oil." I ask, "Where do you get that?" and he answers, "We get 99.2 per cent. for this particular type of ship, and 94 per cent. of all sorts, from abroad." "Good gracious me," I say, "why do you do that?" "Because," he replies, "to get it from home would be a great drawback." "Could you get it at home?" I say, and the reply is, "Of course, other countries get it at home." "Then why don't we get it at home?" "Ah," is the reply "it is not economically sound. It is not on a 5 per cent. basis with a proper sum put to reserve."
I can imagine Professor Sir J. J. Thomson, who put me wise about this—and perhaps he is the wisest man now living—thinking of it in this way. He would say, "I have talked to these people. I think they are quite mad." I am sure he would, and each one of the noble Lord's colleagues to whom I have put this question cannot find an answer. As members of the Government are undoubtedly the most intelligent body of men in this country, the reason must be that there is no answer. It is what Stephen Leacock calls "a moonbeam from the larger lunacy" to spend £1,500,000,000 on weapons of defence, all of which depend on oil, and take practically no steps to get oil
from your own coal resources as all the other countries have done. Some short time ago I had the privilege of staying at Trinity Lodge with the great J. J. Thomson, and our conversation turned on this topic. He said:
I imagine a man from the planet Mars, an intelligent inhabitant from another planet, flying over this country in some kind of helicopter with a perfect telescope by means of which he could not only see the surface but could see down into the earth. I mean the kind of thing by means of which he could see right down into the earth. He would fly all round the world, and he would come back and say, 'Well, the most fortunate country by far is Britain.'
I asked "Why?" and he replied:
This is what he would say: 'Because under their soil they have so much the most real wealth. Of course not diamonds nor rubies nor gold, but a thing incalculably more valuable—power, coal, which creates more power if properly used than dynamite itself.'
I said, "Well, is that really so?" and he replied: "Yes, coal produces more power even than dynamite, and the coal measures of England are of greater value to her than all the wealth of all the other minerals put together in all the round world." I fancy that what he said would not be disputed. Anyhow that is a reason why I think we might make a start now on a bigger scale.
§ I come to my fourth point, the failure of the distressed areas to share in the general prosperity. It is a fortunate coincidence but it is a coincidence—I see the noble Lord, Lord Portal, here and he will agree—that these very measures which the Government ought to take are those measures which would give a message of hope to these people in Wales and Durham, but especially Wales, who are waiting for your word. It is a fortunate coincidence that by doing a thing which is obviously wise and right in the interests of Defence you would mitigate, I will not say cure, but greatly mitigate, the unemployment from which they suffer. I have had inquiries made, and I have been myself to see since I addressed a meeting at the Mansion House the other day at which Sir Thomas Inskip was present. I found to my great concern, that the misery from which tens of thousands of families, mostly the families of miners, are suffering in South Wales, is as acute as ever. It is a dreadful thing to have to say, my Lords, but it is really true. I have had reports from official and other sources, and it is a fact that, 435 though things are so much better in the rest of England, though they are somewhat better there, relatively these people are worse off than ever.
§ I have a mass of figures here but I will not weary your Lordships with them. Put shortly the position is this. Both in Durham and in South Wales the unemployment is double that of the average of England, and in many areas treble and quadruple it. Now I am sure your Lordships are determined that you will not allow that to go on. The bottom falls out of society when fifty, sixty and seventy per cent. of every little village or every street are unemployed. That ought not to go on. Sometimes people say: "Oh, but these unemployed miners do not want to work." That is not true. I myself have seen 268 of them all working away at an out-crop in circumstances of great hardship just because they wanted work and wanted to get coal for the winter. I have seen that myself.
Then, are these people worth preserving? That is the last question I want to put to your Lordships. Well, they are. These Welsh miners are wonderful folk. I lay alongside of them during the War, and I had a letter from a friend of mine only yesterday in which he said:
I am delighted to think that you are going to speak on behalf of the distressed areas in South Wales and Monmouthshire. I know the men of Monmouthshire well, having served with them in command of battalions in peace and in war. A more patriotic and gallant type of man it would not be possible to find. They are unselfish almost to a fault, warm-hearted and great lovers of their homes. You will remember that two battalions of them, one Monmouth, one Welsh regiment, were amongst the first Territorials to go to France in November, 1914. Their courage on the battlefield was an example to us all, and their pluck now in the face of unemployment is a part of their great character.
That is a tribute which I thought your Lordships would allow me to read. It seems to show that it is our bounden duty to prevent these people, so to speak, rotting away, while you do not lift an adequate finger to help them. I think that is all wrong. You can do it by this same method, and why not?
To sum up, I make certain postulates, and I invite the Government to deny them if they can. First of all, more home-produced oil is needed. They cannot say "No" to that, because not
only does the Minister for the Co-ordination of Defence say so but the noble Earl, Lord Baldwin, a member of this House, speaking last July, having said how important it was to this country, went on:
Within the last few days"—
this was July 18—
I have been in touch myself with some who are engaged in the close examination of one phase of the oil from coal question, and, while I cannot make any precise promise at this moment, I personally feel more encouraged than I have been at any previous time to think that in the not distant future we may see oil from coal plant established in the South Wales coalfield.
I do not think the noble Viscount, Lord Halifax, whose attention I crave, has had his notice drawn to what the then Prime Minister, now Lord Baldwin, said at the time to which I have referred. I do not suppose it has been; and I can tell him that in South Wales they all took it as a promise from the Prime Minister of this country.
§ I can tell him also that one of his colleagues most nearly interested assumed, when he read that speech—and he has so informed me—that he thought the matter was settled; that it was so obviously desirable on so many grounds that the thing was settled; and that these oil from coal plants would be dotted about South Wales and probably the poorer parts of the County of Durham. But they are all waiting to know whether you are going to implement that promise. Your Lordships may remember that when the previous Prime Minister, Mr. Ramsay MacDonald, opened the works at Billing-ham he emphasised the importance of this matter. I do implore the Government not to put this thing off by saying: "Oh well, the Falmouth Committee are sitting; we must wait for their Report." Of course, we all know that the Falmouth Committee are sitting And I greatly hope that their Report will enable the Government to know how to proceed. But if they say that they are waiting to see whether they will proceed or not and throw over the Royal Commission's Report, and throw over the Minister for the Co-ordination of Defence, I challenge them, and I shall not let this matter drop in this House or outside until they take steps to save us from awful disaster.
§ We were nearly brought to our knees last time by shortage of food. It is quite easy to see, and experts have seen, that 437 the problem of importing oil into this country may become more and more difficult. Would it not be an extraordinary thing to happen if history were to record that Britain was brought to her knees, that the British Empire was shattered to pieces, because, to quote J. J. Thomson's phrase, "they had the carbon with which they were so abundantly blessed in solid rather than in liquid form." But that would be true. The thing can be done. It has been done. I do implore the Government to go ahead with it. The fact that it will do something to mitigate the misery of that small minority in our island who are the dwellers in the distressed areas is an added reason. But looking at it from the point of view of National Defence, which I have studied all my life, I beg the Government to assure us that they will go forward with this measure which alone can give us security. I beg to move.
§ Moved to resolve, That in the interests of National Defence and in order to reduce unemployment in the distressed areas of Durham and South Wales steps should now be taken to set up plant in those areas for the purpose of obtaining oil from coal.—(Lord Mottistone.)
§ LORD McGOWAN
My Lords, I rise to address your Lordships' House with the diffidence which is natural to one who does so for the first time, and like my noble friend Viscount Home, I crave the indulgence which your Lordships extend to those in my position. The debate that has been initiated by my noble friend Lord Mottistone deals with several matters which affect the company which I have the honour to lead. The noble Lord, Lord Mottistone, has referred to the unhappy question of unemployment and the distressed areas. I am convinced that no member of this House, and no responsible industrialist, would fail to support any steps which the Government might think it proper to take in order to relieve the miseries of unemployment and enforced idleness which have such a disastrous effect on the morale of those who are in that unfortunate position. But the direct problem which is raised in this debate is that of oil from coal.
Imperial Chemical Industries has over many years applied the energy and ability of brilliant members of its scientific staff, and spent well over a million pounds, in order to solve the chemical problem of converting oil derived from 438 the mines of this country into usable petrol and oil. We have succeeded in developing the laboratory process which showed that this was a scientific possibility into a workable industrial process. The capital cost of a plant of economic size to operate this process is large and the costs of operation are necessarily high. This is neither the place nor the occasion to go into detailed figures on these highly technical points, because figures of this kind can be very misleading unless great care is taken to make them strictly comparative and to analyse exactly what they include. It is sufficient to say that although the process is to-day in successful operation it does not, even with the protection afforded by the British Hydrocarbon Oils Production Act, present a favourable opportunity for the investment of large sums of private capital. If private enterprise is to operate successfully, it is essential that those in responsible positions should be most cautious and careful in recommending to the public the investment of large sums of money for industrial purposes, and all the chances and dangers of commercial and industrial life have to be carefully weighed before any such recommendation can be made.
Success from a commercial point of view in the synthetic production of petrol depends largely, as far as the future is concerned, upon the policy of the Government of the day. Any proposals for producing oil from coal by the hydrogenation process upon a scale large enough to have a material effect upon national safety or national economy are lifted out of the realm of private initiative into the sphere of national policy. The broad facts of the matter are simple enough. It is, as I have said, practicable to convert coal raised by the miners of this country into petrol of the highest quality and also into heavy oils. To do so on a large scale will undoubtedly have the effect of stimulating employment in the iron, steel and engineering trades during the period of construction, and in the coal industry and at the plants themselves after that period is completed. But it is important that the employment aspect of this question should not be exaggerated.
In the first place, the iron, steel and engineering industries are at present 439 already working at full capacity, and are likely to continue to do so until the Government's rearmament programme approaches completion. Secondly, the employment given by a full scale hydrogenation plant designed to produce 150,000 tons of petrol per annum is 2,000 men in the factory and 2,500 miners to produce the coal for treatment, as well as some 1,500 men engaged on the manufacture of plant materials, etc., that is to say, the ancillary chemicals used in the process and the engineering supplies necessary for plant maintenance. If the whole of the petrol used in the United Kingdom in the year 1936, that is 4,830,000 tons, were to be processed in this country, it would mean the additional employment of 64,000 men for the industrial process, 80,000 men to produce the necessary coal, and 48,000 in the manufacture of the ancillary chemical and engineering products which I have just mentioned. These figures will not include oils other than petrol. Among these is the heavy oil used for the Navy and Mercantile Marine, the production of which though of national concern, would at present be entirely uneconomic. Hydrogenation of coal to produce these oils would of course substantially increase the figures I have just quoted.
Nor must we overlook the fact that the consumption of petrol itself in this country is increasing at the rate of about 6 per cent. per annum. If this rate of increase were to continue unchanged over the next ten years, the petrol consumption would approach 9,000,000 tons per annum. The corresponding traffic density on the roads, unless a vast new road programme is embarked upon, might well give rise to apprehension, and on account of this and other factors a more conservative estimate should perhaps be taken. By way of illustration, and without submitting it as a considered estimate, I will take a figure of 7,500,000 tons per annum. At this figure the complete indigenous production of our petrol requirements would absorb, in direct employment, approximately 100,000 men on the hydrogenation plants themselves, 125,000 miners and some 75,000 men on the plant materials in question, an over-all total of 300, 000 men. These figures refer only to the men directly put into work by the operation of the factories. I have included none for the construction of the plant, and in 440 any case no calculation of this kind can be really complete in itself, as surrounding the direct employment of the individuals in question there reaches out, in ever widening circles, the employment which they themselves give when spending good weekly wages as compared with their situation when they are dependent upon unemployment insurance and public assistance.
I would not have your Lordships suppose that by quoting these figures I am in any way suggesting that it would be right or proper to produce all the petrol for the country by this means. I merely quote these figures to show what is probably the most that could be hoped for by this method so far as the employment of men is concerned. That it can be little more than a rough guide is clear from the fact that industrial experience in manufacturing processes over a period of years always leads to improvements which result in reduction in the cost of manufacture. This development may well change the economics of manufacturing the heavier oils and so justify their production as well, with a consequently increased absorption of labour. There is one further point I should like to make in connection with this matter, and that is the relation between the low temperature carbonisation and hydrogenation processes. The two processes are complementary to each other. The primary function of the carbonising industry is either to produce coke, for metallurgical purposes by the high temperature process and for smokeless domestic fuel by the low temperature process, or to produce gas for domestic and industrial consumption. In all cases tar oils are produced which form a valuable raw material for, or are best processed by, hydrogenation.
It is not for me to express any opinion as to what the future national policy should be. It has been pointed out over and over again by leading authorities that much damage occurs to health and property in this country as the result of our methods of consuming fuel, particularly in domestic consumption. There is no doubt that the open fire is extravagant in its use of our most valuable raw material and that it is a large contributory factor to the fogs which beset this country. There is therefore much to be said for any encouragement in the use of smokeless fuel, and if the nation ever 441 considered it wise and practicable to take steps to induce the private householder and others to consume the specially-prepared fuels which result from low temperature carbonisation, one of the resultant effects would be a high proportion of low temperature tar oils suitable for conversion into petrol by the hydrogenation process. National security would in this case go hand in hand with national welfare. In the meantime, however, we have in the direct hydrogenation of coal a process ready to hand which can produce petrol—and especially high-grade aviation petrol—without raising extraneous and complex problems of this kind.
I am sure your Lordships will agree that all these considerations are entirely national in character and must be dependent upon the view taken by His Majesty's Government, who have available resources for investigation and for obtaining facts and figures that are open to no one else in the country. The Committee presided over by Lord Falmouth has been referred to this afternoon. This Committee is, I understand, still at work. I should like to say that our company has extended, and is at all times prepared to extend, the fullest possible co-operation to this Committee. In my opinion it would not be wise for the House to form any final view on this matter until it has had the advantage of studying the findings of this Committee—or such of its findings as the Government may deem it in the public interest to publish. We firmly believe that the hydrogenation process is of great importance to the nation, and further, that much of the knowledge and experience gained in elaborating it and designing hydrogenation plants will in itself serve as the basis for further scientific and industrial development in the chemical industry, which is to so great an extent basic to the general industrial development of the country. We look upon it, in a word, as an essential step in the scientific advance to the future.
But in regard to the immediate developments of the process and these questions of grave national importance which are closely allied to it, I feel—and I believe those of your Lordships who have industrial experience will support me in this—that it is a matter for Government consideration and for Government action; 442 that it is a matter of high national policy which is beyond the normal purview of a limited liability company, however large and important. It is for the Government of the day to decide whether national safety demands a certain production of oil from coal in this country, with all its implications. As my noble friend has said, we are very vulnerable in the matter of oil supplies; and in times of emergency supplies must be convoyed overseas by the Navy. To the extent to which we are self-contained, the Navy is the freer for the conveyance of foodstuffs on which we are so dependent. We do know that other countries without natural oil supplies are becoming increasingly interested in local production from the point of view of national safety. If His Majesty's Government decide to put down plants in distressed areas, it can be done. My company has made great efforts, undertaken great expense and taken big risks in bringing a new industry to this stage of fruition. We are naturally proud to have made this contribution to the resources of the nation, and perhaps even to the safety of the country. We remain prepared now, as we have been in the past, to co-operate with His Majesty's Government in any way that may seem suitable for future development in this and in any other fields in which we may be able to render service.
My Lords, I should like to support the Motion introduced by the noble Lord, Lord Mottistone, and also to congratulate the noble Lord, Lord McGowan, on his very excellent maiden speech. His great knowledge as director of a great industrial undertaking will, I am certain, be of great service to your Lordships' House. I feel somewhat diffident in entering the debate at all, and perhaps the noble Lord will forgive me. The whole matter, at any rate as regards coal, can surely be reduced to the simple question: How much coal can we sell or make use of? If we can find a new outlet for coal we have definitely got something to work on, and we shall be well on the way to achieving our purpose of reducing unemployment in the distressed areas. In the production of oil from coal we definitely have a new outlet which, in my humble opinion, is of the greatest economic importance to this country. If we can increase the use of coal, we shall 443 be able to attack that very hard core of unemployment in the distressed areas. The Government Committee which I understand is now sitting has no doubt considered all these factors, but at this moment I feel impelled to draw the Government's attention to the fact that of the three main methods of extracting oil from coal—namely, by carbonisation, hydrogenation and synthesis from gas—the last-named process has not yet been tried in this country. I believe I am correct in saying that.
Perhaps, my Lords, you will bear with me if I enter into one or two technical matters, as it is essential to know them in order to appreciate the position in a proper light. Suppose we take the carbonisation process first. This has already been mentioned by the noble Lord, Lord McGowan, but I should just like to elaborate a little upon it. If coal is carbonised at low temperature the main product is the smokeless fuel for domestic use, but in addition substantial quantities of high-grade oil and petrol are obtained as by-products. It is clear, therefore, that the success of this process depends on the sale of smokeless fuel, and it is interesting to note that the sale of this smokeless fuel has been rapidly increasing during the last eight years. This process, therefore, can definitely be said to be an economic one, and stands on its own feet in that respect. The domestic consumption of coal in this country is approximately 40,000,000 tons per annum, and if the carbonisation methods were able to absorb the whole of this market—which, of course, is manifestly impossible—there would still be an insufficient production of oil for our requirements. None the less, this source of production of oil is of great benefit to the country as far as it goes, and the further development of the industry is of the very greatest importance, and should, I think, be encouraged.
Let me now examine the second process, the hydrogenation process, which has been gone into by Lord McGowan. I think he will agree with me that it has not shown results at Billingham which would justify its description as a good commercial proposition. I presume that the experience of full-scale working has enabled him progressively to reduce the cost of 444 production, but it would be interesting to know, if the noble Lord could inform the House, if the present tax of 8d. per gallon on imported petrol is sufficiently high to enable his process to be run as an economic success in the near future, and if not what scale of duty is in his opinion necessary to ensure economic success.
Now I come to the third process, which is called the Fischer process, which consists of first gasifying the coal and transforming these gases by catalytic treatment into liquid hydro-carbon oils. This process has undoubtedly many advantages, and I hope that the members of the Government Committee who are examining this question, will give it their careful consideration. It seems to me very desirable that the country should have an alternative process which can produce oil on a large scale—it would not be long before it would be possible to determine which is the most economical and best method of producing oil from coal, and which process is the one most capable of rapid extension in time of national emergency. I understand that the Fischer process represents an absolutely new application of science to these problems, and that in this process there are potentialities which would be likely to lead the British oil-from-coal industry towards that goal to which the Government are looking forward, and that is the "economic" ideal. I earnestly hope that the Government will consider the establishment of a Fischer plant in this country.
Let us now examine what is happening in other countries. I do not propose to make any elaborate comparisons between the encouragement given to the oil-from-coal development by the German and Japanese Governments and by our own Government. The circumstances in each country are known, and are subject to varying appreciations of economic necessity. In Germany oil-from-coal production during 1936 is believed to have reached the figure of 600,000 tons. This year the output is expected to reach 900,000 tons, or 50 per cent. of Germany's total requirements. The German four-year plan aims at covering the whole of Germany's oil needs, and as all economic considerations are being set aside it is believed that they will arrive at this end. It is interesting to note that the process used in Germany is, I think, the Fischer process. Then look at Japan. The oil-from-coal plans of Japan are no 445 less extensive than those of Germany. By 1943 Japan aims to be self-sufficient as to more than half of her petrol and heavy oil supplies. The capital required for these developments will be found jointly by the Japanese Government and Japanese industry, and the Government have guaranteed the industry an annual dividend of 3½ per cent. for three years, and 5 per cent. for the next four years, and no dividends will accrue to the Government until profits rise above a 5 per cent. level.
I hope that His Majesty's Government will support the Motion introduced by Lord Mottistone, that steps should be taken to set up further plants for the production of oil from coal, and I hope that an alternative process to the hydrogenation one will be given due consideration and a trial in this country. The Alternative I refer to is the Fischer process, now being used ire. Germany. Our life blood in this country is oil. Storage will help to a great extent, but the means of production of oil from coal which can be expanded in the case of an emergency may well prove the salvation of this country in time of war.
THE DUKE OF MONTROSE
My Lords, I have no intention of detaining you at any great length at this hour, but there are one or two points which I should like to emphasise. The first is that I regret that the noble Lord who moved the Resolution omitted to name the Scottish distressed areas in his Motion. Perhaps coming from the Isle of Wight he forgot Scotland. I hope he will amend his Resolution to this effect. I think it is generally recognised by your Lordships that if we can increase the production of oil from our own resources in such a way that the oil would be able to be used by our Navy, Army and Air Force, we should be greatly strengthening our Defence position; but I should like to feel that your Lordships are also prepared to recognise the fact that there are other methods of attack, and other methods of restricting our supplies of imported oil, besides attack by sea and air. I refer to methods of international policy. There is little doubt that if nations agreed to apply sanctions, or agreed to forbid the passage of oil through the Suez Canal, as we were once talking of doing during the trouble between Italy and Abyssinia. that would restrict our oil supplies.
446 Then there is another matter which has come to light in connection with the unhappy war in Spain, and that is a possible agreement between neutrals against supplying munitions of war to belligerents. There is little doubt that in our case oil would be recognised as a munition of war, and if nations were to concert in action to reduce the supply of munitions, there again it would restrict our supplies. Possibly the United States might be a neutral and refuse to supply oil, and she is one of our largest sources of supply. Possibly America might refuse to supply us with oil until we had liquidated our debt; that would seriously restrict our supplies. Then there is the danger of strikes, strikes through enemy propaganda at the source of supply—namely, the oil-fields. There was recently a strike in Mexico, and there has been a strike in Trinidad, the largest supplier of oil within the British Empire. The strike in Trinidad was fomented by one single agitator. Propaganda, whether carried on by print or by leaflets distributed broadcast, is a most insidious attack, and there is no saying whether in the next war enemy agents may not carry on propaganda and bring about a strike at the sources of supply, the oilfields. There is no more fertile soil for agitation than the native mind and nearly all our oil-fields are worked by natives.
The point I want to emphasise is that quite apart from methods of attack by sea or air our supplies are endangered by international action in the form of sanctions, or restrictions on passage through the Suez Canal, or strikes at the source, against which dangers our military forces and Navy are utterly powerless. The only means of safeguard that we possess is to encourage and develop installations in this country, and so derive our oil from our own resources. That is the only safeguard we have against those forms of attack. About the middle of last month there was a similar debate to this, regarding oil supplies. I was not here myself, but I believe a certain noble Lord proposed, as an alternative to coal distillation, that we should embark upon a large policy of storage of oil. I understand the suggestion was that we should embark on subterranean storage. I think he said it would not only safeguard our oil supply, but it would give work to the unemployed. There is no doubt that to make subterranean tanks on a vast scale for the 447 storing of oil would provide work for the unemployed, but it is overlapping work, it is really wasteful work, for has not Providence stored all the oil we want below ground already in the form of coal? The noble Lord said it might cost £20,000,000 to make these subterranean storage tanks. Surely the idle would be better employed if they were used to extract the oil from coal in a hundred factories all over this country, which hundred factories could be provided at the cost of £20,000,000.
There is one great advantage in the distillation of oil from coal as against the storage of oil. If you distil coal you have two main products—oil and smokeless fuel. In peace time you can use the smokeless fuel in the city for domestic and manufacturing purposes. In Glasgow during the General Strike in 1026, when the factories were closed and there was great economy in burning coal in the hearth, there was a fall of 40 per cent. in the pulmonary diseases registered, which goes to show the enormous advantage to the health of our people if we use smokeless coal. In war time smokeless coal would be available for propelling motor cars, motor lorries, agricultural tractors and fishing trawlers almost as efficiently as petrol or Diesel oil. One hundred factories dotted all over this country would produce 9,000,000 tons of smokeless coal in a year. Nine million tons of smokeless coal would provide the equivalent propellant power of 1,400,000,000 gallons of petrol. If you have the propelling power of 1,400,000,000 gallons provided by the 9,000,000 tons of coal and the propelling power of the oil also produced in your factories, and the propelling power of all the oil already in the country and of any oil that may come in, you have enough propelling power in this country to supply all the wants of our Defence and all the requirements of our Civil Service as well. Therefore, I say if we develop coal distillation we can ensure all the propelling power that we require in this country for all our Services, including Defence.
Some noble Lords might say, "But why, if you can use smokeless fuel as propelling power, has it not been developed?" The answer is easy. It has not been developed because there are no distillation works in the country to-day capable of producing the fuel from the 448 right coal. Noble Lords will ask, "Why are there no such factories in the country to-day?" Again the answer is easy—because there are various impediments in the way of erecting these factories. I will draw attention to one only to-night. Under the Coal Mines Act, 1930, power has been given to group selling agencies of coal to disapprove of long-term contracts for the supply of coal to coal distillation works. If an industrial concern is going to sink £200,000 of capital in putting up a coal distillation works, the first thing it wants to be sure of is a long-term contract and a sure supply of coal, its raw material, spread over a number of years. But the group selling agencies of coal disapprove of these long-term contracts, and rightly so. Why? Because it is generally understood that there is going to be further legislation as regards the selling of coal after 1938, and the group selling agencies are unwilling that collieries should commit themselves to disadvantageous terms before 1938. If the Government wish to develop coal distillation the first thing they must do is to come to some determination about the selling of coal after 1938, and so place the group selling agencies of the collieries in a position to favour long-term contracts. That is the only way in which this can be carried out. I beg to support the Resolution.
§ LORD AILWYN
My Lords, I am sure we have all listened to the noble Lord, Lord Mottistone's great effort on behalf of National Defence and the distressed areas with the greatest interest and lively sympathy, and if the words that I have to say at this late hour are limited to the National Defence side of the problem, this does not mean that I have not the fullest sympathy with the standpoint of the distressed areas. So far as the Navy is concerned, if this were the only alternative to foreign oil I would gladly support the noble Lord's proposition, uneconomic though it be. But there is an infinitely better alternative, and that is the provision of coal bunkers in all ships of new construction to enable the Fleet to burn coal at cruising speed, and thus maintain its mobility in time of war, should the oil supply fail. In this connection I should like to say a very few words with reference to the various objections and criticisms put forward by various noble Lords in the debate on the dual-fuelling Motion the other day.
449 On that occasion I had the privilege of addressing your Lordships for the first time, and, having asked for your indulgence, I had naturally and very properly to be scrupulously careful not to take advantage of it. In other circumstances I should have had a good deal to say in my final remarks with reference to the irrelevance of many of the statements made in the course of that debate. As it was I had to bear the mortification of seeing your Lordships, or certainly those of your Lordships who have not made a study of this question, leave the House with, I venture to think, very considerable misapprehensions regarding the issue involved. A considerable part of the debate was devoted to speeches emphasising the advantages of oil over coal as a fuel for warships. I need scarcely remind your Lordships that there has never been, and can never be, the very smallest dispute on that well known fact. The subject under discussion was how you are going to safeguard the mobility of the Fleet in time of war in the event of an interruption of the oil supply, and the remedy advocated was dual firing.
The noble Earl, Lord Stanhope, who I regret is unable to be in his place to-day, owing to urgent duties elsewhere, in replying for the Government, made the following three statements—It requires about twice the number of engine-room ratings for a coal ship as compared with an oil ship…The coal-burning [10,000-ton cruiser] would be three and a half knots slower than the oil-burning ship…A coal tired ship with the same endurance and other qualities as a modern 10,000-ton oil-fired cruiser would have a standard displacement, not of 10,000 tons, but of 21,000 tons, and would require about 550 more men, and cost twice as much as the oil-fired cruiser.These figures must have appeared startling coming from such a source as the noble Earl, replying for the Government, and must certainly have been sufficient to lead your Lordships to suspect that the advocates of dual-firing were making a fair bid to be certified as insane, and that a mental home was the proper place for anyone who could seriously champion such a cause, much less presume to address your Lordships' House on the subject. And when it is remembered that the statements I have just quoted came on top of a series of utter- 450 ances made by the noble Earl, Lord Howe, of which I will only quote one—If the Navy had to burn coal instead of oil, I believe I am right in saying you would have to increase the personnel of the Navy by something like 15,000 men, and it would probably cost you about £30,000,000—it is not difficult to imagine the effect produced on the country at large that these were unanswerable arguments against the dual-firing system.
These figures, of course, bear no relation whatever to the issue under discussion, and in their implication are a complete travesty of the dual-firing problem. They are figures presumably supplied by the Naval Staff showing the impracticability and, indeed, impossibility of reconstructing the existing oil-fired Fleet into a coal-burning Fleet. No one in his senses would ever advocate such a proposal. What are the facts? I have no intention of repeating the arguments I put before your Lordships' House in the course of the debate the other day. I am only concerned in a few words to put this matter in its proper perspective and to correct the impression that the statements of the noble Lords I have quoted were in any way germane to the issue. I will take only one type of ship, and will select the one that the noble Earl, Lord Stanhope, used for his purpose—namely, the 10,000-ton cruiser. Here let me once again stress the fact that I am talking of new construction, ships now being laid down. What do those who favour dual-fuelling propose? Just this, to dual-fuel four of her boilers—that is, make them capable of burning oil or coal sufficient to develop 10,000 horse power on coal, which would probably produce a speed of 13–15 knots according to the class of coal you use—Welsh, North Country, Australian, South African, New Zealand; all Empire coal, your Lordships will note. Further, to introduce the necessary bunker space to accommodate 1,300 tons of coal. You would then have a ship capable of performing the identical fighting and steaming functions of the present-day exclusively oil-fired cruiser, but with the vital addition of being able to burn coal at cruising speed should the oil supply fail. The extra cost would be infinitesimal, and no appreciable increase of personnel would be required. "But," say the Naval Staff and the other opponents of dual-firing, "what on earth 451 do you mean? What about this enormous extra weight involved?" Your Lordships' House was led to believe that a dual-fired 10,000-ton cruiser would entail her size being more than doubled, with corresponding extra cost and extra personnel.
§ THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HALIFAX)
I am extremely loath to interrupt my noble friend, but I would suggest to him that perhaps he is travelling somewhat outside the rules that generally govern these debates in answering criticisms, as I understand, made in the course of an earlier debate on another subject. I must leave the matter now in his hands, but I would suggest that it would be for the general convenience of your Lordships if he applied himself more particularly to the Motion of the noble Lord opposite.
§ LORD AILWYN
I very much regret if I have exceeded the bounds of order. I must plead inexperience of your Lordships' House. I hoped I was not infringing what I understood were the rather broad rules of debate in your Lordships' House. I would just like to say this as a final remark. It has been said that no Government would ever override the Board of Admiralty in matters of this sort. It is a matter of distress to me, after thirty years in the Navy, to find myself in opposition to any Admiralty view, but one has to be a realist in issues of this sort even though it brings about a conflict of loyalties. One cannot forget that Boards of Admiralty have made mistakes in the past. They opposed the change-over from wood to steel; they opposed the change-over from sail to steam; they turned down Sir Percy Scott's rangefinder until another country adopted it and we had lost the secret; and, finally—a classic example—they resisted to the last the institution of the convoy system in the Great War. I ask your Lordships' forgiveness if I have infringed in any way the rules of debate. My excuse is that I do look upon this question as absolutely vital from the point of view of National Defence, and I felt impelled to do my utmost to dispel the misleading impressions which I feared had been given to your Lordships and to the country at large.
LORD STANLEY OF ALDERLEY
My Lords, I should like at the outset of my remarks to associate myself with the expressions of gratitude to the noble Lord, Lord Mottistone, for having initiated this debate. I say that so that there may be no chance of ill will between my noble friend and myself as the result of anything I may say. The Motion before your Lordships consists in the main of two parts, rather different one from the other. It assumes that the production of oil from coal is of great necessity to this country for two reasons: first of all, for the relief of unemployment in the distressed areas; and, secondly, it is essential—so the noble Lord tells us—for the purpose of National Defence. I take it that it was proved to your Lordships' satisfaction by the debate last month in this House that as far as the ships of His Majesty's Navy are concerned they must be oil-fired. That does not affect my noble friend's argument because no one—not even Lord McGowan—would pretend that Diesel oil, on which the Navy is exclusively fired rather than petrol, is obtainable from coal in any case.
LORD STANLEY OF ALDERLEY
I beg my noble friend's pardon. I bow at once to his superior technical knowledge in the matter, but I am informed that that is so, and I still believe I am right. The noble Lord knows there are two processes for producing oil—low temperature carbonisation, which produces the Diesel oil, and hydrogenation that produces petrol. The noble Lord will correct me if I am wrong.
LORD STANLEY OF ALDERLEY
I know there is a third process on which we have in this country no public information and so little private information that it leads me to dismiss that particular process.
§ LORD MOTTISTONE
If my noble friend will permit me to intervene, perhaps it will shorten his argument if I point out to him that over a long series of years at least one if not two or three of His Majesty's ships have been propelled by oil from coal.
LORD STANLEY OF ALDERLEY
I thank my noble friend; I am glad to hear that; but it does not affect my original argument that this process is in fact uneconomic. So far as petrol is concerned it is a matter of record that that great company, the Imperial Chemical Industries, has been producing petrol from coal for some years. It is equally a matter of record that the plant for producing this petrol has cost—the noble Lord opposite (Lord Melchett) will correct me if I am wrong—in the neighbourhood of £5,500,000. Its production amounts, I think I am right in saying, to 150,000 tons per annum, of which I believe nearly 100,000 tons come from coal. Again I think my estimate is conservative. On that 150,000 tons of petrol that has been produced. there has been a capital expenditure of £5,500,000. The total of our petrol requirements in this country to-day—I think this figure has been given—are in the neighbourhood of 4,5,00,000 tons. That is to say, if we are to be independent of foreign supplies of petrol we shall have to expend a capital sum of money in the neighbourhood of £160,000,000.
My noble friend Lord Mottistone would say, perhaps, that for national safety that is a bagatelle. It was found by the Admiralty during the last War that it was easier to bring oil to where our Fleet was based than it was to bring coal from South Wales to Scotland, for the reason that our convoy system had been so perfected that convoyed ships of oil were brought from the United States with a comparatively small percentage of casualty and loss, whereas in the narrow seas that were infested by submarines, such as the Irish Sea and the English Channel, there were very great dangers. It was found a good deal easier to import oil from the United States than it was to carry coal from South Wales to our Fleet. Moreover, on the other side, that of unemployment, it has been estimated, and I believe estimated accurately, that the 150,000 tons of petrol which is produced by the works at Billingham employ some 1,600 miners. My noble friend opposite will correct me if I am wrong, but I think that is approximately right A simple arithmetical sum will show that if 1,600 miners are employed for the production of 150,000 tons, to produce 4,500,000 we shall employ in the neighbourhood of 60,000 miners. The coal mining industry 454 employs in round figures about a million men, and the unemployment in this industry is to-day about 150,000. Are we to reduce that unemployment at a cost of £160,000,000?
The noble Lord who moved this Motion has said it is uneconomic. I agree with him. It is true that for the purposes of National Defence, and also for the relief of unemployment, we might be prepared to undertake uneconomic measures, but are there no measures less uneconomic than this that might bring about the same effect upon unemployment? The noble Lord stated as a fact something which I hope the Government will verify or deny absolutely one way or the other. He told us that for the first time the Government had accepted the view that it is essential to have oil produced from coal. The noble Lord no doubt has sources of information open to him which I have not, but I should be very much surprised to hear that that information is accurate.
LORD STANLEY OF ALDERLEY
I confess I have not seen the statement that the noble Lord quoted, but I should like to ask the Government for a definite pronouncement on that point. There is only one last word which I will say of rather a general character, and that is to ask: Are we wise to follow the example of totalitarian States in agreeing, as we shall agree if this Motion is passed, to the setting up of a form of self-sufficiency such as they have in Germany? I would point out that the condition and position of Germany is in no manner comparable to the condition of this country. So far as I can work it out, Germany has attempted to make herself independent of foreign oil supplies at a cost of something like 1s. 6d. a gallon of subsidy. Would it be wise to do that in this country? I think not. The Germans, being surrounded by other nations in Europe, are not in our position, and it seems to me, if we are to admit the possibility and indeed the probability of war, then at all costs we must keep free the passage of the seas to this country.
If we are unable to bring oil from abroad then the war is lost, because in that case we should not be able to bring 455 in food either, and that is the first consideration, as I think the noble Lord would agree. It is inconceivable that the whole of the oil-producing countries of the world should bind themselves together to blackmail this country. Should they do so, well, we have certain essential supplies within the confines of our Empire and we can, in those inconceivable conditions, resort to blackmail ourselves. I believe that this proposal will at the most employ 60,000 men. It will certainly do nothing towards making our Fighting Services more independent in time of war. For these reasons—at this late hour I have been compelled to compress my arguments into so narrow a compass that they may be incomprehensible—I hope your Lordships will reject this Motion.
§ LORD MELCHETT
My Lords, I wish to intervene only for a moment. The noble Lord, Lord Stanley, has quoted a number of figures in reference to the Billingham plant, and I would not like my presence in the House to be any indication either of assent to or dissent from any of the figures he has quoted. At this hour I would not hold myself out to be a walking encyclopedia or compendium of all these statistics. But I certainly did point out while the noble Lord was speaking that he was wrong in imagining that fuel oil cannot be produced by the process to which he referred. It can. He has pointed out, and rightly, that it is a very expensive thing to try to make this country safer by producing all the oil it wants from coal. In saying that he is really following the remarks made by my noble friend and colleague Lord McGowan. He also pointed out that it was a very expensive and very difficult thing, so difficult that it was a matter of high national policy and could not be considered from any other point of view.
The noble Lord, Lord Mottistone, paid a very generous tribute to the memory of my late father in connection with this matter. I would like to say one word about that. It is a great many years ago that he first took an interest in this question, and when the major question of whether the Imperial Chemical Industries should be formed or not some people wondered why, situated as he was, he should throw himself with so much zest and energy into the organisation of that 456 concern. He was not in very robust health at that time, and his efforts brought on an illness which terminated fatally. One of the strongest motives, perhaps the strongest motive, was the fact that he believed that the oil from coal processes were of vital importance to this country, and that there was no single chemical company in existence which could handle anything on so large a scale. As my noble friend Lord McGowan said, a sum of £1,000,000 has been spent. Therefore it was necessary to have a large and strong combination that would be capable of undertaking this process which he believed would turn out to be of the greatest importance.
Whether he was right or wrong I cannot judge, and I will not presume to express an opinion. The Falmouth Committee have the figures before them and will report. But it is not only in connection with oil from coal—that was only the first of a number of large processes of this kind—that the chemical industry will, in the course of years, demonstrate the necessity of having great industrial power in order to be able to handle matters of this kind. The Government will perhaps be able to give us some indication of what their final views may he on this very interesting and important matter, but in any case we must be grateful to the noble Lord, Lord Mottistone, for bringing forward this matter.
§ LORD GAINFORD
There is one point to which I would like to refer. The economic argument may be produced by the Government and reference may be made to the possible loss of revenue, but there is one direction in which the Government might help in securing satisfactory results, and that is in helping research. Since the death of Professor Haldane the coal trade have been reconstituting their research work, and one of the directions in which research is going to be stimulated is certainly in the direction of securing oil from coal. We recognise that on a commercial basis it has been difficult for private enterprise to produce a great deal of oil from coal except by high temperature distillation. That is going on in an increasing degree, but there are other directions in which research work stimulated by the Government might help to secure cheaper processes.
§ THE PAYMASTER-GENERAL (LORD HUTCHISON OF MONTROSE)
My Lords, I only regret that this debate started at such a late hour. The subject is one of very great importance and I am sure we have all listened with great interest to the speech of my noble friend Lord Mottistone. There is no greater authority on Defence and during his years of service he has gathered a great amount of experience. Anything he thinks fit to say on matters of Defence is very well worth listening to, and I can assure him that His Majesty's Government will give most careful consideration to all he says. Perhaps I might remind him that only in 1935 he made two speeches on this subject in two weeks. At that time in May, 1935, I made certain remarks on oil reserves. I can assure him that he has a man of real sympathy in myself when I reply for the Government to his admirable speech this afternoon.
May I say with regard to his actual Motion that of course the Government accept it? They are doing this. It is only a question of degree and of the speed at which the matter can be dealt with. Most noble Lords will know that this question of oil from coal has exercised the minds of scientists for many years. It has aroused a great deal of attention and anxiety, and it has cost the loss of large sums of capital. It is only now, owing to the fact that the Government give a preference, that it has reached the point of providing a return on capital. There is no doubt that whether you use hydrogenation or low temperature carbonisation or the Fischer process, this is an expensive method of getting oil, but it is a question that is bound up with National Defence, and the Government have shown their desire to help this type of production. They have given a preference of 8d. per gallon on petrol with a guarantee of 4d. a gallon over a period of nine years, or of the same amount in the aggregate for a shorter period. That means that if the preference continues at 8d. it might not continue after four and a half years. It might do so, but there is no guarantee in the matter. It is quite clear that the Government have been for some time encouraging this method of production. The Air Ministry, as the noble Lord well knows, thinks very highly of petrol produced from coal by various methods and 458 would be only too willing to take more if they could get it.
I can assure the noble Lord that this question is very actively concerning the minds of those charged with the Co-ordination of Defence. The Falmouth Committee—I must mention that Committee—are examining all the facts in relation to all processes in operation in this country and they are also examining processes in Germany and other countries. It is obvious that in speaking on behalf of the Government I can make no declaration before the Committee have reported, but I will say this, that I am perfectly certain that when the Committee do report His Majesty's Government will act upon their advice. It is obvious from what my noble friends Lord McGowan and Lord Melchett have said, that technical difficulties are great and have to be carefully analysed before the Government can embark on large-scale production. They might easily be drawn into wrong types of production. It is only when they have real knowledge that they can enter into production on a large scale. The storage question also cannot be overlooked. Undoubtedly we shall have to store as well as produce oil from our native coal.
Large quantities of petrol are used in this country. Our imports amount to 1,325,000,000 gallons, and with production in this country of just under 92,000,000 gallons we are only producing about 7 per cent. of our requirements. The noble Lord, Lord Mottistone, said that in Germany they had got as high as two-thirds of their requirements. My figures are not so high as that. The latest figures I have obtained from our friends who are connected with the processes over there show a production of 47 per cent. in the year 1936. It had increased by about 7 per cent. since 1935. I have not seen the 1937 figures. The production from coal of Diesel oil has gone down from 8 to 7 per cent.—has gone down by one per cent.
§ LORD GAINFORD
Might I ask the noble Lord whether most of this has not been produced from lignite, and not from coal as we term it?
§ LORD HUTCHISON OF MONTROSE
Quite so; from indigenous products of all sorts; from lignite, and in fact they have been using some soft coals as well. But 459 the production in Germany has of course been stimulated by the fact that the Germans cannot afford to pay for imports from overseas, which we, in a more happy position, can afford to do. Looking at it, however, from a Defence point of view, it shows that by careful examination of the different processes the Government may be able to put their finger on the right process and produce oil from coal by the most efficient means at present known. The process that has been going on in Durham, at Billingham, has been a very remarkable process of hydrogenation; and —if Lord McGowan were here he would probably confirm what I say—it has had its difficulties! There have been very great difficulties to overcome. Whether that process or the process of low temperature carbonisation is the better I do not know; probably the one is complementary to the other, and, using the oil produced by low temperature carbonisation, they can use the hydrogenation process to produce the petrol. At any rate I can assure the noble Lord, and the noble Lords who have spoken, that the Government are actively examining all these processes and doing all they can to get the right one.
As regards South Wales, it will be interesting for the noble Lord to know that quite recently, in collaboration with the trustees of the Nuffield Trust, they have arranged and have completed agreements to erect a low temperature carbonisation plant in South Wales, and have formed a company known as the Low Temperature Carbonisation Company, Limited. The actual construction has began. It is hoped that early next year production will come along. The capacity of the carbonisation plant will be something like 500 tons a day. In South Wales, therefore, the promise that Mr. Baldwin gave in his time is being carried out and this first plant is being put down. I know the noble Lord hopes that further plants will be put down in these various areas, and I have no doubt that when the facts are examined that will come along.
It is perfectly clear from the debate which has taken place that noble Lords are very anxious on this question of oil supply. I see in his place the noble Lord, Lord Strabolgi, who has always taken the most active part in all our talks and Motions on Defence. He knows well the great value of oil: that 460 it is just as necessary—and the Government know that it is just as necessary—as T.N.T. or any other high explosive, and that without it we should be in a very parlous condition indeed. I therefore think it is reasonable that noble Lords who take the matter like that should believe that the people who have been entrusted with the Co-ordination of Defence really are looking into this very serious problem. They know the difficulties of tankers coming to the shores; they know the difficulties not only of the submarine but now also of the long-range aeroplane attacking incoming ships. These difficulties affect oil supply just as they affect food. Therefore we are in agreement that it is necessary to bring those problems to a solution. Of course it is known, and noble Lords have stressed the point, that if you look at it from an economic point of view there is nothing doing. But if you look at it from a Defence point of view, then of course it is a very valuable asset to this country and one which can be followed up and developed with very great success.
I was very interested to hear Lord McGowan's remarks on the various processes of which he has had knowledge. He points out that with experience of the various plants you can reduce costs; in other words, you can get over the difficulties, gradually improve your plant and reduce costs. That shows that the Government are wise in getting all the facts and getting on what I call "the best possible level" in the production of oil from coal. I was very interested to hear Lord Teynham when he was talking on this question of the Fischer process. It is a process which I know is very largely used in Germany. I have been over one of the installations in Germany, and it is a very remarkable process. Whether it is suitable for our coal or not I cannot say; that is for the technical people to say. There again, however, you get a process which will be examined, and examined carefully, by the Falmouth Committee, and a report will be made accordingly to the Government.
This question of producing oil from coal is of great importance to what are called the Special Areas. Lord Mottistone has pointed out the sad state of South Wales. I am glad to note that the Duke of Montrose referred to Scotland; we also suffer ! 461 The fact remains that a good deal could be done to help the unemployed in South Wales and in Durham. But I venture to say this: that it is very difficult even in these distressed areas to get real working colliers, on whom the other workers depend. I have known of cases in South Wales where pits have been delayed in the opening because they cannot get the men who have experience in opening them. That is one of the difficulties. Gradually, however, we are absorbing—and not only in Durham and South Wales, but also in Scotland, I am happy to say—a great many men who have not worked for a great many years. I am sure that if processes like this continue to absorb coal, and certain classes of coal—because all "coal" is not coal, as some people who write to the newspapers seem to think—we shall gradually get a steady use for this coal; and it is only the steady use that will keep those men continuously employed and not dependent on what is known as the export market, which has unfortunately in recent years been so precarious.
At this late hour I should like to say this to Lord Mottistone: that, after all, in Durham the figures of unemployment have gone down from 85,000 to 54,000 between 1934 and 1937. Goodness knows that 54,000 is too many unemployed; but that is a good movement in the right direction. In South Wales the figures are more remarkable still: they have gone down from 157,000 to 101,000. So the movement there is also in the right direction. Finally, I would only say this on behalf of the Government: that we realise the seriousness of this problem; we are grateful to the noble Lord for raising it in your Lordships' House; and I hope that at some future date, when it is raised 462 again, we shall be able to report a more active production of oil from coal.
§ LORD MOTTISTONE
My Lords, I can only thank my noble friend who has been speaking on behalf of the Government for his most friendly speech and for accepting the Motion which I was permitted to put before your Lordships. I would only add in reply that I purposely refrained from referring to the problem of storage, because it is one of such great complexity and, indeed, danger. I am, however, aware of the great steps which the Government have taken and which have been pronounced by Sir Thomas Inskip in another place. As the Minister knows and as my noble friend Lord Hutchison knows, there are added dangers in the matter of storage, apart from possible enemy action, which are becoming more apparent; so that the decision of the Government—which to-day's Resolution amounts to—to go ahead with this plan as soon as they can get the report on the best way of doing it from the Falmouth Committee, is clearly a very wise step, and I thank them for saying so. As to the distressed areas, which rather depend upon his reply, I am quite sure that when they read the noble Lord's speech and see that the Government are in agreement with the general thesis, they will have a real feeling of hope, because they will know that as time goes on, and sooner rather than later, more will be done to employ the miners who are capable of employment and who are still out of employment. I thank the noble Lord, and I thank His Majesty's Government.
§ On Question, Motion agreed to.
§ House adjourned at ten minutes before eight o'clock.