Lords Sitting of 30 March 1938

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
WEST SURREY WATER BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
HOUSING (AGRICULTURAL POPULATION) (SCOTLAND) BILL.
Brought from the Commons; read 1a; and to be printed.

BUSINESS OF THE HOUSE.
THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE): My Lords, I beg to move the Motion which stands in my name on the Paper.
Moved, That Standing Orders Nos. XXI and XXXIX be considered in order to their being suspended for this day's sitting for the purpose of giving precedence to the Cinematograph Films Bill and the Consolidated Fund (No. 1) Bill over other Notices and Orders of the Day, and for the purpose of passing the Consolidated Fund (No. 1) Bill through all its stages.—(Earl Stanhope.)
On Question, Motion agreed to, and ordered accordingly.

CINEMATOGRAPH FILMS BILL.
Order of the Day for the consideration of Commons Reason for disagreeing to certain of the Lords Amendments read.
THE SECRETARY OF STATE FOR AIR (VISCOUNT SWINTON): My Lords, I beg to move that the Commons Reason for disagreeing to certain of the Lords Amendments to this Bill be now considered.
Moved, That the Commons Reason for disagreeing to certain of the Lords Amendments to the Cinematograph Films Bill be now considered.—(Viscount Swinton.)
On Question, Motion agreed to.

LORDS AMENDMENTS.
[The references are to Bill No. 45.]
Page 17, line 16, leave out Clause 16.
Page 43, line 7, column 1, leave out ("15") and insert ("20").
Page 43, line 21, column 1, leave out ("12½") and insert ("15").
The Commons disagree to the above Amendments for the following Reason:
Because not enough films of suitable quality have been or can reasonably be made to enable renters and exhibitors to fulfil the suggested quota requirements.
VISCOUNT SWINTON: My Lords, I beg to move that the House do not insist on the first Amendment, to strike out Clause 16 of the Bill. Your Lordships will remember that Clause 16 amends the Act of 1927, which the present Bill will supersede, by reducing the exhibitors' quota from 20 per cent. to 15 per cent. during its last year. We are dealing here with a situation which is largely accomplished. It is not as though we were able to discuss what should happen in some year which lies before us. We are, by the passage of time and the force of events, dealing with a situation which in fact is half over and which, as I shall show in a word or two, is really much more concluded even than that. The exhibitors' year under the Act of 1927 runs from October 1, 1937, to September 30, 1938. The Act provided that exhibitors should exhibit a minimum of 20 per cent. of British films during that period. Clause 16 proposes that the quota should be reduced to 15 per cent. The year having started on October I last, half of the exhibitors' quota year is already finished.
The position is even more difficult than that because, as your Lordships are aware, exhibitors do not buy films like fresh fish on the day before exhibition. They have to make arrangements a long way ahead, and I suppose it would be true to say that nearly every exhibitor in this country—there are between 4,000 and 5,000—has already booked films completely, or almost completely, for the rest of the current year. Therefore if we insisted on this Amendment we should upset the programmes which thousands of exhibitors are engaged upon. We should force them to acquire additional films over and above the necessary number to fill their programmes, or we should drive them into default. And the position is even more complicated and more difficult

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than that, because an exhibitor who has contracted with a renter for films to be shown during the next six months would not discharge his contractual obligation to his renter merely by taking a film and paying a sum of money and then buying a British film to show in its place.
That would be a bad enough position for him, because he would have to pay for two films when he could only show one, but I understand that the system under which all the larger houses acquire their films is not by an outright purchase, paying so much down for the right to show a film. They buy it on a sort of principle of participation. The renter hires out to the exhibitor a film, but instead of receiving a flat-rate payment he receives a proportion of the net proceeds of all the showings of that film. He contracts with the exhibitor that the exhibitor shall show that film at so many performances on so many days. Your Lordships will therefore appreciate that if the exhibitor is told that he must not show a foreign film which he has acquired the right to show, but must show a. British film in its place, he not only has to spend extra money on the British film but he has a very difficult contractual relationship to adjust with his renter, which cannot simply be adjusted by paying over a lump sum of money. I may add that if he is forced to acquire extra British films we have no guarantee that the films would be satisfactory films. One of the great reasons for getting the Bill through is to kill the "quota-quickie"—the bad cheap film merely manufactured for quota purposes. I am told that there are plenty of these bad "quota-quickies" still knocking about and anybody would be glad to sell them who is in possession of this unpleasant stuff. If we forced the exhibitor to buy films and very likely forced him into the buying of bad films, that, I think your Lordships will agree, would make the position worse for British producers.
Is it reasonable to put this extra and unexpected burden upon the exhibitor? Of course, constitutionally Parliament can make any amendment in a Bill at any stage, but what we have to ask ourselves is whether it is reasonable to do so. In asking that question we should also put another question, and that is, whether the exhibitors themselves have acted reasonably. They have to hook forward and they must have certainty in
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their business. They naturally booked forward on a reasonable expectation of what would happen. The Government, last summer—I think it was last July—published a White Paper in which they said they would propose this reduction. The Bill was introduced in another place and passed through all stages there with this Clause 16 still in, and while, of course, your Lordships were well within your rights in deleting it, exhibitors, who perhaps do not know so much about Parliamentary procedure as we know, might reasonably have expected that the Bill was likely to go through in the form in which it was introduced in another place, and have acted accordingly.
In all legislation it is important that the persons affected by that legislation should feel that it is reasonable, and it is equally important—perhaps even more important—that the carrying out of the law should be practicable. Here, I think, without a doubt, on the facts I have stated to your Lordships, the exhibitors and the subjects affected would feel that we were putting an unfair and unreasonable obligation upon them. Moreover, as I have shown, they could not in fact carry it out. They would find themselves between the alternatives of breach of contract and going into a technical default under the Act. The Act provides that the President of the Board of Trade shall have an exempting power where he is satisfied that a default is either involuntary or not unreasonable. What would happen if we insisted on deleting this clause? There would be a legal obligation upon these thousands of exhibitors to do something which they could not in fact do and which it would be unreasonable to expect them to do. They would be excused, and rightly excused, in their default by the President of the Board of Trade. I venture to suggest that you could not do anything worse or more calculated to bring the whole structure of the Act into contempt than to have this series of defaults which would have to be excused.
In addition to that, we all want to make this Bill a success. We want the producers and the exhibitors to have confidence in one another and to operate with good will. The old Act, so far as it succeeded, succeeded because of that good will. This Bill, when it becomes an Act, will depend very largely on that

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good will. I venture to say that you could not give the Bill a worse start than to insist on this provision, which would be, I submit on the facts I have stated, unjust and which in fact could not be carried out. I hope your Lordships will agree not to insist on your Amendment.
Moved, That this House doth not insist upon the said Amendment. (Viscount Swinton.)
LORD MOYNE: My Lords, I very much regret to see a Minister with the respectable and unspotted reputation of my noble friend engaged upon infanticide! He made sure that he would be able to strangle the last struggling breath which may remain in the Act of 1927 by arming himself with the very effective, but in this case quite unnecessary, weapon of a three-line Whip. I say it is unnecessary because I agree, in view of what we have been told by the exhibitors in their protest to the Board of Trade and also in the debate in another place, that the provision of the 1927 Act is practically dead in so far as it is completely disregarded; and the noble Lord has told us that it would be impossible for exhibitors to carry out the obligation which was there laid upon them. I think, however, that it is very important for the House to understand the distinction between this Amendment and those which we are going to consider in a few moments. This Amendment applies only to an existing obligation which was enacted more than ten years ago.
It was provided in 1927 that until October 1 next, exhibitors should show twenty feet of British film for every eighty feet of imported film. The operation of that enactment was destroyed by the White Paper issued last August, and exhibitors are all breaking the law in advance. They sent a letter to the Board of Trade in which they stated:
"Exhibitors, therefore, had every right to assume that Clause 16 would form part of the Bill, and have proceeded on that assumption."
If these contracts have indeed been made on the assumption that they could ignore the existing law, the last thing that any of us wish to do is to put these people into the position of defaulters. I agree that it would be a bad send-off to the Bill, and unreasonable, to place the burden of hearing all these cases upon the new Films Advisory Committee.
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I want, however, to make just three brief comments on the lesson which we should draw from the present position on Clause 16. First, the Board of Trade miscalculated the position. There was no need whatever to let the exhibitors off their statutory obligations. The films made in the last eleven months, I think it is, show enough for a 25 per cent. quota, not merely 20 per cent. My second comment is that this episode throws a very striking light upon the anxiety, about which we have heard so much in the Departmental Committee and elsewhere, of exhibitors to "buy British" whenever they possibly can. It surely is a vindication of the necessity for quotas, and proof of their powers. The exhibitors could quite well fulfil more than a 20 per cent. quota, and their alleged widespread failure to observe the law, whatever their justification, shows that we cannot afford to do without effective quotas.
VISCOUNT BERTIE OF THAME: My Lords, I think my noble friend below me has made out a tolerably reasonable case. This clause will only operate, in effect, for six months, but I was rather shocked at his reliance on the White Paper. As your Lordships know, no White Paper should ever be incapable of annulment by Parliament.
VISCOUNT SWINTON: I must correct my noble friend. I said that constitutionally, of course, Parliament had every right to do what it wished and was in no way bound by the White Paper. I was only drawing attention to whether or not the exhibitors, who are not, of course, Members of Parliament, had been reasonable in their action.
VISCOUNT BERTIE OF THAME: I only wanted to make the point quite clear.
LORD DARCY (DE KNAYTH): My Lords, I think it is quite clear that certain wholly new factors have arisen since this matter was before your Lordships' House. I think my noble friend Lord Moyne is taking a reasonable and common-sense attitude towards the matter in not pursuing it further. I think we are all most anxious to take a reasonable and common-sense attitude, and we hope that it is an example which will not be overlooked by the Government themselves at a later stage.
On Question, Motion agreed to.

LORDS AMENDMENT.
Page 43, line 7, column 1, leave out ("15") and insert ("20.")
VISCOUNT SWINTON: The two remaining Amendments are on page 43, in line 7, column 1, to leave out "15" and insert "20" and in line 21, column 1, to leave out "12½" and insert "15." I think it will obviously be convenient if these two Amendments are taken together because the one is in fact consequential on the other.
LORD MOYNE: My Lords, I am only rising on a point of order. It is possible that some of my noble friends may wish to suggest a compromise to one of these Amendments and accept the other. If they are put together like this, is it possible to move another figure in the first place and accept the Government's suggestion in the second?
VISCOUNT SWINTON: I would not suggest that they should be put together. They would, of course, I take it, be put separately. I was merely proposing to deal with them together because the two are really entirely interlocked.
THE LORD CHANCELLOR (LORD MAUGHAM): My Lords, the noble Lord, Lord Darcy (de Knayth) has handed to me another Amendment. I am not quite sure whether it is within the knowledge of the House. It proposes on page 43, line 7, column 1, to leave out "15" and insert "17½." I do not know if it is convenient that this Amendment should be moved.
VISCOUNT SWINTON: My Lords, I think it would be convenient if I dealt with the two Amendments and then, if, having heard what I have to say on them, my noble friend desires to put some other Amendment, no doubt he would advance to your Lordships whatever arguments he thought were right thereon. I beg to move that the House doth not insist on this Amendment in line 7. I was very glad to hear that my noble friend and his lieutenant were going to take, in this matter, a practical and commonsense view, because that is what I am going to invite them to take. My noble friend will say I am moving that your Lordships should agree with the Commons in their disagreement. It is fair, I think, to remember that after we had considered this Bill here we sent a volume of Amendments down to the House of
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Commons, ten or eleven pages of them, and every one of the Amendments which we made in the Bill here were accepted in the House of Commons with the exception of these Amendments and the Amendment with which we have just dealt, and on which my noble friend himself admits, on reconsideration, that both Houses are right to agree. This only leaves therefore a single bone of contention out of the very large dish of Amendments with which we supplied another place. These Amendments, with which the Commons have disagreed, would raise the quota of long films for the renter from 15 to 20 per cent., and for the exhibitor from 12½ to 15 per cent.
It will be within the recollection of your Lordships that an Amendment was moved here to increase the quota both for renters and exhibitors of short films very materially. That Amendment has been agreed to in another place. We therefore have imposed a considerable increase of obligation both upon the renters and exhibitors, and we have imposed that increased obligation in addition to the wholly new obligation to have a separate quota for short films as well as for long, films. I would also point out that this Amendment, which Lord Moyne proposed, only affects a single year, and that is very important from the point of view of the renter and the exhibitor. Next year, on the 1st April, 1939, the quotas go up both for renters and exhibitors to the figure at which the noble Lord would like to put it in the first instance. We are not dealing here with an obligation which is to come into force at some long time ahead. We are dealing with an obligation which will come into force the day after to-morrow. It is, of course, inconvenient that we should pass an Act of Parliament so close to the date on which it has got to operate, and particularly I think is it true—and particularly does this impose upon us a duty of caution—that the obligation which we are going to impose upon renters and exhibitors is an obligation which cannot be discharged rapidly. It is not just a simple prohibition that you may not walk on one side of the street. It is an obligation which is imposed upon long periods of work in the collection of finance in order to make these films and the whole process of film construction on a very considerable scale.

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There are certain very important facts which I would ask your Lordships to consider in deciding whether we ought to "step-up" these quotas of renters and exhibitors at the last moment. We have made great changes in the structure of film legislation. We have introduced for the first time a cost test in the making of these films. We have done that in order to kill the "quota-quickies." That means that for these long films, with which we are concerned in this Amendment, no film, unless it is certified to have peculiar merits, is to be allowed to count unless it has a £7,500 minimum labour value. That means that it is to cost not less than £15,000 to produce, and of course in many cases the cost will be very much greater than that. Time is required to arrange for the necessary finance and to produce effectively films of that kind. The worst service we could do to producers—and I am sure my noble friend will believe that I, at any rate, who was responsible for all this legislation, have as much at heart the interest of producers as he has; I think it would be true to say that but for the Act which I introduced and persuaded Parliament to pass, there would not have been a British producer at all.
LORD MOYNE: Hear, hear.
VISCOUNT SWINTON: Therefore if I ask the House most sincerely to be moderate in the instantaneous obligation which it puts upon renter and exhibitor, it is not out of excessive tenderness for those branches of the trade, although we want their good will and must do justice to them, but it is also in the interest of the producers, because nothing could be worse than that, as a result of this legislation, we should start off with some horrid bad films which would get us a thoroughly bad name. I apologise to your Lordships for dealing with this at some length, but there are such technicalities in the Bill that it is clearly important that we should know what we are doing. First of all, we talk about a 15 or 20 per cent. quota. On the face of it any one would suppose that that is something like a 15 per cent. duty; that it means that if you introduce 100,000 feet of foreign film you have to show 15,000 feet of British film. It is not that at all. You have to show 15 per cent. or 20 per
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cent., as the case may be, of the aggregate amount of film which is shown, and therefore if a man rents or exhibits 100,000 feet of film the quota of British film is not 15,000 feet but 18,000 feet. If we take 20 per cent. it means not that you have to exhibit on the 100,000 feet basis 20,000 feet of British film, but 25,000 feet, and I think it is important that the House should realise that, because many members of your Lordships' House are not intimate with the intricacies of the trade, and would suppose that 15 per cent. meant 15 per cent., whereas in fact it means 18 per cent., and 20 per cent. means 25 per cent.
There is another thing which it is very important to bear in mind. I heard a number of speeches on the last occasion, in which noble Lords spoke about the aggregate number of films which were available. They said: "After all, why are you so careful? Why will you not put the quota up another 5 per cent.? There are more than 20 per cent. of British films available." It is enormously important to realise that the obligation you are imposing here is not an aggregate quota. It does not mean that if a million feet of foreign films come in you have to have 200,000 feet of British films in the aggregate. It means something quite different from that. It means that every renter who rents a foreign film has to fill his own individual quota with British films. It means that every exhibitor—4,500 of them I believe there are—who exhibits foreign films in his theatre has to fill his individual quota of British films. That is a wholly different kind of obligation, and it is very important to realise why it is so different.
The way this industry is built up is three-fold. There is the producer, who makes the film; there is the renter, who is the middle-man, who trades in it; and there is the exhibitor, who exhibits it. But in many cases the producer, particularly the big producer, who probably produces most of the films, has what I may call a tame renter, either a subsidiary company of his own or—renters will not mind the parallel—renters who represent something in the nature of a tied house. You may have a producer who has produced twenty films, and perfectly good films, but those films are dealt in by his own renter, and the better the film the less likely is that renter to pass it on to

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somebody else to rent. He is going to keep all those films in his own hands and deal in them to the best advantage. That means that the other renters have to collect British films from other producing houses and make up their own individual quotas by the films they can collect in that way. Therefore if my noble friend recites a long list of films which have been produced, it is utterly irrelevant for this purpose unless he is able to say that all those films are available to the individual renters in this country. I am quite sure he would not do that, and the would not attempt to do it
If he has made his inquiries carefully he would probably tell us that a very large proportion of the films which he knows are in existence to-day are tied films in the sense that they are produced by one producing house or two producing houses here, and they are under contract to be rented to selected renters. The renters' quota which he wishes to increase will have no call whatever on those films to fill the quota. They will have to get their quota out of other British films produced elsewhere. I have stressed that because I am quite sure that the majority of your Lordships have probably not appreciated it. I am bound to say that this is a system which has grown up, and until I went into it very carefully I had not realised in the least the extent to which this tied-house system goes. I think we have to be extraordinarily careful in increasing the renters' quota to make sure that there will be films available.
One other point. Do not let us think of the quota which we impose as a maximum. It is not. It is a minimum. It is the minimum amount which every individual renter or exhibitor has to rent or to exhibit. The Bill would fail entirely if there were not a large number of British films over and above the minimum required to fill the quota. It was never intended—I certainly never intended it in my legislation—that quota and exhibition should be at the same figure. I had always hoped and intended that the total number of films exhibited would be considerably above the minimum obligation of the quota. I think we should be very unwise to raise this quota. What is the whole object of this Bill? It is to get rid of the "quotaquickie," the bad, cheap film, the film
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which is carelessly, quickly, cheaply produced, which has got us a bad name.
It is also to get American producers producing here. It is very important that American finance and American knowledge should come in and employ British labour and British talent. We want to get good films and they are going to be costly. You have to get the finance of those films. It will not be too easy. My noble friend was talking the other day about a period when everybody went mad about films. You could get any amount of money for the asking. You did not even have to ask for it, and millions of pounds of capital were put into this industry. But a great deal of that was lost. It is not a very easy time to-day to raise money for other, more solid and certain, purposes than this, and certainly those who have money to invest will want to be quite sure that they are investing their money wisely, that if they are going to put £50,000 into the production of a film they can be certain that that film has been carefully prepared—good story, scenario writers effectively used, the cast carefully prepared, and indeed the whole structure of the film so organised that it will be worth investing in. Well, you are not going to get people to put money in that way into films which are going to be made at a fortnight's notice and have to be completed within two or three months.
As I say, we want to get American money in. There is, I believe, a very good chance to-day of getting what we never have had—the American producer who is also maybe the owner, certainly a large renter, possibly the owner of large circuits of houses in America, producing films here with British labour, British talent, British artists, and showing those films not only in this country for British quota, but showing them in America, and thus giving British production a worldwide opportunity. We shall not get that if we are unreasonable about the terms of this Bill. I venture to submit that all the arguments which convinced even my noble friend Lord Moyne as to why we should leave Clause 16 in the Bill apply here. If he tries to insist on increasing the quota to a dangerous level he will be passing an unreasonable law, which reasonable men who want to keep the law will not be able to keep He will be forcing the President of the Board of Trade to exercise his dispensing power,

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which ought to be used only exceptionally. He has had to exercise it over and over again in the past. My noble friend was talking about a time two years ago. I have been inquiring, and I find that in the last two years there were hundreds of defaults, but the President of the Board of Trade did not feel justified in prosecuting in more than a very few cases. The use of that power of dispensation ought to be a rare exception. If it becomes a rule you bring this law into contempt. Finally, and once again, you forfeit that good will upon which this Bill with its ten years of, I hope, useful progress has got so much to rely. You would be doing something which is unfair to the renter and to the exhibitor and, last but not least, doing something which might in my opinion very well react most unfavourably on those very producers whom it is your object to serve. I beg to move.
Moved, That this House doth not insist upon the said Amendment.—(Viscount Swinton.)
LORD MOYNE: My Lords, it is very disappointing that the noble Viscount in charge of the Bill shows so uncompromising a front to this Amendment about the renters' quota. Much of his speech was directed to the difficulty of the exhibitor fulfilling his quota because of the fact that many films are tied and he cannot get them. I want the House to come back to this particular Amendment about the renters' quota, and to put quite on one side this difficulty about the exhibitors.
VISCOUNT SWINTON: I did not make myself clear to my noble friend. I was arguing this from the renters' point of view. A number of renters are tied to the big producing houses, and films which they get will not be available to the independent renters, and the independent renters whose quota my noble friend wishes to increase will not, I am advised, be able to find the films with which to fulfil their obligation.
LORD MOYNE: I will come to that. But first I would ask the House to distinguish very carefully between the position of the exhibitor and the position of the renter. Personally, I am not altogether happy as to what supply of films will be available to the exhibitors in view of the incalculable disturbance
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of output, and of films available, which will result from the perfectly sound provision of the treble quota. The noble Viscount pointed out that this Amendment about the renters' quota, putting it up by 5 per cent., applies only for one year. I think it was rather in his mind that we were open to criticism for our moderation. It was certainly suggested in another place that it would have been much more logical to put up the quota throughout the whole period. That argument quite ignores the machinery of the Bill. The producers are very keen on a reasonably high obligation on foreign producers and their agent renters in the first year because that is going to be the test year, and it is going to have a great weight in forming the opinion of the Films Advisory Committee as to how far to vary, by acceleration or retardation, the quotas that are to be enforced. This first year is of very great importance as a jumping off point, and it is for that reason we did not want the Bill to bring down the renters' quota to a much lower level than what has been their obligation up to now.
The noble Viscount alluded to the Amendment regarding short films, and he pointed out that in another place many Amendments have been agreed to. He did not, however, mention that one of the most important of these Amendments was moved by the Government. That was the triple quota; and a great many of those which have been accepted had nothing to do with my noble friends and me who are anxious to give a better chance, as we believe, to British film production. I admit that the Government have met us reasonably on this question of short films quota. They have allowed an increase of 5 per cent. throughout the whole period of ten years, and I am grateful for that. I appreciate that in many respects it is an even more valuable Amendment than that for which we have pressed in the case of the long quotas, because it is a new form of quota, helping a new kind of film activity, and it does not run for only one year as in the case of our long quota Amendment but for the whole period. On that short quota proposal there is really no fear whatever that there will be any disadvantage from the point of view of turning the exhibitor from the screening of short films to that of long. He uses these short films as a convenience to balance

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the length of his programme, and he will continue to do so for one very good reason, that although under the existing system where the American short is given away for nothing, and there is no compelling need to show British shorts at all, British short film producers could not get anything like the cost of production. In fact, short films are produced cheaper than the corresponding length of long film, and they will therefore on an economic basis be sold more cheaply.
So it is a bogey to say that in accepting these short film Amendments we are risking the position of the short film producers, because it is quite certain that the exhibitor, both for his convenience and also on the ground of cheapness, will go on using short films. He must have them, he cannot work out his programme without them. Short films are a British speciality, and I believe they will develop. They may be the means, by experiment, of working out a new type of British product. I sometimes doubt the wisdom of those who say that the only hope for British films—it was said in another place by the Minister in charge—perhaps not the only hope, but the great hope, of British films was to break into the world market with super films. These may be valuable, but I do not think it is at all true that the super film is going to command the permanent and exclusive support of the public that it now enjoys in certain directions any more than the spectacular play ousted the serious and more cheaply produced play from the legitimate theatre. There is a great chance that cheaper films, by new methods, whether they be short films technically or long films, may develop a peculiarly British character. We all know that each country has its own flavour of humour. There may be some noble Lords, like myself, who find it difficult to appreciate transatlantic or German jokes, though we enjoy the pages of our own comic papers without having to read them through a second time as one must do with the transatlantic joke. It may well be that we shall produce a type of film which will appeal to our people but will not appeal to the American people. That is why I do not agree with the view that the only hope for British films is to compete in the world market and to produce films which can only be paid for if they get tens of millions of spectators, in view of the fact
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that every spectator of a film on the average only pays one penny for the top line film and much less towards the cost of the second feature.
I am sure we are all quite appreciative of the wonderful film work that has been done in America. They have shown great invention, great technical excellence, and great enterprise in advertising and otherwise in pushing the products of their industry. We also must recognise that in recent years they have been a very valuable and a greatly valued form of entertainment. Judging by what one's friends tell one, I think that in the United States the attitude to films is rather different from our attitude. Educated and thoughtful people there do not look quite so seriously on the film. They consider it a popular entertainment of no very great value, apart from being an entertainment. Here there are a great many of us who do look upon the film not only for its great entertainment value but also for its future social, patriotic and artistic influence.
It is now proposed by the Government that the long film quota should be reduced to 15 per cent. As the noble Viscount said, these quota percentages are a very complicated matter for most of us to understand. I recognise the very great difficulty in which the Government have been in assessing the exact portion of these quotas and the results which they may be calculated to bring about, but I want to show the House how two new factors have been introduced which are going to make a good deal of difference in the operation of the quota. There is a new basis of computation, firstly, the separation of the short film quota; and, secondly, the provision for double and treble counting. There has been a good deal of confusion—I am not sure it has not been shown even in the speeches of noble Lords here—as to the effect on the long film quota of separating the short film quota obligation. It has even been suggested that this separation is going to throw a new burden on the producer of long films. In fact the operation is directly the converse, because hitherto there has been a freely exercised option on the part of the film renting and exhibiting industry to count long British films against short American films. That paid, especially the Americans, because they could count these good American

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short films against cheap "quickie" British films which there was no intention in the case of the renters of ever having shown. Now they will have to show long films only against long films and that necessarily will reduce the demand for British long films.
A second modification of the position is due to the provision that certain films, high in their labour costs, will be credited double and treble in footage, with an over-riding maximum of not more than half. That means that the renters' obligation, which in the Schedule stands at 15, will be reduced to II as compared with a 20 per cent. that he has been fulfilling hitherto, though it is agreed he has been fulfilling it by his own ingenuity in a way which is really a fraud on the intention of the original Act. See how this output of renters' quota affects the exhibitor. The exhibitors' quota depends on quite a different calculation. It is footage multiplied by time, and the screen value of the renters' treble counting film is not necessarily by any means treble the single counting film with a cost of £7,500 in labour. It is more likely to be something like half as much again. That fact will mean that the provision of films by these foreign renters will have to be supplemented by films made by independent British producers, and it is these independent producers that are causing the greatest amount of anxiety to my noble friends and me who are dissatisfied with the Bill. We have got the figures for the last year. There were about 625 registered films. That meant a renters' quota at 20 per cent. on 121 films. There were 220 British films, produced, and the extra 100 may be taken to have been produced independently regardless of any foreign renters' obligation.
In the past the British independent producer has been able to work with some confidence. He knew exactly what amount of films would be produced in the tied market about which the noble Viscount has told us, and he knew what would have to be made up out of independent sources. He will not have that confidence in future, because he cannot gauge in advance what demand there will be over and above the renters' quota film, since he cannot tell whether the renters' quota is going to work out at 15 in footage or whether it is going to work
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out, because of the production of these treble quota films, at much less than treble screen value, at perhaps only II per cent. Therefore, what the producers fear is that there might easily be very grave fluctuation in the supply of films. As the noble Viscount says they cannot be turned out in a moment. The British producers will be caught short, and the exhibitors will quite properly go to the Board of Trade and apply for relief from an immediate obligation which cannot be carried out because the independent producers are not in a position to supply films for some months ahead. That is really why we want to see the renters' quota put up to the highest reasonable level at the start. Obviously we do not want to bring people into default, and what we are proposing could not possibly bring anybody into default because it is quite easily within the power of the foreign producers to find these films. I think it is a deplorable situation that after ten years and this great effort under the noble Viscount's Bill, having reached the quota of 20 per cent., we should now go half way back to the start and be content with II per cent. on the same basis.
There is another consideration which I confess weighs very heavily with me. There has been a great deal of attention in the Press on the subject of tax dodging. Well, when people exercise their ingenuity to get out of their obligations I have never heard of the Chancellor of the Exchequer saying "I will lower the tax." He has always done his best to drive people up to their duty and to stop any gaps in the law. Let me tell your Lordships how these American renters have been fulfilling their obligation. They are, for the most part, agents of great and powerful American corporations. We had in evidence the footage which they supplied. The average length of a long film is 7,000 feet. For the British film quota in 1935 Columbia supplied 68,000 feet, First National 49,000 feet, Fox 69,000, Metro-Goldwyn-Mayer 89,000, Radio 78,000, Universal 113,000, and Warner Bros. 47,000. These people were so scientific in their computation that they did not provide one single foot of film beyond the exact quota requirement. But there was one very unbusinesslike firm, the Paramount, who filled the quota of 97,000 feet, by a careless oversight, by supplying 98,000 of film—1,000 feet more than the law required.

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I do not think when the quota has been applied with that extreme scientific exactness that we need think that the American renters and producers are going out of their way to find outlets for British production. The independent producers in this country are satisfied that there is no difficulty in supplying the full 20 per cent. for the first year. They absolutely disagree with the Reason given in the Paper which is before us. The Commons disagree with our Amendment because they say
"…not enough films of suitable quality have been or can reasonably be made to enable renters and exhibitors to fulfil the suggested quota requirements."
I am informed by the responsible organisation which represents this great industry that that fear that films cannot be produced is an absolute bogey so far as independent British film producers are concerned. The noble Viscount talked about the danger of putting this quota up because you would face the renter with an instantaneous obligation. He said that it was not reasonable to give him a fortnight's notice to produce a film which would have to be delivered in three months. That is not the case at all. He has got, exceptionally, in the first year twelve months in which to deliver it. I have made inquiries in many directions and I am told that there is no kind of precedent for taking anything like a year for producing even the best of these films. The trade show, even if they were two or three weeks or a couple of months slow off the mark, would take place long before the year was out and films would appear in the list for renters' quota.
Remember, these same renters have made provision for the year beginning the day after to-morrow on the basis of the White Paper which is so sacred. They have made provision, presumably, for an output of 15 per cent. It does not seem a very big matter for them to expand that output by the necessary amount to comply with 17½ per cent. or 20 per cent. nominal quota. I think there is absolutely no evidence that there is any necessity to sell the pass of British film production and abandon the ground which has been so laboriously gained. The same factor we know has queered the pitch—the factor of the White Paper and short notice—but if that applies to the exhibitor it does not apply to the renter with a whole year to fulfil the
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obligation. Even if 20 per cent. may in some cases cause a little difficulty to the renter—not the exhibitor—I am certain some compromise figure would be quite easily within the capacity of the foreign producing industry.
LORD DARCY (DE KNAYTH): My Lords, after what my noble friend has said I should be very grateful if your Lordships would allow me to move the Amendment which stands in my name. It is to the effect that this House should not insist on the Amendment but should propose another Amendment in lieu thereof. I will not bother your Lordships with a number of figures set out in columns, but I propose that instead of sticking to 20 per cent. we might be allowed to retain 17½ per cent. The difference between the two proposals we have before us is 5 per cent., and I am asking that that should be cut to 2½ per cent. Your Lordships will realise that that is very considerably less than half the additional footage originally asked for here. The reason given by the Commons is that the amount of film is not available. If your Lordships agree to the Amendment you will also be agreeing with the Commons in their view, because we are dealing here with a totally different length of footage which no one, as far as I am aware, has suggested is not available. Your Lordships will recollect that there was difficulty about suddenly causing renters to take on an increased rate of quota running through the year. We know quite well how that has come about. We had hoped that the Bill would have been passed earlier, but in the circumstances we realise that there is a difficulty. But though it may be difficult to make films for the next six months I see no reason why certain films should not be produced so that the rate of 20 per cent. may operate at the end of the period. You can do that by relieving them of the extra obligation for the first six months and agreeing to this Amendment.
Most careful estimates have been made of the amount of films that would be required. You are not starting with an industry that is suddenly asked to produce films. It has to produce 15 per cent. and we are only asking for a little more. If you take the ordinary single quota film, sixteen more films would be required to be produced in this country during next year. If advantage is taken

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of the treble quota scheme that produces pari passu single and treble quota films, it means that eight films will have to be produced—four long and four short. There are four major studios in this country; and has anybody ever suggested—and I think they have not suggested it, for the very excellent reason that it would be wholly untenable—that any one of those film studios could not, between now and April of next year, complete one single treble film and, of course, one ordinary film? I might, incidentally, refer to a remark which was made by my noble friend when he talked about imposing defaults on people and said that there might be hundreds of defaults. A film can only be registered for renters' quota once, and in those circumstances it seems to me that the absolute maximum, if every single one so defaulted, would be only sixteen. I do not quite understand where the argument about giving wholesale dispensations can possibly arise. There is, of course, the alternative for each of these studios, if nobody else makes any films, to make four single quota films themselves.
But your Lordships must forgive me if I digress at this point, because I cannot help feeling that, when this matter is looked at, some of your Lordships may come to the conclusion that we are asking for such a small matter that it is not worth while. From the production point of view it is trivial; it is easily obtainable. There is, however, a much broader question than this, if your Lordships look at what this means. If your Lordships consider the cost question, you will realise that a minimum amount of £120,000 will go into the pockets of otherwise unemployed technicians; technicians who as a body have been brought into existence by the Goveernment's film legislation; technicians who have now bought their houses round Pinewood and are in the direst poverty, whose children have to attend communal soup kitchens in order to keep themselves from starving. That is a humanitarian appeal which this House is entitled to consider, and to consider earnestly.
If your Lordships agree to this proposal, you will have met in their entirety the views of another place. Your Lordships will have given way wherever there was any question of practical difficulty. You have agreed entirely with what has been said by the Minister in another place
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over that. You have given way on all questions of technical difficulties. You have given way anywhere where you might have done any possible injustice to renter or producer; and, what is of greater importance, the personal honour of the Minister is absolutely and entirely safeguarded under this scheme, scrupulously safeguarded. In those circumstances I beg of you to consider whether, when we send this Bill back, it will not be a totally different Bill from what came up. It will be a better Bill in that respect. It is shorn of all the disadvantages to which exception has been taken in another place, and it goes back with a really vigorous and cogent humanitarian appeal which we cannot assume, and which we are not entitled to assume, will be lightly regarded in another place.
Amendment moved—
At the end of the Motion insert ("but proposes the following Amendment in lieu thereof: Leave out ("15") and insert ("17½")).—Lord Darcy (de Knayth).
VISCOUNT BRIDGEMAN: My Lords, I want to keep you a very few minutes only in which to add a word or two on the Amendment. After all the talk which has taken place in your Lordships' House on this Bill, there must be very few of your Lordships who are not completely familiar with the intricacies of the quota and with the meaning of the expressions used in the Bill. Therefore I hope that none of your Lordships will think that the one bone of contention still left is anything but the biggest bone, because indeed it is. The initial figure in the Schedule means more to the film-producing industry than any other part of the Bill. Two reasons have been given for the disagreement in another place to the Amendment made by this House. The first is the Reason on the Paper:
"Because not enough films of suitable quality have been or can reasonably be made to enable renters and exhibitors to fulfil the suggested quota requirements."
But there is another reason which has been employed from time to time in this debate and in the debate in another place: that because certain figures were put in the White Paper which indicated the attitude of His Majesty's Government on certain matters, therefore it was an injustice to the trade to make any alteration at the time that the Bill came before Parliament. That, I think, is a proposition which your Lordships will

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accept on this occasion, as on any other, with a certain amount of reserve.
Now it may be perfectly true that the exhibitors, when they saw the figures in the Government's 'White Paper made their plans, with very little regret, to take in a small quota of British films. But it does not follow that the producers gave way to the same feeling. In fact, my information is that the producers have gone on hoping; they have not abandoned hope, and in fact they have made the preliminary preparations to produce films up to the additional amount for which we now ask. That has been 2½ per cent. on the renters' quota. It is perfectly right, and I do not think anybody in this House or anywhere else would disagree, that whatever we do we should not encourage the "quota-quickie." It is a deplorable thing. But can the "quota-quickie" really be held to apply to long films? And, my Lords, it is long films about which we are now talking. The "quota-quickie" is a cheaply-produced film costing £1,000, or something in that neighbourhood. I cannot really believe that anyone in his senses is prepared to spend a minimum of £7,500 on a "quota-quickie." Therefore, whatever this increase which we propose might involve, I do not think it could possibly involve "quota-quickies" on a large scale, because no producer and no financier would agree to put money to that sort of use.
Then the objection has been raised that the producers are tied to their renters and that therefore only a certain number of British films can be absorbed. But the producers have already said in no uncertain terms that they are prepared to make these films and that they are able to make them. I do not think it is likely that they would say that if in fact they had no outlets for the additional films which they maize. For these two reasons I doubt very much whether the arguments used are really as valid as perhaps they appear to some people. I myself, from the inquiries I have made, am perfectly convinced that the producers can make the additional films for which we are now asking, that they can be financed, and that suitable preliminary preparations have been made to ensure that the films will be of a quality of which we would all wish them to be. I beg, therefore, to support the Amendment.
EARL STANHOPE: My Lords, I rather disagree with my noble friend who has just sat down when he says that all your Lordships must have thoroughly understood the quotas in this Bill and the various expressions which appear in it. I have studied the Bill to some extent, and I am bound to say that a great deal of it is extraordinarily difficult to understand. Therefore I am not going to take up your Lordships' time in putting a lot of technical arguments before you. All I want to do is to point out to your Lordships that this Bill has had close consideration in another place before it came here; it was amended in your Lordships' House; it then went back to another place, where all the Amendments were considered including the two main points which we are considering now: the first the dropping of Clause 16, and the second the percentages in regard to the first year, as shown in the Schedule to the Bill. Lord Darcy (De Knayth) told your Lordships that the figure he had put forward had received no consideration in another place, but I am sure he will realise that when an Amendment has been put down, and it is considered in another place, any intermediate figure also comes under consideration, and that therefore anything between the figure which your Lordships suggested and that which is thought of in another place has received full consideration there. He has omitted to tell your Lordships that in spite of the arguments which were put forward, no Division was challenged, and that the Government Motion was accepted without a Division. I suggest, therefore, that this is not exactly an occasion on which your Lordships would be inclined to think that your opinion was necessarily right, and that of another place was necessarily wrong. If your Lordships will look at the figures of the Division here, I am afraid that they were not very large nor was the majority considerable.
Quite apart from that argument I would like to take up the point made by Lord Moyne. He said that this first year will form a test year. I suggest that we had better go slow in that test year, in order to see that we get a really first-class type of British film, and that the quota is easily filled. If that test is passed, when the matter comes up for reconsideration by the Board of Trade in 1939 the President of the Board will see that the quota

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in future years is maintained, and possibly increased. Nothing could make it more difficult for him to increase the British quota than to find that in this first year a large number of exemptions were asked for, and that the quota was not filled with regard either to length of film or quality. All of us desire to see British films increase in quality and quantity, and I feel sure your Lordships will agree, for that reason, that we had better make a slow start and lay a sound foundation in the first year. I am not sure that all your Lordships realise that the figures which are now under discussion refer only to the first year. There is no discussion between this House and another place with regard to the quotas for subsequent years. Therefore I suggest to your Lordships that we shall be wise if we agree with the other place in accepting the figure which, after full consideration, the President of the Board of Trade thinks is the highest figure which is really a wise one to put into the Bill, and do not increase it above that amount.
LORD BALFOUR OF BURLEIGH: My Lords, I very much regret that we are discussing these two Amendments, one about renters and the other about exhibitors, all in one breath. There is a very great difference in the two cases, and it must not be taken for granted that the Amendment which we are now discussing hangs absolutely with the one which follows it. I do not pretend to be an expert, but I have listened very carefully to the debate, and I understand that this is a contest between the wealthy American renter and the struggling British producer. The struggling British producer is being championed in this House by my noble friend Lord Moyne, and the wealthy American renter is being championed by the Government. Now I find myself in disagreement with only one thing which Lord Moyne said. He said he was very grateful to the Government for having made the concessions which they had made. I totally disagree with my noble friend. I think the Government have very great reason to be grateful to my noble friend for having moved the Amendments which have been accepted in another place. By securing
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the acceptance of so many Amendments he has proved that the Government were wrong, and no one, I am sure, has greater knowledge of these matters in this House than my noble friend. He was Chairman of the Departmental Committee who considered all these matters with very great care, and he has been proved to have extensive and very great knowledge, and when he comes and tells your Lordships that this 15 per cent. could not unreasonably be put up to 20 per cent. I, for one, am prepared to support him. In fact if he had proposed to put 20 per cent. back and had taken it to a Division, I certainly should have supported him. If that course be not adopted, and an alternative to take 17½ per cent. is pressed, still more would I propose to follow him.
On the constitutional issue, that it is out of place for your Lordships to disagree with another place, it is pointed out to me that there is a precedent in the case of the Children's Act, when your Lordships put in "whipping"—not that I altogether agree with it. Another place disagreed, but your Lordships insisted, and your Amendment was accepted in another place. I understand that that is a perfect precedent for the course which I suggest you should take to-day. The noble Viscount, speaking for the Government, made the point that it would be a hardship that the finance would have to be got for productions at such short notice. It is the producer who would have to find the finance, and the producers are asking you to accept the Amendment. Therefore it cannot be put as a point against the Amendment that it is hard on the renters and exhibitors to have to produce the finance at such short notice. I think your Lordships would be wise to accept the guidance of my noble friend Lord Moyne, who has such intimate knowledge of the subject. I hope the matter will be pressed to a Division, and that even at this late hour the Government will see their way to accept a reasonable compromise of 17½ per cent.
On Question, Whether the words proposed to be added shall stand part of the Motion?
Their Lordships divided:—Contents, 21; Not-Contents, 95.

CONTENTS.

Iveagh, E.

Cornwallis, L.

Harris, L.

Darcy (de Knayth), L. [Teller.]

Hindlip, L.

Bertie of Thame, V.

Killanin, L.

Bridgeman, V. [Teller.]

Dickinson, L.

Monkswell, L.

Chelmsford, V.

Doverdale, L.

Moyne, L.

Fairfax of Cameron, L.

Oxenfoord, L. (E. Stair.)

Balfour of Burleigh, L.

Gorell, L.

Teynham, L.

Carnock, L.

Hampton, L.

Wolverton, L

NOT-CONTENTS.

Maugham, L. (Lord Chancellor.)

Elibank, V.

Kemsley, L.

Halifax, V.

Kinnaird, L.

Plumer, V.

Lamington, L.

Hailsham, V. (L. President.)

Samuel, V.

Mancroft, L.

Swinton, V.

Marks, L.

Northumberland, D.

Marley, L.

Wellington, D.

Aberdare, L.

Merthyr, L.

Addington, L.

Mildmay of Flete, L.

Aberdeen and Temair, M.

Ailwyn, L.

Newton, L.

Bath, M.

Allen of Hurtwood, L.

O'Hagan, L.

Dufferin and Ava, M.

Amulree, L.

O'Neill, L.

Zetland, M.

Ashton of Hyde, L.

Pender, L.

Belstead, L.

Perry, L.

Airlie, E.

Berwick, L.

Plender, L.

Albermarle, E.

Biddulph, L.

Polwarth, L.

Bessborough, E.

Brassey of Apethorpe, L.

Portsea, L.

Bradford, E.

Cautley, L.

Rankeillour, L.

Carlisle, E.

Clanwilliam, L. (E. Clanwilliam.)

Rea, L.

Denbigh, E.

Ritchie of Dundee, L.

Feversham, E.

Clwyd, L.

Rockley, L.

Graham, E. (D. Montrose.)

Cottesloe, L.

Rushcliffe, L.

Haddington, E.

Craigmyle, L.

St. Just, L.

Lucan, E. [Teller.]

Cromwell, L.

Sandhurst, L.

Midleton, E.

Daryngton, L.

Shute, L. (V. Barrington.)

Munster, E.

Denham, L.

Stanley of Alderley, L. (L. Sheffield.)

Plymouth, E.

Desborough, L.

Radnor, E.

Elphinstone, L.

Stanmore, L.

Rothes, E.

Eltisley, L.

Stonehaven, L.

Scarbrough, E.

Fermanagh, L. (E. Erne.)

Strathcona and Mount Royal, L.

Shaftesbury, E.

Forteviot, L.

Stanhope, E.

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

Templemore, L.

Vane, E. (M. Londonderry.)

Gifford, L.

Waleran, L.

Howard of Glossop, L.

Wharton, L.

Cobham, V.

Hutchison of Montrose, L.

Wigan, L. (E. Crawford.)

Colville of Culross, V.

Illingworth, L.

Wyfold, L.

Resolved in the negative, and Amendment disagreed to accordingly.
On Question, Motion agreed to.

LORDS AMENDMENT.
Page 43, line 21, column 1, leave out ("12½") and insert ("15").
VISCOUNT SWINTON: My Lords, I beg to move that this House doth not insist on the said Amendment.
Moved, That this House doth not insist upon the said Amendment.—(Viscount Swinton.)
On Question, Motion agreed to.

CONSOLIDATED FUND (No. 1) BILL.
Order of the Day for the Second Reading read.
LORD TEMPLEMORE: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a. —(Lord Templemore.)
On Question, Bill read 2a: Committee negatived.
Then, Standing Order No. XXXIX having been suspended, Bill read 3a, and passed.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The Royal Assent was given to the following Bills:

Consolidated Fund (No. 1),

Dominica,

Blind Persons,

Population (Statistics),

Superannuation (Various Services),

National Health Insurance (Amendment),

Cotton Industry,

Housing (Financial Provisions),

Cinematograph Films,

Paisley Corporation (General Powers), Order Confirmation,

Ministry of Health Provisional Order Confirmation (Halifax),

Ministry of Health Provisional Order Confirmation (Nuneaton Extension),

Bombay, Baroda and Central India Railway,

Adelphi Estate.

House adjourned during pleasure.
House resumed.

LICENSING OF ADVERTISEMENTS (SCOTLAND) BILL. [H.L.]
Order of the Day for the Second Reading read.
LORD POLWARTH: My Lords, in rising to move the Second Reading of this Bill I would like to say at the outset that I should never have taken upon myself to introduce such a measure, but the Bill has been produced by the Association of County Councils for Scotland working in conjunction with the Society for the Preservation of Rural Scotland. As I happen at the moment to be president of the County Councils' Association it seems to be my duty to bring in the Bill. The Bill, I may say, has also the support of the Convention of Royal Burghs, a very powerful body in Scotland representing a large number of small towns, and it is also supported by the large cities which already have powers similar to that which it is proposed to give under this Bill. They, therefore, naturally do not wish to have the powers withdrawn. I do not propose to go at any length into the necessity for Scotland obtaining some protection against the aggression of the billposter and the advertiser. That part of the matter will be dealt with more at
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length by my noble friend the Earl of Haddington, who is president of the Society for the Preservation of Rural Scotland.
Since this Bill was introduced in December last a good deal of interest has been manifested in the question, both in England and Scotland, as is shown by the debate in another place and the subsequent appointment of a Committee to deal with the matter. I will refer later to that point, but in the meantime I would like to deal with the question why Scotland requires a Bill for herself. To do so I must briefly refer to the past history of this matter. Your Lordships may be aware that the question of the regulation of advertisements and hoardings was dealt with in Acts of Parliament passed in 1907 and 1925. Both Acts applied to Scotland equally with England, but in practice both these Acts are entirely inoperative in Scotland. They might just as well not be in existence. Scotland at present is without any protection whatever in regard to the sticking up of hoardings and the disfigurement of a great part of her rural beauty. You may ask, why was that? The reason is that while in England bylaws have been passed there are none in force in Scotland. We have not been allowed to get them.
The Act of 1907 provides that any local authority may make by-laws
"for regulating, restricting, or preventing the exhibition of advertisements in such places and in such manner, or by such means, as to affect injuriously the amenities of a public park or pleasure promenade, or"—
this is the important point—
"to disfigure the natural beauty of a landscape."
Under that Act, in 1907 the County of Dumfries applied for by-laws, and in 1908 my own County of East Lothian did the same thing. In both cases the then Secretary for Scotland refused to sanction by-laws on the ground that the actual landscape which it was alleged would be disfigured must be specified. It was found to be practically impossible to specify the actual landscape which would be disfigured. How are you going to do it by any demarcation in map or by-law or in any other way? You could define a public park or a promenade, and say there shall be no advertisements there, but it has been the view of the two counties that that was not enough. We must have a much wider protection against the

521
erection of hoardings, and one might say dangerous advertisements, blotting out some of our best views. In 1919 the County of Roxburgh did get by-laws sanctioned, but it was subsequently explained that they had been passed inadvertently by the Secretary for Scotland, who had omitted to note what was said before to the other counties, that it was necessary to specify the exact locality which required protection. We had always hoped that it might be possible to get a test case out of the Roxburgh by-laws, but we have never been able to get a suitable case. It may be that the advertisers in that district were wary and knew that if they did put up advertisements which disfigured the landscape they could be dealt with and required to remove them.
In 1925 a further Act was passed, which provided for
"… regulating, restricting or preventing … the exhibition of advertisements so as to disfigure or injuriously affect—

(a) the view of rural scenery from a highway or railway, or from any public place or water; or

(b) the amenities of any village within the district of a rural district council; or

(c) the amenities of any historic or public building or monument or of any place frequented by the public solely or chiefly on account of its beauty or historic interest."

That went a little further. It would be possible, of course, to protect the amenities of historic buildings, but the main point—the view of rural scenery—once again we found it impossible to define. East Lothian applied again in 1927 for by-laws under the Act of 1925, but they were met with the same answer: that by-laws in such terms as were proposed would very probably not be upheld by the Scottish Courts. That view was acted upon by successive Secretaries of State for Scotland, no doubt upon the advice of the Law Officers of the Crown from time to time. But in so doing we may claim that the Secretary of State really constituted himself a judicial tribunal. It would have been very much better if he had allowed the by-laws submitted by several counties to be promulgated, and then a test case could have been decided in the Law Courts. If the Scottish Courts held that the definition was not sufficiently precise, and the view was taken that the by-laws must be so framed that everyone should know whether or not they were infringing the
522
by-laws, that would probably be a sound view to take. We think that if a legal decision had been obtained, if the Courts had upheld the by-laws, all would have been well, and if they had refused them it would have been the duty of the Government, or the Secretary of State for Scotland for the time being, to introduce amending legislation to make the whole matter quite clear.
At the same time by-laws were put forward in England, and the County of Somerset put forward by-laws which were sanctioned by the Home Office. At first the Home Office were chary of sanctioning somewhat wide by-laws, but they did sanction by-laws eventually, in the same terms as those which had been asked for by various counties in Scotland. A case was appealed and tried before the Lord Chief justice in the King's Bench Divisional Court, and he said:
"It is true that the council might name specific places if it thought fit, but it is within its powers in saying that 'you must not anywhere within the area which we have to administer erect advertisements which disfigure the natural beauty of the landscape.' In my opinion this by-law dealing with a somewhat ambiguous matter cannot be said to be invalid on account of uncertainty."
Mr. Justice Shearman, in the same case, said:
"Natural beauty is a thing which cannot be defined by specific instances, and the only complaint of the appellants really is that the County Council have not attempted to define the indefinable."
Whether or not the Scottish Courts would have held the same view as the Lord Chief Justice and Mr. Justice Shearman we cannot, of course, state.
But the attitude of the Scottish Office has constantly been to refuse to sanction any of the by-laws submitted by various counties, more or less in the same terms, enabling them to protect the natural beauty of their scenery by ordering the removal of advertisements, of hoardings, which disfigure the natural beauty of the countryside. The result is that at the present time Scotland is entirely at the mercy of the advertisers. We have no protection whatever. Hideous advertisements are rising up in ever-increasing numbers. I am not going to deal with that aspect of the question; other noble Lords will doubtless deal with it who are very much more competent to speak on this whole question than I am. I would, however, point

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out that at the present time these advertisements are rising up in one place after another. Why, and in whose interest, should the motorist, the cyclist, or the humble pedestrian hiking through the country, be forced to look upon these advertisements when he wants to look at a beautiful view beyond? He cannot avoid it, and the humbler the traveller the more continually is this brought before him. You may say that to deny that right is to deny the right of property. In these days, surely, we are all doing that more and more. The Government, in regard to housing schemes and other matters, are directing a great deal of attention to the preservation of the amenities of the country, and quite right it is that they should do so.
I do not for a moment suggest that all advertisements are to be taken away. Advertisement hoardings, I suppose, have their place in these times and play a not unnecessary part in our commercial life. But what is proposed is to regulate where they are. There is a right place and a wrong place for everything. In many cases if the hoarding were removed to a somewhat different spot it would be at least comparatively inoffensive. At present there is no opportunity of dealing with the matter. In another place it was suggested, and I think quite rightly, that there should be an opportunity of negotiating before the hoarding was put up. It is very much easier—this is a strong point in favour of our Bill—to negotiate beforehand, if anyone wishes to put up a hoarding, and to say "No, do not put it up here, but if you will agree to put it up there we shall not raise any objection." It is much better and easier to do that than to allow the owner to put it up and then tell him to take it away.
In view of the Committee which has been specially appointed to deal with this matter, it has been suggested elsewhere that negotiations should take place and that an amicable settlement should be brought about between the licensing authority and the advertising body. But I should like to point out that this is impossible without by-laws behind you. A man may be very willing to negotiate and come to terms as to what he will do if he knows that you have the power behind you to enforce your wish, and that if he does not agree and puts up his
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hoarding in the wrong place he may be made to remove it. But if there is no power behind you, it is quite impossible to get negotiation on this matter. As a matter of fact, the local authority in Scotland has no knowledge whatever when hoardings are going to be put up. Somebody may wake up one day and find a hoarding, but that is all; it is there. This Bill proposes that all such advertisements should be licensed. That would mean, of course, that the application for the licence would come before the local authority or the special committee appointed to deal with the matter, and then would occur the opportunity for coming to terms and arranging where the erection should be placed and where it should not. It would give opportunity for dealing with the matter in an amicable way, and I believe that in nine out of ten cases settlement would be reached.
I have mentioned that the large cities already have the power of licensing: Glasgow, Edinburgh, Aberdeen and, at all events to some extent, Dundee. Your Lordships may take it that these four large cities—Glasgow has over a million people—represent pretty well half the population of Scotland. The number of advertisement signs and hoardings put up in these cities must be infinitely greater than it would be in any county. The billposters are afraid that the passing of this Bill will diminish employment, and diminish their work, but I am very doubtful whether it would. I do not think it would necessarily reduce the number of hoardings or advertisements. It would, however, place them differently, and it might conceivably lead to an increase, because if they were less conspicuous perhaps more advertisements would be required to meet the case. At all events in the cities the control of licensing has not diminished the number. In Edinburgh in 1926, when they obtained powers under their Private Act, there were 324 licences. Now there are about 500 in force, and the power to regulate these advertisements has saved our beautiful capital city of Scotland from appalling disfigurement. Had it not been for that power we should have had sky-scraper advertisements and flashing lights along our beautiful main street and up towards the Castle. That has been stopped by the powers which Edinburgh obtained under her Private Bill.

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I will just add, with reference to the large cities, that since 1931 only sixteen cases out of 571 decisions were appealed, or less than 3 per cent., and only five of those appeals were upheld, or less than 1 per cent. The Edinburgh Act seems to have worked very well indeed, but there are others who can speak and who will no doubt give evidence on this matter. I do not think I need trouble your Lordships with the figures for Edinburgh any further. It is clear enough that the number refused is not very great, that very few refusals have been appealed against, and that in still fewer cases have the appeals been sustained by the Sheriff.
To pass to the Bill itself, Clause 1 provides:
"It shall not be lawful to erect, exhibit, fix, maintain, retain or continue any advertisement, whether existing at the commencement of this Act or not, upon any land, building, hoarding, wall, tree, fence, gate or elsewhere except on such sites, buildings, hoardings or other places as the local authority may in writing license, and such licence may be granted for such period not exceeding three years and under and subject to such terms and conditions to be therein prescribed as the local authority may deem proper."
Your Lordships may say that those terms are very drastic. They are not more drastic than, but practically identical with, the powers in the cities at the present time. If they are being carried out in large cities it will be very much easier to deal with them in rural districts, and as the licences are to continue for three years in the first instance, it will only be necessary to deal with new cases, which will not be very numerous.
There are not many exceptions to Clause 1. The first is in subsection (2):
"A licence shall not be necessary for any advertisement or site for advertisements (not being illuminated advertisements) of the classes following (that is to say):—

(i) Advertisements exhibited within the interior or in the window of any building;

(ii) Advertisements other than illuminated advertisements relating to the trade or business carried on within the land or building upon which the same are placed (and not being sky-signs) or to any sale, feu or let of such land or building, or any effects therein or to any sale, entertainment or meeting held in or upon the same."

If a bazaar is being held at a public hall there is nothing to prevent posters being stuck up on each side of the door, drawing attention to it, and if a house is for sale there may be a hoarding erected on the premises. In the exceptions we have provided for all reasonable cases.
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The third exception relates to newspapers:
"(iii) Advertisements of newspapers or periodicals and newspaper or periodical contents bills and bill boards exhibited within or in the window of or without any building in which newspapers or periodicals are printed, published or sold."
That was put in at the instance of the Newspaper Society. The fourth exception deals with
"advertisements exhibited within any railway station or upon any wall, bridge or other property of a railway company, except any portion of the surface of such wall, bridge or other property fronting any public street, road or way."
It has been suggested—I do not think there will be any objection—that docks should be allowed to share in the exceptions, as they generally do, of the railway companies; and of course advertisements sanctioned by any Act of Parliament, and traffic signs, are also excepted.
With these provisos there will be opportunity for that negotiation which was mentioned in another place, and I believe was mentioned at the conference recently held. Indeed that is the very essence of licensing. If the proposed advertiser has to come to the local authority and say, "I want to put up a hoarding here, and there," it will be examined by the committee, and the result of the negotiations would usually—perhaps not always—be satisfactory. At all events this is a much better method of proceeding than all that can be done under an Act and by-laws to require the removal of offending advertisements. We have to deal not only with big firms who erect hoardings but with what I might call the casual billposter, the man who goes about with a can and a brush and plasters posters up on your gate posts, trees or walls. I had a case recently where a man went so far as to post bills on the base of a war memorial cross. Fortunately there was a member of the Legion there to tear it down.
The matter, as I have said, has been considered by the County Councils' Association from time to time, and all counties are in favour of the Bill and give it their unanimous support. In 1928 a Committee was appointed, and they took the opinion of Counsel, a very eminent lawyer in Scotland, who held the view that the by-laws might very likely not be upheld in a Scottish Court. That is to say he agreed with the Law

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Officers of the Crown. But he went on to say that
"while schedules could define public parks, pleasure promenades, etc.… in the case of landscapes of natural beauty, rural scenery and villages, the attempt to define the indefinable presents as always an almost insuperable difficulty."
In those words he, of course, adopted the words of Mr. Justice Shearman. This eminent lawyer went on to say:
"I confess that the search for a practical method of dealing with this problem has occasioned me much perplexity. The best suggestion which occurs to me for dealing with the matter is to provide by means of a code of by-laws for some system of licensing advertisement sites."
That is precisely what this Bill proposes to do. It proposes to give the local authorities power to licence advertising sites, and the eminent lawyer who gave the opinion which I have just quoted was Mr. Cooper, who is now the Lord Advocate. I very much hope that the Lord Advocate has not changed his views since the date when he gave that opinion, and that he will support the proposals for a system of licensing.
I hope very strongly that Scotland at all events will be allowed to get this power. We are unanimous in Scotland that without it nothing effective can be done. It will not do simply to say that no advertisements shall be allowed within a certain distance, say, from point A to point B. It might well happen that on one side of the road the advertisements were comparatively innocuous, while on the other side they spoilt a beautiful view. Take the case of a road along the sea coast where the view can very easily be utterly spoilt; or a road in moorland country, where you may want to have a view clear on both sides. If we are not to have licensing, what else is to be done? I earnestly hope that we shall be allowed to have a Second Reading of this Bill, and that Scotland may get its licensing; but I would suggest that the Committee stage might be deferred until the Special Committee has reported on the matter. They will have evidence before them. But we did feel that it was very desirable to have this debate, and that the definite proposals for licensing, which alone will satisfy Scotland, should be put before the House. I beg to move.
Moved, That the Bill be now read 2a.— (Lord Polwarth.)
THE EARL OF HADDINGTON: My Lords, I wish very warmly to support this Bill. I do so as representing the Association for the Preservation of Rural Scotland, which works, like its English counterpart, to protect the amenity of our Scottish countryside. I am quite sure that this subject will have the sympathy of all your Lordships, but I would remind you that Scotland is a very beautiful country and her scenery is probably the greatest asset she possesses. We look on it as a heritage which it is our duty to hand down unspoilt to those who come after us. What will future generations say of us if it is we who have betrayed that trust? By neglecting this duty we feel that you would be doing a disservice to everybody—both to the people who live in the country and have pride in their surroundings, and also to millions of townsfolk who look to the country as a means of escape very often from the monotonous, rather dreary conditions in which they have to live, and who, when they come to the country, expect to see it as the Creator made it and intended it to remain.
There is no doubt that of all factors which tend to injure the amenity of the country this promiscuous advertising is far the most acute. We all realise that there must be a certain amount of advertising for trade purposes. But as my noble friend has said, we think there is a right place for everything, and an advertisement which may often brighten up, and indeed beautify, a dingy spot in the town would have a very different affect if it were put in the open country. My noble friend Lord Polwarth has dealt very fully with the provisions of this Bill, and I would only like to speak on the necessity which exists to-day in Scotland for some effective legislation, because, as he has said, at the present moment we have absolutely none. It is the very nature of the Scottish scenery which makes this indiscriminate roadside advertising so very injurious to our landscape. Scotland, or the most of Scotland, is not an enclosed country: to use a Western expression it is a country of wide open spaces, broad vistas, panoramas where the eye can see for miles around, and where one unsightly advertisement may injure the scenery from a thousand different viewpoints. It is for that reason that any by-laws which would be acceptable to the Scottish Office would

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be utterly useless for our purpose. In effect, what the Scottish Office say is this: "We will give you regulating powers over certain circumscribed, scheduled beauty spots." Most Scottish counties are beauty spots in themselves, and it is manifestly impossible to ring off what is and what is not to be a beauty spot in so wide an area. Indeed, I do not believe that that was the object of the Advertisements Regulation Acts of 1907 and 1925, which were made to prevent the disfigurement of the landscape as such, and not of mere points on the map.
Let us see for a moment how much this indiscriminate advertising has recently grown in Scotland. To be quite frank, we have not yet quite reached the stage which was very graphically described by an honourable member in another place, Mr. Strauss, in a recent debate on amenity. Mr. Strauss said:
"I recently drove from Brussels to Antwerp, and continuously on both sides of the road there were enormous advertisements which did not allow you to see any of the country at all, on one side or the other, during the whole journey."
That was a journey of about forty miles. What a delightful drive Mr. Strauss must have had! Well, we are not quite as bad as that yet, but does it not point a warning finger to what may happen, and what will happen in this country if this menace is not very soon checked? I wish I could show your Lordships some photographs which I have here, collected from various parts of Scotland. I am sure they would move you to tears, if you could see them, to think that such things were possible. If you saw the subjects of the photographs on the ground it would move you to entire wrath that such vandalism was permissible in this country. And yet we are obliged to stand by, impotent to have them removed, or to prevent others being put alongside them.
May I try to describe one or two examples? Drive north into Scotland, and you do not have far to go before you meet them. At most of the principal crossings over the Border a certain firm has seen fit to advise travellers that they are in Scotland, and of course when they are there they must shop at that firm's particular establishment. Huge, hideous advertisements have been erected in some of the most beautiful parts of our country for the purpose. I will give them credit for this, that they have had the good sense to put them up
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on the Scottish side of the Border, because they know that there they are safe. If they put them fifty yards south they would be in England, and they would be liable to be removed under the English by-laws. Again, travel up to Fife. There we see a magnificent panorama overlooking St. Andrews and the Bay and the North Sea—or rather we do not see it, because it is completely hidden from one's sight at one of the best vantage points by various hoardings. I have photographs here. Again the Great North Road along which many of your Lordships have doubtless travelled, over the crest of the Lammermoor Hills, reaches its highest point at Soutra Hill and emerges on fine open moorland, typical of Lowland Scottish scenery. This road has become a veritable nest of hoardings. A few years ago there were none. The day before yesterday I counted nine, and in a year or two there may be ninety; there is nothing in the world to prevent it.
As I say, and as my noble friend Lord Polwarth has said, there is nothing to prevent anybody putting up any kind of advertisement he pleases in Scotland provided he can find a piece of ground on which to do it. Surely this is an extraordinary situation. But I am very glad to see that His Majesty's Government have now become aware of the fact, and that only last month they appointed a Committee of inquiry to look into the whole question of advertisement regulation. Representatives of various interested parties were invited to this conference — representatives of local authorities, advertising interests, and amenity societies—and with the exception, perhaps, of a few of the advertisers, opinion was absolutely definite that more stringent regulation was necessary, the only difference of opinion being what form that regulation should take. My noble friend Lord Polwarth has put the case for licensing so admirably that it is not necessary for me to enlarge upon it, but I would just like to say that to my mind any other form of legislation so far devised has this great drawback, that it allows an offending advertisement to be put up and allows the scenery to be spoiled before anything can be done to check it. The public may then have to endure an offending advertisement for a year or more before a prosecution can

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take place, even if it is possible to get a successful prosecution.
Safeguards of course, there must be to any system of licensing—adequate safeguards—because licensing must never become a source of remuneration to the licensing authorities. That would be easily got over by restricting the licensing fees to the cost of administration. Another safeguard would be that the advertiser would have the right of appeal to the Sheriff. Opponents of the licensing system will answer that that system is too drastic, but I cannot see why it should be too drastic as long as you have these adequate safeguards. As has already been stated, the system is in force in Edinburgh and Glasgow, and I cannot see why what is so suitable for the towns should not be equally applicable to the country. At any rate, Scotland with her peculiar type of scenery is worthy of the fullest consideration, and I do not see why, if necessary, she should not be allowed separate legislation of her own of a kind suitable to her needs.
THE DUKE OF MONTROSE: My Lords, I rise to support in a word the noble Lord's Motion for the Second Reading of this Bill. I do not think anyone can object on principle to this Bill, at least no one with any love of beauty and rural scenery, because it is quite obvious that the continual growth of unsightly hoardings and advertisements must demand control somehow. I do not visualise any better way of controlling these things than by a Bill of this nature. The Bill in my opinion wisely places the control of the licensing in the hands of the local authorities. After all, the local authorities lay out the roads. They have to provide the finance for the roads, and therefore they would seem to be the right people to control the beauty of the roads. Some discrimination, however, will have to be made as regards the advertisements which are licensed. It would be a pity to be severe on hotel advertisements, because we are very anxious in Scotland to develop our touring and travel, and the hotel advertisement is not really a trade advertisement; it is really a national service for visitors, tourists, and so forth.
The only real criticism I have to make is that I do not see any mention of what the licence fee is to be. It would be an error if we left it to each local authority
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to fix its own licence fee. After all, when you take out a licence for a dog or a firearm or a car you have to pay a statutory licence fee, which is the same all over the country. In this case the licence fee should also be a statutory fee, the same all over the country, whatever it may be. Of course, the fee would have to be based on the measurements of the advertisement, by the square foot or the square yard. Otherwise I cordially support the Second Reading.
THE UNDER-SECRETARY OF STATE FOR WAR (LORD STRATHCONA AND MOUNT ROYAL): My Lords, the noble Lord, Lord Polwarth, and those who followed him have made out a stirring case for this Bill with which few of us—certainly few of us Scotsmen—will wish to disagree. Since the Bill was introduced the question of advertisement regulation has been discussed, as your Lordships have already heard, in another place, and there was general agreement, in view of the importance and complexity of the subject, that a conference should be called of all the interests concerned so that the questions at issue could be discussed and definite practical steps taken to deal with the problem. That conference was held at the Home Office last month, and the noble Earl, Lord Haddington, has told your Lordships that as the result of that conference it was arranged that a Committee of the representatives who attended that conference should be formed to consider the matters discussed and report to the full conference.
I understand that this Committee, which includes representatives of Scottish local authorities and of the Association for the Preservation of Rural Scotland, will hold its first meeting very shortly, and will endeavour to find a solution which would be acceptable to the various interests concerned. In these circumstances the noble Lord responsible for this Bill may doubt whether this is an opportune moment to proceed further with the present Bill in advance of the consideration of the whole matter which has been undertaken by the Committee. Perhaps also I may give those noble Lords an assurance that the proposals embodied in this Bill will receive the full consideration of the Committee.
THE EARL OF CRAWFORD: My Lords, may I suggest to the Government

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that the most convenient procedure would be for the House to accept the Second Reading of this Bill and for my noble friend Lord Polwarth to postpone the Committee stage until this Committee has concluded its inquiry, if the noble Lord will agree to this.
LORD STRATHCONA AND MOUNT ROYAL: I agree to that with pleasure.
On Question, Bill read 2a.

BRITISH OIL PROPERTIES IN MEXICO.
LORD NEWTON LORD NEWTON asked if his Majesty's Government propose to take any action in connection with the reported decision of the Mexican Government to expropriate British oil properties. The noble Lord said: My Lords, in putting this Question I am of course aware that it has been put in another place, but I think it possible that my noble friend may welcome an opportunity to make a fuller statement on the point. Although it is customary to make abject apologies for speaking at such an hour, I do not think it would be out of place if in a few words I explained what the situation is. Anybody knows that for many years past there has been serious labour trouble in the Mexican oilfields, although the workers are paid 50 per cent. more than the workers in any other industry. These disputes reached a crisis last year, and the result was that it was agreed to appoint what was termed, I think, a Labour Control Commission which was to issue an award. The award was delivered, I think, last December, and I cannot characterise it as other than a purely fantastic one.
The amount was not calculated upon the statements of the companies but it represented what this Committee thought the companies were able to pay, and the sum they arrived at was so stupendous that the companies would have had no profits at all had they paid it and would have become bankrupt. I should also add that the concessions which were forced upon them in favour of the employees were much greater than those that exist in the most highly developed industrial States. I would like to draw special attention to this, that these onerous conditions were not imposed upon any Government undertaking. Government undertakings were exempt from
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anything of the kind. The companies naturally being staggered with this demand, applied to the Supreme Court for an injunction, but, surprising to say, the Supreme Court refused the injunction, stating that matters of profit and loss were of no concern to them at all, although the whole dispute related to profits. That being so, the companies rejected the award, and on the 18th March the properties worth £80,000,000, divided between the English and American companies, became the property of the Mexican Government. I should like also to point out that there was no question of labourism or humanity in connection with this movement, because it has been explained by the Mexican Government that the workers in future will be much worse off than they were before and that in all probability their wages will be lowered.
There is only one thing that surprises me in connection with this matter and that is the statement made by the American Minister, Mr. Daniel, that the action of the Mexican Government came so to speak as a bombshell, that nobody had expected anything of the kind. I do not profess to be more farseeing or perspicacious than anyone else, but when I was in Mexico a year ago, I had not been there twenty-four hours before I resolved to sacrifice my holdings, which, fortunately, were of a modest description, at once, and I congratulate myself that I did so. I do not think that people here have ever grasped the real facts with regard to Mexico. Mexico is now a semi-Bolshevist State, although, curiously enough, it is on very bad terms with the Moscow Government, and I do not think either State is diplomatically represented in the other. But their practices are very much the same, and there has been an increasing disposition in Mexico, which cannot be ignored, to confiscate private property during the last few years. In fact, the country is passing through a sort of social revolution which is no doubt a reaction from the autocratic government of President Porfirio Diaz, who left the country, I think, in 1911. Ever since then the legislation has become more and more advanced, and continuous statements have been made by public men; one was recently made by the Under-Secretary for Foreign Affairs that he looked forward to the day when all foreign capital would be eliminated from the country.
It would be a great mistake to suppose that this action of confiscating the property of the oil companies is an isolated transaction. It is nothing of the kind; it is all part of the system which I have endeavoured to describe, which consists in apparently legally appropriating private property. Perhaps if you are going to be robbed it is more pleasant to be robbed in a legal way than that it should be done at the muzzle of a gun or the point of a bayonet, but the results are exactly the same in the long run, and if the Mexican Government continue their present policy private property will practically disappear. I would also point out that the statement which I observe was made by the Minister who replied for the Government in another place is of a somewhat misleading character. He said he desired to draw particular attention to the fact that this act of expropriation applied only to oil and was not going to be applied to anything else. That is a statement made by President Cardenas. I do not wish to asperse President Cardenas or anyone else. I believe him to be a genuine philanthropist of a somewhat unpractical nature, but his statements vary considerably, because a short time ago he was informing his countrymen that foreign capital was a great benefit to them and that it would be a great mistake to get rid of it.
One may well ask oneself why the oil companies should be attacked at all. They have been an enormous benefit to the country; they have created a great portion of the wealth of the country, and the people they employ are better treated than anybody else. I suppose that the mere facts that they are rich and that they are also foreign constitute an irresistible reason for attacking them. But, as I said before, it is a great mistake to suppose that confiscation is going to stop at oil. Every Government is entitled to produce what legislation it likes, and the foundation of much of the trouble at the present day is a law which was passed in 1936 under which the Government is authorised to expropriate private property whenever it is done for the purpose of the better distribution of wealth. That covers everything. It does not apply to oil only but to everything you can think of. For that reason I think the statement made in another place rather of a misleading nature.
The question is, what are we going to do about it? I am afraid that the chances of successful action upon our part are somewhat doubtful, but what I do feel very strongly is that if we are going to make any stand at all we ought to make it in conjunction with the Americans who are affected in precisely the same way and who are in a much better position to put pressure on the Mexican Government than we are. Unfortunately, in spite of the effusive protestations of love and friendship which are given vent to at Pilgrims' dinners and similar gatherings, the American Government have never shown particular zeal to work in conjunction with the British Government for a good many years past. I hope this particular case may be an exception, and I go so far as to say that I should be inclined to think that unless we can secure co-operation with the Americans, or unless we follow their example, whether they are acting with us or not, the chance of our doing any good is very remote.
Every country is entitled to its own legislation and nobody has the right to interfere so long as that legislation, injurious as it may be, is only applied to the subjects of that country. But when it comes to a question of foreign subjects being unfairly treated or being discriminated against, then it is the duty of their Government to stand by them and do what they can for them. I say again, that now is an occasion upon which something has got to be done. I hope the noble Earl will reassure me upon this point, and when he is answering me perhaps at the same time he will tell me what is being done in connection with the employees of the two companies, who must be in a very distressed state at the present moment.
THE DUKE OF MONTROSE: My Lords, I am very glad that the noble Lord has asked this Question, and I hope that the reply of the noble Earl will be that the Government are going to take a very strong line, because the Mexican position is having a very bad effect upon oilfields in neighbouring countries, in Venezuela and in Trinidad. If it should get about that the British Government are weak and are not going to stand by the rights of their investors in overseas industries it will encourage the natives to take action. I may say that whereas in Trinidad we had hoped to co-operate and carry out the

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recommendations of the recent Commission, the natives have already delayed action and are conferring with a view to taking strike action, to seize the oilfields and follow what has happened in Mexico. Therefore I hope we shall take a strong line. We draw from Mexico 176,000,000 gallons of oil a year, which represents 6 per cent. of our requirements in this country. If by unfortunate weakness we lose that supply, where are we going to get that oil from? Over and over again I have tried to emphasize in your Lordships' House that it is one thing for us to put our whole trust for the defence of the country in imported oil and another thing to be quite sure of those supplies. So I hope that the noble Earl will say that we are going to take a strong line.
LORD AILWYN: My Lords, I rise only to support in as few words as possible what has fallen from my noble friend and from the noble Duke opposite. It is in my estimation quite impossible to exaggerate the seriousness of the situation so eloquently described by my noble friend and the noble Duke opposite or the implications arising therefrom. It seems to me that it is an illustration of the obvious fact that financial control and physical control are two completely different propositions. What guarantee have we, after what has just happened in Mexico, that the same thing is not going to happen in other parts of the world? One wonders, a little grimly perhaps, whether this Mexican incident may administer a slight jolt to the Government's apparent complacency regarding the security of our oil supplies in war time. I will not detain your Lordships by attempting to develop this argument any further. Any further development can be left to the debate next week in your Lordships' House on oil supplies and the findings of the Falmouth Committee. I only wish now to associate myself wholeheartedly with what has been said by my noble friend and by the noble Duke opposite.
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF PLYMOUTH): My Lords, I need hardly assure your Lordships that His Majesty's Government are fully alive to the seriousness of the position which has arisen in regard to this matter. In answering the noble Lord who put this Question, I think it might be helpful if I were to explain
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in somewhat greater detail the circumstances which have led up to the present position. The British oil properties affected by the Expropriation Decree of the 18th March of the Mexican Government are those of the Mexican Eagle Oil Company, a Mexican registered company of which the capital is almost entirely in British hands. This company has operated a number of concessions covering in recent years some 65 per cent. of the oil production of Mexico; together with various American owned companies whose interests covered approximately 30 per cent. of Mexico's oil production, it involved a foreign investment in the Mexican oil industry representing many millions of pounds.
The decision of the Mexican Government to expropriate these properties has occurred in the following circumstances: Following prolonged discussions between the oil companies and the Workers Syndicate regarding a standard collective contract put forward in November, 1936, by the Syndicate, a strike took place in the oilfields on May 17, 1937. In the following month the Syndicate filed an economic suit, which included some claims, which can only be described—as the noble Lord has already described them—as fantastic, against the companies before the Federal Board of Conciliation and Arbitration, who appointed three experts to examine the workers' claims. In their report, which was completed on August 3, the experts alleged that the companies had misrepresented their profits. They declared that the financial situation of the companies justified their acceding to the demands of the workers for increased wages and other benefits up to an annual total of 26,000,000 pesos. The findings of the experts also included a number of proposals for changes in the administration of the oilfields, which the companies claimed would make it virtually impossible for them to control the running of the industry. These proposals included the replacement of all foreign technical staff within three years.
On August 19 the hearing of the economic suit opened before Section 7 of the Federal Board of Conciliation and Arbitration whose verdict, published on December 18, proved to be even more unacceptable to the companies than the findings of the experts, which it substantially endorsed. The Board ordered an additional annual amount to be distributed

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to the Syndicate, which it had estimated, like the experts, at 26,000,000 pesos a year, but which the companies claimed would in practice amount to over 40,000,000 pesos on the basis of the detailed recommendations contained in the verdict. The Board also imposed retroactive payments, which the companies estimated would increase their liabilities in 1938 by an amount exceeding 65,000,000 pesos, or about equal to the whole of their profits in the past three years. The companies consequently appealed to the Mexican Supreme Court on December 28 for a stay of execution. At the same time they proceeded to conduct negotiations with the Syndicate and the Labour Board with the object of arriving at a solution by amicable discussion. These endeavours failed, and on March 1 the Supreme Court, who had declined to examine the financial capacity of the industry, rejected the appeal of the companies and ordered them to comply with the award. There followed a brief period during which it at times appeared possible that an eleventh-hour compromise might be achieved. Indeed, as late as March 17 the Labour Board announced that the execution of the Supreme Court's verdict would be postponed for a further five days. This announcement was subsequently withdrawn, and a decree of expropriation was published on March 18.
Throughout the various phases of the dispute His Majesty's Government, who refrained from intervening with the Mexican Government so long as the case was sub judice, have maintained the closest contact with the management of the Mexican Eagle Company, whilst His Majesty's Minister in Mexico City has been in constant touch with the companies' local managers. Following upon the announcement of the Supreme Court's verdict, His Majesty's Minister at Mexico City officially drew the attention of the Mexican Government to the profound anxiety of His Majesty's Government at its probable consequences to the interests alike of the British shareholders and of all the company's employees. He also expressed the hope that means would still be found to reach a settlement both
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satisfactory to the Mexican Government and equitable to all the interests concerned. He also personally interviewed the Mexican President on the subject. It is highly regrettable that these representations should have proved of no avail and that, notwithstanding the untiring efforts of the companies to find a compromise solution, the Mexican Government should have chosen the course of expropriation. Following upon the publication of the expropriation decree, His Majesty's Government informed the Mexican Government that they formally reserved their rights. The resulting situation is being carefully examined with a view to deciding what steps can most appropriately be taken to safeguard the interests of the British shareholders involved.
In addition, His Majesty's Government have been in contact with the United States Government on the matter. I am afraid, however, that at the moment I am not able to say anything more. Your Lordships will no doubt have seen a report which is published in this evening's newspapers to the effect that the United States Government have sent a stern note to the Mexican Government in connection with this matter. I am, as a matter of fact, unable to confirm that officially, but I assure your Lordships that, as I say, His Majesty's Government have been in contact with the United States Government in connection with the matter. The noble Lord asked me whether I could give him any information as to the fate of the employees of this company. I am in a position to tell him that they and their families have been evacuated and that the company involved is looking after their interests and, indeed, making provision for them for the time being. I am afraid that I am unable to say more than that at the moment, but I can assure your Lordships that His Majesty's Government will take careful note of the views that have been expressed here this evening and that they intend to follow up the matter as closely as possible.
House adjourned at a quarter past seven o'clock.