Lords Sitting of 23 May 1938

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
SURREY COUNTY COUNCIL BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
SHEFFIELD GAS BILL, [H.L.]
Read 3a, and passed, and sent to the Commons.
CHICHESTER CORPORATION BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.

CZECHOSLOVAKIA.
LORD SNELL: My Lords, I beg to ask His Majesty's Government whether they have any statement to make on foreign affairs.
THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (VISCOUNT HALIFAX): My Lords, I would propose first to give a very brief summary of events of the past few days that have tended to show that the situation in regard to the German minority in Czechoslovakia might be entering on a dangerous phase and then to indicate the action taken by His Majesty's Government. On May 19 rumours began to gain currency of German troop movements in the direction of the Czechoslovak frontier. The German Government informed His Majesty's Ambassador on the following day that there was no foundation for these rumours, and they gave a similar assurance to the Czechoslovak Government. On May 20 a number of serious incidents occurred in Czechoslovakia.
On the morning of May 21 the Czechoslovak Government intimated that they were calling up one class for training and for the purpose of maintaining order in the frontier areas. On the same day, an unfortunate incident took place in which

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two Sudeten Germans lost their lives in an incident near the frontier, the full facts of which are not yet entirely clear. The Czechoslovak Minister for Foreign Affairs informed the German Minister of this incident and told him that disciplinary measures would be taken against those responsible. On the same day—May 21—His Majesty's Ambassador in Berlin received further assurances from the German Government that stories of German troop movements were completely unfounded. The Czechoslovak Minister for Foreign Affairs informed His Majesty's Minister in Prague on May 21 that a formal invitation had been sent to Herr Henlein to negotiate on the Nationality Statute, which had been approved on the 19th by the Czechoslovak Government. But on that same day—May 21—it was announced in the Sudeten Press that the Political Committee of the Sudeten German Party had decided to inform the Prime Minister that the Party were not in a position to discuss the Nationality Statute so long as peace and order in the Sudeten districts and, above all, the constitutional rights of freedom of opinion, of the Press and of assembly, were not guaranteed. I now learn, however, that it has been arranged for Herr Henlein to see the Czechoslovak Prime Minister either to-night or to-morrow morning.
In face of this situation, the principal concern of His Majesty's Government has been to use all their influence, wherever it could be effective, on the side of restraint in word and deed, while keeping open the way to peaceful negotiation of a satisfactory settlement. With that object, they have represented to the Czechoslovak Government the need of taking every precaution for avoidance of incidents and of making every possible effort to reach a comprehensive and lasting settlement by negotiation with the representatives of the Sudeten Party. In this, His Majesty's Government have enjoyed the full co-operation of the French Government. The Czechoslovak Government have responded to this representation with an assurance that they appreciate the interest which His Majesty's Government have manifested in this question, and are fully resolved to seek an early and complete solution. His Majesty's Government have represented to the German Government the urgent importance of reaching a settlement if European peace is to be preserved and have expressed
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their earnest desire that the German Government would co-operate with them in facilitating agreement. His Majesty's Government have at the same time informed the German Government of the advice tendered in Prague and of the assurances received from the Czechoslovak Government. The German Minister for Foreign Affairs stated that he welcomed the efforts being made by His Majesty's Government and that the German Government fully shared their desire to see negotiations succeed. At the moment the situation appears to have somewhat eased, and I understand that the elections passed off quietly yesterday without untoward incident.

MARRIAGES PROVISIONAL ORDER BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
CHILDREN AND YOUNG PERSONS BILL.
Brought from the Commons; read 1a; and to be printed.
LEASEHOLD PROPERTY (REPAIRS) BILL.
Brought from the Commons; read 1a; and to be printed.
EVIDENCE BILL, [H.L.]
Returned from the Commons, agreed to.
RADCLIFFE FARNWORTH AND DISTRICT GAS BILL.
  ROMFORD GAS BILL.
  Reported with Amendments.
  PATENTS, ETC. (INTERNATIONAL CONVENTIONS) BILL, [H.L.]
  Returned from the Commons, agreed to, with Amendments.

  LIMITATION BILL, [H.L.]
  THE LORD CHANCELLOR (LORD MAUGHAM): My Lords, I beg leave to introduce a Bill to consolidate, with Amendments, certain enactments relating to the limitation of actions; and to move that it be read a first time.
  Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
  On Question, Bill read 1a and to be printed.

  BOURNEMOUTH CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL.
  House in Committee (according to Order) on re-commitment of the Bill: Bill reported without amendment

  DEFENCE: PROPOSED MINISTRY OF SUPPLY.
  LORD MOTTISTONE LORD MOTTISTONE moved to resolve, That it is essential in the interests of national security that a Ministry of Supply for the three Defence Services be established forthwith. The noble Lord said: My Lords, in moving the Motion which stands in my name I will first say what it is that it is not designed to do. It is not conceived in any feeling of hostility to the Prime Minister, whose efforts in the cause of peace I acknowledge, as does every man in this country with some qualifications perhaps on the Labour Benches. We are all agreed, I understand, in this, that we should seek peace and the effective strength necessary in order to attain it. After thirty-seven years of public life, I may say that I have never found myself in such complete agreement, or perhaps as some of my friends would say so little at variance, with any Prime Minister in all that time as with the present Prime Minister.
  Nor is the Motion conceived in any spirit of hostility to the Minister for Co-ordination of Defence, Sir Thomas Inskip. I am quite sure that he has done his utmost to co-ordinate defence, and done a lot of work which badly needed doing. Nor do I in this matter criticise the three Defence Services, so far as their heads and Chiefs of Staff and fighting personnel are concerned. I am sure they have been doing all that was possible, but what they have been trying to do is a job for which they are not fitted. The House will forgive me if I refer to a remark made to me by one whose memory we all revere, Mr. Alfred Lyttelton. The first time he played golf with me, when handed a putter he remarked "What a game. I am asked to do a job with a weapon wholly unadapted for the purpose." I submit, and shall try to prove, that any ordinary Department, constructed as it
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  is, cannot be effective in doing this business of supply in times of stress, or really even in normal times. I would add also that this Motion emphatically is not an attack upon any section of the Opposition for their failure to support rearmament at the right time. There is a great deal to be said on both sides in that controversy, but that is all past and done with. We are not now interested in the past, which we cannot help, but in the present and in the future, and so I venture to propose this Motion to the House.
  First of all your Lordships will say: Why bring this up, seeing that it was debated and decided two years ago, in May, 1936? To that there are certain very obvious answers. Times have changed, as we found when Lord Halifax addressed us for a few moments just now. One cannot fail to note the progressive deterioration in the chances of peace in the last two years; if we could afford to postpone the matter then, we cannot afford to do so now. There is one point on which I would like to ask Lord Zetland, who I understand is going to be good enough to reply on this debate, for full information, so far as he can give it in the public interest. We have been told in the newspapers, and also here by the noble Marquess, Lord Lothian, of a very rapid speeding up of armament production by foreign Powers. Indeed I shall refer to that in a moment, to give very striking figures. I am told on all hands that in every country in the world—even in the little ones, and especially in the big ones—there has been a remarkable speeding up in the last two years. That brings me to a point that I should like to make. I would beg my noble friend Lord Zetland not to refer to the arguments of 1936 for hardly any of them apply. New-facts have arisen in all sorts of ways, and it is about those that we should like information.
  But there is yet a third reason why we ought to review this matter and speed up our arrangements if we can. Coming back from South Africa with a fresh mind to look at my countrymen again after a short absence, nothing surprised me more than to find that the whole people, especially the young people—quite apart from political Parties—had suddenly turned from pacifists into violent belligerents. I am sure your Lordships have noticed it. Everybody now, whether Labour, Liberal or Conservative, has given up saying he

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  does not want to fight anybody, and many of them want to fight everybody—it does not matter whether it is Japan, or Germany, or Russia, or Italy. They openly say so. It is a very formidable fact. The night before last to refresh my mind, as the noble Earl, Lord Baldwin, does, I was reading Midshipman Easy, and I came across the account of the most famous duel in history, a three-cornered duel, in which the remark was made by that combative young midshipman, "All right, I will give you full satisfaction." "One at a time," said the Bo'sun. "No," said the enraged midshipman, "both together and at the same time." That is the attitude of mind of vast numbers of our fellow-countrymen who until a short time ago were anxious to keep out of war. Now they want to be in it, and if that is so, while we hope they will come to a more sober frame of mind, it does concern us to be quite sure that we are strong enough to fulfil our obligations.
  So much for emotion, and I will endeavour to persuade your Lordships in a few moments that the remedy that I propose now, in May, 1938, is the proper one. I said just now that the past does not interest us, because we cannot alter it, but in this matter of munitions supply the past must interest us very much, because all the factors which concern us are precisely the same now, and all the failures that took place in 1915 are in fact taking place now. I am not standing here to-day to make an enumeration of those failures. We all know that we have fallen behind in many respects. I am speaking not only of the air. In many respects the programme is behindhand. I do not wish to make an attack on anybody, but I will give one instance to show the total failure of what I may call the co-ordination of defence. It is a small matter, but it should concern those who want to maintain the peace. I know of a certain battery—not in my own county—which it was decided to mechanise the other day. Although it was a horse battery, the horses were taken away and tractors sent. But they were told they were very important people in our scheme of defence and they had to set to work to practise hard. Unfortunately, although the tractors were sent, the proper wheels for the guns were not sent, so that once the battery began to travel at the speed of mechanical traction every-
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  thing began to be knocked to pieces. As a consequence they are now going to be compelled to practise with guns which they will not use should their services be called upon.
  That is a small instance, but I could multiply it a thousandfold. It is well known that in the press of work imposed by rearmament and the necessary speeding up, the present arrangements cannot possibly cope with the kind of demands that are made upon the State. I can prove this by a reference to the past, and if need be, if I am challenged, by many instances in the present. I repeat that I am not blaming anybody. It is because you will do a thing with weapons ill adapted for the purpose. I remember 1915 very well. I was then with the Canadian troops, as I was for nearly the whole War, and we were very short of shells. Everybody always is, but we really were. I believe the noble Lord, Lord Addison, has some striking figures as to the quantity of shells the Germans could produce in 1915 and the numbers that we—and I think he knows the French figures—could produce. They were fantastically less.
  All kinds of opposition were raised to the creation of a Ministry of Munitions for supplies. I came home on leave for what was supposed to be ten days, but as usually happened, I had to go away again the next day. But I did have the advantage of seeing Mr. Lloyd George installed for the first time in what was going to be the Ministry of Munitions. He had two typists and a clerk, that was all. I almost think that Lord Addison was present then. But Mr. Lloyd George said: "You will see that this will grow until it saves the allied cause." And so it proved. Had that not been done we must certainly have lost the last War. It was a prety near thing, but this method of procedure which I will presently describe was so effective that it cured our troubles and saved the allied cause. I do not think anybody would deny that that was so.
  I hope that the noble Lord, Lord Addison, who was the last Minister of Munitions but one before the War ended (Mr. Churchill being the last), will give us some figures—I asked him if he had them, but perhaps he has not had time—to show the extraordinary achievements of the Ministry of Munitions in mass production. I will give only one figure to

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  show what can be done if you get the appropriate machine to work. The other day in this House the noble Marquess, Lord Lothian, told us that German production had increased so much that within a year from now, or within the ensuing year, they would have 8,000 aeroplanes.
  THE MARQUESS OF LOTHIAN: Frontline aeroplanes.
  LORD MOTTISTONE: Yes, 8,000 front-line aeroplanes. I do not say Germany is the enemy, far from it. It is like the Midshipman Easy duel again. We do not know whom we are going to fight, but we have to have some sort of parity. But the figure I have quoted is disquieting in view of the statement that we have not got anything like so many aeroplanes, and shall not have, unless something is done. See what happened when the Ministry of Munitions Supply got to work. I speak now of what I know, and perhaps know better than anyone, because I was the second in command at the Ministry of Munitions in the closing months of the War, and when the Prime Minister and Mr. Churchill, who was the Minister, had to be away, as they often had, with Marshal Foch in urgent consultations, I was left in control of this vast and extraordinary organisation. Your Lordships will remember that most of us returned soldiers were unduly contemptuous of the efforts of those at home. We talked about "brass hats" and "old fuddle-de-boos," and things of that kind, and I am afraid I fell into that mistake when I was invalided home in June or July before the end of the War. But when I got to the Ministry of Munitions, to which it was considered to be convenient to appoint a man who had been nearly four years at the War, all that vanished from my mind. I was astonished at the smooth efficiency with which things worked, whether it was in mass production or in new devices due to new inventions and new policies.
  I will give one striking figure about aeroplanes as the result of this. When I arrived at the Ministry of Munitions, and had time to find out all that was happening, we were producing just over 2,000 new aeroplanes a month. When the War ended we were producing just over 2,500 a month. I am here to say—and I challenge contradiction from anyone who knows the facts, and there are many of
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  them in this House—that had the War gone on through 1919 (that would have been a disastrous affair for mankind had it happened) we should quite certainly have had in the ensuing year 40,000 first-line aeroplanes. Here are we professing timidity and wondering what to do because we are only going to produce between 3,000 and 4,000, and all the time we have it in our power, by applying the appropriate remedy, as was done in those days, to produce 40,000. No one would suggest that we should do that, but if it be true, as I think it is, that the Prime Minister would welcome any plan by which he could convince all our friends or possible enemies—and we are very apt to have kaleidoscopic changes—that he has got a machine which could do a thing of that kind if he were to turn on the tap, it would make his task far easier in restoring sanity to Europe.
  Believe me, it can be done. It is not only a matter of mass production, of which I have given one figure and I hope my noble friend will give more. The Supply Departments of the three different Services, together with the Supply Advisers to the Minister for the Co-ordination of Defence, are, and must ever be, totally incapable of performing the function which a Ministry of Munitions Supply can perform, and did perform, with extraordinary success. New inventions keep on coming along, new facts keep on emerging. I understand that even during the comparatively small wars—compared to the last War in which we were engaged—which are going on now, new and surprising results have been found, making it necessary to deflect our activities from one direction to another. That would be a comparatively small thing, but when you come to imminent war I cannot describe to your Lordships the surprising things that come to a man who is in the position of Minister of Munitions or, as I was, Deputy Minister.
  I remember one occasion when, owing to the collapse of attack in one direction and the imminence of attack in another, coupled with new inventions which had only just become apparent to us, it was vitally urgent to the allied cause to make a great deflection of effort. I remember I was told by some of the advisers—your Lordships know some of them; Lord Home was one of the most valuable, and

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  there are many others in this House who were there—that there was one man who might do it. His name is well known to many of your lordships, Mr. Dudley Docker, a great industrialist. I went to see him, and said, "This is the problem we are up against. Can it be solved?" We had had time to send him particulars beforehand, and I remember the interview. He said, "Yes, it can be done." I said, "It is a tremendous thing to do." He said, "It is, but it can be done, and it will be done, and within the time you state." It was done, and few will be found to deny that it was a vital factor in the success of our arms. I have mentioned Mr. Dudley Docker because I know of him, and he is such a well-known industrialist, the cool-headed though soft-hearted man, as you would get in such a position as this. He would, I am sure, agree that he could never have done this remarkable feat—for remarkable feat it was—unless he had had to deal with one vigorous, virile Department, and one only, for Supply—the Ministry of Munitions of that day.
  It was presided over at the time I was there by Mr. Churchill, and I now come to the constitution of the body which I would propose. I have differed with Mr. Churchill on almost every subject. I can say of us, as was said of another two, "We walk happily together, differing not at all except in opinion." But in this matter I have to say that he was a wonderful dynamic force, and it was largely due to him that the machine worked with such amazing celerity as it did. However that may be, such a man must be found to be at the head. What is this body as compared to the Air Council, the Minister for Co-ordination of Defence, the Board of Admiralty, and the Army Council? It is totally different, and when my noble friend Lord Zetland comes to reply I trust he will not say, "Oh, well, there is a lot in that, but if we add Supply Departments to the others, and give some co-ordinating authority to Sir Thomas Inskip, will not that satisfy the noble Lord?" I must say at once, "No, I am afraid not—it is really everything or nothing, the principle of it." I do not suggest for a moment that we should follow the precedent exactly. For one thing, you do not want such a large body in peace time; but that supply, invention, design, and, above all,
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  production of all kinds should be given to the people who know how to do the job I regard as essential.
  I will not quote Mr. Churchill again except to say this, that he phrased it so admirably before—I found it in looking up the debate of two years ago—that I cannot refrain from quoting his exact words, to which, I gather, he must have paid great attention:
  "Supply upon a great scale becomes a vast trade and industrial question, and the people who must direct that business can only be the people who know all about modern scientific manufacture and who are accustomed from life-long experience to the organisation and conduct of great productive plants."
  I am sure that admirable sentence contains a truth which cannot be denied. And now we come to the vital question of what powers shall be given to this body. I have discussed the question with many Ministers, civil servants, and others who have knowledge, and they always say, "What powers are you going to give them?" I do not want to go further into the detail of it. You all remember the Ministry of Munitions. The predominant part of it must be those great captains of industry in whom masters and men have confidence, who have proved their worth to the satisfaction of both sides in industry as being the cleverest and best men, and who are themselves the directing brains in this great organisation which I trust will be set up. They would have all the advantages of other Government Departments added to them—Treasury representation and all the rest—but the directing brains must be the people who have experience of it. Give the job to the people who know their job.
  What powers, first, you may ask, over labour and, secondly, over industry? There is no difficulty about that. Some people who have not studied the matter think that, as it was a time of war, the Ministry of Munitions had compulsory control of labour. They had no such thing at any time in the War—no compulsory powers whatever. Do I not know it from my own experience, when I was fetched out of the field to address a mass meeting at Woolwich at one of the most critical moments of the War! It was thought that as I was the sort of man who made speeches in peace time, I might be fetched out directly my troops were out of the line to make a speech to

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  stop a strike also. My noble friend will remember that disastrous strike. I made the best speech I could. I received a great acclamation, especially when I told them I was going away next day to the front, but they voted by an overwhelming majority to remain on strike. If anybody thinks, as I have heard it said, that it was an easy matter to help the Ministry of Munitions to have labour on your side, I say it was not so. For reasons which I do not wish to go into now labour was very recalcitrant in regard to many of the conditions which men of all Parties thought reasonable. I am here to say that so far as my information goes—and I have tried to find out the facts from all sources—we are likely to have far less trouble with organised labour and indeed with any form of labour in speeding up rearmament than we had in the closing phases especially of the late War.
  Then what about powers over industry? That is different. In war-time a Ministry of Munitions and the Minister of War can be in consultation and can agree to do all kinds of things with regard to the deflection of supplies which we cannot do now without legislation. But I do not want to labour the point, because I think it is obvious. My noble friends will agree that industry will not stand in the way for two obvious reasons. The first is that we know from consultation with them that the leaders of industry are only too anxious to help. There will be no trouble there whatever. Whatever we ask them to do they are ready to do. But what is much more important is this. Speaking as a Parliamentarian, I should say that we know in advance—at least I think we do; we shall know very soon from my noble friend behind me—that in this kind of solving the problems of production and especially of industry as applied to armaments, not only the Conservative Party, if the Government agree, but the Liberal Party (I know because they have told me and have said so) and I believe also my noble friends behind me would support the Executive in every way they can. Therefore should any form of legislation be necessary, for the purpose of these priorities especially, we should find no Parliamentary difficulty in this House or in another place.
  And so I come to my last point. Here is the last objection that may be raised; and when I have dealt with it I shall have
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  no more to say. I apologise for having detained your Lordships so long. Objection will be raised that such a body would interfere with normal trade activities—that is one thing—and that it would be a step towards the nationalisation or socialisation of our industry. I believe the exact contrary to be the truth in both cases. With regard to interference with normal trade activities surely it is true that the men who understand trade best are the men who are likely to interfere with it least. I submit to your Lordships and to the noble Marquess, Lord Zetland, that if interference with trade is in question one of our normal Service Departments is far more likely to interfere with the normal trade of this country in speeding up rearmament than a body of business men who have spent their whole lives in trying to avoid undue interference with the trade of the country. We all know that the normal trade of the country at home and abroad cannot go on as usual, and it would be one of the chief reasons for making this suggestion that, in the case of the Ministry of Munitions, it was possible to conduct trade with the least interference just because a Ministry of Supply was there. Again I challenge contradiction in regard to that from anybody who knows the facts.
  And with regard to the nationalisation or socialisation of industry, I think I shall not be going too far if I say that my noble friends in the Labour Party who believe in the principle of nationalisation and socialisation would be prepared to agree that, until this emergency is resolved and for the particular purposes of this rearmament, they would be the last people to suggest swapping horses in crossing this swift running but probably not perennial stream. To think they would take advantage of the present position to advance the cause of nationalisation is, I am sure, a complete delusion. But if we get an assurance to-day on these various points from my noble friends behind me, then this debate may not have been in vain, because national unity is the first thing in this matter.
  My last word is this. Would the setting up of such a Ministry—I do trust the Government will accept this Motion and the thing will be done—be provocative and an embarrassment to the cause of peace? I know that there are some who think it would, but if I may respectfully say so, although I fully acknow-

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  ledge that it is only the Prime Minister and the Executive of the day who can have full knowledge of the effects of words and actions on the susceptibilities and actions of Foreign Powers, making all allowances for that, I submit that there is no fear of that and that the argument is really the other way. The noble Viscount, Lord Halifax, whose brilliant speech charmed us, thrilled us and persuaded us the other night—it was the best speech I ever heard—impressed me when he told us that he had hopes that national unity would ultimately result in peace. We all hope so, but I cannot but think that it would help if instead of saying, "Oh well, we are going to add another one or two to the Supply Departments, and we are going to do various other things which will speed up," they would say: "We are going to set up the same machinery which produced such astonishing results as amazed the whole world twenty years Ego just as a precaution, to have it all ready and to turn on the tap or turn it off as we like."
  Two results would happen. The first—and this is certain—would be that it would hearten the Governments and people of the whole Empire in a way which nothing else could do. They would say: "His Majesty's Government at home are going to have no havering about; they are going to set up the machinery which will make sure that they will be strong enough to maintain peace." And for those who might be meditating some unfriendly act it would be a real deterrent. One way and another I am sure that if you will be good enough to pass this Motion it will hasten on that happy day when the peoples of the world will make a great bonfire of all their gasmasks and breathe freely once again. I beg to move.
  Moved to resolve, That it is essential in the interests of national security that a Ministry of Supply for the three Defence Services should be established forthwith.—(Lord Mottistone.)
  VISCOUNT TRENCHARD: My Lords, I would like to say a few words on this very important matter. I asked myself when I first saw the Motion on the Paper what called it forth. I cannot help feeling that this debate in your Lordships' House this afternoon and the debate that will take place in another place on Wednesday is intimately connected with what
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  took place on the 12th May when the late Secretary of State for Air gave an outline of what was being done in the air and what was going to be done. I have been abroad for three and a half months and so it is with some diffidence that I take part in this debate, because I have not all the details at hand and do not know whether the figures which have been quoted so freely by critics in both Houses of Parliament are accurate or inaccurate. However, I will not bore your Lordships with many figures. Looking at the matter as an outsider, because I have been a long time away from the Air Ministry, I cannot help feeling (and I dare say most of your Lordships will agree) that the real feeling of uneasiness proceeds from the statement that Germany has more aircraft than we have, is making more and is increasing the gap.
  I would like to divide the subject into two. First of all, in order to see whether this Motion is necessary, I would like to deal with the question mentioned by the noble Marquess, Lord Lothian, of the character of the effort required to reach a standard of parity. Frankly I do not know what is the difference between what we have and what a certain Power on the Continent has—what is the gap between us and that certain other Power. I do not expect the Government to supply that information. They naturally cannot give figures. But they must ask themselves what is the gap and whether it is increasing, and how we can fill it or whether it is impossible to fill. I am not a believer in the slogan of parity. It means so many things. I do not think we can simply count numbers and say that we are equal. I will say that at the present time the gap is x aeroplanes and that it will increase in two years' time when the programme outlined by the noble Viscount, the former Secretary of State for Air, is completed, and will be x plus y. What can be done? To answer that question I think we must go back a little and examine the records of what was done. Perhaps I may be told that the figures are not comparable, but I think they are interesting. The total output of aeroplanes in the last year of the War is stated in Appendix 7 of Volume 3 of the Official History of the War in the Air as 32,000 odd. That was the output after three and a-half years of war. Your Lordships can find details of how the figure was worked out in the Appendix.

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  In the last quarter it was a little less because after November n we slowed down.
  LORD MOTTISTONE: That is the year before the end of the War?
  VISCOUNT TRENCHARD: Yes. It may be said that then we had war conditions and that we could compel this and compel that. That is true, but what other advantages have we now? We have 6,000,000 more of what I may call workable population in the country. We have not now millions of men engaged in the Army in France and other parts of the world, nor the numbers that were wounded or killed. Then again it may be said that it takes more men to build an aeroplane to-day than it did then. I have heard that said, and I dare say it may be so. I have not got the details, but I remember that when we were turning over to metal aeroplanes one of the advantages pointed out was that it would be quicker to draw tubes of steel and that you could make metal aeroplanes much more quickly than wood aeroplanes when each strut and rib had to be planed individually.
  Allowing, however, that it does take more men to make an aeroplane now than it did then, I would like to refer your Lordships to the figures showing how many men it took to make those 32,000 aircraft to which I have referred. On page 85 of Volume 6 of the Official History of the War in the Air is a most illuminating table from which I would quote only two lines, and not all of those. In November, 1917, the total number of people employed in the aircraft industry was 173,969. That included over 52,000 women and 17,000 boys. The percentage of dilution of semi-skilled labour was 40 per cent. In October, 1918, the year in which these 32,000 aeroplanes were made, there were 347,000 persons employed in the aircraft industry. Of those 126,000 were women, and 30,000 were boys and there was 46 per cent, diluted labour. If that number of people could make 32,000 aeroplanes, is it such a formidable number with our population at its present figure?
  The next point is that we are dealing with a population of 70,000,000 against a population of 40,000,000, or, taking the working population, I will assume it is 20,000,000 in Germany as against
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  13,000,000 or 14,000,000 in this country. These figures may be put more accurately by others who know more about it. The noble Marquess, Lord Lothian, referred the other day to the powers possessed by the Government of Germany as compared with the powers possessed by our Government in regard to industry. That is so, but I feel that we have other very great advantages. For instance, we have unlimited supplies of coal, copper and high grade ore. Surely that is a great advantage which the country abroad has not. It is no mean advantage.
  And there is another advantage. The British Empire has the great advantage over other countries of a free currency. So long as that is so, and our credit remains good, the whole world is willing and even anxious to work for us. Even if our reserves of gold and our foreign investments were eaten up, so long as the pound sterling remains the currency of the British Empire England can still obtain within the Empire practically all the essentials for carrying on a war. The only possible effect would be a depreciation of the pound sterling vis-à-vis other free currencies. Nor must it be forgotten that in countries dependent upon themselves for their supplies, who are becoming self-contained, making petrol from coal and food from wood and that sort of thing, vast numbers of the male population must be employed on providing those substitutes, and that diminishes the number of men in the front line. Therefore disparity in numbers may not be so great as some people think. The other country is very severely limited in the amount it can buy abroad, owing to its currency system. Therefore, is not our power of buying abroad a very great asset?
  Plainly, what is wanted is more skilled men in the aircraft industry. I understand that at the present time there are about 100,000 men, or under, employed in the aircraft industry. You will remember the figure I gave just now, of 347,000. I do not know what those hundred thousand are producing. The figures for first-line aircraft, which the Secretary of State for Air gave us, naturally do not give us the numbers of the reserves, and all the other machines that go to make up the first line; that is a very great number, greater than the first line and much greater. I know how

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  much greater it is from my experience of the past. It may be greater by more or by less now; I do not know, I have not tried to find out. If, however, we have only 100,000, is it an insuperable problem to get 375,000? Would the doubling of 100,000 produce double the number of aeroplanes that you are producing to-day? Would trebling it produce three times as many? If so, that is only 200,000 men extra, and some of those need only be semi-skilled. Is it a great deal? The gap has got to be filled. There is no question of that, according to the Government's view of the matter, as I understand it, and to that of the nation. Let us assume for the sake of my argument that we want 375,000 skilled men.
  Now I come to a point which is more closely connected with the Motion before your Lordships' House: could we not get this number of men by reducing activities in some other field? I do not want to raise great and contentious matters, but we must look at all possible methods. Could the number be raised from the Services themselves—for instance, by reducing the number of men on the balloon barrage or the apron? Could it be raised by reducing the number of guns that are made for overseas ports, or for rearming the Army; or by reducing the number of ships that are being built? I do not know; these are contentious matters. If that cannot be done, and if it is laid down by the Government that these 375,000 men cannot be got from the industries that are doing that work, can they be got from other industries or commercial enterprise, say, by knocking on the head tube expansion or the export of motor cars, or by limiting the output of motor cars, or of many other commodities, such as grand pianos, for instance? What can be done to get that number of men? It may be that you could get these men by a limited, a very limited, amount of control. It might not even require limited control; they might be got by co-operation between the Government, the employers and the trade unions. Is a Ministry of Supply, therefore, necessary for this purpose? If you have a Ministry of Supply you have to introduce legislation for control, and that is useless.
  So much for that problem; and now I should like to say a word or two on the other problem, that of delay. If you have formulated your programme and you are going to fill the gap which is sub-
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  ject to the criticism that I have seen in many places, how do we know that you can do so without delay? Is anything brought about without delay? The wiring of your house, the work of a plumber—anything always takes longer than it is planned to take. One great point about delay is mass production. The noble Lord who is sitting on the Front Opposition Bench was present the other night to hear a great leader in the aircraft industry say what he thought about mass production of aircraft: that it was nonsense and there was no such thing. If you look even at what may be called the fantastic numbers of 30,000, 40,000, or 50,000 aircraft, they are bound to be divided up into at least eight different types. There cannot be less. How can you make mass production of 5,000 aeroplanes? You can make it for tablets of soap or motor cars, which are made in millions, but not for a few thousands. You can of course get quick production— I do not doubt much quicker production than we have had.
  The other question is that of modification. I am told that I am not allowed to read what was said in another House, but according to a statement which I read in the Press, and which was much criticised, Earl Winterton there gave an indication of the number of modifications which were made in machines and how they were made. It is in the OFFICIAL REPORT for May 12, at column 1778. Speaking of the past, I agree thoroughly that modifications are the bane of every constructor. But let me tell you how most of them arise. When a design leaves a man's brain, it goes on to the drawing-board. I do not know if any noble Lord has seen the drawings for an aeroplane. They are stupendous in size and number. Many of those drawings are never correct in the first place, or even nearly correct, and they have to be altered by the designer of the parent firm. That is bound to be so, even with the best draughtsmen in the world. I believe that in the past something like 60, 70 or 80 per cent, of the modifications were not made at the Air Ministry. I am not saying that we were to blame a bit; please do not misunderstand me. The aircraft firms themselves had to make 70 or 80 per cent, of the modifications that were necessary.
  Now I come to the modifications that were made by the Air Ministry. I agree

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  that they sometimes seemed unnecessary, and in the rush of business in the last War they were the bane of my existence. But when we got the machines, with all due deference to the noble Lord who I believe is going to speak next, those machines, on which we had spent long and weary hours modifying in the field, amply justified our trouble. Many of the modifications which have to be made in the field are necessary for safety. In many cases a machine has flown for three or four months with no breakages, and then you suddenly have a run of them, and they disclose a weakness. You have only got to be a couple of hundredths of an inch out and you have a weakness. Are you not going to modify those machines? You have to remember the morale of these young pilots. There is one asset which is superior to anything else: that they believe that they are getting a fair deal in the machine. If you do not modify those machines at once when you hear of an accident, or even when you only think that there may be a weak point, you may lose that morale. Think of the boy who is flying. Even with a big machine with two or three men on board, he is still by himself; he has nothing to think of at all for hours on end, and if he knows that he must not dive the machine at more than fifty or sixty miles an hour, or something of that kind, he is bound to lose some of his confidence. When we hear the very bitter criticisms of modification that are being made by ignorant persons—sometimes technical persons—and even criticism which is justifiable, as it sometimes is, do not let us forget the morale of the pilot, for that is the final consideration.
  In conclusion, I would ask: Is it right to set up a Ministry of Supply? I feel very much that I would like to have these points that I have raised dealt with. Can we not get what is wanted in some of the ways which I have tried to outline without going as far, at the present time, as a Ministry of Supply? It would entail the necessary legislation, making for more delay in the end. But if the Government do set up a Ministry of Supply I hope that it may be set up as a complete one, that every one of the Services, as well as the Air-Raid Precautions Department, shall come under it, and that not one shall stand out and say that it will not accept this decision.
  LORD ADDISON: My Lords, I feel a good deal of hesitation in speaking for a third time in this House more or less on subjects allied to the present one, but I promise your Lordships that I will endeavour not to repeat myself. I rise to speak, however, because my noble friend Lord Mottistone has introduced into the House a Motion which I am quite sure one can truly say is not a Party Motion in any sense. The question, I think, that is presented to us is this: We have to supply our forces, military, naval and air, with certain supplies; what is the best way of doing it? That is the question, and it is impossible to escape the conclusion that a Minister responsible for all the supplies, with adequate powers, is the only way in which it can be done efficiently. So far there are really two objections generally urged, and I expect the noble Marquess will either mention them, or, if he opposes the Motion, will take them. They are, first, that a Ministry of Supply will cut athwart the Services' traditions, and secondly, will interfere needlessly with private industry. I would like to address my remarks chiefly to those two objections.
  I think if we were to probe into them—and I repeat what I said the other day or what others have said—we should find that the defects which have recently been the subject of discussion in connection with our air supplies have been due to this, at bottom, that a number of military men—I include seamen in the term "military"—have been given a job which is not their job. The business of the soldier, as we got it defined in the Ministry of Munitions only after a long struggle, was to say to the civilian Supply Department what it was he wanted, how many of them he wanted, and when he wanted them. He having said that, with all the knowledge he possesses of his profession, it was up to the Supply Department to supply them. The business of supply is an entirely different thing in its nature, and in the experience that it calls for from the men concerned, from what a soldier has to do or an airman or a sailor has to do. It is a different business, and it is a mistake to suppose that a Service expert, however eminent he may be in his Service, will be the appropriate man to put in charge of large scale supplies, because that is not the best way of proceeding.

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  May I enlarge upon what the noble Lord said, and give a few illustrations in support of his Motion? Take the question to which the noble and gallant Viscount who spoke last referred frequently—namely, multiplicity of design. The other day I was saying that it was necessary that you should centralise control over design. It is commonly objected that if you do that you will interfere with designers in the different private concerns—that you will cramp their work and limit their initiative, and that sort of thing. As a matter of fact, if the thing is properly handled it is exactly the opposite. I will give you one simple illustration. Your Lordships will all be familiar with the Stokes gun. I remember the trouble which we had in the early stages of its development. It was relatively immature. The idea was all right, but when the artillerymen or the experts in explosives had to deal with it they found various faults in the propellants and in the fuses, and the rest of it, and our difficulties were only overcome, as they were finally, so that we could produce in wholesale quantities, by bringing together in one Department the different people who had charge of the evolution of design, helping invention, carrying on the experiments required, bringing out the modifications required. At length, after about six months of struggle, a more or less perfect weapon emerged. That stage has to be gone through whatever you are manufacturing, but it was only because there was a Central Department, with adequate facilities at the disposal of the inventor, that the thing was developed and perfected as it was.
  Let me give another illustration. The noble Lord who has spoken referred to the number of "duds" served out in the early days, and I remember the complaints that came to us in our early days that shells were being sent out which did not explode. It was true. That meant bringing together the different experts who had cognizance of the matter, marrying up their efforts with the supplies people, bringing in designers and the rest of it, so that ultimately defects in the fuses and propellants were forthcoming; but it was only after months of difficulty, and if we had gone on with separate Departments responsible for separate sections, quite frankly I do not believe we ever should have overcome the difficulty. It was only by bringing
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  together under one authority the different activities that were necessary to achieve the result we required that the thing was made effective.
  Let me give another illustration. I do not think you need go at all the whole hog in these present times, but to give one illustration of what I believe has been a cause and still is a cause of delay, the Ministry of Supply would have to have two Departments with full cognizance of all orders—namely, one which calculated the amount of materials required, and another one which was responsible for accounting for the machinery and the machine tools required. At the present time there is a lag, as I know, in several factories because there is a deficient supply of certain essential machine tools, and the absence of one or other essential machine tools will hold up the whole thing. There is no hope whatever, with great respect to the noble and gallant Viscount who spoke last, of getting the necessary amount of labour employed until you can get brought together the necessary agencies which supply the working material. At the present time a good many men cannot work at the bench because there is a deficient supply of the requisite machine tools. In other directions delay occurs because the supply of the necessary material is not married to a proper priority order to the manufacturer. It cannot conceivably be done when the matter is left to the individual effort of scores of different manufacturers. We should not interfere with private industry if we had a Central Department capable of working out in terms of material all the requirements of its programme and seeing that the supply of materials was arranged for. And what applies to materials applies to machine tools.
  I do not think myself, for instance, that there would be any necessity whatever for a Ministry of Supply, set up in peace time, to be responsible, let us say, for shipbuilding. Not at all. But it would be necessary that the Central Department should have cognizance of the whole programme for iron and steel and for various essential non-ferrous metals, because it is only by their being brought together in terms of the whole programme, and steps being taken to see that the orders are given for their provision in due order and in due quantity, that you

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  can secure that your different shops are fed in appropriate order with the materials they require. Until that is done there is no hope whatever of getting full co-operation of skilled labour, because skilled labour is confronted with these deficiencies every day in the shops, and it knows perfectly well what is holding things up. But with the best will in the world it cannot physically be done as long as it is left to scores, and indeed to hundreds, of different manufacturers to do the best they can in a scramble for their own needs. There is nothing new in it, it is obvious. It was only when these functions were brought under one responsible head that we got away from the delays, and we never shall get away from them until that is done, and I believe it can be done with relative ease at the present time.
  That brings me to another point. Really when one knows the facts, as we do, as to the present aircraft production, to take one illustration, it is so trivial in comparison with our engineering capacity that it seems pitiful to be discussing a figure of this kind after three years of effort—a tenth, not more than a tenth, of the output we had in the last year and a half of the War when our efforts were required to such an intense degree in all sorts of other directions. There could not be a greater and more forcible demonstration of the wrongness of the method that has hitherto been pursued than the fact that after three years of effort, with our immense resources, we are still bothered about a production of aeroplanes which is on so small a scale. That demonstrates that the method itself is wrong.
  May I give one other illustration to force home this point? I remember all the troubles we had about shell filling and assembling. They were due to the fact that in the early days one set of men had been responsible for explosives, somebody else had been responsible for giving the order, somebody else had been responsible for hoping that the shells would come along to be filled, and so on. It just did not work. And it never could work. It could only be made effective when one body of men was responsible for calculating the amount of iron and steel required, the explosives that would be required, where they would be required, when they would be required, making the organisation for filling them at the right time and in the right place,
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  for getting the assembly of the fuses. It was one big supply job, and it has no relation whatever to the qualifications of a general to lead troops in the field. It is a different business, and it must be dealt with in that businesslike way. There we were turning out ten times as many aeroplanes as we are now doing at the end of three years of effort. I remember shipping 50,000 tons a week across the Channel until one day I had a message myself from Field-Marshal Haig saying: "Hold, enough; we cannot carry any more." And at the very self-same time we were doing all these other things as well, something far beyond anything that is now talked about. It must mean, it can only mean, that the methods now being pursued are not the right methods.
  Now may I just say a word about interference with industry? A Department of Supply must have authority in matters of priority. I have no doubt that if we were to look into the orders now in the different machine shops we should find machine tool makers and others with a dozen different demands coming in from all sorts of directions. One may be from a quite unessential peace source—something that does not matter much whether it is fulfilled this week or next; delay may be inconvenient but it is not of vital consequence. We should find all through the country, were we to look at the order books of the manufacturers, that they were fulfilling orders for all sorts of different people, with no disciplined priority among them. A Minister of Supply could not be effective in his work unless he had authority to prescribe the priority in which things should be supplied. That priority would, of course, be drawn up in concert with those concerned in industry so as to cause the least possible friction. The demands in bulk terms under this programme are so small in comparison with what we can handle that I am quite sure that a rational Central Priority Department, in consultation with the industries concerned, could easily arrange its priority of supply—for material, machinery and for the placing of orders—which would interfere with private industry infinitely less than the present chaotic scheme does. That, I suggest, would inevitably be the case.
  I do not like to refer to the powers of Sir Thomas Inskip, the Minister for

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  Co-ordination of Defence, because he has not got any powers I have tried to indicate some of the powers which a Ministry of Supply ought to have, and I suggest that if those powers were properly exercised, sensibly exercised, exercised in concert with the manufacturing and supplying industries, we should get our supplies with much greater ease and greater promptitude and with far less interference with private industry. But it can never be done unless we are willing to vest those powers in one body of people. We cannot expect them to be exercised by a Minister for the Coordination of Defence who is, so to say, served by a man and a boy. The thing cannot be done in that way. It can only be done by a Ministry of Supply having the requisite Departments at its disposal.
  May I say, in conclusion, that my friends and I support this Motion not because we are Socialists but simply because we are sensible men. The Minister of Supply need not, unless the Government wills, run industries himself. He need not have national factories if he does not want them, but he would be responsible for getting the job done. He would be responsible, no doubt, under the present Government for doing it through private industry. I would again like to assure your Lordships in conclusion that our support of this Motion is not because we are Socialists, not because we believe that armament manufacture should be a Government concern and that State responsibility should be greatly extended, but because it is impossible to escape the logic of the noble Lord and the logic of the facts of our own history that if you want to get Service supply in an orderly and adequate way it must be done through one business-like organisation.
  LORD STONEHAVEN: My Lords, I apologise for intervening, but having served as Under-Secretary at the Air Ministry during the latter part of the War there are one or two observations I wish to make. The noble Lord opposite, Lord Addison, speaks with unparalleled authority on the subject of a Ministry of Supply, having been in the first place the first Under-Secretary and eventually Minister of Munitions. It is not unnatural that, having seen the great achievement of the Ministry of Munitions in the War, and having been largely re-
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  sponsible for its success, he should imagine that that is the only way in which the problems with which we are now confronted can be solved. But my noble friend Lord Trenchard rightly said we require a good deal more information that we have had hitherto before coming to a decision on this point, and unfortunately a good deal of that is information which can only be given to us while it is given at the same time to people whom it is not in our interests should possess it. We have therefore got to trust the Government.
  The first point on which I differ from the noble Lord opposite is this. The noble Lord referred to the chaotic state of aircraft construction at the present time. It is the fashion to represent that, and the noble Lord will not misunderstand me if I say that, coming from the Benches opposite, which have done nothing whatever to help the construction of aircraft and other munitions of any kind until a very few weeks ago, we cannot help feeling that they are gloating over the chaos which they wanted to produce. The noble Lord will forgive me for saying that in the circumstances it does not really inspire confidence in the degree of help they are prepared to give us. That being so, I think it very unfair to suggest that the state of affairs is chaotic when we had it explained to us quite clearly by people in a position to know, like my noble friend Lord Swinton and my noble friend Lord Weir, that after three years of very hard work, not only is the original programme of aircraft going to be produced at the time when it was promised, but steps have been taken to quadruple that programme. The idea that that can be done with the industry in a chaotic condition is untenable.
  What we cannot know is the answer to the question asked by Lord Trenchard—what is the size of the gap between the output of aircraft in this country and the output of aircraft in the country on the Continent which we must be strong enough to undertake to fight if necessary? That we do not know, but I expect the Government know. When you think of the amount of work put into the construction of aircraft, the organisation of the shadow factories, the building of aerodromes, and the activities in every direction which have been put into this work, with the help of men like my noble friend Lord Weir, who has had too little credit

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  for the tremendous amount of help he has given to the Government, I find it very unconvincing that the noble Lord opposite, with his new-found enthusiasm and keenness for armaments, should come and tell us that the only way to get aircraft is to adopt partially, not wholly, the system which worked well in the War. The noble Lord said that airmen were not the proper people to control the production of aircraft. Why should politicians be any better? That is what the noble Lord recommended. But he does not recommend it for ships. He stated deliberately that he did not want to interfere with the production of ships.
  LORD ADDISON: I hope the noble Lord will not misrepresent me. To have the thing done you would have someone responsible to Parliament, but I did not suggest at any time that politicians would be responsible for manufacture. You would bring in the people to do the job who understood it.
  LORD STONEHAVEN: Is not the Minister to be a politician? It is from among the politicians that Ministers are chosen in peace time. The noble Lord was brought in as a politician and his chief, Mr. Lloyd George, was a politician. They were brought in as men of Parliamentary experience who could get the job done, and that is what you propose. I confess it does not fill me at all with confidence. There are two points to be met. In the first place, what truth is there in the suggestion, which I do not believe to be true, that the present arrangements for aircraft are inadequate, still less chaotic? That is a question to which, perhaps, my noble friend Lord Zetland will give an answer. Secondly, what justification is there for believing that the present arrangements will not work infinitely better to meet the problem of aircraft production than the partial resuscitation of the Ministry of Munitions as recommended by the noble Lord opposite? I have only risen, being quite unconvinced by the speech of the noble Lord, in the hope that my noble friend Lord Zetland will be able to find an answer to these questions.
  THE SECRETARY OF STATE FOR INDIA (THE MARQUESS OF ZETLAND): My Lords, no one regrets more than I do the circumstances which have been responsible for my replying to the Motion
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  of the noble Lord this afternoon. Had it not been for the resignation of my noble friend Lord Swinton, he would naturally have dealt with this question, and he would have dealt with it with far greater personal knowledge of every aspect of it than I can possibly possess. And may I in passing say this, that the resignation of the noble Viscount reflects in no way at all upon his capacity, upon his business acumen, or upon the tremendous devotion to duty which he has shown during the past three years in which he occupied the position of Secretary of State for Air. His immediate colleagues have good reason to know how great is the service which the noble Viscount has rendered to this country. The public are necessarily not in possession of the information which would enable them to form a judgment, and it is only when history comes to be written and the record of the noble Viscount becomes known that the public will be in a position to form an adequate judgment of his services to the country.
  I accept fully the noble Lord's own description of the intention of his Motion and his speech. He told us it was not intended as an attack upon the Prime Minister, or indeed upon any one else. It was a contribution which the noble Lord was putting forward towards the solution of a problem of admitted magnitude, and I am very conscious of the fact that both the Motion of the noble Lord and the speech which he has made, and the speech which we have heard from the noble Lord, Lord Addison, are symtomatic of a certain anxiety in the public mind. And after all it is not at all surprising, when you consider the state of the world as it is to-day, that there should be anxiety in the public mind. They are anxious to know whether this country is in a position, or if not how soon it will be in a position, adequately to defend itself against the kind of attack which in these days it may have to meet. With the knowledge which is necessarily in the possession of His Majesty's Government we are able to feel that the preparations which have been made and which are still being made are a great deal more effective than might be supposed from some of the speeches to which we have listened, and particularly from the speech of the noble Lord, Lord Addison, and on that point I shall have something to say in a moment. I am not suggesting for one moment that there have not been grounds

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  for anxiety. It was inevitable that there should be in the circumstances of the case.
  But before I deal with that point let me say this with regard to the Motion and the speeches which have been made, and particularly the speech which was delivered by the noble Lord, Lord Addison, on behalf of the Labour Party. I hope that this is an indication that if the time comes, whether that time be near or whether it be distant, when His Majesty's Government will consider that in the public interest it is desirable to set up a Ministry of a kind which is indicated in the noble Lord's Motion, with all the powers which such a Ministry must necessarily have if it is to function effectively, then we shall have the support of the noble Lord opposite and his Party in granting the powers which will be necessary. Let me say a word about the present system since, judging by the speeches to which I have listened, there is a good deal of ignorance with regard to it. The noble Lord, Lord Mottistone, in the course of his speech, said all the facts to-day are precisely the same as they were in 1913.
  LORD MOTTISTONE: 1915.
  THE MARQUESS OF ZETLAND: I understood the noble Lord to say 1913, but of course I accept his correction. But that, my Lords, is not the case. Since the days when the noble Lord presided, as he told us, over the Army Council, and the Air Council and the Ministry of Munitions, there have been enormous developments in the organisation and the functions of the Committee of Imperial Defence, and in no respect has development been so marked as in the organisation of that body which is concerned with the whole question of supply. Let me just remind your Lordships of what the present position is. The Committee of Imperial Defence necessarily works in various Committees. Amongst those Committees is the Committee known as the Principal Supply Officers' Committee. Working under the Principal Supply Officers' Committee is the body known as the Supply Board, and the Supply Board itself controls a number of smaller bodies dealing with particular aspects of the supply problem. The noble Lord, Lord Addison, mentioned the question of machine tools, and spoke as if there was no organisation of any kind for dealing with the question of machine tools. But
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  one of the Sub-Committees is specially concerned with that very question of machine tools. Parallel with the Board of Supply is the body controlled by the Board of Trade which is known as the Board of Trade Supply Organisation. These Committees have their respective functions, but it is quite obvious that they must co-ordinate, and the co-ordination is done primarily by the Principal Supply Officers' Committee with the Minister for the Co-ordination of Defence at its head. The Committee of Imperial Defence itself is constantly reviewing not only all the reports of its various Committees but the progress in every direction of Supply Committees.
  Let me just give your Lordships a very brief account of how that machinery works. The first stage of all is for the Chiefs of the Staff to estimate the extent to which the Army, the Navy and the Air Force have to be expanded to meet any menace of a first class Power. The second stage has been for the Supply Board, working through the agency of a number of Supply Committees, as I have explained, to estimate our total war requirements on the basis given to them by the Chiefs of the Staff, both in terms of raw materials and of manufacturing capacity. Then comes the third stage which has been for the Supply Board, working through the agency of its Supply Committees, to relate those requirements to the manufacturing capacity of the country and to formulate plans for bridging any gaps which there might be between supply and demand. In this process, I can assure your Lordships, practically the whole industry of the country has been surveyed and an immense number of firms allocated between the Service Departments. The next stage was for the body which I spoke of as the Board of Trade Supply Organisation to compare the total estimated requirements of raw materials with the total estimated availability of the materials and to formulate plans to ensure that adequate supplies would be forthcoming in war. These included in many cases the accumulation of reserves of certain materials, which have, as a matter of fact, already been laid in. In view of the existing machinery it is surely extravagant of the noble Lord to say, as he did, that the whole state of the aircraft industry was chaotic.
  LORD ADDISON: Not of the industry; of the Ministry, the machinery.
  THE MARQUESS OF ZETLAND: In view of what I have said in regard to the machinery of Imperial Defence to say that of the Government machinery is not correct. I am unable to accept the noble Lord's charge in that matter. Great stress has been laid, and very properly laid, upon the desirability of the Government having the confidence and constant advice of the captains of industry. Of course, the Government have that advice. Reference has been made to the great services in that respect which have been rendered by the noble Lord, Lord Weir, whose recent resignation no one regrets more than do the Government. We have the advantage of constant consultation now with Sir Charles Bruce-Gardner, the Chairman of the Society of British Aircraft Construction. It is absurd to say that there is no close liaison between the Government and industry itself. The relations between the two are of the closest character. Really, a Ministry of Supply could do no more than is being done by the existing machinery, unless we were to give that Ministry the powers which were conferred upon the Ministry of Munitions during the War. That really is the crux of the matter. I was astounded when I heard the noble Lord, Lord Mottistone, say that the Ministry of Munitions had no control over labour from the start to the end of the War. Surely the noble Lord must have forgotten the Ministry of Munitions Act, which gave to the Ministry the most drastic powers both over industry and over labour.
  LORD ADDISON: No.
  LORD MOTTISTONE: I did not say no control. I said no compulsory powers. To put it into homely language, there was no conscription of labour. It was often proposed, but it was never passed. And indeed labour had more liberty to do as it liked then than at any other time. I have the Munitions Act here. If the noble Marquess will look at it he will see that so far as compulsory powers are concerned what I said is absolutely true. Labour was entirely free in all essentials.
  THE MARQUESS OF ZETLAND: Let me refer the noble Lord for a moment to what was claimed by Mr. Lloyd George when submitting to Parliament the Ministry of Munitions Bill in 1915 when he referred to the powers which were required. Amongst them were (1), power
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  to obtain information as to stocks of raw and semi-raw materials and machinery in the country; (2), power to release trade union practices and regulations—surely that is an interference with the ordinary practices of labour—(3), application of the principle of compulsory arbitration to prevent stoppages of work by strikes and lock-outs; (4), compulsion to secure adequate supplies of labour. If the noble Lord turns to the Act itself, I think he will see that those powers were in fact conferred upon the Minister. Let me mention only one of them. The Minister of Munitions was entitled under Part II, Section 4, of the Munitions of War Act, if he considered it expedient, to declare an institution to be a controlled establishment and if an establishment was a controlled establishment large powers were exercisable over those employed in it particularly these:
  "Any rule, practice, or custom, not having the force of law which tends to restrict production or employment shall be suspended in the establishment, and if any person induces or attempts to induce any other person (whether any particular person or generally) to comply, or continue to comply, with such a rule, practice, or custom, that person shall be guilty of an offence under this Act."
  That was a deliberate interference with trade union practice. There is no doubt about it whatever that the Ministry of Munitions had drastic power to interfere both with every industry and with the conditions under which labour in peace time normally functions. It is the view of the Government that a Ministry of Supply would not effect the objects which the noble Lord has in view unless it was furnished with these powers. The Government are of opinion that the time is not yet when they should ask Parliament to agree to furnish a Ministry with such powers.
  Now let me say a word on what the noble Lord, Lord Mottistone, said about the acceleration of armaments in other countries. He asked me if I could confirm the reports of general acceleration which has been in progress. I should have thought it was hardly necessary for a member of the Government to do that, because it is common knowledge that countries have during recent years been increasing their armaments enormously. Indeed, that is one of the tragedies of the present time, that countries in every direction should be spending these vast sums, not for useful productive purposes, but

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  for building vast stocks of arms. The noble Lord himself suggested, if I understood him rightly, that it would be a tremendous advantage, so far as the diplomacy of this country is concerned, if we were able to go to other countries and say at any moment, "We have the organisation which will enable us to build in a year, not 4,000, not 14,000, but 40,000 aeroplanes." I think that was the argument of the noble Lord. It might be an advantage to our diplomacy, bat there is another side to that question.
  I do not know whether the noble Lord has ever considered how the 40,000 aeroplanes would be paid for, or how great would be the dislocation of civil industry if you were to set about a programme of that kind. A year or two ago, when the present Government announced their five-year programme for defence, they told the country that they estimated that the cost would be something like £1,500,000,000—an enormous sum, in fact a wholly unprecedented sum. Recently, as a result of events in other countries, we have both accelerated that programme and expanded it. It must be quite obvious to noble Lords that the cost of an accelerated and expanded programme is going to be yet more than the £1,500,000,000 which was the figure mentioned. There are limits to what the country can afford in that respect. I do not say that finance must be decisive. In the case of real emergency, finance, as we all know by experience, goes to the wall. But do not let us forget that our economic strength is one of our great assets. It is surely a great advantage that we should be able to contemplate a programme of that magnitude, a programme costing something more than £1,500,000,000, without either unbalancing our Budget or falling back upon devices such as inflation, and so on, to enable us to do so. Finance is not necessarily decisive, but it is a consideration which I venture to suggest to your Lordships as worthy of bearing in mind.
  The Government, taking all these considerations into account, and with a knowledge which, of course, is not fully available to the public, have deliberately come to this conclusion: that to change our organisation at the present moment would not accelerate the programme which is now in hand—and may I mention incidentally, as one example, that the orders for all the aeroplanes which are
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  required to fulfil the accelerated programme have now been given—but would undoubtedly retard it. Secondly, the Government are of the opinion that, that being so, the dislocation of civil industry and the interference with the normal functioning of labour would not be compensated for by the increased production which in due course would no doubt follow on the establishment of a Ministry of Supply, provided, as I said, that it was armed with the powers to which I have referred. If the existing machinery had failed in the way in which the noble Lord, Lord Addison, suggested it has failed, there would certainly be good grounds for altering it. But I deny that there has been any such failure.
  That there have been times of anxiety I do not deny. When you come to remember that only some three years ago we started from zero, and had to build up from zero—for we had disarmed to an extent to which no other country had—the gigantic programme which is now in process of being put through, you can well understand that during the earlier years, the years of planning, there must necessarily have been some delay in actual production. It may be that that period of planning lasted longer than we hoped, but it is now over and production is in full swing. We have additional State factories for armaments springing up; we have great private enterprises working to capacity, and behind them we have a whole scheme of shadow factories which constitute a great war potential. The discussions for labour are proceeding, without the threat of the acquisition of compulsory powers.
  And we do a good many things which we do not publish. It must not be assumed, because we are not always crying on the housetops what we have done, that we are not doing things of which the public are in ignorance. Let me give your Lordships an example of what I mean, because publicity has now been given to it. It was only a short time ago that the public learned of the measures which had been taken by my right honourable friend the Minister for the Co-ordination of Defence for providing for this country in case of war in respect of wheat, sugar and whale-oil. All those transactions were carried through by this machinery which is described by the noble Lord as chaotic, without the smallest disturbance of the

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  world's markets; and no one knew, even in the industries themselves, except a very few persons, until the whole of the transactions had been carried through, that any such thing was being done. I am able to say that we have also secured similar reserves of other essential raw materials. I do not propose to specify them, but I say that we have done that, and that is an example of what is being achieved by this so-called chaotic machinery.
  Finally, my Lords, may I assure you that if we are unable to agree with the noble Lord who moved this Resolution, that a Ministry of the character which he has in contemplation should be set up forthwith, we do not close our minds to the possibility that the day may come, even in peace, when it may be found desirable to take such a step, but we do not think that that time has yet come. Let me add that the whole of the experience of the last War is at our disposal, and is not being neglected. We have laid our plans, and noble Lords will, I think, find that should the moment come for taking rapid and drastic action, whether on the lines suggested by the noble Lord or any other lines, we shall be found ready. Our plans are drawn up, the machinery is in existence, and I should hope that little more than the pressing of a button will be required to set it in motion. In those circumstances, I should rather hope that the noble Lord will not find it necessary to press his Motion to a Division. We welcome the contribution which he has made, and I can assure him that the Prime Minister will give full weight to the arguments which he has adduced in favour of his proposal, and indeed to the arguments which have been put forward by my noble friend Lord Trenchard and the noble Lord who spoke for the Opposition. Their arguments will be given the most careful consideration, but as at present advised the Government are not convinced that the best course for this country to take would be to set up such a Ministry forthwith.
  VISCOUNT SAMUEL: My Lords, my noble friend Lord Crewe greatly regrets that he is unavoidably prevented from attending this debate, and has asked me to say a few words on behalf of those who sit on these Benches, in reply to what has
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  fallen from the noble Marquess. His speech in its final passages must have left the House in some state of uncertainty, for earlier the noble Marquess argued, with force and much elaboration, that to set up a Ministry of Supply was open to very grave objections. He said it would cause disorganisation in many respects, that it would involve increased delay, and in general that such a system was not a desirable one; but in his last sentences he said that even in time of peace the Government would be prepared, if it thought it necessary, to set up that very system. So the difference between us is not whether a Ministry of Supply is a good thing or a bad thing, but whether the time for it is now, or whether we should go on as we are and, if it is thought desirable, at some later date we should adopt this method. The last passages of the noble Marquess's speech replied to the greater part of his observations.
  Might I add that the noble Marquess detailed to us an elaborate system of Committees and Sub-Committees and Joint Committees, sitting under the ægis of the Committee of Imperial Defence. I do not know whether many noble Lords regarded that as a reassurance, but I confess it impressed my mind very much to the opposite effect. It seemed to me that it was the machinery and elaboration of bureaucracy in excelsis. No wonder the programme is behindhand. There is nothing Napoleonic about that system. At a time when you want speed and power you have this amazing, enormous mechanism of Committees and Sub-Committees. Yet it is the Air Ministry itself which is charged with the main and direct responsibility of providing the Air Force which the country requires, and the fact is that a Service Department, or even a combination of Service Departments, is not fitted to do this particular work, which in time of great national danger, requiring enormous effort, has to be done.
  A Service Department, or a group of Service Departments, is not fitted to mobilise industry, allocate priority, and carry out all the other measures which are needed. We all remember how at the beginning of the last War so great an organiser as Lord Kitchener, finding himself at the head of a Service Department, strongly resisted the suggestion that supplies should be removed from

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  the Ordnance Department of the War Office. He came to recognise that he was wrong. Yet we are afraid that the Government are making much the same mistake as that great Secretary of State for War was inclined to make. In ordinary times, when dealing with more or less routine production and supply, it may be all right, but when making a great national effort you require a different system to be brought into operation. The noble Lord says that in time of peace it is not necessary to give such a Ministry powers which the nation would only tolerate in time of War. It may be that a Ministry of Supplies should have certain powers, but it is not necessary to bring into operation every power which it would have on the Statute Book in time of War. The Government, which has been playing to-day the unaccustomed role of the champion of trade union restrictions, need not be alarmed. You can pass an Act of Parliament and fashion it to the circumstances of the time—set up your Department and let its powers be such as are really needed at the particular moment.
  I have not risen to add anything to the arguments advanced by previous speakers. They seemed to me to be very cogent, and I think that Lord Mottistone showed quite clearly what the needs of the case were. I think he had established his case, and was adequately reinforced by Lord Addison in particular. There was, however, one passage in the noble Lord's speech which I was a little sorry to hear, because it might be misinterpreted outside and in other countries. He was perhaps speaking on the humorous side when he said that the youth of the nation was inclined to be not pacifist but belligerent, and to be eager for war. We, of course, know that he did not mean it really seriously, but such expressions, used in either House of Parliament, might be quoted for purpose of propaganda elsewhere, divorced from the context. Perhaps my noble friend when he replies on the debate will take an opportunity of explaining it. The youth of this nation, indeed the larger part of the nation, realises that it is essential that we should be powerfully armed, not in order to make war but solely to prevent it. Now that in present circumstances international disarmament has broken down we are all of opinion that we have to fall back on the other,
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  and much worse, resource of heavy and costly armaments.
  The noble Marquess, Lord Zetland, said that cost may become excessive and unbearable, but on that point two remarks have to be made. One is that if you have a good and efficient organisation you may be able to effect savings and you may obtain the same result at a less cost. For instance, there are many who think that the present control over the prices of armament supplies and the profits of our manufacturers is not adequate, and it might be that a Ministry of Supply would be able to take more effective measures and secure fuller value for the money that is expended. And, secondly, when you are dealing with an international situation such as lamentably exists to-day, when your object is to prevent and obviate war, you are bound to make whatever large expenditure is necessary, and if your purpose' is achieved you effect far more saving by preventing a war, and you spend far less than you would be spending if the war actually occurred. The whole of the armaments programme which is now being carried out would cost less than the cost of two or three months of actual warfare.
  The speech of the noble Marquess to which we have just listened left on my mind the impression that the Government still do not realise how profoundly the nation is disturbed over this matter of aeroplanes. My noble friend Lord Lothian, in his most convincing speech in the last debate, and the speeches that were made in another place during a discussion on the same subject, indicate the reasons for that disturbance of opinion. And opinion is the more disturbed by the fact that the assurance0 given by the Government again and again that after such-and-such an interval, by such-and-such a date, our armaments would be adequate, have not, in fact, been fulfilled. On more than one occasion the Government have said: "By such-and-such a time we shall be equal to such-and-such a Power." Or they may have said: "Our programme is behindhand now, but such measures are being taken that in a few months we shall no longer be behindhand, but will be fully up to promise and expectation." But again and again it has been found, in fact, that that is not so, and the Government have had to come forward and say that circumstances over which

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  they had no adequate control have arisen, that they have done their utmost, but have not done so much as they had hoped, expected and intended.
  The noble Marquess to-day said that perhaps the preparatory stages had lasted longer than they anticipated. Yes, but when they come to-day and again give these assurances, there is naturally some feeling of scepticism, and some doubt whether perhaps three months or six months from now we may not again hear that circumstances have prevented the realisation of their hopes. The Ministers have been changed, and it may be said, "Well, give an opportunity to the new Ministers to see what they can do." But our case is not a question of one personality against another personality. It is that it is not a matter of which men are at the Ministry but a question of organisation and of whether the machinery of the State is adequate for the present menacing situation. That is why we consider that this Motion is well devised, and if my noble friend should go to a Division those of us who sit on these Benches will feel bound to support him.
  LORD MOTTISTONE: My Lords, I should like to say one word in reply, though it is hardly necessary for me to do so in view of the closing words of the noble Marquess's speech. Incidentally, may I say that the path of a man like myself, who perforce has to try to keep clear of Party conflict, is a stony one. I am belaboured by the spokesman of the Government, who does not agree, and now there is my noble friend on my left (Viscount Samuel) who belabours me because he says I tell the foreigners that the young men of this country have all turned belligerent. I will not delay your Lordships on that, but I think there is no
  harm in telling the truth. I have compared them to that bright young spark, Midshipman Easy, and we should all like our boys to be like him. What is the good of young people if they do not feel lively? They have begun to feel quite lively, and all that nonsense about the young men being those who wanted to be cautious has gone by the board, and a good job too.
  But it is equally true to say that all responsible Parties, whether Liberal, Labour or Conservative, seek peace and ensue it. It is just because I think this is the best way of securing that peace that I have moved this Motion. The only difference really between my noble friend Lord Zetland and myself and those who sit here and in some other quarters of the House, is this. He says: "It may well be that this proposed method is the most efficient. I do not deny that it may be, and perhaps it is, and indeed even in peace time we may adopt it." I think that is very fortunate, because now, when we have all Parties agreed, it is a favourable moment. "But ah," he says, "that nasty little word 'forthwith.' I cannot have it. In the near future, yes, but forthwith, no." Here we come to a complete clash.
  THE MARQUESS OF ZETLAND: I did not say sooner or later. I said sooner or later perhaps.
  LORD MOTTISTONE: That being so, a non-Party man feels bound to say that he must put the House to the inconvenience of a Division, because I say "forthwith," and I will not agree to "sooner or later perhaps."
  On Question, Whether the Motion shall be agreed to?
  Their Lordships divided:—Contents, 12; Not-Contents, 54.

  CONTENTS.

  Mersey, V.

  Denman, L.

  Mottistone, L. [Teller.]

  Samuel, V.

  Gainford, L.

  Rea, L.

  Ker, L. (M. Lothian.)

  Snell, L.

  Addison, L.

  Middleton, L.

  Stanmore, L.

  Strabolgi, L. [Teller.]

  NOT-CONTENTS.

  Hailsham, V. (L. President).

  Airlie, E.

  FitzAlan of Derwent, V.

  Cavan, E.

  Halifax, V.

  De La Warr, E. (L. privy seal.)

  Grey, E.

  Trenchard, V.

  Lucan, E. [Teller.]

  Ullswater, V.

  Mar and Kellie, E.

  Devonshire, D.

  Midleton, E.

  Aberdare, L.

  Munster, E.

  Addington, L.

  Plymouth, E.

  Basing, L.

  Dufferin and Ava, M.

  Powis, E.

  Brocket, L.

  Zetland, M.

  Stanhope, E.

  Clanwilliam, L. (E. Clanwilliam.)

  Dickinson, L.

  Jessel, L.

  Rushcliffe, L.

  Ebbisham, L.

  Kenilworth, L.

  Sackville, L.

  Fairfax of Cameron, L.

  Killanin, L.

  Sherborne, L.

  Fermanagh, L. (E. Erne.)

  Lamington, L.

  Stonehaven, L.

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

  Mancroft, L.

  Strathcona and Mount Royal, L.

  Grenfell, L.

  Milne, L.

  Greville, L.

  Newton, L.

  Templemore, L.

  Hampton, L.

  Ormathwaite, L.

  Teynham, L.

  Hawke, L.

  Palmer, L.

  Wardington, L.

  Iliffe, L.

  Redesdale, L.

  Windlesham, L.

  Wolverton, L.

  On Question, Amendment agreed to.

  POOR'S ALLOTMENT IN HANWELL BILL.
  House in Committee (according to Order): Bill reported without amendment.

  BRITISH OIL PROPERTIES IN MEXICO.
  LORD NEWTON LORD NEWTON asked His Majesty's Government whether they can make a statement regarding the present position resulting from the suspension by the Mexican Government of diplomatic relations with this country. The noble Lord said: My Lords, in consequence of the peculiar habits of this place, one of which is that important debates do not start before half-past four in the afternoon, I do not propose to detain your Lordships for more than a few minutes. I shall compress what I have to say within the shortest possible limits. There may be noble Lords present who remember the debate which took place on the subject of Mexico some weeks ago. In that debate I ventured the opinion that we should never obtain any satisfaction unless we acted in conjunction with the Americans. After all, that is obviously the common-sense way of looking at a matter of this kind. If two persons are assaulted by a robber, they do not devise separate means of resisting him, they offer a joint resistance, and that is what one should have thought would have been the obvious thing to do in this case.
  The Mexican Government have, I have not the smallest doubt in my own mind, a most profound dislike both for this country and for the United States, but it is not quite the same kind of dislike. The dislike for America is accompanied by a considerable fear of that country, whereas they stand in no fear of us at all because we are incapable of doing them any
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  serious harm. The Mexican Government have no scruple whatever in differentiating between the two countries. The Mexican Government owe both countries very large sums of money for damage committed during the revolution. When the time came for paying the American instalment it was paid without demur, and without making any trouble at all, but when our turn arrived we received a Note couched in what I might call almost offensive terms, and accompanied by an announcement that they meant to break off diplomatic relations with us. When I advocated joint action with America I was of course perfectly well aware of the difficulty attending such action. Some people are always talking about the mutual love which exists between the two countries. It is an undoubted fact that amongst individuals there is a widespread friendship, but I cannot remember any instance in which the American Government showed any sort of desire to co-operate with us. On the contrary, it is an action which they have appeared to shrink from to the utmost possible extent, and I do not think any one can recall a case in which the American Government have wholeheartedly supported our policy, whatever it was. In view of that fact it seems almost impossible to act in conjunction with them.
  To take this very case, the American Government took action without consulting us at all. The action of the American Government came to us as a complete surprise, although the circumstances were similar and we should have thought that both countries would have acted together. That being so, our Government, in spite of my argument, although I admit that very few people ever listen to my argument, adopted a different line, and the Mexican Government are now confronted with two claims. Can there be any doubt as to which claim they will accede? Clearly anybody must see that whenever a person is disputing with two claimants he will decide for the one he is most afraid of. It is, therefore, an

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  absolute certainty that if anything is done at all it will be done in obedience to the American demand, and we shall get nothing at all. That being so, it is rather difficult to see what we can do. I give the Government credit for wishing to do the utmost to protect British subjects in commerce or elsewhere, but I do not feel at all sure, however good their intentions are and however good their policy may be in principle, that it is a practical one.
  I still think the course which I ventured to suggest would have been by far the more practical one and might have achieved some results. But I do not know that it matters very much. President Cardenas, in whom for some strange reason the American Government placed considerable confidence, has brought his country to such a state, has so completely disorganised it, has so seriously affected all industries, that he has produced a revolution, and a revolution in Mexico is an event which lasts for a long time, and it will probably end in paralysing the country and reducing it to destitution. In those circumstances neither the Americans nor ourselves are likely to get anything at all. Therefore, I very much regret to say, it does not matter very much whether the Government take the same view as I do. I think the ultimate result will be that nobody will get anything out of the Mexican Government at all.
  THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF PLYMOUTH): My Lords, I would like to thank the noble Lord for giving the Government an opportunity of making a further statement on this matter. Your Lordships will in the first instance wish to be apprised of the developments which have occurred since I last spoke on this subject on March 30. At that time I stated that His Majesty's Government, with a view to deciding what steps could most appropriately be taken to safeguard the interests of the British shareholders involved, were examining the situation resulting from the decree published by the Mexican Government on March 18 expropriating the properties of the Mexican Eagle Company and of various American-owned companies. Following upon this examination His Majesty's Minister at Mexico City, in a Note of April 8, informed the Mexican
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  Government that, although His Majesty's Government did not question the general right of a foreign Government to expropriate on bona-fide grounds of public interest and on payment of adequate compensation, this right did not serve to justify expropriations essentially arbitrary in character.
  Mr. O'Malley went on to draw attention to various irregularities in the legal proceedings of which the Mexican Eagle Company had been the object, culminating in an adverse verdict by the Supreme Court which was not, in the view of His Majesty's Government, justified on the facts, with the result that the company was called upon to implement an award quite beyond its economic capacity to fulfil. He pointed out that non-compliance with this verdict did not warrant the adoption of such a drastic measure as expropriation, and formally requested the restoration of the confiscated oil properties as the only way in which the situation could be remedied. On April 12 the Mexican Government replied at length refusing this request and challenging the right of His Majesty's Government to intervene to protect the shareholders of a Mexican company. Their Note alleged inter alia that the Mexican Government were determined to pay for the expropriated properties and that the Republic's capacity to pay was a real and certain fact. On April 21 Mr. O'Malley informed the Mexican Government that the important British interests involved gave His Majesty's Government an undoubted right to make representations on their behalf and he again requested the restitution of the expropriated properties. On April 26 the Mexican Government, in a Note to which Mr. O'Malley replied by stating that His Majesty's Government did not consider it necessary to pursue this aspect of the question further at present, reiterated their view that there was no basis for diplomatic intervention. They also stated that the Mexican Eagle Company had been invited to confer with the authorities concerned with the object of establishing the compensation to which it might be entitled.
  On May 11 Mr. O'Malley requested the Mexican Government to make immediate payment of a third instalment of approximately £20,000 sterling outstanding since January 1, 1938, in settlement of certain British claims

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  arising out of revolutionary action between 1910 and 1920, and which the Mexican Government had agreed to pay in notes exchanged on December 31, 1935. In this Note he referred to the other substantial existing debts both internal and external which the Mexican Government had failed to discharge. Such failure, he pointed out, must be regarded as in itself rendering unjustified the expropriation of the oil companies, an essential condition of the validity of which would be the payment of full and adequate compensation. Two days later the Mexican Minister of Foreign Affairs handed to Mr. O'Malley a Note which enclosed a cheque for the third instalment and argued that under the contractual agreement relating to this claim the Mexican Government were entitled to defer payment on the annuities. In addition to this argument, which Mr. O'Malley was instructed to point out to the Mexican Government is untenable under the agreement in question, the Note took strong exception to the reference to Mexico's internal indebtedness in His Majesty's Minister's Note of May 11.
  The Minister of Foreign Affairs at the same time informed Mr. O'Malley that it had been decided to withdraw the Mexican Minister from London as a protest against the Notes recently addressed to the Mexican Government on the oil situation. The Mexican Minister in London made the necessary communication to the Foreign Office on May 14, stating that the archives of the Legation would be placed in the charge of the Mexican Consul-General. His Majesty's Government then instructed Mr. O'Malley to inform the Mexican Government that His Majesty's Government had decided to withdraw him and his diplomatic staff from Mexico and to place His Majesty's Legation in charge of the Acting Consul-General. Mr. O'Malley left Mexico City on May 20 and the diplomatic protection of British interests in Mexico has been taken over by his Danish colleague, whose Government has been good enough to respond to a request for their assistance in this respect.
  In thus recapitulating the outstanding features of the Notes exchanged between His Majesty's Government and the Mexican Government, the text of which is shortly to be issued in comprehensive form as a White Paper, I have been concerned to emphasize that throughout
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  the correspondence His Majesty's Government have endeavoured to secure respect for the plain principles and precepts of equity and International Law. Whilst, as stated in the first of their Notes, His Majesty's Government fully admit the right to expropriate on bona-fide grounds of public interest and on payment of adequate compensation, it was at once evident to them on reviewing the circumstances of the case that the Mexican Government could not justify their action on either of these grounds. The expressed willingness to indemnify the expropriated companies became illusory in the light of the magnitude of the interests involved and against the background of Mexico's extensive debt obligations, of which only an insignificant portion has as yet been discharged, including the substantial sums due to previously expropriated agrarians both Mexican and foreign.
  The argument of public interest which was adduced in the first article of the Mexican expropriation decree was shown to be equally untenable when considered in relation to the fact that the employees in the oilfields owned by foreign interests enjoyed conditions above the normal level prevailing in Mexico. Their wages were, moreover, almost double those paid to workmen in other Mexican industries. It was indeed the workmen themselves who were likely to be the first to suffer as a result of the changed circumstances, and it is significant in this respect that even before the Mexican Government announced their decision to expropriate the companies, official spokesmen were warning the public that it might become necessary in the immediate future to reduce the wages of workmen in the Government service. It seemed clear that the labour issue, on which the companies themselves were consistently prepared to negotiate on a fair and equitable basis, had been made the pretext for a purely confiscatory action. A labour award inherently unjust and beyond the companies' economic capacity to fulfill was made the basis for depriving them of their property altogether, in return for a promise of compensation which appeared quite illusory. The expropriation was thus the culmination of a series of events from which it cannot be separated. Its nature must be judged from the acts which preceded it, including, as I mentioned in my previous speech, the refusal

  331
  of the Supreme Court to examine the financial ability of the industry to bear the burden of additional liabilities imposed upon it by the labour award of December 18, 1937.
  It is also pertinent to point out that, at the time when the Mexican Government decided to promulgate the expropriation decree, representatives of the companies were engaged in discussing with officials of the Mexican Government a labour formula, submitted on their own initiative, which would have increased the annual liabilities of the companies to the fullest extent compatible with their capacity to pay out of current earnings. The combined profits of the oil companies, it might be observed in passing, averaged no more than 23,000,000 pesos during the years 1935 to 1937 on a capital investment of thousands of millions of pesos. Lastly, the expropriation decree itself, which interrupted these negotiations when they appeared to be approaching a successful issue, constituted a step far beyond what was necessary if the real object of the Mexican Government had been (as it was stated to be) to promote the national interests or the welfare of the Mexican wage earners.
  For all these reasons His Majesty's Government felt fully justified in taking the line that only by a restoration of the properties could justice be done. I can, however, assure your Lordships that although the United States Government have so far elected to concentrate their efforts upon an attempt to secure adequate compensation rather than upon a demand for the restitution of the properties themselves, they have fully understood the different attitude adopted by His Majesty's Government, who much appreciate their sympathetic reception of the explanations of their policy which His Majesty's Ambassador has from time to time imparted to them.
  In conclusion I would add that the decision of the Mexican Government to suspend diplomatic relations has introduced a new factor into the situation which obliged His Majesty's Government to consider what course it would be most appropriate to pursue in these circumstances. It is proposed to defer a definite conclusion in the matter until His Majesty's Government have had the
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  opportunity of reviewing the whole situation with Mr. O'Malley, whose arrival in London from Mexico is expected towards the end of this month. I must add that throughout this unhappy affair His Majesty's Government have felt that they must reserve their right to take all possible steps in their power to protect British interests abroad.

  SEA FISH INDUSTRY BILL.
  Order of the Day for receiving the Report of Amendments read.
  LORD TEMPLEMORE: My Lords, in moving that this Report be received, I would say that I hope your Lordships will excuse my appearance at this box instead of my noble friend the Earl of Feversham. My noble friend has gone to Rome as the official British delegate at a conference of the International Institute of Agriculture. In those circumstances I have been called to take his place. I beg to move.
  Moved, That the Report of Amendments be now received.—(Lord Templemore.)
  On Question, Motion agreed to, and Amendments reported accordingly.
  Clause 4:
  Power of Commission to regulate marketing of white fish.
  (4) The Commission may, in relation to premises used for fish markets, make regulations—

  (a) for regulating the holding and conduct of auctions in respect of white fish at any such premises as aforesaid, and, in particular, for fixing or limiting the number of places at which such auctions may be separately held on the premises at the same time;

  (b) for fixing or limiting the charges that may be made by any person in respect of sales of white fish which, at any such premises as aforesaid, are effected by him on behalf of another person, or in respect of goods supplied, or services rendered, by him in connection with the consignment of white fish for sale at any such premises;

  LORD TEMPLEMORE LORD TEMPLEMORE moved, in subsection (4), to leave out "in relation to premises used for fish markets." The noble Lord said: My Lords, under subsection (4) of this clause regulations made by the Commission may apply only in relation to premises used for fish markets. Paragraph (c) of this subsection, which

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  gives power to the Commission to make regulations requiring the salesman, where fish are sold on commission, to furnish certain particulars of the sale to the owner or consigner of the fish, was inserted in the Bill by your Lordships on Committee stage. Sales of fish on commission may, however, take place outside the actual premises used for a market. Moreover, it is felt on consideration that the word "premises" imposes a limitation as regards paragraphs (a) and (b) of the subsection that is unnecessary and, indeed, may be undesirable. I beg to move.
  Amendment moved—
  Page 6, line 32, leave out from ("may") to ("make") in lint 33.—(Lord Temple-more.)
  LORD TEMPLEMORE: My Lords, the next Amendment, in paragraph (a), is consequential. I beg to move.
  Amendment moved—
  Page 6, line 35, leave out ("at any such premises as aforesaid").—(Lord Templemore.)
  LORD TEMPLEMORE: My Lords, the next Amendment, in the same paragraph, is also consequential. I beg to move.
  Amendment moved—
  Page 6, line 38, leave out ("on the premises") and insert ("at any one place or set of premises").—(Lord Templemore.)
  LORD TEMPLEMORE: My Lords, there is a third consequential Amendment, in paragraph (b). I beg to move.
  Amendment moved—
  Page 6, line 42, leaves out ("at any such premises as aforesaid").—(Lord Templemore.)
  LORD TEMPLEMORE LORD TEMPLEMORE moved, in subsection (4) (b), after "another person," to insert "(whether by auction or on commission or otherwise)." The noble Lord said: My Lords, this is really little more than a drafting Amendment designed to make it clear that the regulations which the Commission are empowered to make for fixing or limiting charges made by a person selling white fish on behalf of another person apply to all such sales whether carried out by auction or on commission or otherwise. I beg to move.
  Amendment moved—
  Page 6, line 43, at end insert ("(whether by auction or on commission or otherwise)").—(Lord Templemore.)
  LORD TEMPLEMORE: My Lords, the next is a drafting Amendment in paragraph (b). I beg to move.
  Amendment moved—
  Page 7, line 3, after ("fish") insert ("to him").—(Lord Templemore.)
  LORD TEMPLEMORE: My Lords, the next Amendment is consequential. I beg to move.
  Amendment moved—
  Page 7, line 3, leave out ("at any such premises") and insert ("as aforesaid").—(Lord Templemore.)
  Clause 7:
  Constitution of boards to administer marketing schemes.
  (2) It shall be the duty of the Ministers to satisfy themselves, with respect to any person whom they propose to appoint to be a member of the board to administer a marketing scheme, or who is a member of such a board, that that person will have or has, as the case may be, no such financial or commercial interest as is likely to affect him in the discharge of his functions as a member of the board; and any such person shall, whenever requested by the Ministers so to do, furnish to them such information as they consider necessary for the performance of their duty under this subsection.
  LORD TEMPLEMORE LORD TEMPLEMORE moved, after subsection (1), to insert:
  "(2) Every person who, by virtue of an appointment of the Ministers, is a member of the board administering a marketing scheme shall hold and vacate office in accordance with the terms of the instrument under which he is appointed; but any such person may, notwithstanding anything in such an instrument, resign his office by a notice given under his hand to the Ministers, and, upon ceasing to hold office, shall be eligible for reappointment to the board."
  The noble Lord said: My Lords, on the Committee stage of the Bill attention was drawn by my noble and watchful friend Viscount Bertie of Thame, who I regret is not in his place now, to a defect in Clause 7 (2) of the Bill in that the subsection (which lays on Ministers the duty of satisfying themselves that any person appointed by them as a member of a marketing board has no such financial or commercial interest as would

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  be likely to affect him in the discharge of his functions as a member of the Board), made no provision for Ministerial action in the case of an unsuitable member. It was then indicated that the Government would move an Amendment on Report stage to meet this point and the Amendment now proposed is designed to achieve this object. The Amendment applies in relation to the independent members of a marketing board the same procedure as is applied to the members of the White Fish Commission, under paragraph 3 of the First Schedule to the Bill; that is, the conditions under which such member shall hold and vacate office will be embodied in the instrument of appointment. I beg to move.
  Amendment moved—
  Page 10, line 25, at end insert the said new subsection.—(Lord Templemore.)
  LORD TEMPLEMORE LORD TEMPLEMORE moved, in subsection (2), to leave out "or who is a member of such a board." The noble Lord said: My Lords, this Amendment and the next two following Amendments on the paper which should all be read together are drafting Amendments designed to bring Clause 7 (2) of the Bill into line with paragraph 5 of the First Schedule. It was found that paragraph 5 of the Schedule as originally drafted inferred that there was to be a continuing obligation on the Ministers to satisfy themselves that a member of the White Fish Commission did not acquire such financial or commercial interest as would be likely to affect him in the discharge of his functions as a member of the board. It was considered sufficient that Ministers should so satisfy themselves only from time to time and Amendments were therefore moved and carried on Committee stage to effect this. The three Amendments now proposed achieve the same object in relation to members of marketing boards appointed by Ministers. I beg to move.
  Amendment moved—
  Page 10, line 29, leave out from ("scheme") to the first ("that") in line 30.—(Lord Templemore.)
  LORD TEMPLEMORE: My Lords, I beg to move the next Amendment.
  Amendment moved—
  Page 10, line 30, leave out ("or has, as the case may be").—(Lord Templemore.)
  LORD TEMPLEMORE: My Lords, I beg to move the last of these drafting Amendments on this clause.
  Amendment moved—
  Page 10, line 33, after ("board") insert ("and also to satisfy themselves from time to time, with respect to any person who, by virtue of an appointment of the Ministers, is a member of the board, that he has no such interest as aforesaid").—(Lord Templemore.)
  Clause 9 [Licensing provisions of producers' marketing schemes]:
  LORD TEMPLEMORE: My Lords, the Amendment to this clause is a drafting Amendment. I beg to move.
  Amendment moved—
  Page 14, line 25, after ("scheme") insert ("or").—(Lord Templemore.)
  Clause 15:
  Appointment and functions of consumers' committee and committee of investigation.
  (5) If the committee of investigation reports to the Ministers that any provision of a marketing scheme or any act or omission of a board administering such a scheme is contrary to the interests of consumers of white fish, or is contrary to the interests of any persons affected by the scheme and is not in the public interest, the Ministers, if they think fit so to do after considering the report,—
  (a)…
  LORD TEMPLEMORE: My first Amendment to this clause is a purely drafting Amendment to correct a grammatical error to which attention has been drawn by my noble friend Viscount Bertie of Thame. We are much obliged to the noble Viscount for his help. I beg to move.
  Amendment moved—
  Page 22, line 42, leave out ("their") and insert ("its").—(Lord Templemore.)
  LORD TEMPLEMORE LORD TEMPLEMORE moved, in subsection (5), after "or", where that word occurs for the third time, to insert "that any such provision, act or omission." The noble Lord said: My Lords, this is a drafting Amendment designed to bring the wording of the first part of this sub-

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  section, which defines the action which may be taken by Ministers on a Report of the Committee of Investigation on the working of a marketing scheme into line with Clause 13 (7) of the Bill which defines the action which may be taken by Ministers independently of any such report from the Committee of Investigation, after considering the effect of the operation of a scheme. I beg to move.
  Amendment moved—
  Page 23, line 12, after ("or") insert ("that any such provision, act or omission").—(Lord Templemore.)
  Clause 19 [Registration under co-operative schemes]:
  LORD TEMPLEMORE: My Lords, there is a drafting Amendment to this clause. I beg to move.
  Amendment moved—
  Page 27, line 21, leave out ("such a") and insert ("the").—(Lord Templemore.)
  Clause 20 [Provisions with respect to submission, confirmation, amendment and revocation of co-operative schemes]:
  LORD TEMPLEMORE: My Lords, this is another drafting Amendment to correct a grammatical error to which attention has been drawn by my noble friend Viscount Bertie of Thame. I beg to move.
  Amendment moved—
  Page 29, line 36, leave out ("their") and insert ("its").—(Lord Templemore.)
  First Schedule [Constitution of the Commission]:
  LORD TEMPLEMORE: My Lords, this is a drafting amendment. The word proposed to be omitted would appear to be unnecessary in view of the subsequent words "given under his hand." I beg to move.
  Amendment moved—
  Page 61, line 14, leave out ("written").—(Lord Templemore.)
  Second Schedule [Incidental Provisions as to White Fish Industry Joint Council]:
  LORD TEMPLEMORE: My Lords, this is a drafting Amendment exactly similar to the Amendment made in the First Schedule. I beg to move.
  Amendment moved—
  Page 63, line 15, leave out ("written").—(Lord Templemore.)

  WORKMEN'S COMPENSATION (AMENDMENT) BILL.
  House in Committee (according to Order): Bill reported without amendment.
  House adjourned at ten minutes past seven o'clock.