§ Order of the Day for the Second Reading read.
§ 3.40 p.m.
§ LORD TEMPLEMORE
My Lords, this is an important Bill of 39 clauses and 7 Schedules which is intended to provide powers which will enable the cotton industry to improve its organisation with a view to checking the serious decline in trade which has taken place in recent years. The causes which have led the cotton industry to ask for legislation to enable them to seek the aid of Parliament to put their house in order are too well-known to your Lordships for it to be necessary to refer to them other than quite briefly. Your Lordships are aware, I think, that since 1914 there has been a very serious decline in the export trade of the industry due to causes quite beyond the control of the industry. During the War there was naturally a heavy fall in our production of cotton goods, and this led to the establishment or expansion of local industries in some of our principal markets. India, China, Egypt, Canada and Brazil between them took more than one-half of the total exports of cotton piece goods. The exports to these countries have now fallen to less than one-tenth of the quantity in pre-War years This development of economic self-sufficiency has accounted for more than two-thirds of our total loss of exports. The other third is mainly attributable to Japanese competition. Low labour costs coupled with the effective co-operation of her commercial interests have enabled Japan to cater for an increasing share in the demand for the cheaper classes of goods. The surplus of productive capacity consequent on the fall in demand has led to an economic price cutting both in the home markets and in the overseas markets which the industry still holds. This in turn has still further weakened the position of the industry and has delayed the modernisation of plant which the severity of Japanese competition has rendered imperative.
Now it has long been realised that this fruitless competition can only be eliminated by reducing the capacity of the industry to something approaching that necessary to satisfy normal demands. Your Lordships will recall the proposals that were submitted by the spinning section 268 of the industry some years ago and which were subsequently embodied in the Cotton Spinning Industry Act, 1936, very often known as the Spindles Act, which was conducted through another place by my noble friend the Lord President who was then President of the Board of Trade and which I had the honour to take through your Lordships House. This Act dealt with the problem of redundant capacity in that section of the trade, and it will not be necessary for me to do more than say that the experience of the working of that measure has shown the considerable advantage of dealing with redundant capacity by a statutory scheme which enables the redundant plant to be removed from the industry speedily and in an orderly manner, rather than by a war of attrition (in which firms are removed from the industry by a process of bankruptcy), which would necessarily leave all the remaining firms in a seriously weakened position.
In a widespread industry such as the cotton industry, however, redundancy schemes must rest on a statutory basis in order that the considerable burden of purchasing redundant plant can be distributed equitably among all the concerns in the industry. Redundancy exists in other sections of the industry besides the spinning section and one of the main objects of this Bill is to provide facilities for further schemes on the lines of that adopted for spinning under the Spindles Act to which I referred just now. Efforts have been made on a voluntary basis in the industry for dealing with another aspect of the problem of surplus capacity. The volume of trade now available is quite insufficient to occupy anything like the whole machinery of the industry, and fierce internal competition has led to producers accepting orders at prices that very often do not cover manufacturing costs. This has brought the trade down to wholly uneconomic levels. Some efforts have been made by voluntary price-fixing schemes to remedy this state of affairs, but the success of these schemes has suffered, and is always liable to suffer, from the fact that they possess no means of preventing, in times of bad trade, individual firms from breaking away from the agreements and undercutting minimum prices. The inevitable result has been the weakening of the resources of the industry. If business is continually carried on without profit and 269 sometimes at a loss, no provision can be made for replacement of obsolete machinery, and the industry must descend, stage by stage, to a state of inefficiency. In these circumstances, the second main object of the Bill is to provide means whereby the price structure of the industry may be underpinned by schemes for minimum prices.
Now two years ago reorganisation schemes requiring legislation were submitted to my right honourable friend Mr. Stanley at the Board of Trade by the printing and dyeing sections which, after careful consideration, my right honourable friend on behalf of the Government found himself unable to accept because these schemes did not appear to have any relation to the problems of the cotton industry as a whole but were schemes designed to deal only with the particular sections with which they were concerned. At the same time the industry were informed that the Government were ready to give any help they could towards reorganisation of the industry on lines which the Government and Parliament could approve, and the Joint Committee of Cotton Trade Organisations were invited to prepare a scheme of reorganisation for the industry as a whole. This Bill is based upon proposals prepared by the Joint Committee in response to this suggestion. The first draft of the joint Committee's proposals was submitted in November, 1937. Prolonged discussions were necessary both between interests within the industry and with other textile interests that might be affected by the proposed legislation. As a result of these discussions numerous modifications were introduced with the object of securing the greatest possible measure of agreement among the interests concerned. In December last the Joint Committee submitted to the Board a revised draft of their proposals embodying these modifications. These proposals were circulated by the Joint Committee among firms in the industry in order to obtain the views of the industry on them.
Subsequently a Command Paper No. 5935 was issued containing the draft of a Bill based substantially on the revised proposals of the Joint Committee. A ballot of the industry was taken under the direction of my right honourable friend the President of the Board of Trade on this draft Bill and steps were 270 also taken to ascertain the views of the operatives and of the merchants. The firms who voted on this question represented over three-quarters of the estimated number of firms in the industry and on the basis of employment the proportion exceeded five-sixths. For the industry as a whole the proportion of votes in favour of the Bill was 65 per cent. measured by the number of firms, 72 per cent. measured by employment, and 70 per cent. measured by output. Replies from the three trade unions consulted indicated that they were in favour of the Bill.
On the other hand the reports from the. Chambers of Commerce showed that the merchants were opposed to the measure. The Government were then faced with the dilemma that the industrialists and operatives were in favour of the Bill while the merchants were opposed to it. The Bill, however, was essentially one designed by the producers to remedy the grave difficulties with which they were faced, and in the circumstances my right honourable friend and His Majesty's Government felt that the views of the merchants could not be allowed to override those of the industry in general. In the circumstances the Government decided to introduce the measure as a Government Bill, which is the Bill now presented to your Lordships During the course of its passage in another place, however, considerable modifications were made in the Bill to meet the objections raised by the merchanting interests. Opposition also came from the rayon producers, but here again after lengthy discussions Amendments were made in the Bill to meet many of their objections. I shall refer later to the various Amendments which have been made to meet the views of merchants and rayon producers.
I now turn to the Bill itself and with the permission of the House I will deal with some of the more salient features. First of all the Bill is essentially an enabling measure. Its purpose is to provide machinery for the organisation of the industry and the formulation and approval of sectional schemes. The co-ordinating body is the Cotton Industry Board, constituted under Clause I and the First Schedule. The Board is to act generally as the mouthpiece of the industry. It is to consist of fifteen members. Three of them are to be appointed as independent 271 persons having special knowledge of the industry, and will be remunerated. The remaining twelve will be persons associated with the cotton trade and will be appointed after consultation with the appropriate trade organisations representing industrialists, operatives and merchants. The Board has among others the important function of the consideration from the point of view of the industry as a whole of schemes relating to redundancy and prices in particular sections. Various duties in connection with trade development are also laid upon it. In the discharge of these functions the Board will sit as a whole. On the other hand the independent members are to sit alone for the purpose of discharging certain functions where the Board has to examine the details of individual businesses and in such cases they will exercise the full authority of the Board.
Clause 2 provides for the appointment by the Board of Trade of a Cotton Industry Advisory Committee, consisting of three independent persons. Broadly the duty of this body is to advise and assist the Board of Trade in matters relating to the industry. In particular it will be the duty of this Committee to consider sectional schemes from the aspect of trade and industry generally. Clause 3 provides for the appointment of a Representative Advisory Council, whose duty it will be to advise the Cotton Industry Board in the exercise of its functions. The council will consist of representatives of all the interests engaged in the industry as well as merchants and rayon producers.
The most important part of the Bill deals with sectional schemes which are dealt with in Clauses 6 to 18. They may be one of two kinds—schemes for the elimination of redundant plant, and schemes for fixing minimum prices. Redundancy schemes will be of considerable benefit to the industry as they will enable production to be concentrated and so reduce the costs of manufacture. The provisions relating to redundancy schemes follow very closely those of the Cotton Spinning Industry Act, 1936. The schemes are to be administered by boards consisting of independent persons. One provision is new in the sense that it did not appear in the Act of 1936, and this I am sure will please noble Lords opposite. It is that schemes may provide for compensation 272 to employees who lose their employment as a result of the purchasing operations of a redundancy board. That is to be found in Clause 8 (3) (b). To provide the money for its activities a board will be empowered to raise loans. As in the Spindles Act the Board of Trade is given power, subject to the approval of Parliament, to guarantee the fund of a redundancy board out of which any such loan is serviced. The total amount for all such schemes to be guaranteed is limited to £2,000,000.
I now turn to Clause 23, which empowers the Board of Trade to extend for a further period of two years the purchasing powers of the Spindles Board set up under the Cotton Spinning Industry Act, 1936, and also contains other provisions varying that Act. I should add, however, in regard to Clause 23, that while the representative trade organisations have requested that the purchasing powers should be extended by two years, the Board of Trade do not intend to do so unless there is a suitable weight of opinion in the industry in favour of that course, and that a ballot of the cotton spinners is now being taken to decide the point.
I have already indicated the need for some means of underpinning the price structure of the industry and that the Bill enables the various sections of the industry to draw up schemes of minimum prices which will have statutory effect. The danger of price schemes is that the price fixed under the scheme for a product will be too high. Considerable care has been taken in this Bill to ensure that this danger does not arise. Schemes are to be formulated by the sections concerned, who submit them to the Cotton Industry Board. A scheme will show the maximum allowance which can be included in a minimim price for depreciation and profit. This will be expressed as so much per unit of output. The other sections concerned to whom the scheme must be sent will then be in a position to see how the scheme will affect the prices of the products. Thus in the yarn scheme the allowance for depreciation and the allowance for profit will be expressed at so much per lb. of yarn. The other interests concerned, for example the weavers, will then be in a position when they are considering the scheme to be able to see the maximum effect the 273 scheme can have on the price of yarn, which is of course their raw material.
It will be open to any of the interests concerned to make representations to the Cotton Industry Board regarding the scheme and the Cotton Industry Board are required to take such representations into consideration when the scheme comes before them. Further, the schemes after having been considered by the Cotton Industry Board are sent to the Cotton Industry Advisory Committee and the Board of Trade, who have before them the report of the Cotton Industry Board. This should provide ample safeguard so far as depreciation and profit are concerned. The safeguard as to the allowance for the actual cost of manufacture is rather different as, being a quantity varying from time to time according to the cost of materials, wages, etc., it cannot be inserted in the schemes themselves. When the price board fix a price for a product it does not become effective until the Cotton Industry Board have authorised it. This duty of the Board is discharged by the three independent members to whom I referred earlier in my speech.
Before giving their authorisation the Board must satisfy themselves that the minimum price fixed by the price board does not exceed the maximum limit defined in Part II of the Third Schedule. This maximum limit is determined by taking an average of the costs of a group of the most efficient undertakings and adding to this the amount stated in the scheme for depreciation and profit. A further safeguard has been added—Part II of the Third Schedule with regard to prices. It is open to anyone who can prove to the Cotton Industry Board that his costs of production are lower than those of the firms who have set the standard for the determination of the minimum price, to sell at a reduced price which will reflect the difference in cost. This will enable the exceptionally efficient firm to reap the advantage of its improved machinery or technique.
Another important provision which should be of considerable assistance in the development of trade is contained in Clause 9 (1) (f) by which the Cotton Industry Board can authorise derogations from minimum prices in order to increase or maintain the consumption of products either generally or in a particular area. 274 These concessions should be of considerable use in enabling the industry to concentrate its efforts on meeting foreign competition in the market where it is most severely felt. The concessions must be available to all persons in the section concerned and to registered merchants.
Clause 19 permits the Cotton Industry Board to undertake research and propaganda for the industry which will be paid for by levies on the industry. In addition Clause 21 gives the Beard of Trade power, subject to the consent of the Treasury, to add contributions from the Exchequer to contributions made by the industry for research. Clause 4 provides for the establishment of an Export Development Committee to advise the Cotton Industry Board on export problems affecting particular markets or particular classes of goods. This will be an important committee, since the Cotton Industry Board must always bear in mind in considering minimum prices imposed by schemes submitted to them the effect those prices may have on the export trade.
No doubt your Lordships would wish me now to refer briefly to some of the main criticisms of the Bill and the steps that were taken in another place to meet these criticisms. Perhaps I should commence by explaining that the industry has two main raw materials, raw cotton and rayon. The production of rayon is an important home industry in the hands of large and well-organised concerns. The use of rayon by a number of industries, of which the cotton industry is the most important, has developed in an amazing manner during the past few years, and rayon has taken the place of raw cotton as well as of other textile raw materials for certain classes of trade. The producers of rayon are outside the scope of the Bill, and in so far as the production of rayon is concerned they will not pay any levies or be subject to any restrictions, but they fear that the cotton interests are so strongly represented on the Cotton Industry Board that schemes designed to promote the trade in goods manufactured from rayon may be rejected if they conflict with schemes concerned with cotton.
A number of Amendments were made to the Bill in another place to meet the objections of the rayon producers, of 275 which the following are the more important. First, the right of the Cotton Industry Board to veto a sectional scheme has now been removed and, whether the Cotton Industry Board approve or not, the scheme must be sent forward to the Board of Trade. Secondly, the constitution of both the Cotton Industry Board and of the Export Development Committee has been amended so as to provide a substantial representation of the rayon interests. Thirdly, provision has been made enabling the Board of Trade to set up the Rayon Committee under Clause 15 of the Bill, notwithstanding that the majority of the interests of the cotton trade concerned with rayon may not be in favour of that course. I understand that the rayon producers attach considerable importance to these changes, which it is hoped have gone a long way towards removing their objections to the Bill.
I have already mentioned that the merchants were not in favour of the Bill. A number of Amendments have been made to meet their criticisms, including the revision of the constitution of the Export Development Committee to provide a greater representation of merchants on that body. Provision has also been made that merchants must be consulted regarding any terms and conditions that may be imposed on the sale of goods under price schemes. Other changes have been agreed in close consultation with the merchants, and there is now some ground for thinking that an expression of opinion at a recent meeting of Lancashire merchants, that there is "a real chance of a great deal of good coming from the Bill," may be taken as representing the attitude of merchants generally.
In conclusion, I would urge that this is an enabling Bill. Nothing will or can be done under the Bill unless the cotton industry, by an appropriate majority, asks that it should be done. Ample safeguards are contained in the Billing various difficulties that are likely to arise in relation to schemes of the kind for which provision may be made, and there is full opportunity for the review of schemes and for their modification, where necessary, by the Board of Trade and by Parliament. This Bill was generally welcomed by all Parties in another place. The Second Reading took place on March 27 last without a Division. 276 Since then it has spent a great deal of time in Grand Committee upstairs, and was so amended, and I think I may say improved, that the Third Reading was taken last week also without a Division. I have explained as well as I can the provisions of this very difficult and technical Bill, though I am afraid I must confess that I know nothing about cotton and also—it is a dreadful confession to make—that with the exception of frequent journeys to and from Ireland and Scotland I do not believe I have ever been in the County of Lancashire.
I happen, however, to have a great friend who is a representative of one of the most afflicted areas in this once prosperous County, a Member of Parliament in another place. I have very often talked with him about his constituency, and I have been very greatly struck by what he has told me about the bravery and the uncomplaining endurance of these gallant people—not only of the operatives, who have been thrown out of work by many thousands, but also of the many people who were once owners of mills and employed large numbers of workpeople and are now in very severe straits indeed. I esteem it a very great privilege to be allowed to introduce a measure of this kind to your Lordships. It is introduced by His Majesty's Government as a real effort to restore at least part of its former prosperity to this great County. I hope that the Bill will have an easy passage through your Lordships' House, and I beg to move that it be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Templemore.)
§ 4.7 p.m.
My Lords, I venture to agree with the noble Lord, Lord Templemore, that this is an important Bill. It is not only important, but I think your Lordships will agree that it is highly interesting. To my mind it is one of the most interesting Bills that have ever been introduced into Parliament. I want, if I may, to take up one point made by the noble Lord, Lord Templemore, because I think that if this fact of which I remind your Lordships is accepted and recognised, it really in a way explains the genesis of this Bill. The decline of the Lancashire cotton industry—Lancashire is practically a distressed area to-day, a most dreadful thing to 277 contemplate—is, of course, as the noble Lord has said, partly due to changing conditions: the growth of local textile industries abroad and so on. The once great monopoly of cotton has been broken into in country after country, not least in our own great Empire of India. This problem came before us when we were in office as a Labour Government, and we did our best to tackle it then. We did not quite have time when the events happened about which the noble Viscount, Lord Runciman, well knows and which jockeyed us out of office. I was at pains then to make inquiries about the Japanese competition, which was particularly stressed by the noble Lord, and which has, as your Lordships know, been a great menace to us in the East, in Africa and elsewhere.
I am informed from Japan—I have not been there for many years and so I have not seen the more important developments myself—that instead of having a number of little industries scattered about in a number of little cotton towns, one doing the weaving, another doing the spinning, another doing the printing, another doing the finishing, another doing the dyeing, and so on, you have in Japan a super-factory into which the raw cotton is taken, and it is spun, woven, dyed or printed and finished, and all the rest of it, under the same roof. That, combined with low wages and Government assistance in every kind of way, explains to a great degree this fierce Japanese competition which has so hit Lancashire. Lancashire built up this vast industry on free competition—on what is called in Yorkshire, at any rate, rugged individualism. These independent masters, some of them rising from the ranks—and some of their grandsons have gone back to the ranks, as the noble Lord said—by their energy and their virile independence not only built up the great Liberal Party but also built up this great industry. Now you see the highly rationalised, trustified industry in Japan competing with them, and the poor fellows are bewildered and they have not known what to do.
I approach this Bill with very mixed feelings accordingly. Here is this industry, which was so well organised in the past and which was founded by men with such great energy and adaptability, having to come almost cap in hand to the Government for assistance. Assistance 278 for what? To allow them to bring in a measure for compulsory price-rigging, for forcing amalgamations, and needless to say they were met with the opposition of the merchanting interests at once. Here you have the representatives of all producing parties, including trade unions, wanting to do something to help their thousands of members, having to fight the merchants all along the fine, and you cannot wonder at this conflict. Here you have syndicalism, which has been so condemned in the past, brought up against the individualism and Free Trade doctrines of the merchants; the merchants have lost, and they now try to make terms. Now the rayon industry want to be in it also. They are going to suffer from very great competition too. I wonder if the Government have paid attention to the development on the other side of the Atlantic of a new synthetic silk, which is I believe about to effect another textile revolution. It is "Nylon," which has been produced after years of research and experiment and the expenditure of immense sums of money. I understand that two vast plants are now in course of completion in the United States by the firm of Dupont de Nemours. This synthetic silk, I am informed, will be cheaper than real silk, just as attractive, and far more durable than rayon, and you will presently have the rayon industry in trouble. I hope that the great rayon companies in this country have made arrangements to manufacture "Nylon" over here.
I said that one could not help—anyone who has studied this subject and knows Lancashire—approaching this Bill with mixed feelings. I wonder what the noble Viscount, Lord Samuel, thinks about it. He knows Lancashire and its troubles. What a change since the conditions of the golden age of Cobden, Bright and Samuel. What does the noble Viscount, Lord Runciman, think of this? What has happened to the great doctrines of Free Trade? I cannot help shedding a tear, as an old Free Trader, when I see this revolution being brought about by a so-called Conservative Government underpinned by so-called Liberals. They have my sympathy sitting on both sides of this House. What about the former High Priest of Free Trade doctrines, the present Chancellor of the Exchequer, Sir John Simon? We have heard the noble Lord, Lord Templemore, introduce this 279 Bill, with its compulsory fixing of prices and the compulsory elimination of so-called redundant factories, and the forcing of the virile, successful, profit-making minority into some partnership with redundant semi-bankrupt concerns. I should imagine that great Free Traders of the past would turn in their graves, and that our Free Traders of the present day would turn in their political graves.
Having said that, one has to realise, as my friends did in another place, that this is an honest attempt by the industry itself, and the trade unions and the Board of Trade, to meet a very difficult situation. They have done their best under world conditions which we, of course, must all deplore, because it is really not so much Japanese competition as world conditions which explain the present distresses in Lancashire. Before dealing very briefly with that, may I say that we shall propose one or two Amendments to which I will refer. They are Committee points, but nevertheless they have been spoken about by the noble Lord, Lord Temple-more, who said for example that there would be compensation schemes for workers displaced, but that they only "may" be brought in. In the case of railway amalgamations, electricity amalgamations, and the London Transport Bill, there had to be compensation for workmen displaced by schemes of amalgamation, and we think there ought to be the same in this Bill. We thank the Government for what they have done, but we think that they should have gone further. The other point is with regard to the governing body, the Cotton Industry Board. We do not think that the 600,000 work-people are sufficiently represented. Out of a Board of fifteen they are to have only two representatives, and this Board will have the great duty of bringing forward these schemes which may mean ruin to thousands of families, and on which the whole future of the industry may depend. That is a Committee point, important as it is.
As has been stated, this Bill has not been opposed on Second or Third Reading by my friends in another place. Nevertheless, the Bill itself has grave defects in principle. We cannot agree that at this time it is good in principle to scrap perfectly good productive plant, modern up-to-date plant as much of it is, capable 280 of producing textile goods, while millions of people throughout the world, and a great many in this country, are ill-clad and in need of the products of these mills. That brings me back to the whole position of the world markets which really makes this Bill necessary. I do not want to embark upon a debate on foreign affairs, but I am sure there is not one of the noble Lords supporting the Government but would agree that if only we could bring about more settled conditions in the world, break down or reduce the trade barriers, and raise the living conditions of the teeming millions of people in Asia and Africa, who need these textile goods, then we should not have these splendid mills and machinery rotting in Lancashire. This whole principle of artificially creating a scarcity in order to keep up prices, is anathema to the Labour Party, and we must oppose it whenever we find it enshrined in any Government Bill. We think it is wrong in principle to create scarcity by destroying plant and preventing people from producing when you have on the other hand great poverty and distress and great need for the very things which you are forbidding manufacturers to make and bring to market.
That is the fundamental defect in the Bill, and we must make that protest. In the meantime I do, on behalf of my Party, welcome certain features of the Bill, and particularly Clause 19. I think the noble Lord skated rather rapidly over Clause 19, which is of fundamental importance. I can see in this clause particularly, and indeed in the Bill itself, an opportunity for organised marketing, and perhaps barter agreements, which I think are required in certain markets. I know this is exercising the attention of the Government. I know also that only certain markets are suitable for that sort of treatment, but we believe that certain markets are suitable for treatment by bulk export marketing schemes, and we see the germ of that in Clause 19 and in other parts of the Bill. It may be necessary to do for textiles, and cotton particularly, what the New Zealand Government have done for the dairy producers there. They buy the whole of the dairy products of New Zealand, and market them in bulk, with great benefit to all concerned. We believe that something of that sort will have to be done in particular markets for the cotton industry. This may sound something like totalitarian trade methods, 281 but while totalitarian trade methods are exercised by other countries, we may in self-defence have to adopt them, particularly in regard to special markets. I could not refrain from shedding a tear at this further blow at laisser faire and the Manchester school, and indeed the individualism of the Manchester man at his best.
§ 4.22 p.m.
§ VISCOUNT SAMUEL
My Lords, I had not intended taking part in this debate, but I cannot allow to pass the challenge thrown out by the noble Lord, Lord Strabolgi. It is true I have been for some time especially associated with Lancashire, a County in which I happen myself to have been born, and for two Parliaments I represented in the House of Commons a constituency the principal industry of which was the manufacture of cotton. But, on the other hand, for the last four years I have not been in close touch with the various sections of the industry, and this Bill, as the noble Lord has said in the course of his very lucid and complete exposition, is a highly technical and difficult Bill. It has passed through some changes, both pre-natal and post-natal, and it is difficult for anyone who is not in close touch with the industry at the present time to be able to offer any very useful comment. It was for that reason that I had not intended to speak. I was hoping that noble Lords who were closely connected with the industry would give this House the benefit of their advice. But the noble Lord who has just spoken has raised some questions of principle on which perhaps your Lordships would allow me to make a very few observations.
On what he regards as the grave of Free Trade and individualism he drops a somewhat crocodilian tear. I gather that his general attitude to the Bill is that, while profoundly disapproving of its fundamental principle, he approves the Bill itself. Let him not make the mistake of thinking that Liberalism is, or has been, opposed to industries organising themselves in order to promote the efficiency of their manufacture or of their distribution, or indeed to advance the welfare of the various sections which are engaged in it. On the contrary, we have for many years past strongly advocated that the various industries should draw together, should create bodies representa- 282 tive of the whole trade, and should take measures in regard to research and in regard to marketing which would promote their welfare. For ten years past we have advocated, for example, that agriculture should organise itself with regard to the improvement of its methods and its marketing, although not endorsing every one of the actual methods that have been adopted in recent years.
And especially in these days when, in totalitarian States, the Government take under their protection whole industries, organise them as a single unit, and come into a market with the whole trade in one hand, it is impossible for British industries to compete with those methods, adopted whether it be in Russia or in Germany or elsewhere, by the mere individual methods that have come to us from earlier times. It is essential, I think, that an industry like the steel industry or the coal industry should draw together, and should be able, when occasion requires, to act as a whole and to make headway, if necessary with the assistance of the Government, against the measures adopted in other lands which I have described. Where such methods of organisation take the form of steps taken by the industry itself, and not imposed upon it by the State, we should not certainly be prepared to oppose them ab initio and as a matter of principle.
With regard to the Lancashire cotton trade, of course the whole trouble has arisen from the immense drop in its exports, and that is partly due to a cause which is seldom mentioned, and which has not been mentioned to-day, but which is fundamental. The reason why the Lancashire trade first arose, and attained its great dimensions and wealth and prosperity, was due to the fact of the humidity of the Lancashire atmosphere. It is a strange and, one may say, an unnatural thing that cotton, which is not grown in this country of course, should be brought across the Atlantic, should be spun and woven in this island, and then distributed from here all over the world. And it was the advantage of climate which was unquestionably the origin of this prosperity. But now, owing to the introduction of artificial humidity, the Lancashire climate can be produced anywhere. I have visited cotton mills in India where, in the dryest of dry climates, you 283 find a degree of humidity, artificially produced, in the weaving sheds which is precisely of the same order as that which exists in Lancashire. And that is the fundamental reason why in this age we find that the Lancashire trade is subject to this severe competition in other parts of the world.
But this Bill shows how completely futile it is to attempt to deal with the competition of other producing countries by means of tariffs. This Bill is not the evidence and proof of the failure of Free Trade; it is the evidence and proof of the failure of tariffs. For tariffs were introduced into this country supported by the argument that if only we had the power to tax the goods of other countries we should immediately secure free entry into their markets for our goods. "Give us," we were told, "the retaliatory weapon, give us something that we can hit back with, and then you will find that the markets of the world will be open to British products; then you will find Lancashire and all the exporting districts flourishing as they used to in old days, and as they have not done in modern times." What has happened? That weapon has been granted to those who believed in it, and efforts have been made to smash through the protective gates of other countries, but it is found that no success has attended those efforts. The value of our exports in the last ten years has fallen by one-third, and the value of the exports of this country last year was less than it was in 1913, and this year the figures were almost precisely the same as last year.
So far as Lancashire is concerned, so far from the tariff weapon having enabled her exports to grow, at the present time the cotton exports of Lancashire are less than they have been at any time since the middle of the nineteenth century—less even than they were in the disastrous years of the cotton famine, which were coincident with the American Civil War. That is the lesson that may be drawn from this Bill. So we have the attempt made by the elaboration of organisation, by the elimination of redundant machinery, and the fixing of minimum prices to try to restore some degree of prosperity to this heavily-stricken County where, indeed, depression has been extreme and poverty most pitiful. As the noble Lord has said, if there were a revival 284 of trade owing to the mitigation of the international difficulties of the present time, no doubt all industries would in some degree flourish, but even then I question whether in Lancashire, faced with the general economic conditions of the world, the tariffs that have been adopted in many countries, and the fact that cotton-cloth can easily be produced in a country no matter what its climate may be, that revival could be very complete.
This Bill is one of extreme elaboration. The schemes that are to be adopted are surrounded by all kinds of safeguards and qualifications, minorities are protected, all kinds of compromises have been agreed to, in order to meet objections from various quarters; and for my own part I question whether the schemes which are proposed will very easily get under way. Whether they will succeed in their purpose I cannot foresee. I do not feel very optimistic, but for my own part, since this Bill is desired by great majorities in the trade, since it is the trade's own effort to achieve some measure of restoration of prosperity, while regretting the necessity for such a Bill I should not be prepared to oppose it.
§ 4.34 p.m.
§ LORD CAWLEY
My Lords, I ask your Lordships' indulgence in addressing the House for the first time. My only reason for doing so is that I feel that expression should be given to what some of us in Lancashire feel who are not in favour of this Bill. After listening to the noble Lord, Lord Strabolgi, I rather feel in speaking against this Bill as if I had just come out of a museum. I still believe in individual initiative and enterprise. I have attended trade meetings dealing with this Bill before it was drafted, and I have been unable to get a clear and detailed answer as to how this measure will help our export trade. The noble Lord, Lord Templemore, referred in sympathetic terms to a number of the cotton masters in Lancashire. I feel just as sympathetic as he does about them. I do feel that this Bill may help them, but it is very doubtful whether it will help the trade of the country, whether it will enable us to produce more cheaply than we are doing at present, and indeed I fear it will have the reverse effect.
I have asked at meetings which I have attended how our exports are to be made cheaper, which can be the only real object of such a Bill, and the answer has been 285 that it will restore order out of chaos, it will put an end to the present dog-fight. The friends of the noble Lord, Lord Strabolgi, have been telling us for the last quarter of a century that we should restore order out of chaos. They have indicated the means, but so far their advice has fallen very largely on deaf ears. We have not believed in the bureaucracy which Socialism entails, and in this Bill we have an example, not of Socialism, but certainly of the bureaucracy which will attend Socialism. Like Lord Strabolgi, I welcome Clause 19. I believe that we can get closer down to our dealings with foreign countries by means of the machinery permitted by this Bill; but the things that really interest Lancashire, or the bulk of the people in Lancashire, are redundancy and price fixing.
I presume it is expected that by the scheme of redundancy we shall get nearly full working in our mills. If that is the case, other things excepted, we should get very much cheaper production. Of that there is no doubt, but there are factors which would take away from that cheapening of production. If we have this redundancy scheme we shall have to pay levies to finance it, and that will tend to make production not cheaper but dearer. When we get into the position that this scheme is fully working we shall want profits, and we have been told this Bill has been put before us in order that we may get those profits. When we have paid for our redundancy and have paid for our profits it is very problematical whether we shall be able to sell more cheaply. I myself believe prices will go up and not down and that trade will not be at all assisted.
It is interesting to ask whether there is any precedent for this scheme of redundancy. There is a precedent in an Act passed in 1936—the Cotton Spinning Industry Act. In that measure a scheme was brought forward for the spinning section of the cotton trade, and a Spindles Board was created for the purpose of dealing with redundancy. That Spindles Board has operated, and it would be interesting if the Government would tell us whether, in fact, the redundancy scheme introduced under that Act has produced cheaper yarn for export or for use here and so reduced the price of other goods for export. I have no statistics on the subject, but it is common 286 talk on the Manchester Exchange that yarn is dearer and not cheaper since the introduction of that scheme. If a redundancy scheme works that way in the case of cotton yarn, there is no reason to suppose it will work in any other way in regard to cotton goods as a whole.
I am afraid, with regard to the minimum price, that the Committee will experience considerable difficulty in assessing the price on account of the great differences of capital charges in various concerns. A good many places have changed hands and have been bought at very reduced prices. I presume that any minimum price scheme will make provision for certain capital charges, interest on debentures and loans, and so on, and it seems to me it is going to be very difficult to assess the minimum price in some cases. Take, for instance, a mill costing £60,000 which has been sold for £6,000 and another mill which remains in the hands of its original owner. Obviously if the purchase price of £60,000 is put on to the cost of production in both mills it will make the products of the one which has changed hands and been sold at a scrap price very much dearer than they are at present. The noble Lord, Lord Templemore, has told us that in a case like that the owners can go to the Board and say they can produce more cheaply and obtain a dispensation, but the tendency, I think, will be for them to get a dispensation which will go half way, which will allow them to produce more cheaply and at the same time permit them to make a very considerable profit.
One matter that was mentioned by the noble Lord, Lord Strabolgi, was that of compensation to the workpeople. I hope that he will be successful in getting an Amendment passed on that subject. I hope also that the Government will take into consideration the difficulties that will attend compensating these workmen. When they come up to the Unemployment Assistance Board to have their cases considered any compensation that they may receive under this Bill would be nullified by the rules of the Board unless some special provision is put into the Bill to enable them to receive differential treatment to that which the ordinary applicant receives. There is one other point I should like to mention. I hope the Government may put into some part of the 287 Bill words that will indicate to those who have to deal with this compensation that they can deal with it in a differential manner. I mean this. I think when it comes to a question of compensation, that compensation should be given more liberally to men and women who are past a certain time in their lives, and also to those who suffer from some disability which has not disabled them from carrying on their occupation in a cotton mill but is practically a complete bar to them ever getting employment again.
§ 4.44 p.m.
§ LORD TEMPLEMORE
My Lords, the Bill has had a comparatively favourable reception. Even the noble Lord opposite (Lord Strabolgi), though he is loathe to praise anything done by this Government, has come to the conclusion, I think, that it is not such a bad Bill. He asked me about price fixing hampering trade development. I should like to say that care has been taken in the Bill to secure that price fixing shall not hamper trade development. Clause 9, subsection (1) (f), is specially intended to provide a means whereby all sections of the trade, merchants and producers, may co-operate in special efforts to develop trade by a reduction of the normal prices for classes of goods and in markets where such special efforts are necessary. The noble Viscount, Lord Samuel, gave us a very interesting speech. I hope he did not intend to entrap me into an argument about Free Trade versus Protection for I do not for a moment intend to indulge in that this afternoon. I know I would get the worst of such an argument because he is a far better debater than I am. I gathered, however, that on the whole he did not disapprove of the Bill.
I should like to congratulate, if I may, the noble Lord, Lord Cawley, who spoke last, upon his maiden speech, which I am sure was listened to with great interest. It is always interesting to us when someone who is an expert on his subject comes to address your Lordships' House and I hope we may often hear the noble Lord again. He asked me whether the point of the redundancy clause was to get better production. That is so. I think he asked also if there was any precedent for this. I do not think he can have been present when I made my speech in introducing the Bill.
§ LORD TEMPLEMORE
I did say that the great precedent was found in the Spindles Act, as it is known, of 1936. I do not think I have any other question to answer. The noble Lord opposite (Lord Strabolgi) said that he and his friends would have one or two points to bring forward on the Committee stage. I am not sure whether the noble Lord, Lord Cawley, did not say the same thing. I shall await with interest to see those Amendments. I may add that I propose to set down the Committee stage for next Monday, July 24, which I think will give plenty of time. I should like to say only one other thing before I sit down. The noble Lord opposite (Lord Strabolgi), as he and his supporters have often done before, rather twitted my noble friend Lord Runciman and my right honourable friend the Chancellor of the Exchequer for changing their views, as far as I could make out, about Free Trade and Protection. Possibly they may have done so. Personally I merely regard them as sensible people who alter their views when they see they ought to be altered.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.