Lords Sitting of 26 July 1939

Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
LORD WOOLTON.
Sir Frederick James Marquis, Knight, having been created Baron Woolton of Liverpool in the County Palatine of Lancaster—Was (in the usual manner) introduced.
LORD GLENTORAN.
The Right Honourable Herbert Dixon, O.B.E., having been created Baron Glentoran of Ballyalloly in the County of Down—Was (in the usual manner) introduced.
HOUSE OF COMMONS MEMBERS' FUND BILL.
Brought from the Commons; read 1a; and to be printed.
WAR RISKS INSURANCE BILL.
Brought from the Commons; read 1a; and to be printed.
HOUSE TO HOUSE COLLECTIONS BILL.
Returned from the Commons, with the Amendments agreed to.
MINING INDUSTRY (AMENDMENT) BILL.
Read 3a (according to Order), and passed.

AGRICULTURAL DEVELOPMENT BILL.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(The Earl of Feversham.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL OF ONSLOW in the Chair.]
Clauses 1 to 3 agreed to.
Clause 4 [Provisions as to negligent cultivation]:
3.24 p.m.
LORD HASTINGS: I would like if I may to address the Committee for a moment on the subject of Clause 4, not that I have any Amendment on the Paper, as your Lordships are aware, but in answer to a number of inquiries my noble friend the Parliamentary Secretary, in the course of the Second Reading debate, made one most interesting answer arising out of the criticisms which were made in the Second Reading debate upon Clause 4. He gave an assurance to the noble Earl, Lord Radnor, that in certain circumstances the persons appointed by the Minister to exercise a general supervision over fertility could be approached by any landowner, agent or other person with an interest in the particular holding, requiring an inspection to be made. There was no opportunity, of course, on the occasion of the Second Reading, to speak again after the Parliamentary Secretary had finished, but I feel that the matter ought not to be left quite as it is.
My noble friend will, I think, realise at once that it would be very peculiar for a landowner, agent or other person interested in the holding, to make a complaint of this particular nature. In the first place, I think that the landowner would regard it as very undignified. In the second place there would be certain risks attaching to such a complaint being made if a landowner were to complain of his own tenant to a third party. The tenant might, not unnaturally, turn round after he had been refused the subsidy and express to the landowner his grave doubt as to whether he would in these circumstances be able to pay his rent. I fancy that that particular safeguard which was adumbrated by my noble friend is not likely to add very much to the safeguards which are essential in this Bill. No Amendment is on the Paper, and it would not be the intention, I think, of anyone interested in this particular subject to press the matter at the present juncture; but I feel that members of all parties—because this is a wholly

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non-political matter—are so much impressed with the risks which are now being run, particularly in arable England, in respect of the entire and complete lack of control of bad farming, that they think something will shortly have to be done of an effective character by somebody to remedy what is so apparent to all concerned.
I imagine that the only effective way of doing that will be, sooner or later; and sooner I hope rather than later, to introduce a measure to amend the Agricultural Holdings Act of 1923. That is the only effective way of doing it, because at the present time and under this Bill which is before your Lordships' House, it is evident to all that the best that the Minister can do, however dissatisfied he may be of the strength of the reports that are made to him in regard to any particular individual claiming a subsidy, is to withhold the subsidy. That does not meet the case in the least. In all probability it only makes it more difficult for the individual from whom the subsidy is withheld to continue farming at all. Agriculture requires to-day that the man who is farming his land badly should be got rid of in order that he may be replaced by somebody both able and willing to farm the land better. Consequently, something far more comprehensive than that which is contained in this Bill will be required. I wish to ask for the indulgence of the Committee only for a moment to express my feelings upon this particular subject, because if no one had expressed what I have ventured to express it might perhaps be accepted within the industry that the reply of my noble friend was considered by the agricultural industry to be adequate to the occasion, whereas in point of fact, although it was the best that he could possibly say and the best, I think, that could be done under the framework of this Bill, it is not adequate, and something infinitely more drastic will be required quite soon.
3.29 p.m.
LORD ADDISON: I should like to intervene for a moment in support of the general case that the noble Lord has presented to the Committee. I confess I was exceedingly disappointed the other day when the noble Earl told us that the reports to the Minister would be made by
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the staff crop reporters, and that apparently it was the intention of the Ministry to rely, so far as this particular clause is concerned, upon that type of report. While these gentlemen do their work very well as far as it goes, and have a great deal of work to do, really that machine is not appropriate for use for this purpose. We are now going to give considerable subsidies for the three main cereal crops and the wholesale deterioration of land that is going on has not been a bit exaggerated by the noble Lord. In fact I think he has understated the case. When we are spending these vast sums of public money I think it is incumbent upon the Minister to take some more effective powers to see that the money is being properly spent and that the land is being well used.
The Party with which I am associated take the view that it would be possible in every county or district—perhaps a district is better than a county—to set up an appropriate committee of knowledgeable, trustworthy, experienced men who would give advice and guidance on matters of this kind, which are essentially technical and which no mere outside person or reporter can possibly appreciate. We had county committees at the end of the War. Some of them operated better than others, I agree, but on the whole they did, I think, raise the general standard of husbandry. The noble Lord said that under existing Acts a landlord is practically helpless and we see in almost every arable county wholesale bleeding of the land and deterioration on a scale which I think is quite unappreciated by the mass of the people. I hope that the noble Earl will tell us, although it may not be possible in this Bill to propose anything more effective—it does not look as if it is possible—that the Government are proposing to set up some effective machinery to see that we get an improved standard of husbandry alongside this vast expenditure of public money.
3.33 p.m.
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (THE EARL OF FEVERSHAM): When replying to the Second Reading debate on this Bill I indicated, in answer to a question by my

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noble friend the Earl of Radnor, that the Government would give a definite assurance that in the case of any farmer who was to receive a subsidy under either the barley or oat subsidy proposals, a landlord or his representative, or an agricultural organisation could make representations either centrally to the headquarters of the Ministry or to the local officer of the Ministry, expressing a desire that an inspection should be made. My noble friend Lord Hastings has raised to-day a doubt as to the feasibility of a landowner in many instances being able to resort to that provision on account of the difficult relations that might ensue between landlord and tenant. I do not think there is real ground for apprehension on that account. It would be possible for any given landlord, first to make representations, as he at present does, with regard to the cultivation of any one of his tenants which he considered to be of a negligent character. If such a personal approach failed—many landlords know instances where it does fail—then, either with or without the knowledge and consent of the tenant concerned, he can write to the Ministry centrally or to the land commissioner for the district.
My noble friend Lord Addison, if I may call him such, has said that he is in doubt whether the three hundred crop reporters who are part-time officers of the Ministry can efficiently conduct these investigations and effect the remedy that is the underlying intention of Clause 4. As I endeavoured to point out in my reply to the Second Reading debate, if the report of a crop reporter is contested either by the farmer concerned or in certain instances I expect by the landowner, it will be for a full-time officer of the Ministry to go and make a second inspection. I believe that in such instances there would be ample safeguard for this work being done effectively and efficiently. I also stated briefly in the Second Reading debate that if it was found necessary in the future to appoint more crop reporters, or indeed more full-time officers of the Ministry of Agriculture, my right honourable friend the Minister of Agriculture would take such steps as he thought necessary to see that the intention underlying Clause 4 was properly implemented.
With that specific assurance that I gave to your Lordships, which I now repeat, I
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hope that the desire on all sides of your Lordships' House to see better cultivation of the land will in fact be realised. If not, if there are further instances on a large scale of cross-cropping, of white-straw crops being grown season after season, thus destroying the fertility of the land, then that will be a most fundamental and proper subject on which agriculturists, either within Parliament or outside, can raise the issue and see that further steps are adopted. I think that my noble friends Lord Hastings and Lord Radnor, as well as the noble Lord, Lord Addison, will agree that Clause 4 goes much further than the provision of inspection in the Agriculture Act, 1937. As subsidy payment can be withheld in the case of a farmer who grows oats or barley if it is proved that the land previously has lost its fertility on account of the growing of wheat, much of the harm that has previously existed will now be removed.
3.39 p.m.
LORD HASTINGS: I am very grateful to my noble friend for having given the further explanation and assurance he has given, but I am compelled to repeat that really this provision is inadequate to meet our point of view. It is inadequate by reason of the limitations of the Bill itself. The only penalty which can be inflicted is the withholding of subsidy payment upon oats or barley. If I may, I would like to draw attention to what was said by my noble friend Lord Cranworth on Monday. He said that if a man who was not farming well, who was over-cropping his land with oats and barley, got into trouble with the Ministry's officials on that account, all he had to do was to switch over to wheat farming when he would be perfectly clear from any kind of interference. That is an extraordinarily undesirable loophole to permit to any man already farming badly, and I am sure that, however well these inspectors do their duty, the limitations within which they are compelled to work will make it absolutely essential sooner or later for an Amending Bill to be introduced in respect of the Agricultural Holdings Act, 1923, when the whole matter can be properly ventilated and dealt with.
The entire farming principle could be brought under the aegis of such a Bill. Anyone approaching the subject would be

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very careful in the first place to be extremely cautious as to how the measure treated the freedom enjoyed by the Competent cultivator of the soil. That would naturally be the first desideratum. But, always bearing that in mind, there must sooner or later be statutory provision for dealing with the appalling wastage which is going on up and down the country and which will, I fear, cause in large measure the expenditure of the taxpayer to be brought to naught. I do not propose to pursue the subject any further except to wish the Ministry the very best of luck under the present Bill. I hope it will be as effective as the Parliamentary Secretary expects. I do not share his beliefs, but I do share his hopes.
3.41 p.m.
THE EARL OF FEVERSHAM: I appreciate the good wishes extended to me and His Majesty's Government by my noble friend. I would merely point this out to my noble friend as he has mentioned the eloquent speech made by the noble Lord, Lord Cranworth, in the Second Reading debate when he referred to the case of a farmer growing wheat upon wheat so as to avoid the cultivation provisions of this Bill and of the Agriculture Act, 1937. I would remind the Committee that wheat deficiency payments depend on the quantity of mill-able wheat which is sold. If wheat is grown too frequently on the same land, the yield will normally be reduced and so consequently will the amount of deficiency payments. Therefore I would submit to your Lordships that there is a definite limit of capacity to switch over the cultivation of wheat, and beyond a certain point it is far from remunerative to the farmer who does not observe the proper methods of good husbandry. That is to some extent a safeguard against the danger that has been pointed out by my noble friend Lord Cranworth.
3.43 p.m.
LORD CRANWORTH: I must say in reply that although that is, I quite admit, some safeguard, nevertheless it is a very small safeguard, because wheat growing can go on till just such time as the fertility in the particular field is destroyed, which is rather like shutting the gate after the horse has gone out.
Clause 4 agreed to.
Clauses 5 to 31 agreed to.
Clause 32:
Payments to Agricultural Mortgage Corporation.
32. The Minister may, with the approval of the Treasury, make, out of moneys provided by Parliament, to the company formed for the purposes of Part I of the Agricultural Credits Act, 1923, in the year beginning on the first day of April, nineteen hundred and thirty-nine, and in each or any of the nineteen next succeeding years, a payment not exceeding sixty thousand pounds either by way of grant or by way of loan and on such terms as may be agreed between the Minister and the said company with the approval of the Treasury.
3.44 p.m.
LORD HASTINGS LORD HASTINGS moved to insert at the end of the clause:
"But no such agreement shall have effect unless it has been approved by a Resolution passed by each House of Parliament."
The noble Lord said: Clause 32 is the clause which deals with the proposed payment to the Agricultural Mortgage Corporation, the matter I raised in the speech I ventured to make on the Second Reading. The terms of this Amendment follow the usual lines which are embodied in this Bill in other cases. We have not very much information as to how it is proposed to utilise this grant, which is not to exceed £60,000, but we have a certain amount of information. I have been anxious to ascertain exactly how that money is to be used, because there exists in agricultural circles a very grave anxiety on the part of earlier borrowers from this Corporation, who at the present time hold £6,000,000 worth of loans, in respect of the very high rate of interest which they are called upon to pay, a rate of interest, of course, which they agreed to pay at the time of accepting the loan but which has become high by reason of the fact that money rates have been very much easier since those loans were raised.
I did not think the Second Reading, nor do I think that this stage of the Bill, would be an appropriate time, quite apart from questions of Privilege which would arise, for the insertion into the Bill of specific directions as to how the Minister and the Corporation should between them agree on the allocation of this money. I do not think that would be appropriate. What I do think would be appropriate is that, when agreement has been reached between the two authorities, Parliament should have an opportunity of examining

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the agreement and of expressing its opinion upon it. It is very evident that this sum, which is not to exceed £60,000, will not be sufficient to meet the very difficult case which confronts the borrowers of the sum of £6,000,000. It is to be assumed that this money is to be devoted in future to making it possible for the Corporation to offer loans at a lower rate than those terms which had to be offered to the earlier borrowers. That is as may be, but that very fact makes it desirable that the opportunity should be given to Parliament for a debate upon the whole great subject of agricultural credit. That is really the purpose that I had in mind in putting down this Amendment.
I have no desire to delay the passage of this Bill, and, as I have already said, I have no desire to impose upon the Minister any particular directions as to how this money should be allocated; but I do want to have the opportunity of debating these arrangements later on, and far more do I want a proper and constitutional opportunity of bringing to the notice of the House the extreme urgency of the whole question of agricultural credit. While the country is now seised of the necessity of re-establishing agriculture on a better, more stable and more confident basis than has been current for several years past, it is not going to be able to do that, and still less is it going to be able to draw back into agriculture that flow of new money without which agriculture cannot survive, unless at the same time it concentrates its vision upon the problem of agricultural credit. I cannot conceive of any more important subject than that in relation to the whole question of agricultural prosperity. That is the purpose of my putting this Amendment upon the Paper. I do not want for a moment to delay the Bill, but I want to have the opportunity eventually of discussing that question of agricultural credit based upon the particular manner in which the Minister is going to dispose of this relatively small subsidy which is being given to the Corporation that is mentioned in the Bill.
Amendment moved—
Page 29, line 34, at end insert ("But no such agreement shall have effect unless it has been approved by a Resolution passed by each House of Parliament").—(Lord Hastings.)
LORD ADDISON: On behalf of my noble friends I should like to give support
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to this Amendment, and for other reasons. First, I think it is right—it is surely essential—that Parliament should have an opportunity of reviewing the conditions upon which this additional assistance is proposed to be given. For my part, also, I should think it would be very useful if we had that opportunity. I have been profoundly disappointed at the trivial extent to which the Agricultural Mortgage Corporation has succeeded in helping agriculture—far short of the anticipations which some people entertained—and it is very important, I think, that Parliament on that account, if for no other reason, should have before it whatever proposals the Minister may have to make for giving this further assistance. I hope that the Minister will accept this entirely reasonable suggestion, which is quite in accordance with constitutional practice, and I see no reason why it should be departed from in this particular case.
THE EARL OF FEVERSHAM: I may first say that the Government are in sympathy with the motives that have been expressed by Lord Hastings, and just now by Lord Addison, upon this Amendment, but for reasons of which I think my noble friend may be aware, the Government are unable to accept it in its present form. It will be remembered that the Agricultural Credits Act of 1928 empowered the Minister, with the approval of the Treasury, to make advances to the Agricultural Mortgage Corporation for the purpose of establishing a guarantee fund. None of the arrangements made under the 1928 Act were subject to the procedure of receiving an affirmative Resolution by Parliament, and it was therefore thought not necessary to make such provision covering the terms and provisions of payments made under Clause 32 of this Bill. But the Government are prepared to do as the noble Lord opposite desires—to undertake that the terms on which payments are made under Clause 32 shall be communicated to Parliament, and I hope that, having received such an assurance, my noble friend Lord Hastings will see fit to withdraw his Amendment.
At the present stage it is not possible for me to describe exactly the way in which this communication may be made, but it may, for example, be by a White Paper, or some other suitable means of laying a Paper on the Table. This procedure

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would enable your Lordships to raise any points on agricultural credit which you might wish to bring before the attention of His Majesty's Government, and in so far as the terms of this Bill will be subject to periodic review the procedure which I now propose will itself provide sufficient safeguards to meet, the point raised by the noble Lord, that when arrangements have been made by the Treasury and my right honourable friend, such alterations or arrangements can be investigated and discussed by Parliament. I hope that after this explanation my noble friend will see fit to withdraw his Amendment.
LORD HASTINGS: As I understand the reply of my noble friend, he proposes, and he speaks of course with the authority of the Government in so proposing, to make arrangements to lay upon the Table a White Paper, or to adopt some equally suitable means of informing the House of the arrangements which are to be made under this clause between the Minister and the Agricultural Mortgage Corporation. That I understand to be what the Parliamentary Secretary has said. I must confess that the actual allocation of a sum so small as £60,000 maximum per annum is hardly worth either the risk of holding up this Bill in the course of its passage through Parliament, or really of a full-dress debate by the House upon a matter of such relative triviality, because I recognise that that sum is not going to be sufficient, or nearly sufficient, to deal with the very much wider issues which are at the back of my mind, and probably also of the mind of Lord Addison. But as I understand the proposal of the Parliamentary Secretary it is that, by reason of the lodging or laying of this information, your Lordships' House will be given an additional opportunity of basing your discussion upon agricultural credits upon that particular Paper which it is proposed to lay in due course. If I am quite right in assuming that that is the intention, I am prepared to withdraw my Amendment. We shall lose nothing thereby.
THE EARL OF FEVERSHAM: I should just say that, as is customary in this House, if a matter of this description, which has only one aspect of agricultural credit, is to be submitted to the House by laying a Paper on the Table, it would
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be reasonable to expect that your Lordships would debate the fuller subject of which the actual proposals contained in the Paper formed a part.
LORD HASTINGS: I beg leave to withdraw.
Amendment, by leave, withdrawn.
Clause 32 agreed to.
Remaining clauses agreed to.
First Schedule agreed to.
Second Schedule [Provisions as to amount of fat sheep subsidy payments]:
3.57 p.m.
LORD CRANWORTH: On the question whether this Schedule shall stand part of the Bill, may I say that it had been the intention of myself and some of my friends to move an Amendment to that figure of 27,000,000, which restricts the insurance to be given to sheep. I have been advised, however, that since this might cost some additional amount from the Treasury it would not be within the purview of your Lordships' House, and further that it would be an Amendment of such substance that unless the Government accepted it to move it would be merely a waste of time. I would, therefore, like to take this opportunity of making an appeal to the Government, through the noble Earl, that even at this eleventh hour they should once more reconsider this figure of 27,000,000. On the Second Reading I gave two reasons which seemed to me to be sufficient for reconsideration, and I only now wish to add this further one, that it does seem a pity that for the sake of what I may call a ha'p'orth of tar they should do something to destroy the value of this most admirable Bill.
THE EARL OF FEVERSHAM: As I believe I indicated to my noble friend on the Second Reading, the 27,000,000 ceiling level that has been fixed under this Part of the Bill is not an arbitrary figure, and I said that if the sheep population of this country exceeds the 27,000,000, the average annual standard price of 10d. will only be reduced to the extent of one-eighth of a penny for each complete quarter of a million up to 28,000,000, and by ¼d. for every quarter of a million thereafter. Therefore, if the sheep population should be 27,500,000—

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a figure which has not been reached during the course of the last quarter of a century—the average standard price would be reduced by only ¼d., bringing it to 9¾d. So I do not think it can be anticipated that the producers of sheep in this country will materially suffer or have great sacrifices imposed upon them by a reduction of that description.
LORD CRANWORTH: I beg to thank the noble Earl for his reply.
Second Schedule agreed to.
Bill reported without amendment.

MILK PRODUCTS MARKETING SCHEME, 1939.
4.1 p.m.
THE EARL OF FEVERSHAM: My Lords, this is a scheme prepared and submitted in accordance with the Agricultural Marketing Act of 1931. It seeks powers for the regulation of the marketing of certain milk products by a board elected by producers of those products. The products are butter, cheese, condensed milk, condensed skimmed milk, dried milk, dried skimmed milk, cream and sterilised cream. The promoters of the scheme are representative of practically all the more important manufacturers of these products in Great Britain. The scheme follows the usual lines of agricultural marketing schemes. It would set up a Board elected by the producers of the various milk products, and the Board would possess the main powers authorised by the Acts for inclusion in such a scheme. They would be able to regulate the prices at which the products may be sold by registered producers, the persons to whom, or through whom, they may be sold, the terms and conditions of sale, and so on. The Board would also have power to buy or sell any regulated product.
The main objective will be to secure stability in the market for milk products, and the scheme seems to fit in well with the regulating of imports of processed milks and the plan for an International Council for processed milks. The need for such a marketing scheme has been stressed by those who have inquired into the problems of the industry, and I think that it will be generally agreed that the establishment of a Milk Products Marketing Scheme is a logical development in
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the organisation of the industry. I will not say much about the provisions of the scheme itself unless any members of the House wish to raise any questions, but I should mention that this is a scheme for controlling the marketing of the factory product, and accordingly the farm producer of these products is exempted, and also the small dairyman producer who makes only a small quantity of these products. I think that the scheme is generally acceptable to those who require to register under it, and it should bring substantial benefit both to them directly, and through them, to milk producers in general. I beg to move that the Special Order, as reported from the Special Orders Committee on Thursday last, be approved.
Moved, That the Special Order, as reported from the Special Orders Committee on Thursday last, be approved.—(The Earl of Feversham.)
4.5 p.m.
EARL HOWE: My Lords, I hesitate to intervene on a subject about which I really know nothing, but I do so for this reason. Only yesterday there appeared in a London evening paper a report of proceedings before the Brighton Town Council which showed that a certain company, apparently in Brighton, which makes ice cream, had applied to the Brighton Town Council for permission to pour 1,500 gallons of milk down the drain. I do not know whether ice cream is one of the products dealt with under this Order, or whether it is as the result of legislation passed by this Government that a state of affairs like this can exist. I am quite sure that there are a great many people living in small back streets who would give a good deal to obtain a lot of this milk, and one wonders whether we are doing right in passing all these Orders and schemes.
4.6 p.m.
THE EARL OF FEVERSHAM: My Lords, I also saw the report in the Press in regard to a large gallonage of milk which, by permission of the local borough council, was to be thrown away. I understand that the milk in question was skimmed milk and therefore it was unfit for human consumption.
LORD HASTINGS: Not "therefore."
THE EARL OF FEVERSHAM: It was skimmed milk, and it was consequently

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not milk which would receive the approval of the medical officer of health under the cheap milk scheme. I agree with the noble Earl that every avenue should be approached for the absorption of such milk, but unless such milk is going to be dried, or used in a condensed form, by a manufacturer, it would not come within the provisions of this marketing scheme. This is a marketing scheme solely for processed milks, which term under the provisions of the scheme, includes butter and cheese. I do not think that the noble Earl need have any apprehension that by the inauguration of a scheme of this character the sort of instance that he has quoted to your Lordships will be encouraged in other parts of the country.
4.7 p.m.
LORD ADDISON: My Lords, I should be glad if the noble Earl could give us a little more information on one aspect of this matter. I cordially agree that a scheme generally on these lines is required, and should be very advantageous, but not, I hope, directed on the lines of limiting the supply. There are ever so many ways in which the utilisation of milk products may be encouraged under an organised scheme. The incident to which the noble Earl has called our attention is only one of many, and such things occur frequently. If there had been a proper scheme for the utilisation of milk byproducts, that scandalous waste would never have occurred. As we all know, though it was skimmed milk, it had exceedingly good food value in it, utilisable for many purposes.
May I ask the noble Earl about another point? Will this scheme be accompanied by any standardisation of the products? I am told, for example, that a good deal of what is sold as ice cream has never seen a cow, and I believe it is possible to manipulate milk fat and other things with suitable adjuncts so that it tastes not unlike the sort of thing that we see retailed as ice cream, and passes muster as ice cream. This business is a very large business in these days, and I hope that the noble Earl will be able to assure us that there will be powers exercisable under this Order that will secure that products which are sold as milk products shall really be as described. If that is so, it
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would be an exceedingly valuable extension of our present powers.
4.9 p.m.
THE EARL OF FEVERSHAM: The products that come under this scheme have naturally to be sold in competition with imported products, and it is therefore very important that they should compete in quality and in their presentation with the imported product. I hope that wise exercise by the proposed Board of their powers in regard to grading, marking, and packing of these regulated products will be of great service to the home industry in improving the quality and standards of its products, particularly in the case of products such as butter which, as your Lordships know, is imported into this country in great quantities in standardised form, suitably marked. As the noble Lord has indicated, there is great room for development in standardising and marking such products as come under the terms of this scheme, and I can assure him there will now be greater incentive for the production of the standardised commodity which he desires to see.
4.11 p.m.
LORD ELTISLEY: My Lords, may I emphasize the point raised by the noble Lord, Lord Addison, in regard to cream? Representations have repeatedly been made to the Ministry of Agriculture as to the need for standardising cream. I came across a case myself quite recently where cream was supplied containing 23 per cent. butter fat. Suddenly, without any intimation to the public, it was altered to 16 or 17 per cent., and the purchasers still believed they were getting the same quality of cream, although that great change had taken place. Although this is a matter on which it is probably impossible ever to obtain general agreement, particularly on the part of the ice cream gentlemen who use no cream at all in the production of their product, if some notice could be taken of these representations we might have a standardised 30 per cent. cream and probably also a 23 per cent. butter fat cream. If the figure was definitely marked on the container it would be a great advantage to the agricultural producer and also a considerable benefit to the consumer.
On Question, Motion agreed to.

AMENDMENT OF THE POTATO MARKETING SCHEME, 1933.
4.13 p.m.
THE EARL OF FEVERSHAM: My Lords, when this Order was put down on the Order Paper it was hoped that necessary and adequate consideration could be given to it by both Houses before the Recess. Certain questions have since arisen concerning it which prove that this will not be possible. It would therefore be for the convenience of your Lordships' House if the Motion standing in my name, approving of the Special Order, were deferred until a later date.

BUILDING SOCIETIES (No. 2) BILL.
Order of the Day for the Second Reading read.
4.14 p.m.
THE LORD CHANCELLOR (LORD MAUGHAM): My Lords, I am afraid I shall be guilty of asking your Lordships' attention for a certain time while I endeavour to explain the measure now before you in moving its Second Reading. I am afraid also the subject is not so interesting as that mentioned in the Motion which is to follow. I must tell your Lordships at the outset, however, that the matter is one of first-rate importance and relates to an enormous number of people and an enormous amount of money. Perhaps I might tell your Lordships how vastly the business of building societies has increased since the War. In 1918 their assets were £68,000,000, in 1928 they had grown to £268,000,000, and the last figures are those for 1937, when the assets of building societies amounted to no less than £710,000,000. The borrowers were 1,400,000 in number, and they had borrowed sums amounting to £137,000,000. In these circumstances your Lordships will appreciate that the stability of these societies, the way in which they carry on their business, and the fairness and justice of their relations with those who borrow and those who lend are matters of first-rate importance.
My attention had already been called to certain aspects of the business of building societies before a case came on which is commonly known as the Borders case, which brought into prominence the relationship between particular building societies and one of the borrowers—
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namely, Mrs. Borders. As soon as that action had progressed some little time, it became apparent that the building societies were faced with a contention of really first-rate importance with regard to their business which suggested that practically the whole of the building societies in this country were acting ultra vices in lending moneys beyond those they had legal power to do, by getting not only security of the freehold and leasehold property which their members desired to use by way of security for the loan, but by taking in addition to that collateral security either from the builder or from some other person. It was suggested that they had no legal power to do so. It is still claimed, I understand, by Mrs. Borders that that is so.
Judgment in the action was not given until February 13 last, but in the meantime it had become apparent that this was a matter that could not be left to be decided with the possibility of its being ultimately decided adversely to the building societies, because as a consequence the people who had entered into transactions with building societies would have been placed in the utmost jeopardy. Accordingly it was thought right by the Government to set up—and they did set up—a Committee of the Cabinet, assisted by an official committee of civil servants, who have continuously from that time considered the way in which building societies have been carrying on business for some time past. They have had many conferences with the joint committee representative of the whole building society movement, and in the course of the discussions other points, some of them of considerable magnitude, have received consideration besides those affected by the legal issues arising in the Borders case. The Government have also taken steps, or are endeavouring by this measure to take steps, to improve the general standard in respect of title which, in the main, comes into the question, and which would afford borrowers and intending householders a greater degree of security than it is possible for them by individual efforts to obtain.
The judgment, as I have already said, was given on February 13 last. That judgment, in fact, did not uphold the view that the actions of the building societies as between them and their members were ultra vires, but it did throw

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out other doubts, including a doubt as to whether building societies were acting within their powers in entering into arrangements with the builders of the houses—that is to say, the builders who were engaged in developing and putting up houses on an estate with the object of the houses being taken over by members of building societies with the assistance of loans from the building societies. Further than that, I think some twenty other actions have been started with a view again, if possible, to succeed in establishing that the building societies are acting beyond their statutory powers. I think, therefore, your Lordships will agree that it is of the utmost importance that those matters should be set at rest, and that the enormous number of people who are interested in these transactions should know where they stand. Accordingly, this Bill was introduced into the House of Commons after a private member had first sought to deal with the matter. Perhaps I might tell your Lordships at once that this Bill was debated in the other place for ten days in Grand Committee. It was debated in an atmosphere in which all the differences of opinion were explored, and the Bill was, I think, improved. In the end it was passed without any Division in an atmosphere of general good will.
I am mentioning these facts partly in order that your Lordships should see the importance of the matter, and also because I want to say this. I have imposed upon me the task of speaking on or introducing certain Bills which in the present state of the world's affairs have not received that consideration which I, occupying the position I hold, could have wished; but this Bill has received a very great amount of consideration, and has been the subject of most careful thought and preparation. I need hardly say that the consideration which has been given to it has been entirely free from any notion of Party advantage and with a desire to deal impartially and wisely with the problem which the Bill solves. The Bill has emerged from the other place with certain improvements as a result of the very great consideration which it received in the course of passing through that place. There is one clause in particular to which I shall call attention, because I think it will tend to improve the standard of building of houses of the
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character with which this industry is concerned without at the same time imposing a financial burden upon the industry. I think I may say that the Bill is in substance an agreed measure in the form in which it now comes before your Lordships, though there are certain persons who have their own views as to what building societies should do, which views are not shared by those who are well acquainted with the industry.
I have one other fact of which to remind your Lordships. It may be that some of your Lordships are not fully acquainted with the way in which building societies carry on their business in reference to what are called builders' pools. In the early days of building societies, when I was a very young struggling junior at the Bar, those societies used to advance up to 75 per cent. of the value of the property on mortgage to the member who was seeking an advance. It is an easy mathematical sum. Suppose the house was being sold for £1,000, it would be sold on terms of deferred payments ranging over a number of years. The purchaser had to find £250 himself, and the building society advanced the other £750 which the purchaser repaid with interest over a period, say, of twenty years. But in recent times the normal average transaction of the building society has been one of a somewhat different character, because many building societies advance not 75 per cent., but 90 per cent., or even 95 per cent., of the value of the house on terms of deferred payment.
For instance, if a house is being sold for £1,000 on terms of deferred payments the builder will guarantee the building society to the extent of a big proportion of the £250 which the person buying the house would otherwise have to find himself. Therefore the transaction takes this form. The building society advances to the purchaser £950 out of the £1,000 at which the house is being sold, leaving the purchaser with only £50 to find, but the builder of the house has arranged to guarantee the building society against loss so long as his guarantee is in force, and for this purpose the builder deposits in cash an amount which in normal cases would be about one-third of the extra sum advanced by the society. That system, I may say, extends probably to 60 per cent. of all modern cases. The purchaser

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only finds about 5 per cent. of the amount of the purchase price, and he covenants with the building society to repay the whole of the mortgage by instalments to cover principal and interest, the instalments being sufficient to provide a proper return on the capital outstanding and to discharge the debt within a specified number of years. When that transaction is extended to a number of houses there comes into existence a species of builders' pool.
Under this arrangement the builder does not withdraw the amount of cash which he has deposited in the pool in respect of a particular house, but deposits a further sum of cash in respect of the next house that he builds, which is sold in the same way, and so on. The sum in the pool becomes an amount which is available for the building society to draw from in the event of any loss on any house which remains the subject of the builders' guarantee if a builder fails to comply with or fulfil his guarantee. The pool in the ordinary case covers a considerable number of houses, and in that way an estate is covered with houses. By this means large numbers of houses have been built for workingmen earning a fairly decent wage. Your Lordships can well understand that the Government are desirous of supporting any scheme by which workingmen can become owners of the houses which they occupy, and when this matter came before the Committees which have been dealing with the subject, the Government came to the conclusion, having regard to certain grievances here and there, and malpractices which they feared were being employed by some of the builders and building societies, that they should introduce this measure with five broad objectives in view. I shall mention them presently, but I want to say at once quite clearly that the great majority of building societies conduct their business admirably. I do not believe there is any substantial complaint to be made with regard to their dealings with the various persons who buy houses. But there are some which are not so good, and there is a growing competition between them.
When I go through, I hope shortly, the various things which this Bill is seeking to do, your Lordships will be able to appreciate the kind of practices as regards
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which the Government are very anxious to safeguard the societies and the purchasers of houses and the persons—mostly working men—who entrust money to building societies out of which advances are made to those who are purchasers of houses. Building societies take additional security when they lend more than 75 per cent. of what I should call the value of the house. Consequently the first thing necessary to be done was to define the types of additional security which might be accepted by a building society, because there are some who take what we may call problematical security for the extra 20 per cent. they advance. It was also necessary to ensure that in the case of a builders' pool guarantee the guarantee should be a sound and adequate security. The next thing was this. The role of the builder who has a house to sell and that of the building society, which is mainly a lending institution, should be kept distinct. The person who is borrowing the money should not imagine that the builder is the same person as the building society or that his interest is the same.
Thirdly, as far as possible, it should be provided that building societies must take such pains as are conveniently possible to have the value of the security adequately assessed for the purpose of their loan, because your Lordships can understand that a building society which is in a bad way and wants to get business will perhaps make very rash advances on houses which are very unworthy of the advance in question. In the fourth place, the purchaser should be protected as far as possible from the misconception which the Government have found to exist in certain cases as to the nature of the transaction, and that in particular he should not be led to believe that the building society has given a warranty with reference to the nature of the house and the way in which it was built, which it is not in a position to give. The building society does not build the house. Although it is called a building society, it is not a builder of houses; it is a lender of money. The house is built, it may be, by a speculative builder, and the matter does not come before the building society until the house is largely erected, and accordingly the building society has not the opportunity of watching the erection of the house from the beginning to the end.

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Lastly, if the borrower falls into arrears with his payments, and the building society decide to realise the security and to sell the property, as it is entitled to do under the terms of the mortgage, it must be made to do so for the best price that can reasonably be obtained in the circumstances. The reason of that is that it has come to the knowledge of the Government that there were cases in which certain societies—by no means the good ones—when they found a borrower in arrears, were apt to accept a price for the house just sufficient to repay them the amount of the advance. That, of course, to a person trained like myself in an equity school is a perfectly dreadful thing to do. The fair thing to do is to get the best price you can for the unfortunate mortgagor. Accordingly they thought that a special provision to that effect ought to be put into the Bill.
Those are the things which it is sought to accomplish by the Bill, but there is one other thing which I should like to mention at once, and that is the provision which is to be found in Clauses 5 and 6, which attempts—I hope it will be found successful; of course it is only an attempt at present—to diminish the risk of jerry-built houses being erected in this country to the detriment of purchasers from the working-and from other classes. The way in which that has been done is this. The Bill contains provisions enabling the Minister of Health to approve a body which will issue certificates in respect of houses erected by those builders who accept its standards. It will be required that those houses should be independently inspected on several occasions—I think it is suggested not less than five—and the builder who obtains certificates from the body in question will be required to guarantee that he will make good defects which become manifest within a reasonable period of time. This arrangement is to be backed by the private body itself, so that if the builder should unfortunately default, the person who has bought a house will have a remedy. Where societies enter into a pool agreement with a builder who is erecting houses thus certified, the Bill permits those societies to give the builder substantially better terms than those which are laid down in respect of similar transactions with other builders—namely, those builders who do not obtain certificates from the body in
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question. The result is that in substance the better builder is going to get better treatment under this Bill, and there is hope that as soon as that body gets going and people know the advantages of certificates, the people who require houses and who are purchasers under the mechanism supplied by building societies will take advantage of that device.
That is the general view of the Bill which I am asking your Lordships to consider, and I shall deal very shortly with some of the clauses, because I am bound to say that some of them are a little difficult for the layman to understand, though the meaning and effect of them are really, with few exceptions, exceedingly simple. Clause 1 validates what has been done in the past and, so to speak, puts an end to the difficulties which were raised in the Chancery action to which I have referred. Clause 2 deals with the future in cases where the building society wishes to advance sums largely in excess of the proper sum which would be advanced on the security of the freehold and leasehold property alone. That is done by providing in Part I of the Schedule a list of the types of additional securities which the building society may accept as the basis for a larger advance than what the Bill describes as the basic advance. The selection of the classes of additional security was based upon the view that the additional security must be of a safe type and that the inclusion of a security in the list can be shown to be necessary to avoid disturbances in the current and the really quite healthy business that most respectable building societies now carry on.
I may mention that Clause 2 contemplates advances to members only. Building societies also make advances to people who are not members, but with regard to those advances Clause 4 prohibits the taking of additional securities, so that they must only be advances of the basic type. In the case of a pool agreement there are complexities and the Bill goes further into detail. It prescribes the minimum requirements which such an agreement must fulfil in order that additional advances may be lawful. These requirements appear in subsection (4) of Clause 2 and in Part II of the Schedule, and are in fact in fairly close accord with what I may describe as the best practice of the best and most prudently-managed societies. Set out in

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the wording of a Parliamentary Bill they seem unpleasantly complicated, but as a matter of fact they are not really anything but simple provisions, and for the moment I do not think I need trouble your Lordships by going through them.
Then there are cases where building societies have been in the habit of entering into arrangements for large advances with big public security companies, such as, for instance, a railway company which has desired to facilitate the provision of houses for its employees. We do not want to interfere with that type of transaction. Certain housing associations are promoted to facilitate the acquisition of houses by certain professional classes, such as teachers and civil servants, and those associations have been in the habit of giving guarantees. The Bill deals with that matter in Part II of the Schedule by enabling, largely, agreements to continue to be made upon the Chief Registrar's approval being forthcoming. I may say that I anticipate no difficulty at all in such cases. There are also cases where the excess advance is given upon an insurance company's guarantee. That, again, is a matter with which we do not want to interfere, and the Bill enables the Registrar to permit it to continue provided that he is satisfied that it is in accordance with the main provisions of the Bill.
Then there is the important question of the amount of time which is to be given to the borrower to repay the loan. Of course it is an inherent feature of this type of mortgage that the early payments are largely payments of interest and the reduction of the capital debt in the early stages is slow. If the mortgage period is too long, it may be that after a certain number of years the house will depreciate in value more quickly than the capital debt will be reduced. Accordingly it is very greatly to the interest of everybody concerned that the time for repayment should not be too long. Some years ago, and in particular when I dealt with matters of this sort, a fifteen-year period was the general rule. During the last twenty years, however, there has been an increased tendency to lengthen the period, and it is not uncommon in these days for the term of repayment to be twenty-five or even thirty years. The better opinion, I think, among all those
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concerned, except some who are willing to do what I cannot help thinking is speculative business, is that thirty years is much too long. The Bill provides in Clause 6 that in ordinary pool agreement cases the period of repayment shall be not more than twenty years, except—now comes in one of the advantages of having a certified house, which, as I mentioned to your Lordships, you may get under the machinery of Clause 5—that if you get a certified house the period of repayment may be twenty-three years. There seems to be no objection to extending the period a little in the case of houses in respect of which the certificate has been obtained.
There are also certain other advantages, which I need not enumerate, in cases where the provisions of Clauses 5 and 6 have been brought into play and the house is a certified house. I should mention further that there is a provision in the Bill under which it becomes the duty of the building society to take care with regard to obtaining the valuation of the house before an advance can be made. There are also provisions which make it impossible for the directors of a building society, by the provisions of the Building Societies Rules, to contract out of the obligation to use their best endeavours to obtain the best advice that can reasonably be obtained in respect of valuing transactions. There are also provisions as to notice under Clause 8, and certain provisions as to warranties and representations, and the latter have been carefully designed so as to prevent the borrower being led to regard the society as making or being deemed to make a warranty to the purchaser that the purchase price is reasonable, or that the amount advanced is an indication of the fact that the house is fully worth the 100 per cent. on which the loan is made, unless the society so intends. No statement of that kind, made by a builder or other interested person, should in any case be given. Clause 9 deals with that matter.
Clause 11 of the Bill restricts the giving of commission to a builder by the society. It has been found that it is the practice of building societies to give commissions to builders for introducing business and that has been found not to be a very desirable practice. Accordingly in future no such commission can be given or claimed. I think I have now given your Lordships a fair account of the

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Bill and I have referred to the more important at any rate of the provisions which it contains. I need not say that I shall be very glad to give any further information should it be desired, but with the statement I have made, I hope your Lordships will be satisfied that the Bill is worthy of your consideration and one which may properly be read a second time. I beg to move.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
4.53 p.m.
LORD ADDISON: My Lords, I think your Lordships will agree that the noble and learned Lord has explained a very complicated and long overdue measure so as to make a great deal of it clearer than it otherwise would have been. I must say, having been concerned in the early days of the development of housing after the War, that one wishes that it had been possible to do something more in Clause 1 than what is, in effect, a whitewashing arrangement for a good many things which never ought to have occurred. I suppose it is unavoidable, but it must be regretted. We have seen, in a good many parts of the Metropolitan area, the worst features of speculative building of poor-class property that this country exhibits. I think, myself, that a good many of the houses which have been built under these combined arrangements promoted by building societies and builders in some parts outside London will be little better than slums in twenty years, if not earlier.
We have heard of cases of shocking materials being put into these houses, and I am only surprised that the legal actions, which really provided the spur for the introduction of this Bill, did not occur before. Tens of thousands of poor people have suffered in silence, or have grumbled to their neighbours, not being able to do anything. By these operations they have been induced to buy houses at considerably enhanced prices, and have let themselves in for weekly payments spread over many years, and long before the expiration of those years the expense of repairs will be a very substantial addition to the rent which they have been called upon to pay. There are one or two points which go to the foundation of the case which perhaps later on the noble and learned Lord will explain more at
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length. So far as I understand, it is now proposed, under Clause 12, that in regard to the value of a house which is to provide the basis of the advance, or of the amount of the mortgage which the mortgagor will incur, it shall be the duty of every director or member of the committee of management of any society to satisfy himself that the arrangements made for assessing the adequacy of the security to be taken in respect of advances to be made, are such as to ensure that the security shall be assessed by a competent and prudent person. It seems very shocking that after these hundreds of thousands of houses have been built we should have to wait as long as this before it became necessary, by Statute, for a society to have a valuation made by what is described as "a competent and prudent person."
THE LORD CHANCELLOR: The noble Lord will understand that that is the usual practice, but it has not been obligatory before.
LORD ADDISON: It is the practice, of course, of all decently conducted firms, but it has not been the universal practice. Otherwise we should not have had the scandals with which this Bill is called upon to deal. And we do know that in fact in many districts the values given have not been assessed by a competent and prudent person, but have been fixed much higher than they ought to have been. People have paid a great deal more than the houses are worth, and by this combination of operations between the building societies and the speculative builders people have been called upon to pay a debt amounting to 95 per cent. of a value which has been fixed at a much higher figure than it ought to have been fixed at and, as the noble and learned Lord explained, it has often happened that in many districts outside London these repayments have had to be extended over twenty-three, twenty-four, and even twenty-five years. Yet one sees advertisements of places where anyone who has any sound knowledge of building knows that the houses will be in a dilapidated condition long before the twenty-five years are up, unless the unfortunate persons who have been persuaded by this combination of interests to buy these houses have been

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able to spend a lot of money on repairs. The same applies, I think, to all the provisions of the Bill, particularly those which restrict the payment of commission, which is a form of mutual understanding which has crept into this scheme of house purchase, by which tens of thousands of poor people are being perpetually cripped by the inflated prices that they are called upon to pay and the long periods over which the payments are spread.
I am sure every one of us is glad to do what he can to facilitate the passage of this Bill. It has long been overdue, and as a former Minister of Health I feel a share of responsibility for not foreseeing the extent to which this scandal has developed—because it is a scandal, and it is no good pretending it is not. It has been very widespread. I am only too glad that at long last it is being dealt with. I hope that the Minister of Health will do all he can to make Clause 5 (I think it is) effective so that it may be widely used, and will place every possible premium upon builders coming within the class of good builders, which it is designed to promote.
I am afraid that just now, under the present conditions of the world, this kind of speculative building is under a cloud, partly because the market has, I think, been over-satisfied in some districts, but mainly because so many people, in different parts of the Metropolitan area especially, have begun to find that the weekly payments to which they are committed, plus repairs to keep their places in anything like a decent state of repair, have imposed upon them a burden which is becoming widely known among their friends and neighbours, and people are becoming more shy than they were of entering into these transactions. Well, it is all to the good that the brake should be put on. I sincerely hope that this Bill will be effective in preventing the further spread of this type of improper building, but I am quite sure that some future Minister of Health will find himself saddled with serious responsibilities in either replacing or restoring slums which have been re-created in our extra-Metropolitan areas, and which, if we had all been as wideawake as we ought to have been, should never have been built. For our part, we welcome the Bill, and
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will do all we can to hasten its passage into law.
5.3 p.m.
LORD MANCROFT: My Lords, this is a useful, although very complicated Bill, and I wish to welcome and support it. I shall make no criticism at all of any of its clauses. I suppose that many noble Lords, like myself, have followed word by word the discussions which took place on this Bill on the floor of the other House and while it was being moulded and improved there in Committee. I must express my admiration for the way in which the Bill has been examined there by all Parties, so that it is now in the improved condition in which we have had it handed to us. I am sorry it has not come here at an earlier date, but that cannot be helped.
I should like to offer some observations. In order to protect myself against its being said that I have offered hostile criticism about the great building societies, I will say this, that those of your Lordships who have had the privilege, as I have had, of doing municipal work in their own native districts, will know, as I do from experience, the beneficial results of these societies helping working people to obtain their own dwelling houses, to find for themselves what is the finest form of investment, that is to say the roof above their own heads, and at the same time to find for small investors a safe investment for savings. Further house building, especially in an old city such as that with I which I am connected, means further health, and that is a public benefit. For the most part, as my noble and learned friend on the Woolsack has said, these building societies have been managed by honourable men, who have tried to do a public duty, and have done it, to the benefit of their fellow citizens.
But I am bound to say that I myself was very surprised to find, during the discussions in another place, that there were unworthy practices by what were described as "sharks," and that a type of building society work was going on of which I had no suspicion, and of which the general public have never been aware. This Bill seeks to put an end to those practices and it will strengthen the good societies. I may say, however, that I do not think the great majority of building societies need give one single thought

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to this Bill; their normal conduct is so straightforward and so proper that they need not consider the provisions of this Bill. They practise the spirit of those provisions of their own accord in the normal course of their transactions.
I ask your Lordships to forgive me for talking about what may be a tiresome and uninteresting subject. But one must never forget that, as my noble and learned triend on the Woolsack has pointed out, a sum in the neighbourhood of £700,000,000, representing in most cases the savings of working people, is at stake in these societies. It is of the utmost importance therefore that all of us should endeavour to see that this money is protected, that the houses are good and of honest value and that the general principles of the building society movement are carried out in a wholesome and useful way. I do not wish to delay the passage of this Bill; on the contrary I wish to do all I can to hasten it forward. I wish however to make an observation or two in the hope that what I say may perhaps contain the germ of something useful to any Government which may be deciding to deal with building society problems, and at the same time will perhaps convey a hint to the building societies, so that they may of their own accord put their house in order.
The Bill will certainly put a check upon the mushroom type of building which certain new "shark" societies—dare I call them wolves masquerading in sheep's clothing?—have imposed on the public Jericho-built houses sold at too high a price. This Bill will help to strengthen the honest societies and check the sale of badly constructed houses, as the noble Lord opposite has said. I hope this will be so because in old cities where there are, already unfortunately, too many slums, Jericho-built houses, within a not very long period will develop into more slums. My noble and learned friend on the Woolsack has drawn attention to one clause, Clause 11, which will check the operations of builders' touts, and stop collusion, and prevent badly-built houses being passed on to inexperienced purchasers. I was recently surprised to hear that there is a type of concern which this Bill will certainly check, and which ought to have been checked years ago. Here you have a concern formed of congeries of not very straightforward people who, however, are
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within the law, operating a property investment trust, a so-called building society (it is a building society in law but it was not established primarily for the purpose of promoting thrift), a land company, and an estate management business, all run under the same auspices. These are not concerns which help the people whom we want to help. These are concerns for fleecing people, by selling badly constructed houses at unjustifiable prices, and financing the transactions by loans which may possibly entangle the purchaser besides depriving him of some of his savings.
The noble Lord, Lord Addison, spoke of his anxiety for those concerned in providing money to the building societies so that the building societies may finance working-men's houses at good value. I do not put much weight on the advantages of the valuations to which the noble Lord referred in his speech in that connection a moment ago. He spoke about—it is the usual formula—competent and prudent persons who make valuations. I do not pay much attention to people who call themselves prudent and competent valuers. It was my duty in the other House to take part in debates where we had to write off from public funds large losses under one of the Acts, I think the Agricultural Loans Act, which arose annually out of valuations made by "competent and prudent persons." When these properties were foreclosed by officials of His Majesty's Government much loss was often made. The value of a perishable thing to-day is no sure guide as to what its value may be many years hence. For that reason I do not pay too much attention to the accuracy of valuations of working-class dwellings by "competent and prudent persons" as to realisation ten years hence.
Of the suggestions I have to make, the first one is this. I am not criticising the Bill at all. I am trying to bring to the notice of your Lordships points which I believe will improve the general legislation relating to, and guide and strengthen the operations of, building societies. The system under which two or more building societies of equal or comparable size can amalgamate is faulty. At the present moment, as far as I can read the Acts of 1874 and 1894, there must be a majority of three-fourths of the shareholders, holding two-thirds of the shares, before amalgamation can take

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place. That is too restrictive. I am not lawyer enough to say, but perhaps the noble and learned Lord on the Woolsack can say, whether a matter of that kind comes within the scope of this Bill. I do not think so, but some sort of legislation should be forecast in the future to allow small or medium-sized building societies to come together and amalgamate more easily than the two Acts of 1874 and 1894 will permit. And for this reason: I would ask your Lordships to look for example at the cotton trade. A small building society restricted to a cotton district might find itself in difficulty if there was distress among the persons who owe it money—that is, people who have loans on their houses. If the eggs of that particular society were not all in the one basket in the cotton area, if the loans of that society were spread out more widely and ramifications extended into, say, a prosperous wool or shoe industry in an adjacent district, the society would be on a broader basis and less likely to get into trouble if there were distress in the single area for its loans.
Then again, quite apart from the reduction in overhead charges because of the administration of larger total loans, you would do away in some measure with unwholesome competition, underbidding, bad risks, bad business. Further, if you gave the societies power and opportunity to amalgamate more easily, you would give them a bigger area in which to collect funds, and in districts where they are well known. Such a proposal has another repercussion. The more funds you can attract into a sound building society, the less chance there is that the inexpert people who have put funds in it will lose their savings in some wild-cat or unsound scheme. That is in the general interest of public thrift. The public cannot put savings into a better or sounder organisation or investment that a building society, therefore amalgamation is an advantage to the public. You obtain a larger area over which to collect and lend funds.
The next point I would like to make is this. As a man who has been connected with trade all his life, I do not like a practice by which building societies, small and large, may allow themselves to be financed, if such is really the case, by means of hank overdrafts. I know the societies must disclose to their depositors that they have ovedrafts. But is it their
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habit to disclose and explain clearly enough to the inexpert person who deposits with them what they have in bank overdrafts? It is an undesirable practice. Banks ought not to lend their customers' money for long or fixed periods, so they retain the right to call the money in. I ask myself what would happen if a building society had a considerable overdraft with a bank when a national crisis occurred, and the bank needed to recall, and did recall, its loan to the building society. One must never forget that building society investments—that is, house property—are mostly long-term investments. A society might have great difficulty in realising quickly these investments in house-loans in order to pay the bank overdrafts; and besides it must also be remembered that in some cases the depositors' money has been obtained on the promise to repay it at short notice and even on demand. Although there is nothing at all reprehensible in this bank overdraft practice, it is one of these things with which building societies might find themselves faced and with evil consequences in time of national calamity or even in time of monetary stringency and in peace time.
Further elaborating that point as one of my suggestions, I maintain that every society should of its own accord hold not less than 10 per cent. of its assets in liquid form. I would go further and say that the proportion of liquid assets to the total deposit liability should be somewhere in the neighbourhood of 20 per cent. and kept in a separate trust fund. That would be an improvement. I know quite well that if the building societies had to put so large a portion of their assets into trustee securities, the earning power of these securities would be very little—the return would be very much less than if they were invested elsewhere. That must be taken into account, and a just balance must be made in the rate at which interest is obtainable from the borrower or even reduced to the lender. On the other hand, whatever extra cost the societies or the borrowers on houses may suffer, there is additional security given to the lender—to the people who find the money for the benefit of those who wish to buy their houses and extra stability to the societies. Let me say that one must never forget that lending long and borrowing short is a sure way to disaster. Here von have a possible case

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where the societies may have to pay money back quickly which they borrowed at short notice and have lent on long term on the security of mortgages on houses which are difficult to realise quickly.
My next point is this. The Ministry of Health have to my knowledge set up a model series of by-laws to guide local authorities in their supervision of the building of houses in their neighbourhoods. These model by-laws are good; but I am under the impression that many local authorities do not operate them. They should be used by local authorities to avoid Jericho-built houses at every operation, from the foundations to the windows, from the gutters to the roofs. There is no reason why they should not be used. Probably the explanation is laziness. The Ministry of Health has gone to the trouble to produce these model by-laws, and one of the points that might be taken into consideration at some future time is that no houses should be allowed to be built and financed under this measure or any amendment of it unless they conform to model by-laws provided for the use of local authorities by the Ministry of Health. Indeed local authorities should be compelled under penalty to operate the model by-laws.
The last point I have to make is this. Most of these building societies were originally conceived and brought to fruition in religious buildings. They were primarily constituted as organizations of thrift, good feeling and self-help. But they are not merely philanthropic institutions to-day. There is an element, a justifiable element, of profit in them, which has stimulated their development and usefulness. That profit element of the building societies system has been quite justifiably pushed along by an element of self interest on the part of the managements. Those who manage the societies receive quite properly an income, and earn their living from making a successful organisation out of the building society with which they are connected. I looked through the last Report of the Registrar of Friendly Societies some weeks ago, and I think that the total annual amount which the management takes—I do not find any fault with it—is as much as £4,000,000 for running the societies.
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I wonder whether the noble Lord, Lord Addison, realises that £4,000,000 is taken in fees and salaries for directors, managers, staffs, auditors, plus, perhaps, some further types of remuneration of which I have no knowledge. There is no provision in this or in any earlier Act as to the way the accounts of these societies should be given to the members of the society. They have to be sent in to the Registrar of Friendly Societies, and they are sent in in a lump sum, and you cannot tell who is getting this money or in what detailed division. The returns refer to directors' remuneration, and fees of staff and auditors, but they do not tell in detail what the directors are getting. Directors are quite entitled to get fees for their work, but the returns do not tell what the fees are. They do not tell either what a director or a manager may be getting other than fees, if anything, they do not tell what is paid for management salary or for valuation fees if payable to a director. I cannot specify other possible payments because I do not know what they are. There are other legitimate ways of obtaining legitimate payments which would not be called directorial fees. These are often not disclosed in annual reports, in detail, given to members of a society. There is no provision for insisting that these details should be given to members or depositors; unless the society itself makes rules to that effect. There is in Building Society Acts no provision as to the election or re-election of directors.
I think my noble friend Lord Stamp will have some sympathy with me on this following point. There is no legislative control as to who should be elected a director or by what means, or what age he should be. The proceedings are governed by rules of the relative society. One of the resultant facts about building societies is that they may if they please have men of even 75 years of age as directors and there is nothing to stop them except the self-made rules. I am nearly 70 myself; I think men of that age are not of much use upon management or directorial boards of trading companies. Matters alter very quickly in this world to-day, economically and financially, and the boasted experiences of a man of 75 are to-day worthless. The man of that age has experiences which he ought to forget and learn new experiences—but he

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is usually too rigid mentally. You do not want experience that was gained 35 years ago. There should be every inducement and opportunity of electing a man whose views are up-to-date. Old men stand in many organisations in the way of the election of men with up-to-date experiences, because methods of election do not facilitate the election of younger men with up-to-date knowledge on the building society and most other boards.
I think that some compulsion—I do not like to use the word "compulsion," but some arrangement should be made in any future Act to provide that the rules of any building society should contain provisions to show the members and depositors what the directors, the auditors and the management staffs are getting in detail, and showing also what the directors are getting other than by way of directorial fees or salaries. Under Section 148, I think, of the Companies' Act, 1929, we now know there is a gap or loophole whereby a director who receives fees can avoid showing the total that he really gets by having himself also made a managing director. That will have to be dealt with in any amendment of the Companies Act. In the same way it will be necessary in years to come to put some provision in legislation connected with building societies to provide that there shall be a full disclosure of the fees or salaries the directors and managers are getting, and that the rules of each society should, of themselves, provide that frank and candid disclosure should be made. My noble friend the Lord Chancellor will remember that earlier in this year I took some action, which he was good enough to support, about publication and circulation of the management accounts of unit trusts; and he carried out a suggestion that I ventured to make to your Lordships by which we have let some light into what a trust management did or could get and how.
I ask your Lordships' pardon for trespassing on your patience, but I venture to make these observations in order to draw your attention, and the attention of departmental officials, to points that I think would help even to improve a system which is of great value to the country. In the hope that these suggestions
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may be considered for future action I beg leave to support the Bill now before the House.
5.28 p.m.
LORD STAMP: My Lords, when we remember that there has been a development of the building society movement from domestic and parochial concerns to a national force of social and financial importance, it is a matter of surprise that so long a period as forty-five years should have elapsed since Parliament was last called upon to legislate for building societies. This in itself may be regarded as a tribute to the satisfactory manner in which on the whole the societies have been operated during this interval. Now this Bill tends to bring the practice of the societies in certain important respects up to the standards of the best administered institutions, and for that reason it may be considered to merit the approval, though that approval I think needs to be qualified in certain minor respects, of your Lordships.
There has been a publicity in connection with certain particulars and certain aspects which has tended to put matters rather out of focus. As we have learned this afternoon, the chief inspiration of the Bill was a certain law case which mainly turned upon the question of the validity of collateral securities. Now it has never been seriously suggested that the societies, any more than any other lending institutions, were economically ill-advised or morally indefensible in fortifying their loans by means of collateral security. What doubts there may have been regarding legal admissibility were due to the rather unimaginative and ambiguous phraseology of the legislation of 1874. But even so, Government precedent of recent years has seemed quite effectively to set any doubts of that kind aside, for various Governments in successive Housing Acts have recognised the principle of loans in which the property was not the only security and which were in part subject to some external guarantee. The societies' practice in accepting collaterals is merely extending this recognised principle with, I think, adequate protective safeguards in the case of the best managed institutions. This method of fortifying by collateral has been a most essential condition of the societies' post-War expansion. It would have been quite impossible without

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it and the social service that they have rendered in connection with postwar housing achievements has to some extent—indeed to a considerable extent—turned upon it.
The Minister of Health recently applauded the erection of the four millionth house since the Armistice. The reaching of this notable milestone—and the improvement in housing standards which, I think, on the whole it signifies—has been largely due to the building societies. Their resources have made it possible, at any rate to the extent of at least one half. They have advanced £1,500,000,000 over the post-War years, and these loans have been mostly to the owner-occupier class, so that in doing this they have made an important contribution to social and political stability. And they have done this without recourse to any form of State assistance or subvention. Thousands of the new owner-occupiers would have been deprived of the opportunity of sharing this improved housing standard, and the benefits of eventual unencumbered ownership, if the societies had only been able to make advances unsupported by collateral, because very many of these people, although they have settled incomes, have little capital resources. It was to help cases like that that the practice of advancing with collateral was evolved.
It was a technique, and I think a helpful technique, which smoothed the field to ownership. It is, therefore, the reverse of an instrument of exploitation which, to judge by some of the comments made, one might infer it to be. It has been the means of encouraging the decent, hard working and thrifty to be still more decent, hard working and thrifty. So far from being an object of censure, I think as practised by responsible institutions it has been an entirely satisfactory device. There is no legal pronouncement against it, and, as I have endeavoured to show, when properly managed—as it has been in the majority of cases—it has been of great social value. This Bill now universalises the procedure in this matter, and in that regard it is to be heartily welcomed. If the building societies have not, to use the word, exploited a particular technique, it is because as they are mainly constituted any form of exploitation is essentially foreign to their tradition, to their whole character and purpose. They mostly owe their origin,
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as has been said already, to little groups of working men and women who created them for service and not for profit. It is merely the scale of their operation which has changed and in most cases not their character or their tradition or the fundamentals of their method. Most of them have the characteristics of public utility undertakings and their aim is simply to bring a reasonable income into proper relationship with reasonable outgoings and so preserve a financial stability. They are just the channel by which the small saver is enabled to lend to the small borrower and they have been on the whole both well and efficiently served.
The Registrar of Friendly Societies has again and again commended the societies upon the economical basis on which they conduct their operations. On that point I would like to refer to what the noble Lord, Lord Mancroft, said. I think the best societies do give very considerable details about their outgoings—the various fees to directors and other officers and so on. At any rate they are very closely watched in regard to the percentage they bear to the whole operations of the particular society concerned. Should they be outrunning any proper proportion, the fact would stick out quite clearly to all, and would prompt questions which can always be asked, and are asked, quite freely in the annual meetings. What I do think we are entitled to say is that any question relating to the ages of directors and their remuneration or the requiring of any kind of publicity should be general and apply equally to all kinds of industries concerned. There is no reason for selecting this particular class of concern for that kind of legislation. A long experience—and these people have a very historical background which goes back to the latter part of the eighteenth century—has given them an ingrained tradition of public service, and the more you know of the worthy directors of these societies the more you realise that it is this tradition of public service which is a safeguard to the investor and the borrower alike.
In the main the Bill tacitly recognises these facts, but there are several respects in which it reflects traces of harsher and less well-informed criticism. These are chiefly evident in the restrictions proposed, notably in the prohibition of the payment of commission in certain con-

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ditions, the limit placed on the amount to be loaned, and the imposition of a maximum number of years for which the loan may run. These place a movement which has been happily free from any kind of restraint under specific control. I am not objecting for a moment to the principle of the restrictions. The principle may be perfectly right. The question is that of selection—whether it is right that legislation should confine itself exclusively to one type of mortgage institution, whether in so doing it may not open the possibility of intensified competition from other institutions that are not similarly restrained. If you have these restraints upon commission and restraints of various kinds applicable to only one type of mortgage institution, and there are other institutions which are operating solely for profit in this field of mortgage advance which are not similarly restrained, it may be that these provisions, being selective, may nullify the object of the Bill.
Those institutions are free to wage competitive warfare without any effective Parliamentary or departmental control. There are obvious dangers in any one-sided discrimination of this kind. I am advised that there are already signs that some of the less reputable companies in other fields of finance are seeking to deflect some of the business hitherto satisfactorily handled by building societies through the exploitation, to use that word, of the differential advantages which they will now enjoy. We had occasion to refer on another Bill to the difficulties that arise from selective legislation, and the only qualification I would make to approval of this Bill is that the provisions are not wide enough, that while they may be advantageous and justified in bringing the standard of the slower, less efficient and less scrupulous up to the standard of the best managed society, that alone is not enough. It is necessary that any investigations and any restrictions should be applied to all.
5.39 p.m.
THE LORD CHANCELLOR: My Lords, I should like to thank noble Lords who have spoken for the approval which they have given to the Bill after, it is quite plain, very careful consideration of this measure. I would also say that the matters to which the noble Lords, Lord
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Mancroft and Lord Stamp, have drawn attention will be very carefully borne in mind by His Majesty's Government. With reference to the point which the noble Lord, Lord Stamp, mentioned, that there may be competitive bodies who will jump into the possible breach caused by this Bill, I can tell him—what he probably knows—that again and again that has been found to be the fate of precautionary legislation of this character. You stop the possibly dishonest person from doing something which is greatly to the detriment of the public by a particular measure, and he and his adherents at once discover some other way in which they can achieve their object. All the time the Government have to the best of their power to watch anything of that kind, and they have to stop the other cracks which have become evident in the precautions which ought to be taken to prevent fraud and unfair dealing.
I do not think it would have been possible in this Bill to deal with all the matters to which the noble Lord, Lord Stamp, has referred. I think it would require a measure of a very different character, and probably one which would have been much more difficult to draw, difficult as this measure has proved to draw, because in a wide measure which would prevent all forms of improper dealings by persons who lend money for the purposes of housing or building it would be difficult to prevent interference with legitimate enterprise. However, it can be done, and if it is found that these dishonest persons mentioned by the noble Lord are taking advantage of the provisions of this Bill and introducing fraud and improper and disloyal competition, then I can assure him that the Government will intervene and endeavour without delay to produce another Bill which will prevent the consequences which he rightly pointed out are possible consequences of this Bill.
The Government are well aware of the importance of this matter, as I hope my introductory remarks this evening proved, and the dangers and risks which noble Lords have pointed out will be watched. There are a number of people who are closely in touch with the building of houses in this country and the methods under which they are being built. These things cannot be done in a corner; the facts will be available and remedial

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measures will be taken. I thank noble Lords for the speeches which they have made on this Bill.
On Question, Bill read 2a and committed to a Committee of the Whole House.

FUEL SUPPLIES IN WAR TIME.
5.43 p.m.
LORD AILWYN LORD AILWYN rose to draw attention to the matter of our fuel supplies in time of war, and to urge upon His Majesty's Government the necessity for instituting without delay a national fuel policy based upon the use of British coal, afloat—both in His Majesty's Fleet and in the Mercantile Marine—and upon the use of alternative fuels derived from British coal ashore—both in our heavy road transport and in industry as a whole—thus releasing this country from its present position of highly dangerous dependence on foreign imported oil; and to move for Papers.
The noble Lord said: My Lords, my motive in placing this Motion on the Order Paper is, first, to place the issue of our fuel supplies in time of war clearly, unemotionally and without adornment before your Lordships; secondly, to try to persuade your Lordships of the real danger of the existing position; and thirdly, if I am fortunate enough to carry the House thus far with me, to suggest the remedy for combating this danger. I may remind the House that this is not the first, nor yet the second occasion upon which I have troubled your Lordships with this matter, and lest it be thought that mine is a lone voice crying in the wilderness—in other words, if I may be forgiven the expression in your Lordships' House, that I have a bee in my bonnet—I should perhaps preface my remarks on this occasion by saying that I speak for an ever-increasing body of opinion in the country, and particularly for those with whom I am associated in what is known as the British Coal Campaign, consisting of a number of independent persons having no connection of any sort or kind with coal or oil, and no interests to serve other than the good of the country and the better attainment of national security. It may well be that greater weight will be attached by your Lordships to the view, which I shall expound for this knowledge that they are shared by a body of men, many of them
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eminent in their several spheres, who have studied this question in all its ramifications ceaselessly, tirelessly, with an open and unprejudiced mind. With these opening remarks I will, with your Lordships' permission, turn to the Motion.
The world of industry and transport to-day operates to such a preponderant extent on oil that if it is withheld the national life is paralysed. In this country not a propeller of a single ship of His Majesty's Fleet, and less than half the propellers of the Mercantile Marine, can revolve; not an aeroplane can rise from land or sea; our mechanised Army, our road transport, many of our factories—all are silent, motionless and ineffectual, without the motive power of oil which gives them life. Whence comes this vital commodity? Have we oil in this country? Are there any supplies in the Empire? I will not weary your Lordships with figures or statistics; I have given them before; I have them here, if anyone should care to see them. Suffice it to say that in the year 1938 no less than 92 per cent. of our oil supplies came from foreign countries, the remaining 8 per cent. from British sources. In spite of long, costly and sustained efforts to find virgin oil in this country, only an insignificant quantity has been discovered.
When I use the term "insignificant" I am naturally using it in a relative sense—in relation, that is, to our immense requirements. What are those requirements? In 1938 we imported into this country no less than 13,450,000 tons of oil, an increase of 700,000 tons on 1937. Year by year our consumption steadily increases, and I would remind your Lordships that these figures relate to peacetime requirements. When we come to consider what our requirements are likely to be in time of war, we are faced with the obvious difficulty that we have no real experience of a major war being waged tinder modern conditions upon which to draw, so that any estimate of our oil requirements in war time must be largely a matter of conjecture. But it is generally agreed that those requirements cannot be less than double the quantity that we require in peace time, even with the strictest rationing of consumption by non-essential users.
When one considers, for example, that a modern large high-speed bomber uses approximately a gallon of petrol a mile,

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which mens that one of these aircraft in one journey of 300 miles consumes no less than one ton of fuel; when one considers further that it takes approximately three tons of crude oil to produce that one ton of petrol; when one considers, in short, that a bomber uses a gallon of petrol a mile, more than three gallons per minute, and that one ton of crude oil produces only sufficient petrol for one of these aircraft to go fifty miles and back, it will be seen that we very soon arrive at staggering figures. One of our leading technical journals, in discussing this matter a few weeks ago, gave a rough estimate of 4,000,000 gallons of petrol as our possible daily consumption in war time, an equivalent of over 4,000,000 tons a year. That is petrol requirements alone. Be that as it may, it is clearly a fact which nobody will be found to dispute, that without vast quantities of oil arriving in this country secure from interruption we shall be unable to wage war so long as we have no alternative to exclusive dependence on imported oil. That, I submit to your Lordships, is a plain statement of fact of the position in which we stand to-day.
I turn to the dangers of that situation in war time. First and foremost it has to be admitted that we have no control of any sort over the sources of supply of over 90 per cent. of the oil that we import. We have to depend upon the good will of the foreigner, who may or may not be sufficiently friendly disposed towards us to release the oil. Over 40 per cent. of our 1938 supplies came from South and Central America, the great bulk from Venezuela. When we recall the history of our experience with the Mexican Government a little over a year ago, involving the expropriation of our oil supplies in that country, and when we reflect upon such things as the prevalence of strikes, unrest, and so forth, in the various oil fields, I venture to think that he would be a brave man who would characterise this source of supply—our major source—as an assured one.
Over 17 per cent. of our 1938 supplies came from the United States of America. What is America going to do if a major war breaks out in Europe? I suggest that she is going perhaps to mobilise her own forces. At least she is going to speed up her own rearmament, resulting in an increased demand for U.S.A. oil for her
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own purposes. This will almost certainly tend to reduce the amount which will be available for export. Add to this the complete uncertainty as to future Neutrality Bill legislation, and I think we can fairly say that there can be no cast-iron certainty about our supplies from the United States of America. Nearly 20 per cent. of our 1938 supplies emanated from Persia—Iran. Whatever the extent of our financial control in this field we certainly have not got the physical control, which is the thing that really matters, and a stroke of the pen by the head of that State would be more than sufficient to end our concession there. I will not take your Lordships any further along this particular aspect of the dangers that beset us so far as the sources of supply are concerned. Over 75 per cent. of our oil supplies emanate from those three major sources which I have named.
Let us turn, secondly, to the question of safeguarding these vast supplies in transit to this country, assuming that the oil has been released at the source. Every gallon of oil has to be transported over thousands of miles of sea, in tankers, requiring convoy and escort protection against enemy action by aircraft, submarine, and surface raider. The tanker, moreover, requires convoy, I should have added, in ballast as well as when loaded. The tanker moreover suffers from the disability of being only a half-time ship. She brings oil to these shores, and then has to return empty to the source of supply for more. The collier, on the other hand, carries a full cargo of coal on her outward journey and brings back a full cargo of foodstuffs or raw materials, on her homeward journey. I need not stress the uneconomic process of such a limitation, nor the serious implications involved at a time like the present, when we are short by something like 2,000 vessels of the number which we had available in 1914. Then with regard to our oil from Iraq, it has to flow through hundreds of miles of pipe line, easily cut in a hundred places by a mere handful of marauding Arabs, or other ill-disposed persons, and controlled by pumping stations highly vulnerable to hostile action from the air or from the ground. Protection, therefore, will be essential in war time for this very important source of supply, involving dispersion of our military effort and so a weakening in theatres of war

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where maximum strength should be concentrated. So much for the aspect of transportation.
Thirdly, there is the question of finance. At first sight it might appear that at times like these, when we find ourselves spending, during so-called peace, well over £1,000,000 a day on rearmament, the matter of payment for our oil supplies is a very minor and unimportant matter. I must remind your Lordships, however, that even during the Great War, when the demand for oil was infinitesimal compared with the world's requirements to-day, the price of oil soared. It rose to £20 per ton, and as I have stated in this House before, there was a case of one of His Majesty's ships that had to pay no less than £32 a ton for replenishing her tanks with oil, which costs £3 a ton in normal times of peace. When one considers the immensity of the demands which will be made by all countries engaged in another world war, will anyone challenge the possibility that the price of oil may well be forced up to say £40 or even £50 per ton? Even in these days of astronomical figures I suggest to your Lordships that an expenditure of something in the nature of £3,000,000 to £4,000,000 a day on our oil supplies alone, is a consideration not to be lightly ignored. I would also venture further to remind your Lordships of the Johnson Act in the United States, which prohibits the granting of loans to nations defaulting on loans floated during 1914–18. In other words, our oil has to be not only fetched but paid for.
Fourthly, and lastly, of the dangers which I am asking your Lordship's to consider in this matter of our oil supplies is the possiblity of oil exhaustion in the world. Let me say that I recognise that this is a debatable point. On the one hand we are told by the spokesmen of the oil authorities themselves that, on the basis of present-day world consumption, the proved oil reserves of the world will be exhausted in another twelve or fifteen years from now. On the other hand, when we venture to quote this presumably authoritative source we are told by those who deprecate any allusion to such a possibility as oil exhaustion, or difficulty of supplies, that the expression "proved oil reserves" does not mean anything at all to do with what such a definition would appear to mean—that it
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in fact means something completely different. Far be it from me to attempt to unravel such a highly technical tangle. One knows that oil, unlike coal, is a very elusive substance, and that fields dry up unexpectedly and new fields are discovered. There can clearly be no certainty of unlimited fresh fields appearing, and as I shall in a moment or two be asking your Lordships to consider the greater use of British coal in our national life, it would be well to state here, as a fact and not as a debatable point, that the stocks of coal embedded beneath our feet in this country are known to be sufficient to last something in the nature of 500 years.
To sum up the points which I have endeavoured to put thus far before your Lordships: Our capacity for waging war, should such a catastrophe be forced upon us, is dependent upon an assured supply of vast quantities of oil emanating from foreign countries, which firstly may not be released for our benefit at the source; which, secondly, has to be transported in half-time ships across thousands of miles of ocean, requiring convoy and escort protection against enemy action; for which, thirdly, we may have to pay ransom prices; with the possibility, fourthly, of oil exhaustion supervening and paralysing our national life. I submit to your Lordships that such a situation—and I have endeavoured to give your Lordships a true appreciation of the position—is fraught with the gravest dangers, and I ask you to say that immediate steps should be taken by His Majesty's Government to minimise these risks, which manifestly imperil the very existence of this country and of the British Empire. The remedies which I propose are outlined in the words of the Motion, and I respectfully ask for your Lordships' patience and indulgence while I do my best in the fewest possible words to develop them.
In these days of air power and mechanised Armies vast quantities of petrol are essential in order that these services may function, for, as is well known, these arms of our Defence Forces stand alone in their inherent incapability at the present time of using any alternative fuel. For every ton of petrol there are two tons of residuals to be disposed of, for, as I stated a few moments ago, it takes three tons of

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crude oil to produce one ton of petrol. The only feasible solution therefore, is to burn the fuel oil and Diesel oil under boilers or in engines both afloat and ashore. Not only will this ensure useful disposal, but it will guarantee the solvency of the oil trade. I ask your Lordships' particular attention to this: the existence of air power and of mechanised Armies definitely entails oil power, not only in the air and on land, but on the sea as well. Or, to put it in a different way, a great and expanding demand for petrol requires a reciprocal oil fuel policy at sea. Hence we have a 100 per cent. oil burning fleet and a 50 per cent. oil burning merchant fleet.
Oil shortage in the event of war would be unlikely to occur in the opening weeks of hostilities. The reserves which we are told are being steadily built up in this country and in the Dominions will be sufficient for a time, presumably, to offset reduction of imports caused by enemy or other foreign action. But what will happen in the event of a protracted war? So far as the Air Force is concerned the probabilities are, I submit, that the reserves of petrol in the country, plus the amount made available by the drastic rationing of all private and commercial supplies, will be sufficient to see the initial intensive air war through to its inevitable conclusion, which, in the opinion of many people, will be air exhaustion. The war will then settle down to the long, grim struggle of the last War, and indeed of all wars, in which, as ever, sea power will be unquestionably the deciding factor. Now if we are to exploit to the full this factor of sea power it is imperative that our Fleet and Mercantile Marine shall have complete and unfettered mobility and freedom of movement.
How is this to be achieved beyond any possibility of doubt when the motive power of our ships is controlled by the foreigner? The only certain means is to be independent of imported supplies of fuel, or, in other words, to rely on our own inexhaustible stocks of coal in this country. The day has, unfortunately, not yet arrived when we can produce all the oil that we require from our own indigenous coal. Nevertheless—this is perhaps a slight digression, but I venture to repeat the conviction to which I was bold
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enough to give expression in this House fifteen months ago, that, in spite of the Falmouth Report, the accomplishment of that much-to-be-desired result will be achieved in due course. But it is the present, and not the future, with which we are vitally concerned, and it is surely clear that we must therefore lose no further valuable time in safeguarding our ships against a shortage of oil by enabling them to burn coal as an alternative should the emergency arise.
So far as the Navy is concerned, we hold that this safeguarding capacity can be achieved by dual-firing all ships of new construction. We say that it is possible to build an efficient dual-fired warship equal in speed, armament, and protection to the exclusively oil-fired ship, involving little, if any, addition to personnel, and only a slight increase in displacement and cost. There is no intention that this dual-fired ship should be capable of steaming at full speed on both fuels. Any such condition would at once entail prohibitive increase in size and personnel, and would be quite impracticable. The proposal is very simple—to build into all new ships sufficient bunker space to contain the necessary coal to enable the ship to develop on coal the horse-power requisite for steaming at moderate speed. It would not even be necessary to carry the coal at all, so long as oil was available, or until its supply was threatened.
Our approaches to the Admiralty regarding this question have been unfruitful, their attitude being merely a resolute non possumus. The replies which I have rereived from the Government Bench on each occasion when I have raised this issue in your Lordships' House have been, if I may say so, unimpressive and unimaginative. They have consisted largely of reeling off a list of technical objections in the course of which certain figures were given purporting to show the impracticability of incorporating any such measure as that advocated—figures which bore no relation whatever to realities or to the modest proposal put forward, and conveniently ignoring the main issue, which is not a technical one, but a strategic, economic and political one. Considerable prominence was given in the Press to the Admiralty announcement in the statement accompanying the Navy Estimates for 1939 that after "detailed investigations of the claims put forward

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in favour of a return to coal-burning in warships" they found that such a measure "would impose such a handicap on our ships as to be definitely unacceptable."
On that statement I would simply say this, that no "detailed investigations" applied to a ship designed to burn oil could possibly prove conclusively that a return to coal is definitely unacceptable, and there is a widespread and disquieting belief that the Admiralty "investigations" were, in fact, confined to a ship designed for exclusive oil burning. Our contacts with the Admiralty have only served to confirm this impression. If this belief is unfounded, the Admiralty should refute it, because the conviction is growing that the slight additional displacement and cost inherent in the use of coal as an alternative is being used as a pretext to confirm a predetermined policy of exclusive reliance upon imported oil. The Admiralty have admitted that coal-firing might be an advantage in the case of war near home. Farther afield, on the other hand, in the Far East for example, they have maintained that oil is an advantage, on the score that it can be obtained from local sources, whereas coal would have to be transported from South Wales. Modern methods of coal burning however have completely undermined this Admiralty contention, for the reason that Australian coals, and indeed all Empire coals can now be used efficiently. Furthermore, the present position of affairs in the Far East would scarcely seem to justify the Admiralty's former optimism with regard to the continuing availability of oil supplies in that part of the world.
We are forced reluctantly to the conclusion that the Admiralty have set their face ruthlessly against the use of coal in any shape or form, and this conviction is strengthened by the decision that even the new Royal Yacht is to be oil-fired. This decision has been received with incredulity and dismay; for, whatever objections the Admiralty may see fit to maintain against coal burning in warships, none of them can possibly apply to the Royal Yacht; and surely it would be a happy gesture, and more in accordance with the fitness of things, if His Majesty's Yacht were to sail the seas fired, as heretofore, by British coal. It is very much to be hoped that reconsideration may be given to that entirely deplorable decision.
A further indication of the Admiralty's unwillingness to consider the use of any fuel other than foreign oil is to be found in the case of the convoy escort warships. These vessels would appear to be eminently suited to burn British coal, their function lying far from the front line where high speed is regarded as essential, their duties being to remain with a slow moving convoy and protect their charges from enemy action, by surface, undersea, or over-sea raider. It is surely a completely wrong conception and rank heresy to suppose that such craft must be capable of extreme speed when such capacity involves the use of that invaluable fuel oil, every gallon of which is required for other essential services.
And so I would ask your Lordships' most earnest consideration of this vital matter of the safety of the Fleet in war time. Let it not be forgotten that in the last War, when our oil requirements were a tiny fraction of what they are to-day, and when our means of conveying and defending that oil were far greater than exist at the present time, so grave became the shortage of oil in 1917 that over 400 liners and cargo ships had to be fitted to carry oil in their double bottoms, to the exclusion of large quantities of food. The dual-firing of all new ships destined to join the Fleet proper, and the coal-firing of all ships whose function will not bring them into the front line, are measures that are surely dictated by the urgency of the times. As one of our leading ship-owners writes:
"Since it would be a high point of strategy on the part of our enemies to withhold oil from us, it would be inexcusable not to provide against such a contingency. To have the facility to burn our own fuel in such an extremity would represent a safeguard altogether beyond computation. To be without it might mean irreparable disaster."
Before leaving the matter of the Fleet I should like to take this opportunity of tendering my thanks to the noble Earl, the First Lord of the Admiralty, for kindly offering me at the end of last week facilities to meet two of the technical heads of Admiralty Departments. The time was too short for me to avail myself of this offer, for clearly, without technical experts present on both sides, I might have resembled the fly walking into the spider's parlour and getting quickly enmeshed in a highly technical web. I am none the less grateful for the offer. I must remind the First Lord, however,

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that I am approaching this matter from a far broader aspect that the merely technical one. May I also say that in reply to a recent question in another place the Admiralty admitted for the first time—this is important—that it was possible to build a dual-fired warship having the same military characteristics as the exclusive oil-firer if the extra tonnage and cost were accepted? This answer shows clearly that, as a result of a frontal attack, the Admiralty have been driven from their front-line trenches which they have held for so long with great tenacity—for their contention until then had always been that no dual-fired warship could possibly match the exclusively oil-fired enemy ship. They are now hanging on by their eyelids to their second line of defence, and trying desperately to consolidate what is clearly an untenable position, for how can a little additional weight and cost possibly be held in the balance against the complete safeguarding of the Fleet?
I turn to the almost equally vital case of our Mercantile Marine, and when we talk of sea power it is well to remember that it is cargoes which really matter, the main function of the Royal Navy being to protect our own cargoes and to deprive the enemy of theirs. While it would be incorrect to say that the decrease of one thousand tramp steamers of 2,000 tons gross and over under the British flag as compared with 1914 is due to the abandonment of coal in favour of oil, it would be true to say that it is a contributory cause. In the days of coal-burning, when coal was exported from this country for the use of our ships, employment was found for large numbers of tramp steamers which, by earning an outward freight on their coal cargoes, successfully competed with foreign ships for homeward bound cargoes, thereby enabling our Mercantile Marine to more than hold its own even against tramp shipping heavily subsidised by foreign Powers.
What are the forces militating against a return to coal-firing in the 50 per cent. of our merchant ships which to-day burn oil? Firstly, I suggest, that political measures such as quotas, restrictions, and central selling schemes, instead of promoting an extended use of British coal, have, like many another unsound remedy, produced a reverse result. The price of bunker coal has risen to uneconomic figures, and
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many shipowners have been forced to draw their supplies from the Continent. What a situation to have to contemplate! The richest country in the world with our incomparable coal supplies, a country whose prosperity has been built up on our coalfields—and our own shipowners being forced to go to the Continent for their coal supplies! It is a Gilbertian situation if it were not so utterly tragic. Government action is clearly necessary here, and should be taken at once if our shipowners are to be induced and encouraged to burn British coal.
Secondly, it is not known nearly as widely as it should be that, with modern methods, coal can be burnt as economically and with the same consistency as oil. A collier's holds can now be emptied into a ship's bunkers by machinery without dust. Conveying machinery can feed coal from any bunker to the machine-fed furnaces, and the ashes can be extracted by machinery and ejected into the sea. Stokeholds are painted white, and in them a few skilled men watch gauges and occasionally touch a switch or turn a wheel. They are cool and clean, and no coal or dust is to be seen. Coal in itself, though black, is cleaner and healthier than oil, which is also black, for there is no reek of oil, and engineers working in modern coal-fired boiler rooms have said that they prefer them to oil. Coal-burning ships can now be as smokeless as oil burners, for the reason that the coal is mechanically forced in underneath the fires and the draught forces the smoke upwards through the fire, thus converting it into a smokeless gas.
Again, in modern closed furnaces, both air draught and coal feed—and so boiler furnace heat and power—are all under complete control, which was not the case when furnace doors had to be opened for shovelling in coal by hand. With furnace doors never opened, and control complete, furnace heat regulation is as easy as turning a gas flame up or down, the gas in this case being the air supply. That old curse of coal firing—the frequent cleaning of boilers—is a thing of the past, for with mechanical firing the coal is always moving, and ashes and clinker are pushed away and drop into a trough for mechanical removal. Consequently coal fires can now be as clean as oil fires. Finally, coal furnaces can now be of any desired length, and machine-fed coal

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furnaces 22 feet and even longer are in daily use. It is true, in fact, to say that coal has emerged from the dirty, smoky, muzzle-loading stage of stokers, shovels, and fatigue into the clean and smokeless machine-gun stage of mechanical firing. These remarkable developments in coal combustion are peculiarly adaptable to the faster cargo ships and liners, but it is probable that in the slow tramp steamer of 9–10 knots the extra cost of a mechanical stoking plant would be unjustified and hand-firing would still be the most economical method of propelling such ships.
I apologise for troubling your Lordships with these technical details, but I have thought it expedient to do so in anticipation of the many technical objections which were put forward by certain noble Lords on former occasions, and with which perhaps they may have been preparing to assail me to-day. I have informed myself of these facts, not only in conversation with engineers in daily touch with these matters but by personal visits both ashore and afloat—ashore, at the Battersea Power Station, a few minutes walk from your Lordships' House, where no less than 10,000 tons of coal a week are mechanically fed to the furnaces—afloat, on board one of the Southern Railway's train-ferry steamers operating between Dover and Dunkirk, an ideal testing ground for mechanical stokers due to the exacting conditions obtaining in cross-Channel work, involving quick accelerations and retardations and thus requiring maximum flexibility.
What progress, if any, is being made in the restoration of coal-burning in our merchant fleet? It may interest your Lordships to know that an order has recently been given for a new 22-knot coal-burning cross-Channel steamer, her boilers to be fitted for this mechanical firing. Two new passenger liners of 6,000 tons, with this same modern system of coal-burning, will shortly be running between Calcutta and Rangoon. This is satisfactory as far as it goes, but your Lordships will agree that this is only a start, and far more encouragement is necessary if things are really to be got going in this direction. One gladly welcomes the recent action of the Government in giving some slight preference to coal-burning ships when framing British shipping subsidies. This should certainly be some incentive to our shipowners, but the greatest encourage-
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ment of all, of course, would be for the Admiralty to give a real lead in the matter, to abandon their exclusive oil-mindedness, and their uncompromising veto on the use of coal in men-of-war, and to call for designs forthwith of dual-fired first-line warships and coal-fired second- and third-line ships. Is it too much to hope that while there is yet time the Admiralty will make this move so urgently required and so set the example to the Mercantile Marine—that great service with which the Royal Navy is so proud to be so closely associated?
Finally, the question of our land transport and industry as a whole. If the restoration of coal-burning in ships is of paramount importance for the restoration of national security, and for recovered prosperity, the substitution of coal derivatives for petrol and oil on land is only second in importance. Your Lordships will be aware of the rapid strides which have been made in France, Germany, Italy and many other countries in the use of producer gas as a substitute for petrol and Diesel oil, with the active encouragement of the Governments concerned. I saw a few days ago a report showing that Russia also is now producing no less than 32,000 producer-gas vehicles. According to the Bulletin of the Russo-British Chamber of Commerce, the experiments which have been carried out in Russia with vehicles equipped with producer-gas plants have proved so successful that the Soviet authorities have decided to go ahead with construction on a large scale. While it is true that in this country there has recently been a considerable awakening to the economic and technical advantages of this fuel, derived from our own coal, the melancholy fact remains that so far as achievement is concerned, we are a long way astern of other countries. This is in no way due to our inferior technical knowledge. On the contrary, the results obtained in this country and the excellence of British plants, no less than the unique suitability of our coals, have been universally acknowledged.
When I raised this matter in your Lordships' House in April of last year, I was informed that the Government had this question under very serious consideration, and your Lordships were assured that "the Government are actually taking action at the present moment." That was in April, 1938. I

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certainly have no wish to embarrass His Majesty's Government, but I should be grateful for any information that the Minister can give as to what this action was, or has been in these last fifteen months, in regard to this matter, for the results of this serious consideration and action taken have been deplorably unfruitful. We have the mortification of seeing, for example, a big City Corporation replacing their worn-out tramways, not with trolleybuses dependent for their functioning on British coal but with motor 'buses burning foreign oil. In what other country in the world could we see such short-sighted fecklessness, to use no stronger term?
And yet it is difficult to blame local authorities who may be ignorant of the pressing need for a greater and more extended use of our own coal in the interests of defence. It is the Government's duty to educate the public on this point, and to insist that the time has arrived when the needs of national security positively demand the introduction of British and Empire fuels wherever their use provide an economic and efficient performance. That they do fulfil these conditions has long been demonstrated, and producer-gas is an eminently suitable fuel for heavy long distance road transport such as 'bus and lorry, for tractors, barges, fishing craft, coastal vessels and stationary plant. I may be told that the Government have already done their part in that they levy no tax in respect of such fuels, and that the heavier producer-gas vehicle pays a lower rate of vehicle tax. While acknowledging these benefits, it must be said that they are not far-reaching enough.
In the case of compressed town gas, an excellent fuel, the gas bottles, like the producer in the producer-gas vehicle, should not be included for taxation in the unladen weight of the vehicle, because existing regulations force the slightly heavier gas vehicle from the 30 mile per hour to the 20 mile per hour class. The accumulator in the electric vehicle is not counted as part of the weight, and surely the same concession should be granted to compressed-gas and producer-gas vehicles. When it is remembered that private and commercial supplies of petrol and oil will be drastically curtailed in the event of war or emergency, and when it is realised what added employment will be given in the coal fields through the extended use
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of coal and its derivatives, it is surely the duty of the Government to assist to the utmost in the development and use of these British alternative fuels, now, and not wait for an emergency to arise.
One final word. I desire to stress, as I have done before in your Lordships' House, the great unwisdom and the grave danger of storing our vital oil supplies in these great tanks above ground. Many of your Lordships must have seen them and their extreme vulnerability must have occurred to all observers. Our policy of reliance on foreign imported oil entails the building up of immense reserves in this country and other parts of the Empire, and it is clearly essential that these precious stocks should be housed in such a way as to reduce to a minimum the risk of destruction by enemy action. They should, of course, be placed underground. Other commodities can be dumped in a hundred different places—in sheds, in sidings, on wharves, in open fields, if necessary. Oil alone, our most vital requirement, must have a container for its reception. Hundreds of thousands of tons of oil will be required to arrive in this country every week in time of war in tankers from overseas, and must be unloaded without delay in order that the tankers may turn round and go out for more. Where are you going to put this life-blood of the nation if the containers for its reception have been bombed out of existence? May I urgently beg His Majesty's Government to give your Lordships the assurance that no further time will be lost in building underground storage, whatever its cost, and so safeguard these vital reserves and whatever supplies manage to reach this country in time of war? May I also beg for an assurance that the Government are satisfied that the necessary tanker tonnage is available, and that port facilities exist for handling the vast quantities of additional oil which will be required in war time, observing that some of the ports used in peace time may not be safe for the work of discharging in war?
I have done. I have to ask your Lordships' pardon for keeping you so long, but I have endeavoured to put before your Lordships as concisely as possible the plain unvarnished facts of a situation which in the opinion of many of us who have closely studied the whole question bears the germs of desperate peril for this country and the British

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Empire. The sands are running low. Once before, within the memory of most of us here, the country was saved at the eleventh hour by the Government steping in and over-riding the objections obstinately sustained by technical experts. I refer, of course, to the institution of the convoy system in 1917 by which measure this country was saved from starvation and the Allied Powers from capitulation. There may yet be time to ward off still greater disaster if the Government will show vision and courage and resolute determination to take immediate steps to deal with this Achilles heel of our national defences. I beg to move.
6.32 p.m.
LORD STRABOLGI: My Lords, I will detain your Lordships for a few minutes only, but I must congratulate the noble Lord on the very closely reasoned case he has presented to your Lordships. That gives me the greater pleasure because I always approve of a Conservativé Peer attacking the present Government, and I am glad to see so many Peers with naval experience here ready to assail the noble Earl the First Lord of the Admiralty. I have had experience of this question for many years, because the mining members of my own Party very naturally have pursued it with great vigour. I want to say immediately that of the three parts into which the noble Lord's Motion may be divided I desire to support him on two, but with regard to the third, that of coal firing in the Navy, I feel bound to support the noble Earl the First Lord of the Admiralty in resisting it. I do not want to go into details on that point. The military objections are to my mind overwhelming, and I will mention only one in particular. That is, that a warship taking in oil fuel in a harbour if attacked by aircraft could immediately get her guns into action. If she was taking in coal she would be helpless for some considerable time. That is one of the many military considerations of which one must not lose sight.
On the other hand, I quite agree with the suggestion that it is the Government's duty to encourage, possibly through the subsidy, the building of merchant ships to burn coal. That, I think, is a thoroughly sound policy. I do not know whether the noble Earl has the figures, but I think it would be interesting to hear
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how far we have gone in the production of oil fuel in our own country. The noble Lord spoke of our marvellous reserves of coal, but all that coal, of course, can be turned into heavy oil and petrol and lubricating oil, and it would be interesting to know how much is being produced now after all the money and all the efforts spent on hydrogenation and high temperature and low temperature carbonisation. I do not know if the Government are watching the latest developments in the synthetic treatment of coal. The leading method, of course, and the one that is best known, is the German Fischer-Tropsch process. There are disadvantages in adopting that, because we have to pay royalties, but the British process, I am told, is making considerable progress and sounds most promising. I hope the Government are going to look into it and encourage it if it is at all possible to do so.
The noble Lord, Lord Ailwyn, spoke of storage and of the vulnerability of oil tanks. That depends largely on where they are placed, but I am advised that oil tanks are not only difficult targets to hit, as was shown in Spain in recent months, but also that they are not so vulnerable as might be supposed. It is very difficult, I am told, to set them on fire. But they ought to be placed geographically where they are not so exposed to air attack. I agree with the noble Lord, Lord Ailwyn, in being a little worried about the tanker position. I know it has been engaging the attention of the Government for a long time, and I do hope they have made long-term arrangements with the American tanker companies. If they have American tanker ships on long-term charter, then I do not think the American Neutrality Act will matter so much. I do not want the First Lord of the Admiralty to say anything which would give away secrets—one of the difficulties of debates such as this is that so much information which the Government ought to have would be rather mischievous to give to the House—but at the same time I agree that we must not let the First Lord of the Admiralty hide completely behind the plea of public interest. We have a right to know that the country is safe in this matter.
Now I come to the third part of the Motion, and I do support what the noble Lord said about encouraging the use of

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road vehicles which are not dependent on petrol, both those which are electrically driven and those which use producer gas. The noble Lord, Lord Teynham, I believe will speak, and he has great knowledge of this matter, but I would like to support what has been said about the necessity of greater relief from taxation of such vehicles because of the added weight which they require. May I make this further suggestion? I think myself, from such study as I have been able to give to the subject, that there is a case for the building up of reserves of producer gas plant of the type which can be adjusted to existing motor vehicles. The Government are storing tractors for agricultural purposes, and I should have thought that the same argument would have justified the encouragement of a shadow scheme or the actual storage of producer gas plant.
I can imagine that the First Lord of the Admiralty will produce the usual argument, which is perfectly sound, that we have to keep the trade routes open in time of war, and that if they are kept open we can bring in oil; but I think there is a reservation needed there. I think a case can be made out for doing all we can to relieve the Navy of responsibility for trade routes so that it may be left free for other duties. The more we can store in this country while we have time to do it, and the more we can produce in the way of home fuel, and the more we can economise in fuel in the way suggested, the better it will be from a naval point of view. The Fleet has very wide responsibilities to-day—wider than ever before—and if we can relieve the Navy of responsibility for the trade routes as far as possible I think that would be sound strategy. The Government, we are told in the Press, are taking advantage of the phenomenally low price of wheat to buy wheat and store it in Canada. That should be extended in all directions, particularly with regard to oil.
With regard to what the noble Lord said about the ability to last out a war, the information I have about the German oil situation throws a ray of light into his rather gloomy picture. I am told that the German oil situation is most critical and far worse than ours, and that it would be difficult for the Germans
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to last in any way more than three months if they were so foolish as to plunge into a war. But we must not take comfort from that only. Their only chance is a lightning war. We, as always, have to be prepared for a long war, almost of exhaustion and attrition—we hope it will not be too long—under modern conditions. It is the longish campaign that rather alarms me. I cannot help feeling that the Government's broad plans are rather based on the medium campaign. We may have to be prepared for a very long campaign, and the long-range remedies to which the noble Lord, Lord Ailwyn, has referred in two thirds of his Motion I should respectfully like to support. I know the First Lord is very much of the same mind in these matters, and I hope he will give your Lordships some comfort.
6.42 p.m.
LORD MOTTISTONE: My Lords, I do not wish to go into the merits of the case except to make an appeal to my noble friend opposite, for the purpose of this debate, to realise that if he would slightly amend his Motion he would probably have on his side, notably the noble Lord who has just addressed us, and also a great many other noble Lords who have supported me in my campaign for having home-made fuel for the Fleet—and, indeed, the whole Board of Admiralty. As he will see, he asks that we should institute without delay
"a national fuel policy based upon the use of British coal, afloat both in His Majesty's Fleet and in the Mercantile Marine—"
And then he goes on:
"and upon the use of alternative fuels derived from British coal."
That is, home produced fuel, ashore, and all the other matters. If it were to read:
"The necessity for instituting without delay a national fuel policy based upon the use of British coal"
it would leave the First Lord of the Admiralty free to say, "Well, of course, for most of our ships, and indeed for all our newest ships, I agree with the noble Lord, Lord Strabolgi, that we must have a liquid fuel"; but he would be bound to say—I know he would—that if he, speaking for the Board of Admiralty, could have home-produced fuel to burn in our ships, whether it were liquid or solid, he would be compelled to support this Motion, for the reasons that the noble Lord has just given.

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It is obvious that the Navy would rejoice if they could have home-produced fuel. It is a pity to try to pin them down to using our coal in a solid form. All the men I have spoken to say that some of the ships, or most of them, would prefer to use it in a liquid form. As we all now know, it is all the same thing, it is all carbon, and you can turn the solid into the liquid; but the process is expensive. There are three methods, and the last of them, to which the noble Lord has referred, is a very satisfactory one—the new synthetic method. But there can be no doubt that if the proposal that I made three years ago, that the Government should spend £40,000,000 on making the Navy independent of foreign fuel, had been carried out—and my noble friend on my right here will, I think, not quarrel with me when I say that with that £40,000,000 that could have been done—the Navy would now be independent of foreign imported fuel. Now I appeal to the noble Lord to get us all on one side by making the Motion read in that way, and then I cannot think that there is more than perhaps one man in this House who will not accept it with both hands.
LORD AILWYN: My Lords, if I may answer that suggestion for one moment, if what the noble Lord proposed had been done, then clearly my Motion would never have been put forward. It is because it has not been clone, and because we cannot produce at present anything like our requirements of oil at home, that I have brought forward my Motion.
LORD MOTTISTONE: But should the noble Lord not make his Motion read in that way, so that he would not condemn one part of our ships—namely, our warships—to the use of coal, while, if he uses the words "alternative fuels," he has it in his power now to prevent the Government from wriggling out of the very awkward position in which they have been placed by their refusal adequately to encourage the use of home-produced liquid fuel?
6.45 p.m.
LORD TEYNHAM: My Lords, I must apologise for rising to address you on two consecutive days on the subject of coal, but I feel so strongly on this Motion that I feel bound to enter the lists again. I must support what has been said by Lord
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Mottistone on this matter; but I believe that the noble Lord's Motion is primarily that the Navy should go back to coal and use coal firing. There are a very large number of objections against it. I think he is prepared to allow the Navy the use of oil produced from coal, but I doubt very much whether the £40,000,000 suggested by the noble Lord, Lord Mottistone, would produce anything like the oil we require to run even half His Majesty's Fleet. This section of the Motion, dealing with His Majesty's Navy, has been debated in your Lordships' House on many occasions, and I fully realise that the noble Lord refers to the design of new warships. He suggests, however, that technical reasons should not enter into any argument against his proposed policy, because they do not exist. Technical objections, I am well aware, may not be of any moment as regards the Merchant Navy, but when it comes to His Majesty's Navy those technical objections certainly exist and are of great importance. I hope I shall not weary your Lordships if I give you a few of the technical objections all over again which have been given in your Lordships' House before.
Oil has a much greater heating value than coal and is much more uniform in heating quality; therefore it must follow that a ship has a greater steaming radius from the use of oil. Another point is that oil does not deteriorate in storage; in hot climates coal deteriorates quite a lot. Moreover, with oil there is no ash; with coal there is a good deal of ash. Oil takes up less space in storage than coal, and an important point to notice is that the oil bunkers can be completed to within 95 per cent. of fuel stowage; whereas with coal bunkers that is not possible, as you must leave room for men to get inside and trim the bunkers down so that the stokers can fire the coal. Therefore it must mean that you must provide a much larger space in a ship. Also I think there is bound to be a great difficulty of hatches for reserve bunkers, and if you have a dual-fired ship you must have reserve bunkers for the coal. If you have these reserve bunkers for the coal, it must entail additional hatches through the protective deck, which again weakens the structure of the ship, especially against aerial bombardment, because you are going through the protective deck. In addition, a number of

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holes in the bulkhead are necessary when coal is used, in order to extract it and get it down to the stokeholds. This again means a further weakening of the ship's structure and of course a danger of leakage.
Many arguments have been brought forward in favour of the protective effect of coal in bunkers in His Majesty's ships in the event of war. This is a very doubtful protection; it is only protective in the event of bunkers being completely full. If they are half full and have been trimmed, then there is very little protection left. Refuelling of oil-burning ships is about three times as quick as with coal, and in emergency can take place at sea; this is an absolute impossibility with coal. When a warship is coaling, as was pointed out by my noble friend on the opposite Benches, it is very difficult for that ship to protect herself against an aerial bombardment; whereas with oil she can shut off the valves and be ready for action at a moment's notice. Another point to note is that when a warship is coaling practically the entire ship's company have to be employed on the work, and if they have to go into action almost immediately afterwards they are hound to be not so fit to fight the ship as they would have been if only oil storage had taken place. Dual firing by means of mechanical stokers, or otherwise, for coal, must mean increased weight and, therefore, less speed and armament for any particular size of ship, and smaller steaming radius. Also, what is perhaps more important, a very large increase in personnel would be required, with all the attendant increases in accommodation, victualling, etc. I think it is the general view of most naval officers that technical arguments in favour of oil are so strong that they outweigh any strategical advantages that might be obtained from the use of coal.
I will now turn to the proposed policy as a whole. Apart from technical objections, I think it is true to say that every country that has a large fleet is in the same position as ourselves as regards oil supplies, except perhaps Russia and the United States of America. Again, the only coal really suitable for the Navy is found in Wales, whereas oil can be obtained in various parts of the world where our fleet may be stationed, and colliers taking coal out to these various
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stations would be just as vulnerable to the enemy as oil tankers bringing supplies of oil to this country. The noble Lord, Lord Ailwyn, has referred in his speech to the proposed new Royal Yacht for His Majesty, and said that it would be desirable that she should be constructed to be coal-fired. Surely the noble Lord would be satisfied if this vessel were to use oil produced from British coal. The noble Lord also referred in his Motion to alternative fuel derived from British coal that might be used in our heavy road transport. I have made a very careful study of this matter, and as President of the Transport Producer Gas Association, I can assure him that very great strides have been made in industry in the design of suitable gas producers for road vehicles.
I had hoped, to-day, to be in a position to congratulate His Majesty's Government on the help they are proposing to give to this new industry, in order to produce a well designed gas producer plant. I understand that the Government Fuel Research Station at Greenwich has been working on the design and performance of such a plant for many months. So has industry, and surely it would be well for the country that the knowledge gained by the Government research station at Greenwich and that of industry should be pooled. The Department of Industrial and Scientific Research was formed specially to co-operate with industry and make grants, with Treasury sanction, for experimental purposes in co-operation with industry. To have industry working in one direction, and the Government in another direction, is surely uneconomic. I hope His Majesty's Government will consider this point carefully, and bring the two parties together at the earliest possible moment. The conservation of our oil fuel in time of war is of paramount importance, and anything that can help in this direction, I would suggest, should be given the very fullest support possible under the circumstances.
6.54 p.m.
LORD CADMAN: My Lords, in the old days, when wooden ships gave way to iron ships, a similar controversy to that now under discussion about oil and coal took place, but scientific development and progress could not be checked, nor will they be now. The policy which the noble

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Lord, Lord Ailwyn, has adopted in his endeavours to persuade the Government to change their attitude on the subject of coal appears to be founded on the old adage that constant dripping wears away a stone. Ever since the last War, successive Governments have considered the merits and demerits of coal and oil for use as fuel for the Navy. Each consideration—whatever the political hoe of the Government in power, and whatever the constitution of the Board of Admiralty—resulted in a definite decision that the Navy should continue to be oil-fired. More recently, the present Government submitted the whole problem of fuel policy to a Sub-committee of the Committee of Imperial Defence, which, I believe, investigated it with great thoroughness. The conclusions of the Committee have in large part been made public, and they do nothing to support the contentions of the noble Lord who introduced this subject for debate. Nevertheless, the noble Lord and his like-minded friends persist, in season and out, in drawing the attention of His Majesty's Government to the necessity of reversing a policy which definitely has the support of the most experienced advisers on whom the Government can call.
The reason for this insistence is that the noble Lord and his friends detect, in the Government's present policy, a state of "highly dangerous dependence." It is remarkable, however, that they perceive that dependence only in one of its many facets. It is invariably dependence on imported oil which alarms them. The fact that the national life is also dependent on imported wheat, on a whole range of other imported foodstuffs, on imported rubber, and so on, does not apparently disturb them in the least. Nor are they able to detect that a similar dependence is shared by all other European Powers. France has virtually no indigenous production of oil; Italy also is almost wholly dependent on imported liquid fuels; Germany, in its progress towards autarchy, is now, at great expense, able to produce some 35 per cent. of its peace-time requirements of oil from home sources. Nevertheless, such are the advantages of oil firing for naval purposes, and so essential are the products of petroleum to all modern military operations, that these and other countries, dependent though they are on imported oil, use liquid fuel,
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with few exceptions, in their naval vessels, and must rely in every military operation upon continued supplies of imported liquid fuels.
The essential fact is that every great Power is dependent on imported supplies for some of the vital requisites of war. Attempts are made, as we are well aware, to evolve national substitutes for these imports or, more frequently, to accumulate reserves of vital imported substances. It is common knowledge, for instance, that the Governments of all the great Powers, including ourselves, have recently accumulated large stocks of liquid fuels and have thereby assured that the dependence of which the noble Lord is so fearful shall be mitigated, at least in the opening phases of hostilities.
I thought it remarkable that, in drawing the attention of His Majesty's Government to this matter, the noble Lord should have restricted himself as he did to fuel for the Navy, the Mercantile Marine, heavy road transport and industry as a whole. These categories suggest that the noble Lord is at present concentrating his attention on the heavier oils alone. The Navy and Mercantile Marine consume fuel oils and Diesel oil. Heavy road transport operates on types known as road fuel oils. "Industry as a whole" may consume any type of oil, but industry as a whole in this country is even now mainly a consumer of coal or of power derived from coal. What, I should like to know, does the noble Lord suggest should be done about the fuel for aeroplanes, for the lighter forms of road transport, and for all the mechanically operated tanks and vehicles used by the Army? Presumably, these are not to be produced from British coal, or the noble Lord would surely have included them to strengthen his case and to draw the attention of the Government to his case still more forcibly. If, however, they are not to be produced at home, are they still to be imported? I suspect that the noble Lord was covering himself, that he realises fully the fabulous expense and the virtual impossibility of rendering this country independent of imported oil. I have no doubt also that he realises that the plant which would be needed to produce all the oil he wants from coal would be so vulnerable a target, and so strong an incentive to bombing, that it would probably become inoperable from the moment hostilities began. The

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noble Lord referred to the great tanks for storage and the necessity for putting them underground. He did not mention that very large plants would have to be erected to carry out the policy which he suggests.
The outstanding fact is that, if war broke out, we and every other belligerent country would be in a state of highly dangerous dependence on many things. We, for example, would be dependent on the Navy—but I refuse to believe that we should be highly dangerously so. The Navy, in all its activities, is dependent upon speed. And to attain the speed comparable to that of the ships of other oil-fuelled navies, we can only rely upon the use of oil. The coal-fired ships of the noble Lord's happy imaginings would be as well equipped for modern war as would the tortoise in a race against the hare. Unfortunately, we cannot carry the parallel further and expect other naval Powers to fall asleep.
I have often wondered what motive inspires the noble Lord in raising the issue around which the present debate is centred. It cannot, I think, be an anxiety for the efficiency and the welfare of the Navy. His experience as a serving officer must surely have taught him that, in matters of operating efficiency on naval vessels, coal cannot compare with oil. The only possible motive which I can detect is a desire for increased prosperity in the coal industry. If that is so I suggest, with all respect, that the noble Lord is embarking on an unhealthy and dangerous cruise. Greater prosperity for the coal industry will never be attained by attempts to force coal as a fuel upon unwilling users, or by endeavouring to cause its re-adoption for purposes in which it has been supplanted by a more efficient fuel. I suggest therefore that the noble Lord should try another line of investigation for the betterment of the coal industry. No industry has ever progressed which has set its mind and its heart upon a return to days which have gone for ever. Progress depends on aspirations towards an ideal. Even if the ideal is not immediately attainable, it acts nevertheless as a stimulus to initiative. In endeavouring to attain it, something will be accomplished; and in the fulness of time the accumulation of even small accomplishments results in an entire
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change of use, in a greater adaptation to existing conditions, and in enhanced prosperity for the industry concerned.
There were two points made by the noble Lord at the opening of his speech to which I should like to refer. He said that the volume of oil in the world was very limited. I think he mentioned a figure of twelve years. That figure is totally incorrect; the amount of oil in view to-day far exceeds that. The other point was when he spoke of oil being brought over in the late War to the exclusion of food. I happened to be the responsible officer for dealing with the use of double bottoms in tankers, working under the Minister, Mr. Walter Long, and I may tell the noble Lord that not a gallon of oil was brought to this country in replacement of a pound of food. The orders were given that when a ship was departing from the other side of the Atlantic it was to come laden with other products than oil unless it could not be fully laden with them, and then only the double bottoms were to be used and to be filled with oil.
7.6 p.m.
LORD BARNBY: My Lords, my excuse for intervening is that on a former occasion when this matter was raised in your Lordships' House by the noble Lord, Lord Ailwyn, I took part in the debate and dealt with the question of road transport from the point of view of economy of fuel consumption. Since that time I am bound to say that I have been greatly discouraged to find that more has not been done by the Government. I hope that the noble Earl in replying to-night will devote some part of his speech to that particular aspect of the question. It was raised in a relatively limited form by the noble Lord, Lord Ailwyn, because, very naturally, he devoted the bulk of his speech to developing the marine side of the question. The noble Lord, Lord Teynham, also referred to it, and spoke with the authority of the position which he holds in this particular field. I am sure that we are indebted to the noble Lord, Lord Ailwyn, for raising this matter again, and your Lordships will agree that for care in the preparation of his speech and the brilliance of its presentation he deserves our thanks.
I was, to say the least, surprised that the noble Lord who has just sat down,

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who at least cannot escape the suspicion of having definite leanings on this subject, should have insinuated that my noble friend Lord Ailwyn in raising this question spoke for the coal industry. I imagine that what led him to raise it was his intimate knowledge as a serving officer, and the enthusiasm which, on patriotic grounds, he devotes to the examination of a case which he is particularly competent to follow. I should have thought that: in your Lordships' House a matter of this importance would have attracted a larger attendance, especially of noble Lords who are interested in oil—and there are many—and in coal. I am surprised that we do not see here to-day more noble Lords who are interested in coal, because when it is a matter of their own particular interest in coal I notice there is a very large attendance in your Lordships' House.
In developing the question of oil for road transport I do so from the wider point of view of the protection of sterling. That has not yet been mentioned in this debate. Surely if it be true that 92 per cent. of our total imports of oil are from other than Empire sources, the strain on sterling of the importation of oil must be an appreciable one. For that reason it is difficult to understand the reluctance of those Departments concerned, particularly the Ministry of Transport and the Treasury, who control the registration and taxation of vehicles, such as battery vehicles, vehicles running on gas, steam vehicles or producer gas vehicles. In all these cases it is a matter of regulation to allow such vehicles to carry the same pay load at the same speed and with the same tax as other types of vehicles. It is obvious that that must depend on agreement between the Departments. There cannot be in that matter the same technical controversy as there very naturally is between marine experts on the question of oil or coal at sea. My two terms on the Central Electricity Board enabled me to see at close quarters the astonishing changes which have taken place in the thermal efficiency of coal combustion and the relative cost of current under the thermal and hydroelectric systems. I wish to support my noble friend who initiated this debate in the emphasis he placed on how the conditions for the use of coal at sea have been entirely changed.
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I finish on this note, that surely there cannot be grounds for this disinclination on the part of the Departments concerned to give more sympathy, if not to give actual encouragement—and it is in their power in many directions to give ample encouragement—to the development in this country of a supplementary means which may be available on a big scale in case of war for road haulage by a propelling medium other than oil. The controversy is a technical one as to matters of cost. I do not propose to enter into that. I do not propose to weary your Lordships with any figures, but it is incontrovertible that we are spending immense sums of money and putting a tremendous burden on the taxpayers of the country for varied purposes, while other countries—France, Italy, Germany, Russia, japan—have all taken strong Government action to encourage a supplementary means for the protection of their mobility in possible time of war, apart from the consolation of the exchange in time of peace. The encouragement of road transport is a means of security in time of war. I do not need to remind your Lordships of the vulnerability of the railways and the flexibility of the roads; but I finish on the key that if, as we are assured, the consumption of oil on land, at sea, and in the air is a vital test of our staying power in war, surely then ecenomy in the use of that fuel for road transport internally is vital. That is the appeal that I make to the noble Earl. If he is not able to give us much in detail at this late hour, I hope he will at least urge the Government Departments concerned to give greater sympathy to the representations made to them from various angles of this important subject.
7.15 p.m.
EARL HOWE: My Lords, I shall detain your Lordships a few moments only. I have heard the noble Lord who introduced this subject raise it before in your Lordships' House. The noble Lord is a naval officer, and speaks no doubt with the idea of giving us the benefit of his experience as a naval officer. The ground was very well covered by the noble Lord, Lord Teynham, who dealt with most of his arguments, but I would really ask the noble Lord, as a naval officer, to tell us how a destroyer flotilla of the British Navy could possibly operate on coal and carry out its work. It can only be done by providing completely double crews for

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all the duties concerned. You could not possibly expect your crews, having been out on patrol or some special duty like that, to come in and re-coal the ship and go out and carry on with thorough efficiency. I always think the case of destroyers is perhaps the best test to apply to arguments on the subject of oil versus coal.
I hope I may say a word on the subject of producer gas. I have not an oil share, and I am not directly or indirectly connected with oil, but I am interested in the production of vehicles to run on producer gas or on oil, or even trolley-buses. The firm to which I belong makes all of them, and it is a matter of complete indifference which we make. With regard to producer gas, there is a system now which is capable of running road vehicles on producer gas. In fact the firm to which I belong has made several vehicles already, and one is being tried out extensively in this country. The conclusion we have come to is that it is impossible to operate the producer-gas vehicle in peace time on the existing basis of taxation. I am afraid the Government will have to go into the matter from the point of view of taxation generally, and see how taxation is distributed over heavy commercial vehicles before it is really a commercial proposition to run a vehicle on producer gas. The Government might go into it, and I hope the noble Earl, when he comes to reply, will be able to give us some little assurance on this subject. I should like to support the noble Lord, Lord Ailwyn, in what he said and also what fell from the noble Lord, Lord Barnby. I do think the Government could do a good deal to encourage the use of producer gas, and perhaps something might be done to encourage the use of steam vehicles in the heavy commercial vehicle industry. At this late hour I do not wish to detain your Lordships, but I trust the Government will be able to offer us some encouragement.
7.18 p.m.
THE FIRST LORD OF THE ADMIRALTY (EARL STANHOPE): My Lords, as several noble Lords have said, this is far from being the first debate on this subject we have had in your Lordships' House. I am afraid nothing I am likely to say is going to convince my noble and gallant friend Lord Ailwyn. I observe, however, that he remarked that we had
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been driven from our front-line trench. May I suggest that he has been driven from his front-line system, because the claim he put forward to-day is very much less than he put forward in the past? I may say, to begin with, that of course the whole question of fuel supply is constantly in the mind of His Majesty's Government. We recognise to the full the difficulties of exchange, and we realise that in time of war that situation is going to be much more difficult. Therefore, if it were possible with equal efficiency to run the whole of our services on home-produced fuel, no one would be more anxious to do it than members of His Majesty's Government. May I remind my noble friend that, as has been said by, at any rate, one other Peer, every single country in the world is running its Navy on oil fuel, and with the exception of the United States and Russia every one of them is dependent on imported supplies?
My noble friend stressed the great danger in which this country is placed by being dependent on foreign sources for its oil supply, but, as was suggested by my noble friend Lord Cadman, oil is only one of the things which we have to import into this country. Food, raw materials of all kinds, all sorts of objects, some of them of great bulk, have got to be imported into this country, and if we fail to import them into this country we lose the war. Of that there can be no question. That is why the Navy counts as the Senior Service, and not only as the Senior Service but as the one on which the whole country depends for its security. We might lose battles in the air, or we might lose battles on land, but if we lose the battle at sea we are finished, because starvation then stares us in the face. Therefore when we realise the vital importance of our imports into this country, let us realise also that oil is only one of those imports and therefore the duty of protecting it is but one of the duties which is laid upon the Fleet. I entirely agree with what was said by the noble Lord, Lord Strabolgi, when he stated that the more we could lighten the burden that lies upon the Fleet in regard to the escort which is necessary for materials to be brought to this country, the more will the Admiralty be pleased. The burden is so heavy that the more we can reduce it the better and the greater is the safety of this country.

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But let us realise the practical side of the question. If you are going to limit your ships by compelling them to burn coal, you are going to put them in a position in which they are likely to find themselves inferior to the ships of the enemy. Therefore you will be placed in the position that you will very possibly lose your battle at sea, and although you have your alternative supply of fuel close at hand, nevertheless you are not in a position to defend your material as it comes into this country. I thought my noble and gallant friend had given up his front-line system. My recollection of what he said on the last occasion is that we should revert to solely coal-burning ships. I may be wrong, but I did happen to look at part of the debate, and that is the impression, going through the speeches, which came to my mind. Now he does not even ask for dual-firing. What he does ask for is one or two boilers in which coal will be used while the remainder of the boilers in the ship will be oil-fired. That is, of course, a very different matter, but it still raises the most tremendous practical difficulties.
In the first place you cannot burn oil and coal under the same boiler unless you have an entirely different system of boilers from what we have now. The oil-fired boiler is anything up to twenty or more feet in length, and if you have coal-fired boilers they cannot be more than 7 ft. 6 in. for the reason that the stoker cannot shovel coal further than that. I believe that if any of your Lordships were to try to feed coal to a distance of 7 ft. 6 in. you would feel it was full long enough. If the boiler is mechanically fired you can have the long boiler that is required, but you must also have the machinery and equipment which have to be put in for mechanical firing. You have to have first of all your hoist to carry the coal up to a height well above the boiler, because even though you may fire your boiler at the bottom and push your coal in by the mechanical stoker at the bottom of the fire, none the less your coal has to be delivered at the top of the hopper. There has to be a hopper going down to feed the mechanical stoker which is at the bottom of the boiler, and therefore your coal has to be conveyed from bunkers near the bottom of the ship up to the high level where it can be fed down into hoppers and conveyors. I think my noble friend
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Lord Teynham pointed out that that means holes in decks and holes in watertight compartments. If your Lordships will examine the plan of modern ships, particularly those that are being built now, you will see that in order to increase the safety of the ship and to protect her both from air and underwater attacks, the sub-divisions are very considerable. Therefore the moment you put in these conveyors and these hoists you very seriously reduce the safety of the ship, and make her much more vulnerable.
There is a further point. These conveyors and hoists go almost inevitably into parts of the ship where otherwise you would have your ammunition hoists. I was examining plans only last week. The noble Lord says that the Admiralty are hidebound about this, but to examine the problem I invited him, as he told the House, to come and see for himself. I hope he and some of his expert friends will do so. We have had some so-called experts. One, I think, had never seen the inside of a warship, but he knew about mechanical coal stoking, and when he saw what a ship was in plan he realised that it was quite impossible to adapt that system to a ship. I hope my noble friend and some of his experts will come and see these things on paper, because it is much more easy to explain from a plan than I can hope to do to your Lordships' House. He will find that the experts of the Admiralty have gone into these matters with extreme thoroughness, and they are fully prepared to discuss the question, to point out their side and to listen to the other side; but I can assure my noble friend that, having approached the subject with an open mind, I myself was absolutely convinced, and there can be no question whatever about it, that as regards His Majesty's Fleet, it is essential that we should continue to rely on oil firing.
Let me give one or two figures only. A dual-fired ship, such as the noble Lord suggests, of course increases the tonnage of that ship by some 20 per cent. That means that either she has to have largely increased horse power or she has great loss of speed. It is difficult to give exact figures, because it depends on the number of coal-fired boilers put in and also whether you have mechanical stoking appliances or hand appliances. It makes an immense difference. Taking hand appliances, this is what happens. In a

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10,000 ton cruiser, dual-fired as the noble Lord suggests but by hand, we should lose 12½ per cent. in maximum speed, and have 25 per cent. reduction in maximum endurance, and a 50 per cent. increase in the engineer complement. My noble friend does not believe it, but he is not an engineer, and the engineer officers after all are experts on this matter. Let me tell him that he is not entirely correct in saying that there are now no coal-fired ships in His Majesty's Navy. There are a few small ones, and it happens that I have had to go into the case of two of them, the reason being this. With coal-fired boilers—of course they are very old ships—the number of the crew is far higher than it is for an oil-fired ship, and the result is that the living conditions in these coal-fired ships are infinitely inferior to those in the oil-fired ships. I found that those conditions are nowhere near up to the standard which is required in His Majesty's ships now for the amenity of the crews who live in them and who in an emergency will have to fight them.
The noble Lord suggested that as regards escort vessels they had no need for speed. I wonder whether, if I appointed him to an escort vessel and the convoy was attacked by a submarine, he would not then think that he needed extreme speed forthwith. After all, the duty of the escort vessel is not only to protect the ships in the convoy but to destroy the attacking ship, and then what we require, if there is an attack, is that the escort vessel should go at whatever speed is necessary—probably extreme speed—to attack the submarine or whatever ship it may be which is attacking. He suggested also that it required no increase in personnel. But if you are going from cruising speed to a higher speed you cannot do that with your coal boilers and so your oil-fired boilers must be kept at sufficient heat to develop full speed. Both types of boilers have to have their crews there. Those who take the risk of low speed often endanger their ships.
As regards the statement made in another place that it is now possible to build a dual-fired warship that is equal to an oil-fired warship, that is true if you are prepared to increase the size, increase the horse-power and generally to make a very much larger vessel. But, of
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course, you then get an entirely different type of vessel with characteristic disadvantages in many other ways. For instance, very large cruisers for many kinds of fleet action have great disadvantages. There are many advantages in having small cruisers, for instance, in night action. I do not want to go into more technical detail, because I may be revealing things which everyone would agree should not be stated in public, but I may say that, although it is technically possible to produce a dual-fired warship, at any rate it has very many disadvantages. If the noble Lord comes and talks to my experts, I think he will see that those disadvantages are so material that we have no alternative but to come to the decision we have.
He referred to the use of coal in the Mercantile Marine. I wonder whether he is aware that the Secretary for Mines summoned a conference in February, 1937, to consider the extended use of coal in merchant ships. As a result of that a Committee was set up which reported in July, 1938. They reported that for certain types of ships oil had considerable advantages, but that in regard to ships of 1,500 to 8,000 steam horse-power coal undoubtedly could hold its own. The Committee said, and the Government agreed, that many shipowners are entirely unaware of the modern methods of coal firing or of the greatly improved boilers that are now in use, and of the advantages to be derived from that type of fuel. We are doing our best to assist the use of coal in ships by giving a preference in the building subsidy of 1s. per ton in the case of tramp steamers and 1s. 6d. in the case of cargo liners. But, as the noble Lord said, one of the disadvantages of using coal is the very high price of bunker fuel. The matter has been brought to the notice both of the coal-owners and of the shipowners, with a suggestion that they should get into conference together and see if lower prices cannot be arranged. In several cases that has been successful and the price has been brought down materially, to the great advantage both of coalowners and of the shipping community. There is, however, one point which has not been mentioned. Some mechanical stokers require a very special type of fuel. It is entirely incorrect to say that they can use Australian or Welsh or any other fuel that is available. They can only use one type and a

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certain size of fuel. The subject is one of great difficulty. The noble Lord may be interested to know that as a result of the policy which I have just mentioned, of giving a preference to coal-burning ships, 63 per cent. of the vessels so far notified to the Board of Trade as having been ordered under the recent subsidy are coal-using ships.
I turn for a few moments to the use of coal in industry generally. There are some sections of industry in which oil fuel has marked advantages, and we must remember that many of our industries have to be in competition with those in other countries which often pay lower wages and possibly lower taxation. I think it will be agreed that the Government would be entirely unjustified in bringing strong pressure on such people to use coal when they find it better to use oil. But the idea that oil is being very widely used in industry is, I think, one that is entirely incorrect. People have an exaggerated idea of the respective amounts of oil and coal in use. The estimated annual value of coal used in industry on shore is £80,000,000 against £3,000,000 for oil. The balance is a very large one indeed, and when I remind your Lordships that the Fuel Research Station is constantly endeavouring to encourage the production of suitable fuels and to bring their advantages to the notice of consumers, I think it will be seen that there is hope that the preponderance of coal will at any rate at least be maintained.
Now I turn to the subject of heavy road transport. Several noble Lords have mentioned the question of the turnover from tramways to other kinds of mechanically - propelled vehicles. Of course in a great many cases tramways have turned over to trolleybuses. It is rather interesting to notice that tramways in the past ten years have consumed only 721,000,000 electrical units in 1937–38 as compared with 794,000,000 units ten years earlier. That deficit, however, has been more than replaced by the greater number of electrical units consumed by trolleybuses. That figure has risen from 12,000,000 units to 203,000,000 units. The result is that tramways and trolley-buses together have increased their consumption of electrical units from 806,000,000 in 1927–8 to 924,000,000 units in 1937–8. That is the last complete year for which figures are available.
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It is, of course, true that a very large number of large towns have preferred the ordinary petrol motor 'bus, chiefly because of its flexibility. We have seen in London how the population has moved out from the centre to the suburbs. You have to adapt your transport to where your population lives. Therefore it is natural, where there are old cities not quite certain where their populations in the next ten or twenty years are going to live, that they should have a system of transport which could be switched over from one route to another without the difficulty of having to alter wires and the other arrangements required for the trolleybus. But we do endeavour to encourage all those local authorities to go for trolleybuses and electrically-driven vehicles in preference to petrol, pointing out, as no doubt my noble friend Lord Ailwyn would warmly approve of, the danger that there may be shortage of petrol in time of war and therefore severe rationing.
LORD BARNBY: Can the noble Earl give any indication of the proportion of power units required for the propulsion of 'buses within the municipal areas, in comparison with the power required for road haulage in the country as a whole which has taken the place of rail transport? The proportion to which he has just referred, which is illuminating and extremely encouraging, must be a very small proportion of the total problem.
EARL STANHOPE: I am not an expert on transport matters, but I imagine that the trolleybuses are almost entirely in urban areas and not in country areas, for the obvious reason that in country districts the wires are tremendously expensive to put up. I imagine that in country districts the ordinary motor bus would naturally be able altogether to undercut the trolleybus in the cost of installation. I do not know that I have put it quite clearly; what I want to say is that the cost of installation of the trolleybus, when you run it in a country district, would be so high that I cannot imagine that it would be preferred to the ordinary motor 'bus run on petrol.
Low BARNBY: I appreciate the noble Earl's explanation, but I do not want to run the risk of this matter failing to reach the Departments concerned, principally the Ministry of Transport and the Treasury. The problem should be met by

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concentration on road haulage, and therefore on concessions which would come from the present taxation to encourage road haulage and the replacement in it of imported fuel by other agencies for propulsion. My remarks were based on that proposal, which has the object of diminishing the drain on sterling.
EARL STANHOPE: Knowing my noble friend, I thought at first he was going to go for horse transport! He did not know that my noble friend Lord Cadman had started life as a great authority on coal power and had come to oil later. I do not know whether he likes his first or his last love better; I would not be so indiscreet as to inquire; but he knows a great deal about both. As regards the heavy motor vehicles, as I said, I am not an expert on these matters and therefore there is not very much that I can say to the House, but I can assure your Lordships that the Fuel Research Department has been investigating that subject very closely. As my noble friend Lord Teynham knows, all sorts of experiments have been made; we are very closely in touch with the producer gas experts, and I understand that very considerable progress is being made in that direction.
I am not at liberty to say more than that at this moment, but I would point out to your Lordships that, while several noble Lords suggested that the electrically-driven vehicle should have its batteries included in the weight, the Ministry of Transport say that the electrically-driven vehicle—I refer to the battery-driven vehicle, not the one supplied by overhead wires—really does not compete with the ordinary petrol-driven vehicle. I believe its speed is very much less, and certainly its radius of action is very much less, and therefore it is not really a competitor of the petrol engine, so you cannot very well compare it with the producer gas plant. On the other hand, the producer gas plant has the great advantage that it runs on a non-taxed fuel, and the petrol vehicle is, of course, extremely heavily taxed. The noble Lord suggested that we should do even more for the producer gas vehicle. I do not know whether my noble friend Lord Howe would suggest that the tax on petrol should be increased, so that a greater preference should be given to the producer gas vehicle, but I should be rather surprised if he would!
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I do not think I can say more on that side. I should just like to say one or two words on the question of reserves. I can assure the House that this matter of fuel supply in time of war is constantly before His Majesty's Government and is under constant examination. My noble friend Lord Mottistone suggested that if we had only followed his advice we should be over-produced with the fuel we required from the coal of this country. May I remind him of the findings of the Falmouth Committee, which investigated this subject with great care, as he knows? They came to this opinion, and it is an opinion which His Majesty's Government have accepted:
"In general a policy of depending on imported supplies with adequate storage is the most reliable and economic means of providing for an emergency, and they cannot recommend the reliance of the country in war time on supplies of oil from indigenous sources established for this purpose unless any particular aspect of the case can be shown to be exceptional."
The reason for that decision was, I understand, the one given by my noble friend Lord Howe: that these big establishments required to convert coal into oil are themselves a very great mark, a far bigger mark than the actual oil tanks required to carry the oil to this country. Therefore from the point of view of safety from air attack the oil tank is to be preferred to the factory which converts coal into oil.
As regards the protection of those reserves, I am afraid that is a matter which, as your Lordships will fully appreciate, although perhaps I might be prepared to inform your Lordships privately, I am certainly not going to state in public to this House. It is one of the matters that no doubt those who bear us no love would very much like to know, and they are certainly not going to get it from me. But that point, I may say, has not escaped the notice of His Majesty's Government, and if ever those oil reserves were attacked, I think that people would find that it was not a particularly healthy performance, or one that was particularly successful.
I have answered or tried to deal with most of the points that were raised by my noble friends in this debate, and I can only say that it is a matter of great importance and one that we are constantly considering. I should have liked very much to win over my noble friend Lord

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Ailwyn, who with such great ability has brought this Motion before your Lordships' House, and if he would only come and visit us at the Admiralty I should hope that he might be converted to our side.
LORD AILWYN: Could the noble Earl tell me about the port facilities for taking the increased quantity of oil in war time?
EARL STANHOPE: Yes, I think I can give the noble Lord that assurance. I understand that he asked whether it would be possible to land in the ports of this country the increased quantity of oil that would be required in war time. Yes, that has been under investigation constantly, and we are thoroughly satisfied from that point of view.
7.49 p.m.
LORD AILWYN: My Lords, at this late hour you will not expect me to deal with many of these points that have been raised. I should like first of all to thank the noble Earl for his usual courtesy and for the very full way in which he has answered my points. Certainly with the greater part of what he has told me I am reasonably well satisfied. I am, however, extremely disappointed over the question of the Fleet. I am sure that what the noble Earl has said he genuinely believes to be the fact, but I can only repeat in two words that, so far as the Fleet is concerned, the dual-fired ship retains her full steaming and endurance qualities as an oil burner. There is no question of not wanting the ship to burn oil; the only point is, if the oil is not there, have a safeguard.
606
However, I will not keep your Lordships any longer. I am a little sorry that the noble Lord who spoke from the Cross Benches, Lord Cadman, should have thought it necessary or helpful to impute certain motives to me in moving this Motion. I think if he had listened to my speech he might have realised that I was raising this Motion on one ground only—namely, national security. Those who have spoken against my proposals have attributed to me statements and arguments which I have never used, and have then proceeded to demolish them to their complete satisfaction. I thank noble Lords for having taken part in the debate, and clearly I have no alternative but to ask permission to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

SENIOR PUBLIC ELEMENTARY SCHOOLS (LIVERPOOL) BILL.
Brought from the Commons; read 1a; to be printed; and referred to the Examiners.

BASTARDY (BLOOD TESTS) BILL. [H.L.]
Report from the Select Committee (with the Proceedings of the Committee) made, and to be printed. Minutes of Evidence, with Appendices, laid upon the Table and to be delivered out: Bill reported, with Amendments, and committed to a Committee of the Whole House, and to be printed as amended.
House adjourned at eight minutes before eight o'clock.