Lords Sitting of 3 April 1940

Preamble
The House met at four of the clock, The LORD CHANCELLOR on the Woolsack.
NEWCASTLE AND GATESHEAD WATERWORKS BILL.
Read 2a, and committed.
TORQUAY CEMETERY BILL.
Read 2a, and committed.
ELY CATHEDRAL CANONRIES BILL.
Read 3a, and passed.
NORTHALLERTON URBAN DIS TRICT COUNCIL BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.

CHINA: BRITISH POLICY.
4.1 p.m.
VISCOUNT SAMUEL: My Lords, I should like to ask the noble Viscount the Foreign Secretary a question of which I have given him private notice: whether the policy of His Majesty's Government in China remains unchanged. Perhaps I may be allowed in a few sentences to give a reason for this question. It arises from a statement made by His Majesty's Ambassador in Japan on an important public occasion a few days ago, on March 28. The terms of that speech as reported in the London Press may give rise to misunderstanding. We all desire that the relations between this country and Japan should be placed on a satisfactory footing, and must welcome the efforts of the Ambassador in Tokyo to effect that object. But, as briefly reported, the speech to which I refer might be interpreted as a condonation of the actions of Japan in China in recent years and an acceptance of her present policy. In view of the opinion in regard to the Japanese invasion of China which is generally held in this country, in the
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United States, and indeed in most countries of the world, I trust that the Foreign Secretary may be able to reaffirm the declarations repeatedly made on behalf of His Majesty's Government as to their attitude towards the legitimate Government of China.
4.3 p.m.
THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (VISCOUNT HALIFAX): My Lords, my attention has been called to the speech which His Majesty's Ambassador made at a meeting in Tokyo of the Japan-British Society, and I have had an opportunity of seeing more complete details of the speech than it has been possible to obtain, so far as I am aware, from the Press. I can assure the noble Viscount that it was no part of the Ambassador's intention to suggest that the policy of His Majesty's Government had undergone any change or that it in any way diverged from that which has been repeatedly explained in Parliament. It follows that there is no question of His Majesty's Government changing their view as to what they must continue to regard as the legitimate Government of China; nor is there any question of a departure from the general attitude which they have adopted towards the Far Eastern question, or any modification of their desire to see a settlement of the dispute on equitable terms. His Majesty's Government do not, however, regard their policy as thus described as being in any way inconsistent with the endeavour to place our relations with Japan on a more friendly footing. Sir Robert Craigie has rendered very valuable service in this direction, and it was this purpose which he was especially concerned to promote in his speech.

WOOL CONTROL.
4.5 p.m.
THE DUKE OF MONTROSE THE DUKE OF MONTROSE rose to ask His Majesty's Government whether they are aware of the grave dissatisfaction among farmers over the wool prices and the system of wool control; and whether the producers of wool from all parts of the country can have adequate representation on the British Wool Central Advisory Committee along with that of the manufacturers and selling interests; and to move for Papers.
The noble Duke said: My Lords, in rising to move the Motion standing in my

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name I speak with a good deal of diffidence, because agricultural topics are generally dealt with in this House so much to your Lordships' satisfaction by noble Lords like Viscount Bledisloe, Lord Hastings or Lord Cranworth, who have vast experience in agriculture. But agriculture, as you know, is a very diversified form of industry and has to be examined from many angles. While the noble Lords to whom I have referred generally address your Lordships on the subjects of the cultivation of arable lands or the breeding of livestock on low-lying lands, I want to try to put before you this afternoon the grave anxiety felt by the hill farmers, especially the black-faced sheep farmers, of Scotland who are fanning on the mountains and the bare moorlands for the production of mutton and wool. Sheep farming on the mountains is a very different proposition indeed from the cultivation of cereals. In farming on the low-lying lands, in the cultivation of cereals, if one line of crop is unsuccessful you can turn to another line of crop, or indulge in a little of all kinds of crops. But in hill sheep farming, as it is carried out in the vast areas of the poorest land in this country, you can do nothing else. There is no alternative crop; you must farm sheep, always sheep, all the time. If the prices for mutton and wool drop out of the sheep business, there is nothing you can do except clear your flock and allow the land to fall derelict and lose a lot of your capital in so doing.
I am sorry to say that during the last two years mountain sheep farmers, especially the black-faced sheep farmers of Scotland—whose industry is very large indeed: they farm over 3,500,000 sheep—have had a terribly bad time during the last two years. I will try to give you an idea of what they have been through. There are only three sources of revenue open to a hill sheep-farmer. The first is the sale of the wool, the second is the sale of the lambs, and the third is the sale of the cast ewes. During the last few years cast ewes have dropped from 29s. to 22s. a head, lambs have dropped from 20s. to 12S. a head, and the wool has dropped from Is. 1d. per lb. to as low as 4½d. per lb. There has been a drop in all three sources of revenue to a hill sheep farmer. That means that, while all the costs of farming have gone up on the one hand, the bottom has
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fallen out of these three sources of revenue on the other hand. The whole business is absolutely uneconomic to-day, so much so that quite a number of farmers have been ruined, or nearly ruined.
The three largest Counties in Scotland where black-faced sheep farming is the predominant form of agriculture are Argyllshire, Perthshire, and Inverness-shire. During the last few years the breeding ewes in those three Counties have fallen by 80,000, or 11½ per cent. of the breeding stock. If that fall goes on, it will not be long before there are no black-faced sheep in those three Counties at all, or indeed in Scotland. It would be bad enough for those three Counties if that happened, but it would be disastrous to the whole scheme of agriculture in Great Britain if it happened, because black-faced sheep breeding is a primary industry, and it is about the only branch of agriculture which is a primary industry. By that I mean that black-faced sheep farming does not depend for its prosperity on any other part of agriculture. Black-faced sheep farmers do not need to import any feeding-stuffs, and part of their crop, the wool, is an export; we export it to America and to Italy. At a time like this, therefore, in view of the fact that black-faced sheep farming is carried on on a vast area of derelict land, where no other form of agriculture is possible and where no other sheep will feed, and having regard to the facts that no feeding-stuffs need to be imported and that the wool is an export and therefore helps our foreign exchange, it is surely of vital importance to this country that this industry should prosper.
But it is not prospering. As I have said, the black-faced sheep farmers are in a state of grave anxiety as to what is to happen. I wish that I could say that the rot, if I may call it so, had stopped. It has not stopped; it is still going on. I for one, as a black-faced sheep farmer, am faced this autumn with the grave decision of whether I shall clear 1,600 ewes off two of my farms, allowing the land to go derelict. I do not want the land to go derelict, but neither I nor any of my colleagues who are black-faced sheep farmers can afford, with the financial burdens that we have to bear, to carry on a business which is absolutely uneconomic at to-day's prices. Perhaps some of your Lordships may feel that the Government

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control of prices may be of help. I am sorry to say, however, that nothing that has been done under the Control has been of the least help to the black-faced sheep farmers, for the simple reason that whatever has been done under the Control has been done too late to benefit them.
If I am not wearying your Lordships, I should like to take mutton as an illustration. When the Ministry of Food first fixed the price of mutton they did so without consultation with the farmers at all. They fixed the price of mutton at 6d. per lb. regardless of any breed of sheep, whether heavy-weight sheep or light-weight sheep. The feeders who buy the lambs from the hill breeders say that if they are to make a profit with mutton at 6d. per lb. they must pay a very low price for the lambs. The result was that on the declaration of the price of mutton, the price of lambs fell by 7s. to 12s. a head. Later on, the Food Controller saw that a great mistake had been made, and he put the price of mutton up by 2d. per lb. Still later, he saw that a mistake was continuing to be made, and he put up the price by another l½d. per lb., so that it was 9½d. per lb. But it was too late; all our lamb sales had taken place, and not one little bit of that advance in the price of mutton percolated down to the hill farmer. It all went to the feeder or to the butcher, and I doubt whether the consumer derived any advantage from it.
Let me now take the case of wool. The Wool Controller, without any consultation with the farmers at all, issued a stand-still order on September 5. Under the stand-still order, wool was frozen on the farmer's hands; the farmer was prevented from selling his wool in any market. Because the Controller had not consulted the farmers as to what was possible and as to what the effect of the stand-still order would be, it was an absolute fiasco and had to be cancelled. Some time in December he issued his second scheme. The second scheme was no good, because all the wool sales of those who had free wool had taken place, and those who had wool frozen on their hands were offered only 10d. per lb. as a maximum price. There was no minimum price. It was impossible for all farmers to obtain the maximum price of 10d., and, there
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being no minimum price, it was absolutely uneconomic.
None of our black-faced sheep farmers can understand the working of the Wool Control. Under the Wool Control the Wool Controller can commandeer the wool at any price up to 10d. per lb., but he releases it to the merchant at 14d. per lb., a margin of 4d. That is an excessive margin and more than covers all the expenses. As he must be dealing with about 40,000,000 lb. of wool, there must be an enormous profit going to the Wool Control. We should like to know what profit is in fact made by the Wool Control and why none of that profit comes back to the producers of the sheep, who produce the mutton and the wool. We had a discussion with the Wool Controller at Carlisle, and we pointed out to him that 10d. per lb. without any minimum was absolutely uneconomic. To our amazement, the Wool Controller said that the costs of production did not interest him when fixing the price of wool. Did your Lordships ever hear such an extraordinary statement? What would steel makers say if you told them that the cost of producing steel did not interest you when you fixed the price? What would the colliery people say if you told them that the costs at the coal face did not interest you when fixing the price of coal? What would the cotton people say if you told them that the cost of the looms did not interest you when fixing the price of cotton? It is an amazing statement, and we cannot see why the business of the hill sheep farmers should be treated differently from every other business in this country.
We realise, however, that despite all the disappointments in 1939 to those of us who are hill farmers and who breed sheep for wool and mutton, perhaps things have gone too far to do much about the 1939 prices. But what we do want to know is, where are we going to be in 1940? Now we were definitely promised by the Wool Controller and by the Minister of Supply that we, the farmers, would be called into consultation before—not after, as happened in 1939—the prices were fixed in 1940. The prices of the English wool fall to be declared some time early in May. Time is getting very short, but we farmers have heard nothing yet about being called into consultation. What we want to know is whether that promise that we are going to be called into consultation is going to

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be implemented. Are we going to be called into consultation, and if so when? We ought to be called into consultation at once before the English prices are fixed. Then we want to know, are the costs of production going to be taken into consideration? We say that there ought to be no discrimination between the businesses of this country. If other businesses have their costs of production taken into consideration we certainly ought to have that same privilege. Are they going to be taken into consideration or not?
Then we feel that we ought to have representation as an agricultural community on the British Central Wool Control Committee. On the British Central Wool Control Committee there are representatives of manufacturers and representatives of the merchants, but why are there no representatives of the producers? Surely, in a democratic country like this it is only fair and right that all interested parties should be represented on a Control Committee without any discrimination whatsoever. If the merchants and the manufacturers are represented surely it is only right that the producers should be represented also. I know that there is an Advisory Committee on which farmers are represented also, but that is another Committee, and it never seems to be called in to advise, or whenever it has been called in to advise its advice has never been taken. But the British Central Wool Control Committee is a central body which is, or ought to be, in touch with the Wool Control and the Minister of Supply almost daily, and it is upon that Committee that we as producers wish to be represented. All I can say is that if those requests, which I think are fair, are met with sympathy and understanding, well and good, we shall be satisfied. But if for some reason or other as producers our ambitions and desires are turned down, well, we hill farmers will lose all confidence in the Control and in the Ministry of Supply; and that surely would be deplorable, absolutely deplorable, at a time like this, when everybody in the country is asking us to do everything we can to produce all the mutton and all the wool that are possible. I beg to move the Motion that stands in my name.
4.24 p.m.
THE EARL OF BREADALBANE AND HOLLAND: My Lords, I rise to support
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what has been so well said and so powerfully expressed by the noble Duke who preceded me. I do crave your attention to-night because wool is a most difficult subject in which to interest any audience, even your Lordships, but it is one of the most profound importance. It is important for the war effort of the nation in general, and it is important to sheep farmers at home in particular. During the last century this country has relied more and more on foreign imports and raw materials from overseas, and the home farmer's interests have suffered in consequence. This policy may have worked in times of peace, but it will not do in war, for what is the position with which this country is confronted to-day? We are threatened by the submarines and the mines and the bombing machines of a ruthless and determined foe, who would starve us into submission to-morrow if he could, and who in the last war sank over half a million tons of shipping in one month. Indeed, at a time when the British Empire is on the threshold of a struggle for its very existence, I need hardly stress in your Lordships' House how essential it is that the home producer should receive every possible encouragemet.
Government speakers, with all the influence they command, have emphasized the urgent necessity of cutting down our imports and increasing our home production to the utmost limit of this country's capacity. They have pointed out that every pound of mutton, every fleece of wool raised within our shores represents an economy in shipping, a lightening of the burden on our gallant Navy, and a reduction in the amount of money flowing out to pay for imports. No contribution to our huge economic effort could be more valuable or more vital. To the sheep farming industry itself this matter is of the Most serious consequence, and upon its satisfactory solution the future and stability of sheep farming in this country may well depend. Indeed, the position is so serious that I am sure that every word uttered in your Lordships' House to-night will be read with the most anxious interest and scanned with the keenest scrutiny by sheep farmers all over the Kingdom to-morrow.
Now what exactly is the trouble? What is it that has, caused such apprehension and such loss of confidence among sheep farmers to-day? It is this. Farmers are

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being compelled by Government order to hand over their wool at a price which admittedly bears no relation to the costs they have incurred in producing it. Can any statement be more astounding or more disturbing? Yet such is undoubtedly the fact. Last autumn a meeting was held at Carlisle between the Wool Controller and leading agricultural representatives from all over Scotland. They pointed out that the price at which the Wool Controller proposed to take over the 1939 wool clip was not one at which it was possible for farmers to produce it without loss. What was his answer to that? He stated, and I understand he made no secret of the fact, that the cost of production was no concern of his, and that his business was simply to purchase the wool at the cheapest price he could. That may sound a good bargain for the kudos of the Wool Control, which in the last war made a profit of some millions out of their transactions, but it is a deplorable bargain for the hill farmer, upon whom this country may be forced so gravely to depend, and it is a policy of madness for a country which is threatened by a hostile blockade.
What makes it worse is that there seems no available court of appeal, no Minister interested or powerful enough to put the matter right. Farmers were so concerned at the outlook that they petitioned for an interview with the Prime Minister in the hope of getting redress. They were told that he was—as, with all the burdens and responsibilities which must rest on his shoulders, one can well believe—too busy to see them. They then asked for an interview with the Minister of Supply, whose special business it is. Once again they were unsuccessful. Finally, at very short notice and on a different matter, they were accorded an interview by the Minister of Food. I should like to state here that they have systematically had the most understanding consideration from the Secretary of State for Scotland and his Department for Agriculture, but at the same time this grievance has never been put right. I ask this: Why should farmers, upon whom this country so greatly relies, have to go round hat in hand from one Minister to another, from one Controller to another, from one official to another, in this importunate and humiliating fashion? What has been
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the result of all this unsympathetic and unhelpful attitude? It is this. Good practical men who have spent their lives in farming, and who still wish to farm, are being driven out of business by sheer lack of money and compelled to abandon the raising of sheep at the very time when they are most required.
Let me not be misunderstood. Farmers are not asking for inflated prices. They realise too well the seriousness of the world situation for that. They are not seeking to grow rich during the country's crisis. They are far too patriotic for that. But what they do ask, and what they have a right to ask, is that if they risk their capital in producing the goods the country requires, they shall receive a fair and economic price in return, a price which will enable them to meet their commitments squarely, and does not force them to borrow from the banks and to face ruin or even bankruptcy as a result. I could put before your Lordships the actual figures of losses which have been incurred on one sheep farm after another during the last year, and it is time these grim facts were frankly faced, but lest I be thought to overstate my case, let me quote to your Lordships what was said by a leading agriculturist the other day. Speaking at Ayr, one of the most prominent farmers in the West of Scotland is reported to have used these words:
"He thought this was where the Government had gone wrong. They had never consulted the farmers. 'Treat farmers fairly,' he added, 'and we will respond, as we are as patriotic as any other section of the community. Appoint representatives in whom we have faith, and we will follow, but we must no longer be asked to tolerate a system which forces us to educate our temporary masters, and degrades us in the process to the appearance of a mass of grieving, grousing malcontents.'"
These are strong words, but they are no stronger than the situation demands.
Throughout the North at the present time there are farms unlet, and sitting tenants anxiously wondering if they, too, must quit the only livelihood they know. As your Lordships are aware, the home farmer is bound by law to pay a minimum rate of wages to his shepherds, he is bound to pay for wintering his lambs away from the rigours and snowdrifts of our Scottish hills, he is bound to pay the war-time price for his feeding stuffs; and at the present controlled price he simply cannot do it. In ordinary times of peace

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the hard answer might be that if a farmer cannot make his business pay then, like any other trader, he must give it up. That is precisely what is happening all over Scotland to-day, but it is precisely what this country cannot afford to watch with indifference. Indeed, one of the ironies of the whole situation is that the Government, whose own action has been so largely responsible for the trouble, have at the same time been urging and imploring sheep farmers to increase their sheep stocks and even to put sheep on to barren deer forests, where the risk is obviously greater and the return even more problematical. The Government cannot have it both ways. They cannot expect to increase home production on the one hand if, on the other, by an inadequate controlled price, they compel the farmer to lose money when he does.
Let us look for a moment at the three sources from which the sheep farmer can normally expect to obtain some return for his capital and his work. I shall try to do this as briefly as possible. These sources are his cast ewes, his wedder lambs, and his wool. The cast ewes are, of course, the ewes which have reached an age when they can no longer spend another winter on our bleak and barren hills. In the ordinary course they are bought by Lowland farmers, who take them down to richer grazing and milder climate, and there breed one or possibly two cross lambs before sending them on to the butcher. Now, owing to the great ploughing campaign which the Government have found it necessary to introduce, much of this grazing will be broken up, and therefore no longer available. Consequently the market for cast ewes will be largely curtailed, and hill farmers will be forced to sell them direct to the butcher at slaughter prices and as best they can. Similarly with the wedder lambs. These, also, are usually fattened through the autumn by Lowland farmers. Now, with the reduction of grazing, they too must be killed before the approach of winter. So what is there left? Simply and solely the wool clip. Nothing else stands between the hill farmer and a loss.
I shall, for brevity, confine my figures to black-faced wool, though I would emphasize that my arguments apply equally to the more expensive types, and that some of these, such as the Cheviot, are, if anything, even more severely hit.
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As many of your Lordships doubtless know, black-faced wool is grown under the hardest conditions of all. It is derived from sheep which form the very backbone of Scottish hill farming. They are the only ones hardy enough to endure on Highland moors and capable of converting the coarse herbage and heather found thereon into the useful products of wool and mutton. Black-faced wool has been taken over—one might almost say confiscated—by the Government at an arbitrary maximum price of 10d. a lb. This price seems to have no logical or economic basis, and to have been arrived at contrary to the experienced advice of practical farmers on the British Wool Central Advisory Committee. I should mention here that this body, appointed by the Government presumably for the very purpose of giving the Wool Controller the benefit of expert and practical advice, has met once only since the war began, and not only was the advice of Scottish farmers not taken on that occasion but the body has never been invited to assemble since. Is that fair representation of the producers' interests?
During the last war, when the Government also found it necessary to control the price of wool, the figure was then successively 11½d., Is. 0¾d. and 1s. 1½d. per lb.—that is to say, an average of rather more than 1s. a lb. If is. a lb. was a fair price in the last war, how can 10d. a lb. be a fair price in this? It is common knowledge that the cost of living, the cost of wages, the cost of feeding stuffs, indeed the whole cost of production has gone up since then out of all recognition, and for the Wool Controller merely to say that is no concern of his seems to me just trifling with a most serious matter. No wonder farmers are in despair, no wonder all confidence in sheep farming is going or has gone. There are thousands of acres of good sheep farming land standing idle to-day. There are numbers of sheep farms standing unlet to-day simply because farmers dare not risk their capital in stocking them. Is that what the country needs? Is that what the Government desire? Yet whether they do or not that is in fact the position, and it will get worse unless the present anxiety is dispelled.
Let me turn to the future, to the question of the price at which the 1940 clip is to be controlled. I understand, and the

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noble Duke confirms it, that the Wool Controller indicated that the price for 1940 would not be prejudiced by the inadequate figure of 10d. given in 1939. But is that so? I should welcome some statement from the Government Bench on that point. What farmers fear is that in practice it will, and that they will wake up one morning to find that the whole matter has been settled over their heads, and that once again the controlled price has been fixed at a figure which condemns them to certain loss. What is so urgently required is some clear and categorical assurance from the Government that when the price of the 1940 wool clip comes to be decided—and that cannot be too soon—they will take into consideration the cost of production and will give the advice of practical men the attention that it deserves.
There are other matters which are accentuating the widespread dissatisfaction. Amongst these are the present prices allocated for fat stock. For this year alone they are perhaps sufficient, but that is only because the feeders were enabled to buy their beasts last autumn at slump prices, bankrupt prices, caused by the general uncertainty in the trade as to the future intentions of the Government. The full loss fell on the hill farmers, and unless hill farmers are to suffer another grievous loss these prices must never be allowed to recur. Then there is the question of delay in payment for the 1939 clip which has been taken over by the Controller. In ordinary times Scottish hill farmers begin to sell their clip in September and receive cash from the brokers soon after. Last autumn wool was requisitioned on September 1, and yet to-day, some seven months afterwards, there are farmers all over Scotland who have not received one penny in payment. There are also certain difficulties connected with the purchase of fat stock on a live-weight basis. But all those matters are relatively (and I emphasize the word relatively) less important. They will no doubt adjust themselves as the Government organisation gets into its stride, or they can be smoothed out at a conference between the parties interested with good will. What is absolutely essential is that the agricultural industry, one of the greatest industries in Scotland and one on which the livelihood and prosperity of so many
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depend, shall regain its confidence, and only by Government action can this be done.
In this connection, may I quote from a recent speech of the Lord Privy Seal? The Lord Privy Seal was referring at the time to the Government's attitude in regard to the campaign for growing more food, and this is what he said:
"So far as the Government are concerned, we are determined to give the campaign our fullest possible support, but this does not mean that we are entitled to lay all the burden on the farmers and the farm workers. We cannot divest ourselves of our own share of responsibility."
How heartily I agree. He then continued:
"Let us then regard agriculture. The growing of more food at home is a form of economy which we not only expect but upon which we insist, for it is not only a great economy, it is also a magnificent opportunity. We should take it with joy, with hope and with determination."
Those are words of great inspiration, but I ask, how is a farmer who cannot even pay his wages without borrowing, and who sees his life savings diminishing month by month, to continue to farm with either joy or hope or even with determination?
And yet the whole matter is really contained within such a very small compass. If the Government would only heed the advice of practical men who know the difficulties from the inside, it could so easily be put right. Let the controlled price be based on a reasonable cost of production, and let whatever is a fair profit to the farmer be added. This is a system which is well-known and well-tried in many other industries to-day. Let us see just what it would entail. The total annual Scottish wool clip amounts to some 26,000,000 lbs. of wool. An increase of 4d. per lb. in the controlled price would represent a sum of under £500,000, or less than the cost of two hours' war. The Government may reply that even that is a great deal at a time when the country's finances require to be so carefully husbanded. That may be so, but what would they obtain in exchange? They would gain the stability and the good will and the best efforts of the whole sheep farming industry. Is not that worth having, and doubly so in times like these? If the Government could recently find some £50,000,000 by a mere stroke of the pen for the beneficent purpose of helping our

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Colonies abroad, surely they can find less than £500,000 in the course of a year for the assistance of our sheep farmers at home. I should state here that so great is the disparity between the price at which wool is requisitioned from the farmers and the price at which it is subsequently retailed to the public, that in the opinion of many knowledgeable men a greater economy in the administration of the Wool Control would provide the Government with the whole sum required.
I beg the Government to look at this matter in a broader spirit and to realise that for a paltry 4d. a lb. they are jeopardising the whole future of sheep farming in this country. I implore them, before it is too late, to give a gesture of encouragement to an industry which sorely needs it—an industry on which this country may yet have to rely, an industry which in times past contributed so large a share to the development of Britain's power that it is symbolised in your Lordships' House by the presence of the Woolsack, an industry which will, I am sure, respond in full measure to all calls that may be made on it once farmers are assured that this policy of discouragement, this seeming disregard of their legitimate interests is to cease, and that in future they will receive what they have never yet had, that is, a fair deal from an industrial nation which has neglected their interest in peace, but is taking advantage of their patriotism in war.
4.53 p.m.
LORD GAINFORD: My Lords, we have listened to two very effective and eloquent speeches from the noble Duke and from the noble Earl who has just resumed his seat. They have dealt almost exclusively with the position of the sheep farmer in Scotland. I want to say a word on behalf of the dalesmen who are also sheep farmers in Northumberland, Durham and Yorkshire. Those men have just the same complaint to make which has been so eloquently put by the two previous speakers. I am not going to repeat what has been said, but I do say on behalf of the English dales-men that they have had a very bad time, that they are having a very bad time, and that it is a vital industry in which they are engaged. These dalesmen almost exclusively rely upon the sheep which run upon the moors above the dales in which they live. It is vital to this country that we should keep our flocks of
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sheep intact and that sheep farming should be a profitable industry. What I want to say to the Government is that we do not want mere words of sympathy with the condition of these sheep farmers. We want the Government to say definitely that they are going to do something tangible which will help the sheep farmers and enable their calling to be a prosperous one. I beg the Government to say something which will be of real value to the sheep farmers.
4.55 p.m.
LORD TEMPLEMORE: My Lords, I think that the position of any noble Lord who is not a Scotsman who has to answer a Scottish debate is always unenviable, especially when the unfortunate representative of the Government has to reply to such very eloquent speeches as those we have heard to-day from the noble Duke and from my noble friend behind me, the Earl of Breadalbane. I am, however, glad that my noble friend has raised this question to-day, because it enables me to deal with some details of the system of Wool Control and to make a few points that may not be quite clear at the moment. I will do that first and then answer the specific points which have been raised. In passing I would say that I cannot to-day answer the points raised by my noble friend behind me about the prices of fat stock and other cognate matters. The question of the noble Duke deals entirely with wool and I am going to confine my remarks to that, if my noble friend will excuse me.
It was on October 23 last year that under the Control of Wool (No. 5) Order the great bulk of the stocks of Dominion and other imported wool in merchants' hands in this country was requisitioned. On October 30 all stocks of home grown wool in merchants' hands were also requisitioned under the authority of the Control of Wool (No. 7) Order. In both cases the compensation payable to merchants on taking over the wool was some 10 per cent. above the price ruling just before the outbreak of war. It had been hoped to include home-grown wool in farmers' hands in the No. 7 Order, but discussions arising out of representations made by the farmers delayed the requisitioning of this wool until December 16 and therefore it could not be included in that Order.
The first consultative step taken to discuss the compensation to be paid to

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farmers still owning wool was the convening in October of a joint meeting of the British Wool Central Advisory Committee for England and Wales and the British Wool Central Advisory Committee for Scotland and Northern Ireland. The main function of these Committees is to advise and to make representation to the Wool Control with reference to the valuation and purchase of home-grown wool. I should like to mention to your Lordships the composition of these Committees. The Committee for England and Wales is composed of six farmers nominated by the National Farmers' Union and the Royal Agricultural Society for England, four merchants, one spinner, two manufacturers and one representative of the Ministry of Agriculture, a total of fourteen persons. On the Scotland and Northern Ireland Committee the farmers have four representatives who are nominated by the National Farmers' Union and the Chamber of Agriculture for Scotland, and the other members of this Committee are two merchants, two brokers, one manufacturer and a representative of the Department of Agriculture for Scotland, a total of ten persons. Therefore I do not think that my noble friend was quite justified in suggesting, as he seemed to do, that farmers are not properly represented on the Committees. In the opinion of the Government that is not the position.
At the joint meeting which was held under the independent chairmanship of Mr. Tom Levy, M.P., a previously circulated list giving the prices ruling in June and July, 1939, was accepted by the Committee as a basis for discussion. The Committees by a majority recommended that the compensation which should be paid on the taking over of the farmers' clips, so far as they remained in farmers' hands, should be equal to the prices on the agreed list with the addition of 33⅓ per cent. This proposal went substantially beyond what had been thought feasible, but the question of the purchase price received further detailed consideration by the Minister of Supply in consultation with other Ministers concerned. In arriving at a conclusion on the subject, His Majesty's Government considered it essential to bear in mind two main considerations: first, that the general basis of requisition of existing stocks of commodities at prices round
32
about 10 per cent, above pre-war prices had been adopted by the Government for a wide range of commodities; and secondly, that existing stocks of wool in merchants' hands, both imported and that already sold to them by farmers, had in fact been taken over at that price level. In consequence, on the taking over of these wools, which were ultimately requisitioned by the Control of Wool (No. 10) Order in December last, compensation has already been paid on the basis of the maximum prices in force at the date of the Order.
These maximum prices were laid down in the Control of Wool (No. 9) Order, and generally they are about 10 per cent. above those in the agreed price list to which reference has been made. An exception was made in respect of black-faced wool. In this case an increase of 33 per cent. was given in view of the special circumstances. This wool enters specifically into the export trade with the United States, and having regard to the possibility of a good external market, the Minister agreed to a concession in this case. The prices are, of course, for wool unselected and ungraded, as delivered by the farmers in the normal way. I want to point out that the compensation paid in respect of the 1939 clip now being taken over is limited by the maximum prices in force at the time of the requisition Order under the terms of the Compensation (Defence) Act, 1939. That is, the Government are paying the maximum price which is legally permissible. Consideration will shortly be given to the price to be paid for this year's clip.
I should like to assure my noble friend, who raised this point specially—and I shall refer to it again later on—that full consideration will be paid, before the price is fixed, to the representations of the farmers both in Scotland and in England. Before I came hare I had consultations not only with the officials at the Ministry of Supply but also with my right honourable friend the Secretary of State for Scotland, whom I saw personally and who told me what I have just informed the noble Duke. As I hope will have been clear from this account of the negotiations which led to the fixing of the price paid by the Government for the 1939 clip, the sheep farmers are represented on the British Wool Central Advisory Committees, which are the bodies

33
dealing with the aspect of wool control affecting farmers. They are also represented fully on local area advisory committees, which have important functions—within the limits of the price structure laid down in the Order—in matters on which a knowledge of local conditions is of consequence. They are consulted in the application of the price schedule to types of wool, unspecified in the schedule, which may be produced in their area, and they act as a court of appeal in cases of dispute over the appraisement of wool being taken over.
Now I turn to some of the questions which the noble Duke specifically raised. He said, and we all regret to hear it, that the black-faced sheep farmers, especially in the three large Counties of Argyll, Perth and Inverness, are facing ruin. I can assure him that it is undoubtedly recognised by His Majesty's Government that the sheep industry, and particularly the hill sheep industry, is and always was an important part of the economy of agriculture in Scotland, and the Government fully realise that there have been bad years for hill farmers during the last ten years. I have a table here by which I see that the years 1932, 1933, last year and the year before were the worst years. As a set-off to this, the four years from 1934 to 1937 showed price levels for lambs and wool considerably above the level of these bad years.
The noble Duke asked me especially about the profit of the Wool Control. Wool, as of course he knows, is taken over from the farmer in an unselected and ungraded state. As sold by the Control it is usually selected and graded. Substantial expenses are incurred by the Control in dealing with the ungraded clips: handling, carriage, grading, overheads and so on. Any profit which may be realised will accrue to the Exchequer, just as any loss, on the other hand, will fall on the Exchequer. The general policy laid down by the Government for the taking-over of existing stocks of a wide range of commodities was to pay the pre-war price with a margin to secure that the holders should not suffer any loss on holding the stocks. This was adopted irrespective of the price which the Government might secure for the goods. It is part of a general policy, and I am afraid that an exception cannot be made in the particular case of wool.
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My noble friend also found fault with a remark which the Wool Controller made at Carlisle. It was on November 24 last year, on the question of the price. This was also mentioned by my noble friend Lord Breadalbane. In answer to that, I have to say that all the Controller meant was that he fully realised the difficulty that the farmers were having in making their farms pay, but he pointed out, as he was bound to, that his duty compelled him to have regard to wool economics only. The prices are fixed by the Government and not by the Controller, and the Government naturally have to take every consideration into due account. The noble Duke asked me during the last part of his speech whether farmers were going to be consulted before prices were fixed for 1940. As I have already told him, the answer is Yes. When that will be I do not know, but I can assure him that is so and that their opinions are not in any way going to be ignored. The noble Lord who spoke from the Liberal Benches, Lord Gainford, besought the Government to do something practical to save these farmers. I am not in a position, I am afraid, to give him a definite answer to that. I can only say that naturally the Government are fully alive to the importance of this branch of agriculture, as of every other.
In conclusion I should like to say that this debate—which my noble friend and the noble Earl, Lord Breadalbane, said was an extremely important debate and would be watched with interest especially, I think he said, in Scotland—will, I know, be read with interest by the Minister of Agriculture, the Minister of Supply and the Secretary of State for Scotland; and I am sure that every consideration will be given to the points which have been put forward to-day by my noble friend. I have done my best to answer most of the points which he raised. I do not suppose that all that I have said will satisfy him, but I can only repeat that the Government consider this a very important debate, and that the remarks made by the noble Lords who have spoken will be most carefully noted by the Cabinet and by members of the Government.
5.11 p.m.
LORD BARNBY: My Lords, I listened with interest to the assurance which the noble Lord who spoke for the Government has just given, that the various members

35
of the Government and heads of Departments to whom he referred will read with great interest and care what has been said in this House to-day. When I came here I had not decided whether I should intervene in the debate; I waited to hear what my noble friend would say in reply to the points which have been raised. With the indulgence of the House, I now feel compelled to make one or two remarks on what the noble Lord, Lord Templemore, has said. Before doing so, however, I should like to say that I cannot help feeling that the case put by the noble Duke and by the noble Earl, Lord Breadalbane, was of such a character that, had more members of this House been present, they would have felt a great degree of conviction that there were some grounds for asking for better treatment from the Government, and I feel inclined to think that more would have been inclined to intervene in the debate. In any event, we must feel sure that a case put by two members of your Lordships' House who speak with so much knowledge and authority on this subject, is entitled to the consideration which it has been given.
On the last occasion on which I heard the noble Duke in this House, it was in support of something which was strongly resisted by the Government. He made an appeal that we should make more use of home fuel for the propulsion of vehicles in this country. The Government resisted it, taking the view that it was not possible to give the Excise and other concessions which were necessary. But now we see the wisdom of the proposal which the noble Duke made and can realise the degree to which the country would be advantaged had his appeal to the Government been acted upon then instead of only now, after so much time has elapsed. Perhaps that may be prophetic. I know that the noble Duke is a man of resolution, and it may well be that his feeling on the matter now under discussion is so strong that he will press his Motion to a Division. I feel sure that if more members of your Lordships' House were present he would have sufficient support to justify his doing so, but what his decision will be in the circumstances I do not know.
I feel impelled to intervene because of something which fell from the noble Lord
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who replied for the Government. He seemed to me to fail to deal with the emphasis laid by the noble Earl, Lord Breadalbane, on the fact that no Minister appeared interested enough or powerful enough to deal with the representation of the agricultural community on this particular point. The point made by the noble Earl was that there is a Central Wool Committee, but that has met only once, and therefore it cannot be of very great assistance to the Minister. The point that I want to make is that there is a very strong feeling in interested circles in this country—not only among wool growers, but on the part of the wool textile industry as a whole—that the Minister concerned in this matter, the Minister of Supply, has not been inclined to confer with the trade associations which are available for consultation for the purpose of giving advice which they are qualified to give in the interests of the country, advice which, if the Minister were wise, he would have sought and would have taken.
Emphasis has been laid on the fact that the cost of production was not taken into account. The noble Lord who replied for the Government gave an assurance that the words used by the Wool Controller were not meant to be understood in the sense that was attributed to them. Doubtless it is now the intention of the Government to take the cost of production into consideration. Another point raised concerned the profit made by the Wool Control. Unfortunately, the noble Lord who dealt with this question did not trouble to give the House the correct perspective on this aspect of wool control. The British taxpayer is committed to purchase the British clip for one year and the Australian and the New Zealand clips for the duration of the war and one year thereafter. It may well be, therefore, that the total will amount to hundreds of millions of pounds of wool. That is a very important matter, but the British wool in any one year will probably be only about one-tenth of the whole, and advantage might well be taken of that fact.
The noble Lord did in fact point out that the price received by the Scottish wool grower was in excess of the price obtained by the English wool grower. It might well be suggested, therefore, that the Scottish wool growers have been less badly treated than other sections of the

37
community. The surprising fact is that others of your Lordships who are wool growers in England have not complained of the treatment which they have had. There is a feeling throughout the country that very large margins exist between the price at which wool has been taken over and the price at which it is being issued to users in this country and for sale abroad. This seems to presuppose that the administration of the Wool Control is not as efficient as it might be. I think that the noble Lord who spoke for the Government did not put this matter in the right perspective. I happen to know that the individual in the Ministry of Supply who is responsible for administering the Wool Control is thoroughly capable and efficient. I may be biased on that point, because it so happens that I appointed him to the same position in the last war, when I was responsible for wool control. It is not a question of the way in which the Control is carried out but of the way in which decisions are taken by the Minister at the top. In this particular case certain Orders exist, and the difficulty may well be that they are not being properly put into force.
I cannot resist interposing an anecdote on this particular point. When, as an officer in uniform, I was sent to buy the British clip in the last war, naturally we had to deal with Scotland. We had Advisory Committees there and we took the opportunity of conferring with everyone who could help. I was then sent to Ireland, with the instruction "Whatever you do, be careful on the political side." I duly approached the Commander-in-Chief, and we had many negotiations finally to check the manner in which the wool was going to be taken over. We came back and we were again warned that there must be no risk of incurring political difficulties. So some wise person—I take no credit for it myself—suggested that "What you really want is somebody of great administrative experience." Therefore some great ex-Indian Proconsul was suggested, one of the late Lord Curzon's minions who had been Governor of Eastern Bengal. He was brought in and told, "You had better go to Ireland and carry out this work." He consented to do so. He had never been to Ireland before, and he knew nothing about wool. He went over, duly carried out what was intended, we kept free of any trouble, and he came back after a
38
while. We naturally asked him out of curiosity what his reflections were. He said, "Oh, this was quite simple. There is little difference between Ireland and India. If necessity exists for oppression it does not matter how much you oppress people, provided you oppress them all equally." The point is that in the treatment of this wool there has been definite variation in the way in which it has been handled, and that, I submit, is the cause of a good deal of the dissatisfaction which may well exist, and the perplexity and confusion which arises from the manner in which things may have been done.
In conclusion, I wish to give an example which emphasizes the suggestion that. I make with regard to the action of the Government. I understand that in September, shortly after the announcement of the intended purchase of the Australian and New Zealand clips by His Majesty's Government, warnings were sent from Washington of the need for an immediate statement regarding the availability in adequate quantity of merino wool in Australia, and that in the absence of this prices would rise. The warning was unheeded. The steep price rise occurred. Meanwhile negotiations for purchase were strung along. This action of His Majesty's Government forced prices up in the remaining neutral markets, and naturally made the negotiations more difficult. A further warning was then given that unless the availability of liberal supplies was announced it was likely that the United States would turn to other markets. The end of the normal wool season in the Southern hemisphere is now approaching, and against the quantities of between 200,000 and 300,000 bales of Australian wool which it was thought in October could surely have been disposed of in the United States, it is reported from Australia that the actual shipments of fine wool in South America and in the Cape in their place have amounted to nearly 150,000 bales of Australian equivalent. Meanwhile, purchases from Australia are understood to have been under 50,000 bales. It is clear, therefore, that some 16,000,000 dollars of exchange, sorely needed in America, have been lost. In addition, the denial of supplies in time to Canada by direct shipment from Australasia compelled the raising of the intermediate tariff in Canada. This was followed by

39
what are believed to have been appreciable imports of South American wools, involving the loss of further dollar exchange.
That is what, I suggest, gives the impression that the handling of wool disposal, and particularly the requirements of the United States and Canada, are not properly understood. It has been suggested that to avoid further unnecessary loss to the wool trading account, and disadvantage to the Australian wool grower, there should be established a Committee to advise the Ministry of Supply, which would include men of the necessary technical experience of wool conditions in, and wool trading with, the United States. Now the point is—and this affects the British wool clip—that since wool control was imposed prices of wool have advanced about 60 per cent. in the United Kingdom. Meanwhile since October in the United States prices have fallen about 30 per cent. It must be remembered that under present conditions the New York Wool Top Futures market is the only remaining daily record of wool prices. I submit that that one instance shows that there has been an absence of adequate consultation with appropriate sources of knowledge available to the Minister. It is for that reason that I hope that the noble Lord who replied on behalf of the Government will take note of some of the points I have raised, and that he may see his way to suggest to the Minister of Supply that it may well be that better attention could be given to the possibility of disposal of this wool in the United States, and that there should be the necessary consultation.
5.27 p.m.
THE DUKE OF MONTROSE: My Lords, I do not intend to detain your Lordships at any length, but I would like to say that I listened very carefully to the reply of my noble friend Lord Templemore. I was gratified to hear him say that he viewed with great sympathy the desire of the hill farmers for adequate representation on the Committee, and also for better prices, or for prices sufficiently good to cover their cost of production. I was particularly gratified to hear that the Wool Controller did not really mean that he would not consider the cost of production when fixing the price, because that would have been an
40
extraordinary thing. As regards the composition of the Committee, there seems to be some misunderstanding. I said there was no representation of the farming interest, and the noble Lord informed me that there was. I think I heard the noble Lord say six.
LORD TEMPLEMORE: Six in England, four in Scotland.
THE DUKE OF MONTROSE: All I can say is that the Committee have, I believe, met once only since the war began, so that whether there are farmers on the Committee or not makes no difference.
LORD TEMPLEMORE: May I interrupt? When they did meet after all they fixed the price.
THE DUKE OF MONTROSE: On the only occasion when the Committee met with the farmers present their advice was not taken, and that was what landed the Control in the soup, when they had to scrap their scheme. However, I hope now, after what has been said, that there will be no doubt about the Committee being taken into consultation very much more frequently, in fact, I think the Committee should be in almost daily touch with the Controllers both of food and of wool. I almost had it in mind to ask for a Division, to insist on something definite being stated to-day. I was entirely in favour of what the noble Lord, Lord Gainford, said on behalf of the Yorkshire farmers—namely, that we did not want sympathy, we wanted something definite, because the situation is really very grave, and many of us are very nearly ruined. But in view of what Lord Templemore has said and the assurances he has given that the questions of representation on the Committee and better prices will seriously be considered, I will not do so, but will ask leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

DRAFT UNEMPLOYMENT INSURANCE (INCREASE OF BENEFIT IN RESPECT OF DEPENDENT CHILDREN) ORDER, 1940.
5.30 p.m.
THE LORD PRESIDENT OF THE COUNCIL (EARL STANHOPE): My Lords, I beg to move that the Special Order, as reported from the Special Orders Com-

41
mittee yesterday, be approved. Perhaps in doing so I ought to bring a few points before your Lordships very briefly in regard to the Report which that Committee made. The Report of the Statutory Committee on Unemployment Insurance shows that, owing to the improvement in employment generally, income has exceeded expenditure by over £16,500,000 in the year ended December 31 last. At the same date the net balance in the Fund was £57,500,000, while the debt on the Fund was £77,000,000, the rate of interest payable on the debt being 3⅛ per cent. The improvement in the Unemployment Insurance account is largely due to increased employment owing to Defence expenditure, and they say this:
"It appears to us to be certain as any prophecy can be that the end of the present war will be followed, as the end of the last war was, by severe unemployment."
That being so, they do not feel justified in spending the large amount of balance which has been collected last year and during previous years in increasing benefits and doing other things, such as the reduction of contributions and so on, which would reduce the amount of the Fund and swallow up a good deal of the balance which had gradually been piling up. They recommend, therefore, that part of the accumulated balance should be used to reduce the debt and advise the allocation of £37,000,000 to that end. That would leave £20,000,000 in the balance of the Fund, and £40,000,000 of debt as against the present £77,000,000.
This reduction of debt will mean a saving of £1,100,000 per annum, and the Committee recommend that the saving should he used to improve the rate of benefit in respect of the first two children of unemployed people by increasing the benefit by one shilling a week as from the 15th of the present month. His Majesty's Government accept the recommendations which have been made by the Committee, and propose to put the recommendations into operation. It is not necessary to get an affirmative Resolution from your Lordships' House in regard to the repayment of debt, but it is necessary to get an affirmative Resolution in regard to improving the benefits for the first two dependent children. Your Lordships will therefore see from paragraph 2 of the Draft Order that that is the matter which comes before the House to-day. As regards the agricultural part of the scheme, a similar im-
42
provement is made in regard to the first two dependent children. That also comes under paragraph 2. What is, however, required, to come before your Lordships for affirmative Resolution in this connection is that there was a ceiling to the benefit that could be paid to agricultural workers in the past. That was 33s. a week, and it is now proposed to raise it to 35s. The agricultural scheme had an excess of income over expenditure last year of £600,000, with an accumulated net balance of just under £3,400,000.
Your Lordships will see from the Report that the Committee state there are some 50 per cent. of the unemployed in the agricultural industry who do not fall under the insurance fund, and inquiries are being made as to how that happens. I imagine it is probably the case that a large number of men who were not in any special employment put themselves down as agricultural workers, although in fact they only do a certain amount of casual work at the time of the harvest. We shall know more about that when the Committee have inquired into it. I do not think I need say any more, but if any noble Lord raises any point I shall do my best to meet it. Meanwhile I ask your Lordships to give approval to this Draft Order.
Moved, That the Special Order, as reported from the Special Orders Committee yesterday, be approved.—(Earl Stanhope.)
5.35 p.m.
LORD STRABOLGI: My Lords, my noble friends and I can only approve of one part of this Motion by the Government, and that is giving an extra one shilling per week to the unemployed man for the first two children of his family. We do not want to delay the Order, and that is the attitude taken by my right honourable friends and honourable friends in another place. I understand it is proposed to begin paying this extra shilling about the middle of this month. But with regard to the way the very large surplus is to be disposed of, and indeed the findings of the Committee, we have some observations to make of a critical nature. Your Lordships will have heard the noble Earl quoting the opinion of the Beveridge Committee, as I may call it, with regard to the future course of unemployment during the present war.
EARL STANHOPE: After.
LORD STRABOLGI: Also during. We have here the epitomised memorandum issued to the Select Committee on Special Orders in your Lordships' House, and I am quoting from that. I have also refreshed my memory by referring to the Report itself. The remarks to which I wish particularly to draw attention, and which have shocked my noble friends and my Party, are these. First of all, the Report says it is impossible to make any reasonable forecast of the future course of unemployment. That is an extraordinary statement to make in the middle of this war. The Government have again and again assured us all would be well. On the last occasion particularly, Lord Templemore said it was true there have been delays in taking up the slack of unemployment, but before long every man willing and able to work would be in full employment, and there would be a shortage of labour. Those were the comfortable words that Lord Templemore had to say to your Lordships, while in another place the Minister of Labour always paints the rosiest picture of what is going to happen to-morrow and the day after to-morrow. Now we find the Statutory Committee on Unemployment Insurance—a very distinguished body under the Chairmanship of Sir William Beveridge—declaring they cannot make any reasonable forecast of the future course of unemployment. That is point number one.
The second thing is even more shocking to my noble friends, and that is that the Committee say it is certain as any prophecy can be that the end of the present war will be followed, as the end of the last war was, by severe unemployment. Surely we have learned something from the events following the Armistice which closed the last Great War? That statement must, of course, have been made after all available information had been obtained from the Government, and it seems to me to reek of defeatism—not defeatism in war, but defeatism on the Home Front. We declare that it is the Government's business now to have the best available talent hard at work devising schemes to prevent the dislocation which this Committee advise is bound to happen after the war, and to prevent this heavy unemployment, and we must make our protest on this occasion against any such doctrine.
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That is the preamble. Having questioned the premises on which these proposals are founded, we want also to question the proposals themselves. I regret very much, not for the first time, that we have not got any direct representative of the Trade Union Congress in your Lordships' House. I always think organised labour should be represented in your Lordships' House; but I will do my best to state very briefly their point of view with regard to this large surplus which has accumulated. It is mentioned briefly in the Report, and it should have been received with more attention and sympathy. They hold that in spite of the Government and their bad organisation, the incidence of war—as regards war work and so forth—is bound to reduce unemployment, and therefore the surplus in the Fund will increase. Therefore it would be desirable to give greater concessions now to the remaining unemployed, particularly in view of the rising cost of living. First of all, they recommend that there should be an all-round improvement of benefits. The proposals they made would, I understand, cost about £6,000,000 a year. We are aware that this would mean legislation with the law as it is at present. The debt has to be paid off, and indeed the Committee of your Lordships have found that this Order is intra vires. That is one proposal. They wish particularly to have the three-day waiting period abolished, which would cost about £5,000,000 a year, and there are certain anomalies in the regulations for married women with good industrial records which they would like to see revised.
Those were the Trade Union Congress proposals, and I notice that in the Report of the Statutory Committee one of the members, Mr. G. W. Thomson, in a note of reservation, supported two of the suggestions of the Trade Union Congress. We regret very much that these proposals of the Trade Union Congress, which are supported by the Labour Party as a whole, were not adopted, and that, in effect, the Chancellor of the Exchequer has seized upon this large surplus of money for the reduction of the debt. We think that the occasion should have been taken to improve the benefits all round in the way I have described. I felt bound, on behalf of my noble friends of the Party for which I speak in your Lord-

45
ships' House, to make that protest, but we do not wish to delay the passage of the Order, because at any rate the 1s. a week for the first two children is helpful, and we are only sorry it does not apply to all the children of the unemployed men.
5.43 p.m.
EARL STANHOPE: My Lords, the noble Lord opposite quoted the précis which was laid before the Special Orders Committee, but he only quoted half the sentence when he stated that the Committee say it is impossible to make any reasonable forecast of the future course of unemployment. The noble Lord did not even stop at a comma, but missed out the rest of the sentence which shows that they were referring to what was likely to happen at the conclusion of the war.
LORD STRABOLGI: I meant that.
EARL STANHOPE: The noble Lord made that as a second point, but he said it was an amazing thing that they should not have been able to say what the course of employment would be during the war. What they did say was that taking the war and afterwards it was impossible to say what employment there would be. The noble Lord and I differ on a great many subjects, but the other day he surprised me somewhat by a remark he made. I suggested that there was a considerable amount of unemployment clue to the war beginning, and he suggested that we were much too quick in making the change-over and in causing people to discharge those who were working for them. That is exactly what is likely to happen at the end of the war. The moment the war ceases the output of munitions of all sorts and kinds will come to an end as rapidly as possible. Practically in every case contracts contain a "break" clause, and those working with such a clause will at once cease to manufacture. People then have to take up their ordinary peace-time occupations and fulfill peace-time requirements. But who can say what we shall be able to afford at the end of the war? It will depend how long the war goes on and to what extent taxes increase. Motor cars and other things which employ a great deal of labour may not be required to any extent by the general public for the simple reason that they may not be able to afford them.
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If one thing has come out clearly in the situation of the world as a whole I should have thought it was that employment found by the State never takes the place of employment which is found to meet the requirements of private individuals. That, I know, is directly contrary to the view of many members of the Socialist Party, but you have only to look and see what has happened in the United States of America to find confirmation of it. There, I understand, the policy of what is called out there "priming the pump" has been used to a gigantic extent, and they have piled up debt in that country to an extent which we in ordinary peace-time conditions would regard as being quite beyond our reach. Yet the fact remains that they have in the United States of America a vast amount of unemployment in spite of all that has been done by the State to try and reduce it and indeed to try and abolish it. Very little effect seems to have been produced as a result of all their efforts. Therefore when the noble Lord opposite expects this Government, or any Government, to be able to find plans by which the whole of those now employed in making munitions will find work to do and the wages which they can get in any ordinary State employment by making roads and doing work of that kind, he has only to look and see what is the result of the experience of other countries to realise how small a contribution such work makes towards the reduction of unemployment. Therefore when the Commissioners, who after all have amongst them several distinguished economists whose views must carry weight, themselves make the remark that has been referred to, I do not think the Government are unjustified in taking a similar view.
I am sorry to hear the noble Lord make one statement which I did not expect from him, because I am quite certain he knows a great deal too much really to take it seriously. He said something about the Chancellor of the Exchequer seizing this balance. He knows well that this reduction of the debt is not going to have the smallest effect upon the future Budget, or indeed, upon any Budget. The money is transferred from the Minister to the Debt Commissioners, and remains in their hands. If they find that these particular investments are not such as they desire to hold and they sell them,

47
they are compelled to buy investments to an equivalent amount. Therefore this is not a hen roost which can be robbed by the Chancellor of the Exchequer, nor is it a windfall which falls into his open hands in order to help his Budget in the future twelve months.
I do not think I need go into the question the noble Lord raised regarding the benefits that the Trade Union Congress desire. We would all like, of course, to improve the benefits, but to pile up the expenditure on the Fund at a moment like this, and then possibly have to reduce it again at the conclusion of the war, would be an extraordinarily unwise policy and one which those who have the labour interest most at heart, as many of your Lordships in this House have, would feel was undesirable and not one to be followed. The noble Lord mentioned the case of the married woman. That of course is not an insurance case at all. When a woman who was in employment and gradually accumulating contributions to the unemployment fund, married, what happened in a good many cases was this. She had not the smallest intention of going back into employment. She took up household duties, and, we hope, had a family, but she thereupon proceeded to draw insurance as an unemployed person. That was not the intention of the Fund at all, and eventually legislation was passed to prevent it happening. Now, in order to draw insurance, she has to show that she is definitely, in spite of her marriage, going back into employment and that, in spite of her efforts to get work after her marriage, she has been unable to do so. Therefore this particular point is not an insurance point at all, and no doubt it was for that reason the one member of the Commission who supported the other two recommendations did not support that one. I think I have sufficiently met the noble Lord's arguments. I do not suppose I have persuaded him, but I hope I have made him realise that there is another point of view and one which must be given full weight.
LORD STRABOLGI: My Lords, may I by leave of the House thank the noble
48
Earl for the very full explanation he has given of the Order? I entirely agree that under the present system of capitalism we cannot solve the problem of post-war un-employment. That can only be done under Socialism.
EARL STANHOPE: Or in Russia.
LORD STRABOLGI: It has been done there all right.

MONMOUTHSHIRE AND SOUTH WALES EMPLOYERS' MUTUAL INDEMNITY SOCIETY, LIMITED: PETITION FOR BILL.
BIRMINGHAM CORPORATION BILL: PETITION FOR ADDITIONAL PROVISION.
CHRISTCHURCH CORPORATION BILL:
PETITION FOR ADDITIONAL PROVISION.
Examiners' Certificates of noncompliance with the Standing Orders, referred to the Standing Orders Committee.

BUSINESS OF THE HOUSE.
LORD SNELL: My Lords, I beg to ask the noble Earl the Leader of the House if he can make any statement about future business.
EARL STANHOPE>: My Lords, I am much obliged to the noble Lord. There is no business on the Paper for to-morrow, nor is there any business for Tuesday of next week. In fact, there is no business for Thursday of next week either. Therefore I propose that when we adjourn today it shall be until Wednesday of next week. Perhaps we had better wait and see whether any business is put down for the Thursday before deciding anything further. At any rate, the only business at present on the Paper for next week is that set down for Wednesday.
House adjourned at ten minutes before six o'clock.