Lords Sitting of 29 April 1947

Preamble
The. House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers.
2.35 p.m.

NAZEING WOOD OR PARK BILL. [H.L.]
LORD RUSHCLIFFE LORD RUSHCLIFFE rose to move, That it be an instruction to the Select Committee to which the Bill may be referred that they regard the interests of food production, both now and over a lengthy period of years, as being of primary importance. The noble Lord said: My Lords, I need hardly say that I do not propose to refer at all to the merits of this Bill, still less to its details. Those are matters which, obviously, will be gone into by the Committee to which the Bill is referred. What I desire is that this House should place on record once again an expression of the great importance which it attaches to food production in this country.
Quite recently we had a debate in this House in which my noble friend Earl De La Warr, amongst others, pointed out to your Lordships the position in which we stand with regard to food production, and next week Lord Woolton has a Motion on the Order Paper to call attention to the growing danger of a serious shortage of food in this country. It can never be said that your Lordships' House is either ignorant of or indifferent to the very serious position in which we stand with respect to food production. It is probably the most serious position of the kind with which this country has ever been faced. The noble Lords whom I have mentioned (to instance only two), who speak with infinite authority on these matters, have called our attention to the seriousness of the position.
The Bill itself deals with an area of about 450 acres. A long time ago—in the 15th century—this area of land was a deer park. In the 16th century the deer were destroyed, and the land then became
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vested in the lord of the manor subject to the right of those who lived in the neighbourhood and in the neighbouring village of Nazeing to pasture their cattle in the waste of the manor. In the 17th century, an arrangement was come to between the lord of the manor and these freeholders under which a portion of the land—about one-fifth—became vested in fee simple, free from encumbrances, in the lord of the manor, and the other four-fifths in the freeholders, who, presumably, could have done what they liked with it. The position remained as I have indicated, and in 1778 an Act was passed in this House which defined the rights of the freeholders to pasturage over the four-fifths of the land to which I have referred. Under that Act, each of the freeholders had the right to pasture twenty sheep and four horses, and the Act provided that a gentleman called a "pindar" should be appointed as a sort of keeper to look after the whole area. Gates were made and fences were set up to secure that the cattle did not stray.
That state of affairs continued until the beginning of the last war, when the land was requisitioned by the Ministry of Agriculture and, through the agency of the Essex War Agricultural Executive Committee, was ploughed up. And the Ministry of Agriculture appear to have made and to be making a very good job of it. The usual rotational crops have been cultivated. Wheat, oats, barley, potatoes and sugar beet have been grown and very good crops have been produced. The requisition comes to an end in three years' time—that is, in 1950—and the freeholders are most anxious that they should be permitted to continue the good work which has been carried on by the Ministry of Agriculture. They are desirous that they should be allowed to cultivate land in this area after 1950, but of course they cannot do that until this Act of 1778 has been repealed, and that is one of the objects of the Bill which is now before the House. The instruction asks that the Committee to whom this Bill is referred shall, in considering it, have regard to the primary importance in the future of the cultivation and production of food on this land. As I have said, as the freeholders have this right of pasturage, unless the Act of 1778 is repealed the land, presumably, will return to the rough grazing which it was before and be lost to cultivation. With the object of obtaining

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once again an expression of the view of your Lordships' House that food production should be regarded as of primary importance, I beg to move this instruction.
Moved, That it be an instruction to the Select Committee to which the Bill may be referred that they regard the interests of food production, both now and over a lengthy period of years, as being of primary importance.—(Lord Rushcliffe.)
2.42 p.m.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE AND FISHERIES (THE EARL OF HUNTINGDON): My Lords, first of all I would like to say how much the Government are in sympathy with the remarks of the noble Lord, Lord Rushcliffe. It would be difficult to emphasize just how important, how vital, food is to us now, and will be for many years to come. Therefore we are in agreement with the principle of this Motion, which stresses the point we have been trying to make, to encourage people to understand that we must concentrate upon the production of food during the coming years. We do not quite agree with the noble Lord, however, on the wording of his Motion. Although we fully recognize the importance of food production, there are other things which may in the future be equally important. For instance, at the present time we are faced with the rival importance of, say, coal production—fuel—and food. It would be hard to differentiate and say positively which is more important to our national life. Therefore I should like to suggest to the noble Lord who moved the Motion that he should alter one word of the proposed instruction to the Select Committee. That word is "primary." That word emphasizes the point that food production is the only possible consideration and that it should override every other possible national need. I do not think that would be wise, and if the noble Lord would agree to alter that word so that the instruction reads "as being of outstanding importance," the Government would gladly accept his Motion.
2.44 P.m.
THE EARL OF SELBORNE: My Lords, I venture to think that the noble Earl's point is not really of great substance. I do not live in the area dealt with by this measure and I have no interest in the Bill, but I have some knowledge of the dis-
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trict, and I can assure the noble Earl that, as a matter of geology, it is known that there is very little coal under Essex. Therefore I do not think that either coal or oil is going to compete with food production. The point I should like to make is that surely the word "primary" does not mean that it should exclude every other consideration; it simply means that it is of the first importance. I think the noble Earl would agree with that—he would be a very bad agricultural Minister if he did not, and he certainly is not that. I hope that the words "primary importance" will remain, because it seems to me that they mean no more than they say. I venture to think that in these times, with this terrible crisis facing us, we must be resolute in seeing that considerations of food production are borne in mind at every turn. It is always easy, when any specific case conies along, for somebody to say that there are other considerations; but let us bear in mind the primary importance of food production at the present moment. However I am not suggesting that there is a great difference between the words "primary importance" and "outstanding importance," and therefore whichever way my noble friend who moved this Motion decides, I will follow him.
LORD TEVIOT: My Lords, I would like to point out to the noble Earl opposite that without food we shall not get the coal, because miners will not be able to work unless they are properly fed. Therefore, I put food as being of primary importance. We have to feed our people properly if we are to get other products from our country, and I hope that fact will be borne in mind. I think that this Motion is correctly worded, because, without any question, we must produce the food if we are to get adequate labour and men able to work under the strenuous conditions of mining.
LORD RUSHCLIFFE: My Lords, I do not think there is very much disagreement between the noble Earl, Lord Huntingdon, and myself. There is not very much difference between the words "primary" and "outstanding." If the noble Earl is prepared to accept the Motion with the word "outstanding" substituted for "primary," I am prepared to agree.
On Question, Motion, as amended, agreed to.

FELIXSTOWE URBAN DISTRICT COUNCIL BILL.
Read 2a, and committed.

COMMONWEALTH GIFTS FOR FLOOD DISTRESS RELIEF.
VISCOUNT SWINTON: I beg to ask the Government the following question, of which I have given private notice: To ask His Majesty's Government what is the approximate amount of the gifts which have been offered by Governments and private organizations in oversea countries of the British Commonwealth for the relief of distress caused by the recent floods in this country.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON): My Lords, as the noble Viscount is aware, a fund for the relief of distress due to the recent floods has been opened by the Lord Mayor of London, who publishes daily in the Press particulars of the larger gifts received. I understand that gifts amounting to the magnificent sum of more than£1,000,000 sterling have been made or promised by Governments, societies and individuals in the oversea Dominions and Colonies. I take this opportunity to renew our expressions of profound gratitude, which I feel the House will share, to our friends overseas for their most generous help.
VISCOUNT SWINTON: I am very glad the Government have taken the opportunity of giving wider publicity to these many acts of generosity. I really do not know which we appreciate the more, the generous material help or the kindly sympathy which inspires it. This is one more typical example of the truth that in the British Commonwealth we are all members one of another.

WELLINGTON MUSEUM BILL. [H.L.]
2.50 p.m.
LORD HENDERSON: My Lords, I beg leave to introduce a Bill to transfer to the Crown Apsley House and the site, forecourt and garden thereof and certain chattels formerly belonging to the first Duke of Wellington; to provide for the Use of Apsley House partly as a museum for the preservation and exhibition of the said chattels and other chattels associated with the said first Duke or his times, and
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for other public purposes, and partly as a residence for the Dukes of Wellington; to amend enactments relating to the Wellington estates so as to provide for the automatic devolution of the property subject to the trusts thereof whenever there is a change in the person holding office as First Lord of the Treasury, Chancellor of the Exchequer or Speaker of the House of Commons; and for purposes connected with the matters aforesaid. I beg to move that the Bill be read a first time.
Moved, That the Bill be now read 1a.—(Lord Henderson.)
On Question, Bill read 1a, to be printed, and referred to the Examiners.

ARMY AND AIR FORCE (ANNUAL) BILL.
Returned from the Commons with the Amendments agreed to.

BUSINESS OF THE HOUSE.
VISCOUNT ADDISON: My Lords, I beg to move the Motion that stands in my name.
Moved, That Standing Order No. XXI be considered in order to it being suspended for this day's sitting for the purpose of giving precedence over other Notices and Orders of the Day to the Third Readings of the Treaties of Peace (Italy, Roumania, Bulgaria, Hungary and Finland) Bill, and the Naval Forces (Enforcement of Maintenance Liabilities) Bill.—(Viscount Addison.)
On Question, Motion agreed to, and ordered accordingly.

NATIONALIZATION AND INCOME TAX REVENUE.
2.52 p.m.
VISCOUNT ELIBANK: My Lords, I beg to ask the question standing in my name.
[The question was as follows:
To ask His Majesty's Government, what is the estimated average aggregate annual loss to the Treasury in Income Tax paid by companies connected with the nationalized industries, i.e., coal, transport, electricity and gas; and further, how do the Government propose to make good this loss of revenue.]
THE MINISTER OF CIVIL AVIATION (LORD NATHAN): My Lords, the statutory bodies to which the nationalized industries are transferred will be liable to Income Tax on their profits, like any ordinary trading concern. Your Lordships will remember that Section 47 of the Coal Industry Nationalisation Act, 1946, provides that:
"Nothing in this Act shall be deemed to exempt the Board from liability for any tax, duty, rate, levy or other charge whatsoever, whether general or local."
VISCOUNT ELIBANK: May I ask—arising out of that answer—whether the same principle is to apply to all three industries as in the case of the coal industry?
LORD NATHAN: A clause in similar terms appears in the Transport Bill and in the Electricity Bill.
VISCOUNT SWINTON: Arising out of that reply, I would point out that the noble Lord has told us what are the provisions of the Act, of which indeed I think we were well aware. I rather gathered that the import of the question was whether the Treasury were going to make or lose money out of this transaction. Is the noble Lord in a position to say what the prospects are of either getting more or getting less from the coal industry?
LORD NATHAN: I scarcely think that arises on the question on the Paper.
VISCOUNT SWINTON: With great respect, I would point out that the question is this: What is the estimated average aggregate annual loss to the Treasury? In common English, that means: do the Government estimate they will make or lose—
A NOBLE LORD: In Income Tax.
VISCOUNT SWINTON: In Income Tax, certainly. The question I asked—which was indeed the question on the Paper—is: Have the operations of the Coal Board (which has to pay Income Tax if it makes a profit) proceeded sufficiently far to indicate whether it has to pay more or less Income Tax than did that industry under private enterprise?
LORD NATHAN: The position is as follows. After nationalization these industries will stand in regard to Income Tax on exactly the same footing as they did before or would have done had there been no nationalization. As to whether the future will show a profit, or a greater
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or less profit, or a loss, or a greater or less loss, than was the case before, or might have been the case had there been no nationalization, that is purely a matter of speculation upon which there is no data at present available upon which to form a judgment.
LORD REA: Is it not a fact that, prior to nationalization, the Government received Income Tax from collieries making profits, and that no rebate was made to those that suffered losses? If they are now all aggregated, is it not a fact that the losses will be deducted from the profits before Income Tax becomes payable, and therefore, there is bound to be a considerable loss to the Revenue?
LORD NATHAN: The question of the out-turn must really await some experience on those matters, until accounts have been prepared and their general effect can be surveyed.
VISCOUNT ELIBANK: Am I to understand from the noble Lord's answer that the Government did not consider at all what the effect of the nationalization of these industries would be upon Income Tax? Because the noble Lord said it was all a matter of speculation. Did the Government merely speculate on this question before they entered into it?
LORD NATHAN: I have the feeling that the noble Viscount has raised a broad question of policy in contradistinction to the question of fact which he raised in his question. My recollection —and I speak only from my recollection—is that the very point now put by the noble Viscount was considered and discussed in the course of the debates on the Coal Bill.
LORD TEVIOT: Now that the word "profit" has been mentioned, I do hope that the Government will see that nobody makes any profit, because I understand that that was one of their major policies —that no profit was to be made by anybody and that everybody should work. only for the State. I hope that that very fine sentiment will remain when they are considering these matters.

PALESTINE EVACUATIONS.
2.57 p.m.
LORD DE LISLE AND DUDLEY: My Lords, I beg to ask the question standing in my name.
[The question was as follows:
To ask His Majesty's Government what arrangements were made by the Government of Cyprus to accommodate the families of officials in the Colonial Service when they were evacuated from Palestine to Cyprus during February of this year, and whether the cost of their lodging in Cyprus has been met by the Colonial Office.]
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, I understand that those families of Palestine Government officials who went to Cyprus elected to do so, instead of coming to the United Kingdom, under arrangements made by the Government of Palestine, on the clear understanding that they would have to find their own accommodation in Cyprus. Their passages were paid for by the Government of Palestine. The Palestine authorities have considered what assistance can be given to Government officers to meet the additional financial commitments with which they are faced in maintaining two establishments. It has been decided that married ex-patriate officers whose families are outside Palestine will be paid with effect from March 1, 1947, compensatory allowances of£17 a month for the wife and£8 a month for each child under 18 years of age. Married British sergeants and constables of the Palestine Police Force who are already eligible for certain family allowances under existing regulations where their families are not with them in Palestine, will receive double their present allowances. The revised allowances are£9 6s. 4d. a month for a wife without children,£10 8s. a month for a wife with children and£5 8s. 4d. a month for each child. These allowances will be payable for a period of four months from March 1, 1947. The question of an extension will be reviewed at the close of this period in the light of the circumstances then prevailing.
LORD DE L'ISLE AND DUDLEY: I should like to thank the noble Viscount for his reply and to ask two supplementary questions arising out of his answer. Does the noble Viscount think this is the proper way to treat the families of those devoted servants of the State employed in Palestine under conditions of great danger and privation—I do not mean actual physical privation, but great danger for so long a period? Does he
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think this is the way to treat them: that because those families were told they could come home, therefore, the Government have been considering for the last two or three months whether they ought to have any allowances? Does he really think that the delay in coming to this conclusion (which may have been announced before; I stand subject to correction) is justified? I know that there has been considerable feeling among the families of Colonial officials that their treatment is not equal to that, let us say, of commercial firms in Palestine, who made arrangements for billeting immediately those families arrived from Palestine?
VISCOUNT HALL: I cannot accept the statement which has been made by the noble Lord that there has been any delay in arriving at a decision as to whether compensatory payments should be made, and, indeed, in view of the figures which I have already given I cannot agree that the amounts are ungenerous.
LORD DE L'ISLE AND DUDLEY: Might I ask whether this is the first announcement that has been made?
VISCOUNT HALL: It may have been the first announcement, but the families themselves—who are the most important parties concerned—were informed some time ago of the amounts which they will receive, and indeed there has been no direct complaint from them as to those amounts.

TREATIES OF PEACE (ITALY, ROUMANIA, BULGARIA, HUN GARY AND FINLAND) BILL.
Read 3a (according to Order), and passed.
NAVAL FORCES (ENFORCEMENT OF MAINTENANCE LIABILITIES) BILL.
Read 3a (according to Order), and passed.

COTTON (CENTRALISED BUYING) BILL.
Order of the Day for the Second Reading read.
3.0 p.m.
VISCOUNT HALL: My Lords, I am afraid it is too much to hope that I can

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describe this Bill as a non-controversial measure, but there is one thing on which I think your Lordships will agree with me: that the Bill deals with a very important industry—that of cotton—and concerns the industrial life of a very important part of the country— namely, Lancashire. The cotton industry does not now play such an important part in the industrial life of that county, and the economic life of the nation, as it did some twenty years ago, when it gave employment to nearly 700,000 persons, and when in the spinning section alone there were some 600 firms employing 250,000 workers.
In 1935 the value of the output of this industry, in all its various sections, was some 4.5 per cent. of the total output of British industry and the value of its export was 14 per cent. of the total. To-day, in all sections, the industry still employs well over 200,000 persons —in the spinning section alone, 95,000—and it still provides some 7½ per cent. of our export trade. With the peoples of the various countries—including our own—clamouring for consumer goods, this total production could be very largely increased, were it not for the fact that the amount of labour available is insufficient to satisfy that demand. Following the depression of the 1930's much rationalization has taken place and many spinning firms have disappeared. But there still remain some 280 firms, many of them small and unco-ordinated, which comprise the spinning section of this industry. If the recommendations of the Working Committee, which have recently reported upon the cotton industry in Lancashire, are implemented, as they may well be, the number might be reduced to below 200.
In general, the industry falls into the following sections, though in some cases some firms may carry on several of them. First, there is the purchasing of raw cotton; secondly, the spinning of raw cotton into yarn; thirdly, the weaving of the yarn into cloth; fourthly, the bleaching, printing, dyeing and finishing of the cloth; and, fifthly, the marketing for the home and export market. The Bill, the Second Reading of which I am moving this afternoon, is concerned only with the first stage, that of purchasing, and the sale to the spinners of the raw material. Before the war the Lancashire spinner bought his raw cotton from merchants who operated the free market in Liverpool.
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This system had operated for nearly one hundred years. It may have been a good enough instrument in the nineteenth century, when the products of many thousands of cotton farmers, subject to innumerable hazards, had to be brought somehow to thousands of freely competing small-scale spinning units, but during the past thirty years conditions have been changing; there has been a growing community of interest between the producer of raw cotton, the manufacturer, and, indeed, the consumer. This interest has been created with the desire and intention to eliminate what might be regarded as the parasitical middle-man. This development is not confined only to the cotton industry. The same can be said of some branches of agriculture, and, indeed, know it can be said of some selling of coal, even under private enterprise. I could give many experiences of the sales agent of coal who made almost double and treble the profit made by the colliery company which produced the coal—and, indeed, a sum on every ton of coal far in excess of the amount paid to the miner who had to produce it.
Thus the free market for some time was becoming far less indispensable than it had been in the nineteenth century. Even before the war some of the textile organizations were buying their requirements direct without using the market intermediary. It can be said that the Liverpool market has been notorious for speculation and speculators, many of them outsiders who had nothing at all to do with the cotton industry, either the production or the manufacture, and many of whom made considerable fortunes. Of course, as might be expected, some incurred losses as a result of the fluctuations in the price of cotton. These market fluctuations are of no benefit to the manufacturer. What the manufacturer needs is to be able to purchase the right kind of raw cotton at a stable price, so that he can safely make his contracts for months and, in some cases, for years, ahead.
The Liverpool Cotton Market was closed in 1941, owing to war conditions. Shipping, and to some extent currency, controlled the sources from which we could purchase, and limited the amount of our purchases of raw cotton. It was, therefore, essential to ensure that the cotton which could be imported was of the type most needed to provide for war-time re-

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quirements. From that date the Government became the sole importer in the country of all stocks other than consumer stocks, which were requisitioned. Thus the continuance of either the spot or the futures market became impracticable, as neither could function without stocks of raw cotton. Since that time—and indeed to date—the Cotton Control of the Board of Trade have continued to import all requirements. During the war period the distribution to spinners was carried out by the merchants, as agents of the Control, and for this purpose they were paid a remuneration which, together with the buying brokerage paid them by the spinners, enabled a nucleus organization to remain in existence. At the end of the war the Liverpool and Manchester Cotton Associations pressed for a decision in favour of the opening of this market, but the Government decided, after very serious consideration, that cotton centralized purchase would be the best method by which this country could secure its requirements of raw cotton, and also that it was in the best interests of the cotton industry.
As I have said, the systems of private purchase and futures market which prevailed before the war were open to substantial objection. They gave opportunities for wide and undesirable speculation; in too many cases the dominant objective was to serve the interests not of the Lancashire spinner but of the gambler in cotton prices, and they failed to adapt their methods to the changing circumstances of the times. The Government are satisfied that the form of centralized purchase which has operated sucessfully during the war will enable the cotton requirements of the industry to be supplied in the future at least as economically as by private enterprise, and with a greater certainty and regularity. It will also, in the opinion of the Government, give the spinner that stability of price which is vital to him if he is to make firm quotations to his customers without the risk of losses due to market changes over which he has no control. The purpose of this Bill, therefore, is to continue the centralized purchase of cotton by establishing a Raw Cotton Commission substantially to take over the functions, now exercised by the Board of Trade, of buying, importing and distributing all the raw cotton required by the cotton industry and other users in the United Kingdom. It
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prohibits the import or sale of cotton other than by the Commission. There are some exceptions —cotton imported for re-export, and sales for that purpose—but generally the position is that the Commission are the sole importers and the sole distributors. Thus it will be seen that merchants are prevented from acquiring stocks of cotton, and in effect any re-opening of the Liverpood cotton market is prohibited.
Clauses 1 to 4 of the Bill provide for such a Commission, giving it the necessary powers to carry out the functions to which I have already referred and to inflict penalties for contravention of those powers. Clauses 5 to 8 provide for the constitution of the Commission, which is to be a body corporate with the requisite legal powers and status. The Commission will have their principal office in Liverpool, with a branch in Manchester. This implements undertakings given by the Government that the Commission's administrative headquarters should be in Lancashire, to serve Lancashire and the great textile industry of that county. The Commission will consist of a Chairman and one or two independent members, who will devote their time primarily to their duties as members of the Commission. The intention is that while the Chairman may be drawn from outside the industry, the other two independent members should have cotton experience. One of them will probably look after the buying side and the other the distributing side. There will also be appointed part-time members of the Board, not exceeding ten in number. This will be a very representative body. Although the membership is, of course, not yet determined, it will possibly include representatives of the spinners, of the weavers or cloth merchants, of the cotton merchants or brokers, of the trade unions concerned, and also men of industrial, commercial, financial or administrative experience, together with a member of the Cotton Council when this is established. Clause 8 requires that the Commission should make an Annual Report to the Board of Trade as soon as possible after the end of the financial year. A copy of the Report will be laid before Parliament, and it will cover every aspect of the Commission's activities.
Clause 9 deals with research. It may be said that science has come to the aid of the cotton industry, as it has come to

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the aid of all industries which are prepared to use it. The raw cotton is graded, selected and packed now as it has never been done before, and many spinners are content to buy on description. The value of research, properly directed and intelligently carried out, particularly to an industry such as this, cannot be overemphasized. The cotton industry is fortunate in having two organizations which, between them, cover the ground—namely, the Empire Cotton Growing Corporation and the Shirley Institute. The Empire Cotton Growing Corporation are shortly establishing a new research station in Uganda, which is perhaps the most important of our colonial cotton-producing territories. Its research covers the study of both plant breeding and the methods of production. It seeks to improve the yield per acre, the spinning qualities and, above all, to deal with the pest resistance of the cotton grown in the Empire, as well as to ensure the maintenance of soil fertility; that is, to see that cotton cultivation forms part of a sound system of peasant cultivation. The work of the Shirley Institute is really complementary to that of the Empire Cotton Growing Corporation. Its research is sponsored by the Director of Scientific and Industrial Research, under the Lord President, and it has no real counterpart anywhere else in the world, being uniquely equipped to investigate both the physical and other properties of every type of cotton and also its spinning qualities. Samples of new types of cotton are regularly submitted to the Institute for its examination and report, and its advice is continually sought, not only by growers and spinners but also by the Cotton Control. It is expected that the Commission will keep in very close touch with these research organizations and will make frequent demands upon their services.
Clause 10 empowers the Commission to continue the cover scheme, which was introduced in 1941 and extended in 1946. Under this scheme the spinners in the United Kingdom are protected against risk of loss arising from the changes in the selling price of cotton. At present, the scheme covers spinners only, but this clause empowers the Commission to extend a similar cover scheme to other sections in the industry should they think fit. Clause 11 provides that the Commission may act as agents for the Board in buying, importing, holding, and treating, so
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as to render saleable cotton linters and cotton waste. We import almost all of the cotton linters, which are very important to industries such as rayon, plastics, paper, surgical dressings and felt, while nearly two-thirds of the cotton waste used in this country is produced from spinning mills and weaving sheds here. It is merchanted privately by the mills where it arises and is sold to merchants, who in turn sell to waste-spinning mills and other cotton waste users. It is not proposed to interfere with this arrangement. This clause also empowers the Commission to act as agent for the Government in supplying cotton to overseas countries. We have in mind here the need for some machinery to enable us to procure cotton for Germany during our occupation period, and possibly for other countries as well.
The remainder of the clauses provide for the transfer of cotton assets from the Board of Trade and include the financial provisions. The assets to be transferred are in two categories, the first comprising stocks of raw cotton, and rights and liabilities under contracts for the sale and purchase of cotton. It may interest your Lordships to know that at the present time the amount of cotton in stock in this country is some 1,500,000 bales, with 250,000 bales in transit and 500,000 bales bought in foreign countries—a very substantial amount. I do not propose to take up much of your Lordships' time in a detailed explanation of the financial structure of the Commission, other than to say that it is intended that they should have adequate resources, which will amount in the aggregate to about£200,000,000. It is estimated that the value of the stocks which will be taken over by the Commission from the Cotton Control may be about£80,000,000 in value, but they will start with little or no cash in hand other than the Reserve Fund, about which I will say a word later.
They will, of course, be receiving a steady flow of income from sales to spinners. The amount will be subject to alterations in selling prices, but it should maintain a fairly steady level. Outgoings on purchases, on the other hand, may well be extremely variable. With a seasonal crop like cotton there are tunes of heavy buying, and at peak periods large sums of money may be outstanding. Moreover, as the experience of the inter-war years shows, cotton prices are liable to very wide

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fluctuatións. For these reasons, ample provision for advances must be made, and a power to borrow up to£85,000,000 over and above the value of the stock initially taken over seems to us to be reasonable. Advances on capital account are limited to some£10,000,000. Then there is a reserve fund which may amount to some£25,000,000. The Commission will be taking over their cotton stocks at a time of high prices, and at a valuation which reflects their appreciation since April of last year. The appreciation in price of the stocks, together with the profit made by the Control, amounts to a figure of some£24,000,000. This fund will enable them, if necessary, to write down these stocks when prices fall again, as sooner or later we expect they will. But owing to the rising prices and wise buying, profits on cotton sold by the Council during the financial year ended April 1, 1947, as I have already pointed out, are estimated to exceed£10,000,000. This sum forms a substantial part of the reserve fund.
There is only one test, which can be. applied to these proposals, and that test must be this: Can this Cotton Commission serve the cotton industry, the employers, the workpeople, and indeed the nation. better than could a return to the old method of speculative gambling which existed before the war? We think they can, and we think they will prevent many who made very little contribution to the wellbeing of industry taking large profits from the industry without taking any responsibility. It has been stated that the Liverpool and Manchester Cotton Associations received between them some£2,000,000 per year in profit. They employed some 350 principals and 3,000 employees to provide the raw cotton requirements for the spinners. This figure does not include the labour required for warehousing and handling. Someone had to pay the profit received and find the remuneration for the persons referred to, and there is no doubt that a substantial part of that came from the cotton industry itself. It is the view of His Majesty's Government that a single buyer will provide not only the service given by the Liverpool and Manchester markets, but will provide much more adequately and more cheaply the raw cotton required. The first example of that is that the actual staff to be engaged by the Commission
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will be reduced to about one-tenth of the numbers employed under the old system. That will enable the buying to be much more economical and the spinner should get the benefit of this economy. Another advantage is that instead of prices of raw cotton fluctuating from day to day, as they did in the pre-war days, there will be stability and security given to the spinner.
LORD CHERWELL: Over what sort of period will there be stability?
VISCOUNT HALL: If the noble Lord will be patient I will inform him of the fluctuations over the last six years.
LORD CHERWELL: I know those.
VISCOUNT HALL: Then the noble Lord knows the answer to his question. Security is what the spinner greatly desires and it is something which he has received since control commenced six years ago. It is interesting to note that there have been five—and only five— changes in price during the whole of that period.
A NOBLE LORD: Those were war years.
VISCOUNT HALL: Two of the changes were to reduce the price of cotton and three were to increase it. So far as can be ascertained, there has been little or no complaint from the spinners about the operation of control. Some complaints, of course, have been made concerning the quality of the cotton delivered, and complaints have been made that the spinners were not able to have the wide range of quality which they desired. But, so far, of the administration itself there has been little or no complaint. So far as the quality was concerned, that was inevitable, as many of Liverpool's warehouses were destroyed by enemy action and others were taken for the storage of food. For years the bulk of our raw cotton stocks has had to be stored in open sites without adequate protection. There have been no facilities for sampling before delivery to spinners but, on the whole, spinners will admit that under war and post-war conditions they have had a very good deal.
It is the desire of His Majesty's Government that the industry should have every opportunity to re-establish itself, to increase in importance and to increase its output of consumer goods which are so urgently required by the people of this and other countries of the world. At the same time the Bill will ensure that there will be no opportunity for speculators to

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dabble in the fortunes of this great industry and that the cotton to be provided to the spinners will be available without having to bear the expense of unnecessary passengers. I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2a (Viscount Hall.)
LORD CHERWELL: My Lords, As I said on a previous occasion, when a man chooses a quack doctor it is no use endeavouring to prevent him from trying to use the quack's nostrum. The only thing is to let him take a dose and hope that the patient will survive the ministration of his chosen practitioner and, having observed the failure of the promised panacea, will revert to a more sensible cure. Naturally I do not want to carry the analogy too far. I do not want to suggest that Ministers on the Government Bench are quacks in the sense that they are selling a panacea which they know to be useless, merely for the sake of gain. They have told us often enough how much they despise the profit motive. I maintain that they are deluded by their own catchwords and that they are administering to the unhappy British people a dose of the nationalization nostrum without any evidence as to its value or to its healing power. No doubt they honestly believe it will be beneficial. We feel equally confident that it will be deleterious. This determination to nationalize cotton buying is only one small instalment.
We do not intend to divide against the Bill, for two reasons: first, only bitter experience will convince the electorate of the futility of this fallacy; secondly, this particular piece of futile dogmatism is capable, we hope, of reversal and repair. Whether Liverpool will ever regain its pre-eminent position as the focal point of the cotton trade is another question. Those abroad may have seized this invaluable international asset. In the noble Lord's introductory speech I found no logical argument in favour of this measure. He has given us certain diatribes against speculators and the evils of speculation. They are like complaints about the man who insures his life for speculating upon the anxieties and dangers which beset him. You might equally well say that those who invest in a life insurance company or form a life insurance company are speculating to the disadvantage of those who insure their lives.
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The noble Lord said one criterion should be whether this proposal will give the cotton industry a better service than before. On the other hand, the President of the Board of Trade withdrew consideration of this matter from the Cotton Working Party on the grounds that it was a political issue and did not involve an economic decision at all. We have yet to see any economic evidence that this proposed measure will give the spinners more cotton, better cotton, cheaper cotton, than they have had. It derives simply from the doctrinaire conviction that what is done by the servants of the State who are secure in their position is always well done, and that what is done by a man because it profits him to do it well is bound to be badly done. It is a very broad premise. You might almost conclude from it in logic that Ministers should have civil servants to deliver their speeches for them instead of speaking themselves. I do not think we have had any evidence in the speeches we have heard from the opposite Benches that people who make speeches on which depends the success of their jobs do it less well than if the speeches were read by civil servants.
If we propose not to vote against the Second Reading of this Bill, we do so because we think the country must be allowed to taste and test the medicine of their preferred practitioner. It is our duty to point out that we believe it will have most unfortunate results and to give the reasons why we take this view. We believe the closing of the Liverpool Cotton Exchange is most foolish for two reasons. First, it will hamper and handicap the cotton spinners, and secondly, it will cost the country a very large amount in foreign exchange which we know cannot be afforded at the present time. First let me consider the handicap to the cotton spinner. When the Cotton Exchange was functioning, any increase in the demand for any particular type of raw cotton could be met by increased purchases in the countries producing the particular types in question. Constantly varying requirements were reflected inconstantly varying day-to-day purchases, and a steady equilibrium could be and was achieved between supply and demand. By a highly developed process of buying and selling futures, in the admittedly to some extent speculative futures market, it was possible to insure against any change of price

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between the date of the contract and the date at which the raw cotton was used. Thus, the spinner could be sure of effectively getting his cotton at the price ruling at the time when he had to quote for the yarn, no matter what fluctuations of price might occur.
How does the Government propose to deal with this? As I understand it, in place of this simple method an elaborate Government scheme is to be introduced. Every Saturday every spinner is to send to the Commission a list of all his holdings of cotton of each type, and his liabilities as determined by his outstanding contracts for yarn. If prices are raised he is to be credited for every pound of cotton he holds in excess of his liability; if they fall he is to be debited correspondingly. I dare say that by this means the spinners may insure against price fluctuations, at the cost of an immense amount of paperwork and bookkeeping. But who will pay the piper? I should say the Cotton Commission, because unless they enjoy a most highly developed second sight, and foresees exactly how much of each of the various types of cotton will have to be purchased, they must buy an excess of every sort, and carry gigantic stocks of every variety in warehouses in Liverpool. But, quite apart from questions of the cost of storage and depreciation, any such endeavour would be bound to result in enormous wastage of unwanted varieties purchased in excess. And unless the Treasury are to subsidize cotton buying and make the taxpayer pay the difference, the loss incurred in this way must be added to the average price of cotton sold, which means that the spinners will have to pay more for their cotton than would have been necessary under the old system. That would be greatly to the detriment, obviously, of their power to compete in the export markets.
I have been assured that we have an instance of the result of Government intervention of this sort in the wool trade. Under bulk buying the wool was sorted into ten or twelve grades, each of which was put on the market at a standard price. Naturally, the buyers selected the best samples in any one grade, since they had to pay the same price for it whether they needed the higher quality or not. The result is, I am told, that the Government are now landed with large quantities of
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wool of low quality in each of the grades, which they find very hard to sell. This is the sort of thing that is bound to happen with cotton. The noble Viscount has told us that fluctuations of prices brought no benefit to the manufacturer. That is perfectly true, but how are we going to abolish them? He said that what the manufacturer wanted was stable prices. These, he said, were vital. That also is true, if you can ensure them all over the world. If you are dealing with England alone—that is, the home country—then the Commission can fix the prices and the consumer can pay accordingly.
But what is to happen when the manufacturer has to deal abroad, if the Cotton Commission price is above the price ruling abroad for his competitors? Then he will not be able to compete in the export market and we shall have depression and unemployment in the cotton industry. A stable price in this country, if world prices fluctuate, will mean fluctuating employment and unnatural boom-like conditions alternating with slumps in the export trade. Surely that is not a desirable state of affairs. The more stable prices are on the home market with a material which is exported to the extent that cotton is exported, the less stable will be the employment position. It is no use saying that the cotton spinners approve of this Government plan with its bulk buying. They had enough experience of that in the war years, and the vast majority of them voted against the proposed suppression of the Liverpool Cotton Exchange. I believe that only, o8 per cent. voted in favour. Some 79 per cent. voted against, and 19 point something did not answer the questionnaire.
Perhaps even more important than the spinners' difficulty of securing the desired type of cotton from the Government and insuring it against price fluctuations is the fact that the Government will certainly have to pay far more for cotton and, therefore, charge far more than would be necessary under the old system. Everybody knows that the yield of cotton is subject to enormous fluctuations. The amount planted depends upon the whim of thousands of small growers all over the world and the amounts harvested are enormously influenced by vagaries of the weather, insect pests and the like. We have been told that the Liverpool Cotton Exchange was a medium for gambling. Bulk buying in cotton is probably the

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most stupendous gamble that any Government has ever indulged in. When we rind they have got to have a fund of£210,000,000, so as to secure themselves for purchases which at present amount to something of the order of£50,000,000 or so a year, it shows that they have very little confidence in the certainty of securing their material at cheap prices.
Of course, in war time, the conditions and Government control mattered very little. Prices were unimportant; markets for yarn were assured and, in many cases, insatiable. But for the Cotton Commission to go into the market, buying in bulk, without knowing exactly how much will be required of scores of different varieties, and merely guessing what the yield per acre will be, even if they know how many acres have been planted, is a speculation such as nobody in the City would dare to embark upon. When we remember that the price of raw cotton frequently fluctuates within a few months by 10 per cent. or 20 per cent. and that in pre-war years we bought something like 500,000 tons of cotton, which to-day would cost about£80,000,000, it is plain that merely by buying one month too soon or too late the Government might easily lose£10,000,000 or£20,000,000 of foreign exchange, mostly in hard currency. In April, 1937, for instance, the price of cotton was 6o per cent. higher than in October. When we remember that the turnover in a year—if ever our cotton industry revives, as we all hope it may, in spite of Socialist help—might easily amount to t£80,000,000, it is clear that we might lose more than 100,000,000 dollars in one year if our civil servants misjudged or mistimed their bulk purchases in this one commodity—100,000,000 dollars, enough to pay for all our tobacco!
The private trader, dealing in a small way could insure against such fluctuations, thanks to the existence of this considerable speculative market in cotton which reflected the varying ideas of the operators, with all their sources of information and experience, about the future position of supply and demand. The private market could safeguard itself against violent fluctuations because it was possible, through the futures market, to revise prices every day. The price finally paid for a consignment was the result of chain, buying and selling, re-buying
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and re-selling, and so on, over a period of three months or so. But is it seriously suggested that the Government can go in for speculating on such a vast scale on the New York market, or wherever it may be, so as to insure against varying prices? It could not happen—not more than once anyhow. But unless they do, they are exposing the country, as I have said, to the risk of losing incalculable amounts of foreign exchange.
Another point of great importance is, of course, that prices will be subject to political pressure. When you have innumerable merchants haggling with producers, no political or international question is raised. But when the Cotton Commission, appointed by the British Government, comes into the market, the whole situation changes. Bulk buying inevitably leads to bulk selling, as we have seen in the Argentine and elsewhere to our cost. Prices are then not fixed by supply and demand, but by arguments round a table. The producers put forward an admirable closely-argued case concerning the cost of production, based on statistics which they alone can check, including all sorts of Overheads which the buyer cannot control. Our politeness, our fairmindedness, our credulity, are all enlisted against us, and prices emerge which have little relation to world figures. And non-commercial political reasons are used to prevent our standing out for fair prices. We have only to remember what happened a few days ago in connexion with the wheat agreement, or the tea position, or the linseed oil scandal, to realize how important dais is. I have a list here of certain commodities bought by the Government. The noble Lord said that he hoped the prices of cotton would fall, but let us take a few of these materials. The lead price on April 4, 1946, was£45 per ton. On July 1, it was raised to£55 per ton, and on January 1, 1947, to£70 per ton. On March 31, 1947, it had been raised to,£90 a ton.
LORD STRABOLGI: There is a world shortage of lead, and but for controls, prices would be much higher.
NOBLE LORDS: How do you know?
LORD STRABOLGI: I do know.
LORD CHERWELL: The noble Lord is achieving an omniscience which we all envy. Then take the case of spelter. In

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four consecutive rises it went from£39 5s. per ton in April, 1946, to£70 per ton in January, 1947. Copper rose from£72 per ton in April, 1946, to£84 a ton in July,£98 in December,£117 in January,£127 in February, and£137 on April 1.
VISCOUNT HALL: May I ask the noble Lord whether he is quoting world prices?
LORD CHERWELL: I am quoting the prices charged on the British market. The noble Lord will know the case of linseed oil. In September, 1946, the price was raised from£65 to£135, and on February 2, 1947, it went from£135 to£205.
LORD SHEPHERD: Would the noble Lord kindly say whether the figures he is now quoting of prices in this country are higher than the prices outside this country in countries where they have no controls?
LORD CHERWELL: I am not concerned at this moment to prove what happens in other countries. Rubber, the only substance which has been decontrolled, has fallen and not risen in price.
LORD SHEPHERD: The noble Lord is seeking to prove that prices have gone up because of controls. I would like to know whether the prices now being quoted are the prices charged throughout the world or only in this country.
LORD CHERWELL: Prices have gone up; that, I think, is agreed.
LORD SHEPHERD: Prices have gone up everywhere.
LORD CHERWELL: All I have been saying is that the noble Viscount said he hoped that prices of cotton would fall; yet here we have four commodities which have been under Government control where prices have multiplied manifold. I think it is a case once again of hope triumphing over experience. I think the Cotton Commission will be extremely lucky if they are not forced to pay prices 10 per cent. or more above average competitive prices. Quite apart from the loss of millions of pounds, how can our cotton industry possibly compete in the world markets if they have to pay 10 per cent. more for their raw material? The only remedy would be an export subsidy at the expense of the taxpayer—if that is allowed by our international commitments. I wonder if our people will think it worth adding more to the cost of
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cigarettes and beer, merely in order to pander to the Socialist obsession for bulk buying.
In addition to these huge prospective losses owing to the extra cost of cotton bought by the Cotton Commission, there is absolutely certain immediate loss of profits from commissions, arbitration fees, and so on, which has been admitted by the Chancellor of the Exchequer to be a loss of about£1,000,000 of foreign exchange a year. To a Minister who accepted with a shrug the loss of£60,000,000 through what amounts almost to malfeasance in Germany, a mere£1,000,000 of foreign exchange may seem a small price to pay to salve a colleague's susceptibilities. When one recalls that it would pay for one-thirtieth of our tobacco, it seems slightly more serious. Enough to buy the tobacco for 3,000,000,000 cigarettes, one hundred for every adult, is just thrown overboard, for no reason at all except to please the doctrinaire Socialists who wish to ram their fad down the throats of what used to be our most important exporting industry. Such action taken at the very time when all the members of the Cabinet have been exhorted to pipe in unison the tune "Export or Expire" really savours of a form of obsessional neurosis.
I have left to the end the simple human problem of the people who have been thrown out of work by the Government decision. Of course, there are not a great number of them. But injustice is just as great if it hits only a few as if it affects many. I do not know whether the word justice still makes an appeal to the noble Lords on the Benches opposite. Some weird variant or hybrid called "social justice" seems to have displaced what used to be one of our most cherished possessions. Social justice, apparently, allows the Government, with a clear conscience, to treat an individual unjustly for the advantage of the majority. This is not the place to discuss the ethics of that point of view. I can only say that I personally detest it; but unhappily it is becoming very prevalent. Reading the debates in another place on this Bill, I have seen no justification whatever for the Government's refusal to give any compensation to the unhappy people, many of them ex-Service men, who, after spending their lives in the Liverpool cotton market, to the great advantage of the cotton industry, are now forbidden to

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practise their trade. The argument of the Government spokesman sounded like a caricature of the mid-Victorian capitalist of fiction—the march of events, let them go on the dole, and so on, was the theme. Unfortunately, since it involves expenditure of money, there is little hope of putting this gross injustice right in this House, but I think it should be put on record that the Opposition consider the Government's conduct in this matter to be reprehensible in the highest degree.
As I said at the outset, we do not propose to divide against this Bill, but we are convinced that this country will have cause to regret its passing. We are convinced that the cotton spinners will not have such good service under the arrangements proposed. We hold that the arrangements contemplated, far from producing cheaper cotton, will compel the industry to pay higher prices for raw cotton than their foreign competitors—unless, of course, they get a subsidy from the taxpayer. We consider that it will involve a considerable increase in our expenditure of foreign exchange—the last thing we can afford, according to the Government's own White Paper. Finally, we condemn the unnecessary hardships inflicted by this decision upon a large body of men working in the Liverpool cotton market, who have rendered valuable service in the past to the community, merely in order to put into practice the doctrinaire obsession of the Government in favour of bulk buying.
4.0 p.m.
LORD FARRER: My Lords, even after listening to the eloquent speeches we have heard this afternoon, I do not think that anyone can seriously say he knows anything about this trade unless he has worked at it, or lived amongst the people concerned. The commodities themselves do not matter in comparison with the characters of the people who deal in them.
I make an apology for venturing to address your Lordships because, quite obviously, I know nothing about it. If any of your Lordships survive what I have to say, I hope that you will agree with me at least on that point. I was a little bit cheered by the fact that the noble Viscount who opened the debate this afternoon made exactly the same point. He found himself rather disturbed by these figures, with that infernal decimal point
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which occurred in all the documents dealing with this matter.
Since Christmas time I have been through shoals of documents dealing with this subject. I confess that the impression left on my mind was that this was not primarily a commercial question. Dividing the question into various aspects, it is one of the grossest cases of injustice which I have ever seen. The more I read the more strongly did that conviction become impressed on my mind. As has been pointed out, the question of the abolition of the Liverpool and Manchester Cotton Exchanges was not put forward at the General Election and requests for a discussion were refused in an extremely peremptory manner. We were told that it was a "political" question and would have to go to the Cabinet. In March, 1946, the decision was announced. I confess that personally I think that is not the strongest argument against this measure. The figures slowed that 0.8 per cent. of the spinners and others were in favour of the Government's scheme. The position seems to depend entirely on the merits of the opinions of 0.8 per cent.; the mere fact that there were only 0.8 per cent. is not a conclusive argument. I know that I am very Victorian in my way of looking at things, and it may be that that is not conclusive, but people do attach importance to majorities.
Then again, this proposal was not in the Government's Election address. This proposal was apparently settled at a meeting of His Majesty's servants at the highest level, and the matter is a closed issue, although the constitutional lawyer might have something to say as to the theory underlying it. The Cabinet as a body is of comparatively recent legal existence, but that point is one which may be left to more learned people than I.
On the question of compensation, if you introduce such violent changes as this into an old-established trade which, on the whole, has served this country well and faithfully, it seems to me that with the amount of disorganization and ruin involved, affecting all sections of the trade and industry '(and do not forget that it includes a large number of women, so that it is doubly unfortunate), you are liable to cause far more harm than if you left it alone. There ought to be some provision made for compensation. I suppose that people who have a direct knowledge of mill-hands (and no doubt

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some of your Lordships have a much greater knowledge of them than I) have formed a definite affection and admiration for them, and want to help them. This Bill, it seems to me, applies such arbitary penal measures to the channels of the cotton trade that it is rather like making cotton "contraband of peace." Your Lordships may remember that in the autumn of 1915 and 1916 there was a great deal of discussion in economic papers as to whether or not it was possible to make cotton contraband of war. The penal clauses of this Bill seem to me almost to be making cotton a contraband of peace. These clauses make it a criminal offence for British subjects to practise their calling; they are liable to a fine of£200 or three months imprisonment on summary conviction; or, on conviction on indictment, to a fine of£500 or two years imprisonment. That seems to me rather harsh treatment for a British subject daring to practise his own calling.
I seem to remember having been taught in my infancy of the existence of the document called Magna Carta, which historians have since tried to denigrate, saying that it was of no importance. It seems to me perfectly iniquitous that a British subject should be treated in that way.
I will leave the question of prices to those more accustomed to dealing with such matters than I am. As I see the position, if we have a buyers' market, instead of a sellers' market, the Government may find themselves in a very difficult position in the years to come. May I next say that I feel the tendency to use military analogies in matters of trade and commerce is a very dangerous one? I had occasion, at one period of my life, to study the question of the Japanese cotton industry. I remember my chiefs telling me how wonderful that industry was, how it was all organized on a military basis with a General Staff. That was long before the days in which there was any thought of the atom bomb. I do not think that those people would make that kind of statement now. It is true that the Japanese industry was very efficient in buying cotton, in manufacturing it and perhaps, one might say, in selling it. That very efficiency proved its undoing because under their absolute necessity to sell every yard of cotton which they wove they were always trying to get behind the back of
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the immediate purchaser. It was like their system of poultry feeding whereby they cram chickens by machine, which seems to me to be a very cruel thing. That is what the Japanese did to their markets. With the exception of one or two rather odd cases, as is well known, they simply squeezed us out of the markets which we regarded as very important. That was all done under their system of more or less State control and ownership, but worked, of course, through the big merchant firms.
I have a fear that, as the noble Lord, Lord Cherwell, pointed out, foreign customers for our cotton goods, or those who sell us the raw cotton, will tend to say, if they are to have the pleasure of dealing with His Majesty's Government instead of with individuals whom they know by their names and even by their nicknames, and who are in fact their friends, that they will cut us out altogether and go straight to other countries instead of coming here, and we shall in that way lose a good deal of trade. I do not think enough attention has been given to the export aspect of this matter. I am sorry to say that I have noticed among people in Lancashire a tendency to take rather a defeatist attitude since their businesses have from day to day been overshadowed with the risk of being confiscated. They say: "What is the good? Take cotton right out of our county. Never let cotton be any more associated with the name of Lancashire." After what they have been through, I am not altogether surprised that those symptoms are discernible. I hope that by some miracle—I do not see what we can do—they will get better heart.
Finally, there is the question of quality, which the noble Viscount who supported this Bill raised. I think that is one of the most important things, as anybody who is in the trade will appreciate. The numbers of bad gamblers and speculators were very many fewer than has been suggested. I hope the noble Lord, Lord Hawke, will explain the arithmetic of this much better than I can, but the idea behind purchases and transactions of this form is, as a rule, not that of doing something astute, or of betting, but of evening out the risk. I am rather afraid that no Government Department can possibly have the knowledge of the character of the people from whom they are buying their cotton, or of the quality of the cotton when delivered, that independent people who have spent their lives in the industry possess. For

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instance, pests have been mentioned. Pests are, of course, a highly specialized subject. I believe that one of the worst pests is called the pink bollweevil. I would call your Lordships' attention, I hope respectfully, to the fact that this pest is pink.
4.15 p.m.
LORD DARWEN: My Lords, I welcome this Bill, and I congratulate the Government on their courage in introducing it in the face of a very well-worked-up opposition. I speak as a member of a cotton firm, and as the chairman of a firm of manufacturers. I have been engaged in the cotton industry all my working life, and I therefore claim to know a little about it.
LORD HAWKE: Would the noble Lord let us know whether it has been as a spinner or a manufacturer? There is a very important difference.
LORD DARWEN: I said as a manufacturer. The manufacturer takes the yarn from the spinner and weaves it into cloth. I think it is necessary to be precise in your Lordships' House this afternoon. I would like to say, in answer to the noble Lord who has just sat down, that I think the defeatist attitude in Lancashire to which he referred is largely due to the immense amount of ill-informed criticism which has been poured upon Lancashire, and upon the cotton trade, by people from all over the country who really know very little about it. I say, emphatically, that I do not accept a large part of that criticism. In my opinion, the trade has not been anything like as inefficient or as incompetent as has been stated. Nevertheless, a great many changes are being proposed, and I am afraid that, owing to changed times, many of those changes are inevitable. First, there is to be a change in the organization in the industry—the amalgamation into bigger, and supposedly better, firms and units. I want to point out that that change, though it may be necessary, means a very real loss of something of value in the personal relationships between the employer and the employed. My firm is a family, firm. It has been in the family now for three generations, and there is a very valuable personal relationship between the employers and the employed that will inevitably be lost when this scheme of amalgamation comes into force.
Secondly, there are to be very big developments in the matter of equipment
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and machinery. So far as manufacturing is concerned, there is a movement to automatic looms. I want to point out that, while that also may be necessary, it entails a great loss to the worker in respect of craftsmanship. Some of your Lordships may be surprised to hear that there is such a thing as craftsmanship in weaving, but I can assure you that there is. I would like to tell your Lordships one of the most moving stories that I have ever heard. One of our weavers was dying of cancer and had been off work for many years. She asked if she might go back into the shed before she died, in order that she might once again, for the last time, see her four looms. The secretary took her into the shed at a time when nobody was working there, and it brought tears to his eyes to see her patting the looms and talking to them as if they were beloved companions. There is that affection for the factory in Lancashire, and there is going to be a great loss in that respect when we get our more efficient industry. We shall also lose much in the social attractions of the factory itself; and the two-shift system—which will be absolutely essential if automatic looms are to be worked— disturbs the social life of the community. I feel it is a very tragic thing that, as our great powers of producing wealth are growing, so we are all the time more and more destroying the joy in work itself and even the joy in the community outside the working place. Those changes may be necessary, but those losses are inevitable if the changes are made. Their purpose is to get greater efficiency to get higher output per man hour, to make the most of the reduced manpower (or womanpower as it largely is in the weaving industry) of Lancashire, and to raise wages (which is a thing badly needed in Lancashire, because the cotton trade has always been a horribly low-paid trade), and to recapture the export trade.
When I first went into the industry, the export trade was 87 per cent. of the whole; we never made a piece in our factories for the home trade. It seems to me that it would be grossly unfair—and I do want noble Lords to face up to this —if all the changes that we were making for the sake of greater production were to mean sacrifices by the workers, and if we were to refuse to consider any changes in the marketing system, which would mean sacrifices by other people. That is the first point I want to make. I believe

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that the marketing side of the cotton industry has been far more inefficient than the producing side, and I am quite certain that much greater savings can be effected in marketing than any possible changes in the production side can bring about. I am looking hopefully at this Bill as the beginning of an organization of marketing in the cotton trade, although it is not absolutely the beginning. When the noble Lord who has just sat down was talking about the question of compensation, there came into my mind the picture of all the yarn agents who were dispossessed of their trade during the war, and who were completely blotted out owing to the refusal of the Cotton Control to allow commissions to be charged. But this is another big step forward in improving the marketing system, and I hope it is the beginning of a complete organization of marketing in the cotton trade.
The next point I want to make is that although the saving which this Bill will effect may seem to noble Lords to be very small, it must be understood that the cotton trade is a trade which works on infinitely small margins. I do not think there is any other industry in the country which works on such small margins, or which has achieved anything like such cheap products. I may tell your Lordships that I myself have refused orders, which were badly needed by the mill at the time, for as little as a halfpenny a piece on a thirty-eight yard piece of cloth; and that halfpenny a piece was equal to 2½per cent. on the capital of the concern. There would be 61b. or so of yarn in such a piece, and therefore one-eighth of a penny per lb., or even one-sixteenth of a penny per lb., on the yarn is a vitally important matter, at any rate in the export trade. In a great many of the bulk cloths which are made for export the cost of the raw cotton and cleaning is equal to something over 40 per cent. of the total f.o.b. cost of the cloth, so that a small fraction on the cotton is a very material matter when it comes to selling cloth for export. That is the second point—that margins are so small that a very small saving effected by this Bill on the purchase of cotton will matter very materially to the industry.
The interests of the trader are not the same as those of the producer. The trader wants a fluctuating market so that he can make his profits, but the producer wants a
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stable market. Cotton has been, as we have heard repeatedly this afternoon, the happy, or unhappy, hunting ground for almost all the speculators in the country. They have had no concern whatever with the industry, or for it. They have certainly increased the fluctuations in the price of cotton and made trade more difficult for legitimate traders and legitimate users. It so happens that about three years ago I set out to make an inquiry into the running of the cotton trade under control, and I asked several of my friends on 'Change if they would send me a memorandum setting out what they thought about the control. I may say that I did not know the political colour of any of these men whom I asked for these reports. One leading spinner sent me some very interesting figures, which prove how badly the Liverpool cotton market served the industry and the nation in time of war, and why the Government were forced to take control of the cotton market in the spring of 1941. While this was war-time, I think it is fair to say that the same irresponsible factors have always been at work disturbing the cotton market and making it more difficult for traders and producers. The spinner I have referred to wrote:
"On the raw cotton side, the object of the control has been to prevent an unwarranted rise in prices, and to reduce purchases requiring dollar exchange and stimulate the use of African and Indian cottons. No direct control was placed on the sale and purchase of cotton on the futures market until April 1, 1941."
I want to give the figures which show the history of the cotton market during those first war years, and which show why the Government were compelled to take over control in April, 1941. On August 31, 1939, October futures closed at 4.72d. —or, for those who do not like these "dots", nearly 4¾d. On September 1, the next day, it was 4.99d.; on Monday, September 4 (that is, the next trading day), 5.95d., or nearly a 1d. rise.
LORD WOOLTON: May I ask the noble Lord whether he is quoting Liverpool prices for American cotton?
LORD DARWEN: Liverpool prices for American cotton. On Tuesday, September 5, the directors of the Liverpool Cotton Association did not open the market until 11.30, instead of 10 0'clock, and ordered that the maximum rise must not be more than 25 points over the previous day's close, and that the maximum fall

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must not be more than 50 points under the previous day's close. Under those conditions, for several days, there were no transactions; but by September 12 October futures had reached 6.41d. and then they' fell to 5.60d. in October. After that there was a steady rise, until on January 5,1940, January futures reached 9.09d.
Then the Allied Armies collapsed in France, and speculators began to sell. By the middle of May, May futures were down to 6.97d. and markets closed because it was feared that continued selling would mean that many Liverpool merchants would not be able to continue in business, since their clients would not be able to pay their differences. The market was closed from May 20 to June 13, when prices were resumed at about 7.25d. Then at the end of September, 1940, it again became apparent that the futures market was not fulfilling its purpose. The closing price of September cotton on September 3 was 7.97d. By September 25 it had gone up to 8.42d. On Thursday, September 26, the market closed for three days, and on October the next trading day, maximum and minimum prices were fixed. The October maximum was 7.97d. and the minimum 6.86d. So the Government went on trying to control the market one way or another, till eventually, on March 31, with March at 8.64d., the market was finally closed, and on the next day all the stocks not actually in spinners' hands, and all cotton arriving after that date, became the property of the controller at the prices ruling on March 31.
I think that any unbiased person looking at that record would say: "This is a clumsy way of governing the price of a raw material essential to all these many workers in the industry." I asked one of my friends—himself a cotton merchant—to say something to me about this matter of control, and to my complete surprise he said: "If you want an honest reply, I can only say that they (the Control) have done the job better than we ever did it." That was a man speaking absolutely against his own interest, and that is my answer to some of the statements made by the noble Lord, Lord Cherwell. This same cotton merchant also sent me a statement in writing, backing up and elaborating that statement which he had made to me on 'Change. He pointed out that if any man had suggested before the war that the cotton trade
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could possibly manage without the futures market, that man would have been considered a lunatic; yet experience of control had shown that the cotton market was a clumsy expedient, it was an evil, and that it exposed an important and indispensable commodity to the whims of speculators not even remotely connected with it. He asked in this written document: "Why should our export prices of cloth be often at the mercy of the bookmaker. the money lender, the banks and the speculator?" I do not think this man is a Socialist.
He went on to say that, of course, the speculator helped to make the market, and that if it had not been for the speculator there would not have been the fluidity of the market that was necessary. But he pointed out that the Control had found an alternative which was far less cumbersome, far less costly and more satisfactory. This was about three years ago, and he said that although it was totally against his own personal interests, his opinion was that the cotton market should never come back, and he believed that it never would come back.
There has been one quite unnecessary luxury in the cotton market which the Control has swept away; and that is overspecialization. People who know nothing about the cotton trade talk a lot of nonsense about this over-specialization in cotton. Under the old contract the spinner could demand in the most meticulous detail an exact regularity in all his cotton; bales must be more alike than peas in a pod, and he could reject them if they were not. The result was that the cotton merchant had to over-cover his spinner's contracts by something like 20 per cent. Somebody had to pay the cost of that risk the spinner took, and all the classification that had to be made—it was not done for nothing. The Cotton Control swept the contract out of existence, and they substituted a short typed sentence which ruled out all these possibilities of making claims because the cotton was not exactly up to the previous standard.
I am not going to say that that has not produced any difficulty in Lancashire, because it has produced some difficulties here and there; but the extraordinary and astonishing thing is how small that difficulty has been, and how remarkably well the cotton trade has been able to adapt itself to the new conditions. When the

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noble Lord, Lord Cherwell, was speaking I wondered if he knew why it was that spinners went out searching for all these queer brands of cotton. Believe me, it was not in order to get any particular quality or colour; it was in order to find some cotton that had not yet been established on the market, and was therefore cheaper than other cottons because most people did not know anything about it. That was the main reason for going to seek those queer brands of cotton. And when they became established on the market, and began to get their full price because of their value, then the spinners who had first discovered them, in nine cases out of ten, dropped them and went to look for another cheap cotton. It is not really necessary—and it will be far less possible with the amalgamations into larger firms and the setting up of automatic machinery—to have all these queer brands of cotton.
In my opinion this fanciness in the cotton trade, which has crept in only since the First World War, has been a real disadvantage to the trade in many respects, and so far as cotton is concerned I am sure the Commission will be well advised not to try to restore the old position. Now, as to the question of trading, I say quite frankly that in my opinion a great deal of the success of the Japanese cotton trade was due to their centralized buying of cotton and to the fact that they bought very heavily on big crops.
LORD HAWKE: Would the noble Lord say whether in fact there was any centralized buying of Japanese cotton? I know of none, and I have worked in the cotton industry.
LORD DARWEN: The noble Lord perhaps is right in his correction. Centralized buying was perhaps the wrong term. "Bulk" was undoubtedly the correct word.
LORD HAWKE: Not more bulk buying than the buying by other people.
LORD DARWEN: Private bulk buying in very big amalgamations.
LORD WOOLTON: Perhaps the noble Lord means they bought a lot.
LORD DARWEN: They bought heavily on big crops, and I hope the Raw Cotton Buying Commission will buy heavily on big crops. I also hope the Buying Com-
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mission will be able to make hay while the sun shines, and in a time like the present, when the trade can well afford to buy above world prices for cotton, I hope the Commission will charge above the world price in order to amass a financial reserve which will enable them to let the trade have cotton in the slump period at less than world prices. From what has been said this afternoon, I do not know whether noble Lords really realize that centralized buying, bulk buying, has not the same advantage in a sellers' market, such as we have to-day, as it will have when we return to a buyers' market. When we come to a buyers' market it will mean that the export trades of this country will need all the help they can get. It is then, when they need all the help they can get, that bulk buying will place us in a very strong position; and in spite of any international enactments there may be, I hope the authorities will
be strong enough to encourage the development of mutual trade, which I think would be in those times a great advantage.
Before I sit down I would like to mention Clause 22, which gives the Commission power to make regulations for enabling them to obtain all such information as appears necessary. I would beg the Minister to look into this matter of asking for information. I agree that information is necessary and it is quite right that it should be asked for, but, speaking for the cotton trade as I have known it, I would say that that industry has worked on very small overheads and with very small clerical staffs, and the returns and statistics which are now being demanded by a growing number of authorities are a serious burden, if they are to be made accurately, and if they are not made accurately then they are of no use
The point I wish to make is this. What is basically the same information is asked for in a slightly different form by two or more authorities. That means it has to be all worked out afresh in each case—or guessed afresh. If the Central Statistical Department were to collect and co-ordinate all the inquiries—I underline that word—of the various authorities, I am sure the demands for information could be very much simplified and replies would be more accurately made, and a great deal of work would be saved both to industrial firms and to the Civil Service. In conclusion, I would say that I believe this Bill will

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serve the cotton trade and the country well. I believe it will provide cotton at less cost, that it provide a steady market both for consumer and grower, and that it will enable the country to save dollars by stimulating the use and therefore the growth of cotton from non-dollar areas.
4.41 p.m.
LORD TEVIOT: My Lords, I have listened with the greatest possible interest to the noble Lord who has just sat down. I am not a manufacturer; I am a wearer, and I am sure, from what he told us this afternoon that, I, like a great many other people, will have to continue to be a wearer of austerity garments. I want now to ask him this question—he evidently has been in the manufacturing world for a very long time and knows all about it. If the system, which he considers was for many years before the war so unsatisfactory, had been reintroduced and this proposition had been put up, would he have said: "Yes, we must get a return to and adopt the socialized system"? That is what he suggested to-day. Again, I am rather shocked that, for a second time this afternoon, he seemed to think that profits were things which were all right. He even said something about 2½per cent. A rate of 2½per cent. A rate of 2½per cent. is looked upon to-day by the Chancellor of the Exchequer as sufficient profit for people to make on business or on anything else. It appears that though the Government are so unfavourable towards profits, there is now a suggestion that profits ought to and must be made to carry on any kind of organization.
The noble Lord talked a great deal about war conditions, but he did not mention a fact that seems to me very important—namely, that under war conditions there is only one customer. Now we are facing a world where we shall have a tremendous amount of competition, and we have to supply goods that the customers want. If we cannot, somebody else will. Therefore, I feel that the arguments which he brought forward this afternoon regarding war conditions and the various prices he quoted are not very analogous to the conditions and prices with which we are going to be faced in the years to come. I shall say only one word about bulk buying or hulk selling. Let me put it rather crudely. Suppose your Lordships were all members of
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a pig club, and said: "We are going into the local market where a lot of pigs are coming up for sale." And suppose we advertised that we were going to buy them all: what hope would there be of getting them at a reasonable price? That is what will happen with bulk buying or bulk selling. It will be exactly the same. Along comes the dear old British Government to buy or sell, and everyone will say: "We are on a good thing now." Up will go prices or down will go prices accordingly. You cannot get away from human nature in this or any other country.
I listened with great interest to the noble Viscount who moved the Second Reading. It seemed to me as if there was a degree of uncertainty in his mind, as in the mind of the noble Lord who has just spoken. He said it was "hoped this," and "the Government thought that," rather than—as I would much prefer to hear at the outset of a great adventure of this sort—that it was "confidently anticipated." I would like to hear the Government spokesmen say they are sure that this or that will happen. I am afraid that this Bill, like other legislation by this Government, is in the nature of a gamble. It is the same sort of thing as we have had with regard to Cable and Wireless. Here is an industry which has been built up over a period of many years. It has established a market, and that market has been in existence, I believe, for a hundred years. Now we are going to knock it on the head. The same applies to Cable and Wireless. That piece of legislation is another gamble on the part
of the Government. As I say, they seem very uncertain about this matter. It appears to me that they are saying they "hope this" and they are "expecting that," but they do not say: "We are assured and quite certain that this is going to happen, and that it is going to be for the great benefit of the country."
Your Lordships may remember that I spoke on this subject last May—just about a year ago to-day. I had a Motion then on the question of nationalization, and I think I said at the time that there were two industries which I thought should be exempt from nationalization, if any industry should be exempt. Those two were the cotton industry and Cable and Wireless. And I said so for this reason: that in each instance you have an inter-

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national industry, and how in the world you are going to nationalize what is essentially an international industry is beyond me. In these days we are in a very difficult position as regards foreign exchange. We used to get a great deal of foreign exchange through the cotton business. That will now cease. The noble Viscount said, with, it seemed to me, a certain amount of sarcasm and bitterness, that these wicked bankers, these wicked brokers, these wicked exchange dealers and other wicked people, are going to be, so to speak, knocked on the head. I have not that low opinion of the people who have been concerned in this great industry in Liverpool. If they were the type of people the noble Viscount depicted, they would not have been trusted by foreign customers. But, on the noble Viscount's own showing, those foreign customers sometimes did not bother to come here themselves. They simply gave their orders, being assured that they would get an honest deal. I regret very much that the noble Viscount expressed such an opinion of his own countrymen in that part of England.
Last Friday something fell from the lips of Sir Stafford Cripps, in another place, which I thought was very appropriate. He was rather driven into a corner—I think it was by the honourable member for Daventry—and when he was properly in the corner he said that this was a matter which he thought ought to be settled in the House of Lords. That is a splendid tribute to this noble House, and I am sure that your Lordships here to-day will be delighted by it. I believe that this Bill is one of the Bills that ought to be settled by the House of Lords. As Lord Cherwell has said, we are not going to divide upon it, but the spirit of division will be in the minds of most of us, even if we do not actually do it.
On the question of stability of prices, I understand that growers all over the world had complete confidence in the Liverpool cotton market. They knew that, generally speaking, so far as it is possible to have stability with regard to any such commodity as cotton, what they grew would be sold at a reasonable price. This confidence is one of the things that is going to be completely wrecked. Here we are going to create a great Government monopoly. If the Government make a loss (and in my view they are certain to
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do so, for I do not believe they have the capabilities, the experience, or the knowledge to run a great industry of this sort), who is going to make good the loss? It is, of course, to be met by the taxpayers—every one of us. We shall have to pay by direct or indirect taxation—that is the only way in which losses can be made up. I will not say any more about the question of buying. It has been demonstrated by previous speakers how very delicate a matter is the buying of the various types of cotton that are required. It is rather curious, I think, that the late Lord Mayor of Liverpool, who is a Socialist, should take such a strong line as he has done with regard to this Bill. It was interesting to see the stand he took. I compliment him on it. He showed great independence of mind politically, which is something that is greatly needed to-day.
Now I wish to put this question to the noble Viscount. The Government are going in for bulk buying, and there will be a price at which, I take it, everyone in this country must buy from them. Everyone who buys from them will have to pay a certain price. Suppose it should be possible to buy more cheaply in other parts of the world, is anybody here to be allowed to do it? Are people to be allowed to buy cotton cheaper abroad than we can get it here, in our own country? The noble Viscount shakes his head, so I take it that they will not be allowed to do so. But I can visualize our competitors abroad jumping in and buying cotton cheaper than we here can do, and what chance then will our manufacturers have to sell their goods in the markets of the world, if they have to pay so much more for their raw material?
Up till now, I have been quite unable to see that the Government have made out any case to prove that the cotton market at Liverpool was bad for the country, or was a bad asset for the country. Nor have they made out any case in justification of this complete alteration in dealing with compensation—a matter of which I think the noble Lord, Lord Farrer, spoke. The noble Viscount knows that there are families, members of which, generation after generation, have been in the business—in all walks of it. If you are going simply to throw those people out, without regard to their great interest in the business and the fact

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that it is the basis of their whole family life, heedless, too, of any question of the goodwill which so many of them have established; if you are going to turn them out and give them nothing by way of compensation for doing so, that will be the most tremendous act of injustice which any Government could perform anywhere.
I would like, further, to ask this question. I understand that some of the permanent officials in the Treasury and the Board of Trade—of course, this is all hearsay, but no doubt the noble Viscount will answer, if he knows whether it is so; I do not see why he should not—are by no means of one mind on the question of the elimination of the Liverpool cotton market. Is that really so? I do not know whether the noble Viscount feels inclined to answer that. I have heard that these gentlemen do not by any means agree on this policy. Of course, they are not politicians; they are civil servants, and they may have more open minds about the matter. There has been, I understand, a great set-out concerning Sir Frank Platt. His opinion was just one man's opinion, ard it may be that the whole of his board did not agree with him. With regard to the figures of the impartial ballot that was taken, I am told that 20 per cent. of those concerned did not vote at all, 0.8 per cent. were in favour of the Government's decision, and 79·92 per cent. were against it. That seems to me to explode completely the idea put forward by the Government that the industry as a whole wants this scheme. I do not believe for one moment that that is so. I believe that if a plebiscite were taken in Liverpool you would find that there was an overwhelming majority against this undertaking.
LORD CHORLEY: Will the noble Lord indicate when the Government suggested that the employers in this industry were on the side of this Bill?
LORD TEVIOT: I thought it was quite clear that on many occasions the Government have announced something of that sort in the other place. I think I am justified. I have not a copy of Hansard with me, but I will certainly look it up, and I will let the noble Lord know. I understand, and I have it from a very authoritative source, that the Government
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claim they are moving with the approval of a reasonable proportion of the trade. I believe that is not true.
LORD CHORLEY: May I ask the noble Lord from what he is quoting?
LORD TEVIOT: I am told that is what the noble Viscount, Lord Hall, said. Now that the noble Lord draws my attention to it, I believe he did say exactly that this afternoon. The noble Lord, Lord Cherwell, has dealt so fully with many questions with which I was going to deal that I will not repeat what he said. But there is just this point. I understand that the world value of cotton recorded a very serious decline in a few days in the New York cotton market. I think it was in October last year, or the year before that; I am not sure.) I understand that the price fell to the extent of about£12 per bale, and—though I stand to be corrected on this—that on the stocks we had we showed a loss of about£30,000,000. If the noble Lord could say whether that is true or not I would be grateful. Then we hear a great deal about this question of profit. I will not deal with that, except to say that I am glad the Government are now coming round to the idea that profits must be made in any business.
If there is any Socialist member of this House who has any business, and understands business methods, and who has had business experience before the war in normal times, I should like to hear him give really cogent reasons why he wishes to depart from the practice which was carried on before the war, and say why he is in favour of what is proposed here. We are giving away one of the most important assets of our country. The cotton exchange was not a national affair; it was an international affair. It employed thousands of our people, either directly or indirectly, and gave us a great position in the world. I see that the noble Lords opposite shake their heads, and are probably saying, "What a wild man." I may be wild in making these statements, but I would like to hear some of the noble Lords opposite give some cogent reasons why we are justified in passing this Bill. I ask some of them to shake off the shackles of their political Parties, and come out and tell us if they have any reasons, why they are supporting this Bill; and I would suggest that they should lead us into the lobby against it.
5.5 p.m.
LORD HAWKE: My Lords, I have no connexion with the cotton trade to-day, but for some twenty years I had experience of it, as a merchant overseas or as a Government servant, and this Bill has come to me as a profound shock. Frankly, I do not believe the Government know what they are doing, and they are committing, in effect, an international crime. I propose to leave others to deal with the effect the Bill will have on Lancashire, and to confine myself chiefly to the effect upon the cotton growers, and upon international cotton prices, of the abolition of the international cotton market in Liverpool. Liverpool was the best commodity market which man has yet devised. The noble Viscount who moved the Second Reading of the Bill said, I believe, that we were 2,000,000 bales bull of cotton at the moment, in stock and in sight. This fills me with considerable alarm, because cotton prices at present are three times what I used to consider to be reasonably safe. If we are 2,000,000 bales uncovered bulls we may come a very nasty cropper. Moreover, the noble Viscount has not consulted me, so far as I can see, in committing me to my twenty pounds share of it.
I am not going to follow the noble Lord, Lord Darwen, in all his arguments. I have little doubt that from time to time I sold his cloth, and perhaps sent back the cotton which he wove. I think that he and I probably differ on almost everything, and particularly if we were searching for inefficiencies in the pre-war structure of the cotton trade. I should certainly look for them in the weaving section of the industry which he represents, whereas he would come to my house—the distribution —to find the same points. Cotton is largely a small man's crop, whether in the United States, India, Egypt or elsewhere. Ever since the American Civil War the proportion of cotton grown outside the United States has been increasing rapidly. Immediately before the war less than half the world's crop was grown in the United States, and much less than half the world's exports came from that country. The United States, the most expensive producer, has been forced to subsidize production and exports.
This tendency over many years has, of course, increased the importance of Liverpool as a market where all varieties of cotton could be bought and sold, and in
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this respect Liverpool's position was unique. It was in Liverpool that the impact of the outside growths from numerous countries was felt, and it was from Liverpool that the alarming effects of frost and bollworm in the cotton belt were mitigated by sales from less affected lands. Now that the Liverpool Cotton Exchange will be no more, New York will rule the world. For political reasons inherent in the Loan Agreement, we shall have to continue to draw a large proportion of our cotton from the United States. Our other suppliers will claim that the price in New York is the world price and, if they do not get prices based on New York, feelings will be roused and political trouble will develop. Without the salutary influence of Liverpool the American bulls and bears will rampage all over the world and the American Government Cotton Bureau monthly forecasts of the crop will be suspect.
May I now turn to the growers? Cotton is grown, as I said before, by small men. It is picked for some four months of the year, but used the whole year round. The pre-war machinery for disposing of the crop was roughly this. The grower sold at or before harvest, either to a merchant or direct to a ginner—the man who removes the fibre from the seed. The ginner worked his factory for perhaps six or eight months in the year on stocks brought from merchants or accumulated by himself direct from growers. He sold his cotton as and when demand developed through merchants buying to supply the mills of the world. Those most insistent on quality tended to be the first to buy, and the ginner both sold before he bought and also had to carry large stocks.
In the part of the world I know, all these processes were very highly competitive. The ginners competed strongly for cotton to keep their machines running, and in turn they competed strongly to sell cotton to the mills. The margin of profit at every stage was very small indeed and would not permit of running the risk of market fluctuations; hence the futures markets were used freely by ginners and merchants. The local futures markets provided a means whereby mills, ginners, merchants, and even some of the large growers, could buy or sell without fail at any time in any reasonable quantity. These futures markets alone made it possible for the whole trade to be highly competitive; in other words, the grower could get a very full price. The margin

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between the price the mill paid for ginned cotton and the price the grower received in the field barely covered the cost of the various operations of handling and transport—and all this because the market risks could be unloaded on a futures market. The local futures markets were not self-sufficient. They were harnessed to world prices through Liverpool. If the local price rose or fell too much—if, for instance, Indian cotton in Bombay became too dear, compared with American cotton in Liverpool—straddle operations would develop and the margin could be ironed out.
These operations, of course, would have a salutary effect on Liverpool, which, in turn, would be transmitted to New York. The chain of marketing and risk-taking from the field to the mill was complete and perfect. It was most rare to find an occasion when cotton could be bought in the field and sold to the mills of the world at a profit. I know that noble Lords opposite may not believe this, but I can assure them from my experience that that is absolutely true. Cotton could always be bought and sold at the correct price of the day on the futures markets. There was no question of there being only buyers or only sellers, and Liverpool provided the ultimate re-insurance in this respect. A cable to Liverpool, and the sender knew that he was covered as buyer or seller for any quantity at the price of the minute. I do not think that the world's secondary futures markets could have functioned as well as they did without this ultimate recourse to Liverpool.
Curiously enough, I have some experience of working the same growth of cotton, both with and without a futures market. Twenty years ago there was a certain variety of cotton for which there was no futures market, and the price for which depended entirely upon the size of the particular crop and the demand from the mills of the world for its particular characteristics. At that time the merchant shippers could buy their cotton locally and sell it to the mills of Europe at the very handsome margin (for cotton) of some 5 per cent. Some enterprising people decided to start a futures market. From that moment onwards that cotton became just as competitive as any other, and it was no longer possible to do simultaneous business at a margin.
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We are apt to turn to Japan—and Japan has been mentioned this afternoon —for lessons in the cheap production of cotton goods. In pre-war Japan there was intense competition among the few big houses and the very many small houses, but was it a coincidence that at Osaka they had a cotton futures market, a yarn futures market and even a cloth futures market? In my opinion, the very cheap prices and very quick delivery that japan could always quote for export business owed a good deal to the existence of this yarn and cotton futures market. I think all this goes to support me in maintaining that the more perfect the system of futures markets—and in cotton the system was the most perfect of all the commodities—the more competitive is the handling of the commodity and the smaller the profit of distribution. The President of the Board of Trade is always allergic to the cost of distribution, and I cannot help thinking that if he had time to consider the subject he would have been clamouring for more futures markets rather than fewer, and he certainly would not have been throwing away the great natural advantages of Liverpool
For Liverpool had great natural advantages. It was a great port; within a hundred miles, 10 per cent. of the world's cotton was spun; and within another 1,000 miles or so a further 20 per cent. It had no domestic cotton crop to complicate matters. It was backed by an important agreed international banking system. It had a sound currency. It was run by men of long skill and experience, with that peculiarly phlegmatic British temperament so suitable for the management of commodity markets. There used to be an old Liberal doctrine, with which I have much sympathy, that nations should busy themselves in those activities in which they enjoy the most advantages and display the greatest talents. There are many old Liberals on the Government side to-day, yet so far from their being encouragement to all those merchanting activities, at which both our friends and foes acknowledge our pre-eminence, there is positive discouragement—even prohibition.
The Economic Survey gave but a cursory glance at those activities comprised under the heading of our invisible exports, which would include, of course, the proceeds of our international cotton

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trade, yet all those invisibles are thought to have produced before the war nearly as much foreign exchange as our total exports of merchandise. Surely, instead of setting export targets so very unrelated to probabilities, we should be making a greater effort to increase our invisibles, and to enlist the skill of the men who produce these invisibles. Their production of foreign exchange per head can be far higher than that of industry, yet they are not receiving much encouragement to-day. By this Bill one of the most skilled sections of our community is being more or less put out of business—surely the economics of "Tomtopia."
I have endeavoured to show that without the Liverpool futures market the profit of distribution of cotton is likely to increase, that prices are likely to be more erratic, dependent on American weather, and that the ordinary tug-of-war of business exchanges is likely to be replaced by the more dangerous contest of diplomacy—perhaps even open diplomacy. We can only hope that the Government will in due course take advantage of the loophole provided by Clause 10 and allow an embryo futures market to be re-created in Liverpool, so that the great skill and experience of that city may be harnessed towards helping us to pay for our daily bread. In doing so, it will be conferring great benefits on what I believe to be the largest trade in the world, and not least on a million or more humble cotton growers, many of whom are citizens of the British Empire.
LORD AMMON: My Lords, perhaps this would be a convenient moment to adjourn for the Royal Commission.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
5.30 p.m.
The following Bills received the Royal Assent:

Treaties of Peace (Italy, Roumania, Bulgaria, Hungary and Finland),

Naval Forces (Enforcement of Maintenance Liabilities),

Army and Air Force (Annual),

Forth Road Bridge Provisional Order Confirmation.

House adjourned during pleasure.
House resumed.

COTTON (CENTRALIZED BUYING) BILL.
Debate resumed on the Motion for Second Reading.
5.42 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I welcome and support this Bill, because in my opinion it marks another stage in the assault which His Majesty's Government is making upon one of the most pressing and urgent problems which is facing British industry to-day, the problem of cost. In the make-up of industrial cost, for years past there has been an increasingly serious factor—the charge levied for the services of bringing buyer and seller together. It runs through the whole industrial structure, from the production of the raw material to the sale of the finished article to the ultimate consumer. It is useless to deny that in this factor there is all too large a parasitical element, the hosts of brokers, merchants, manufacturers' agents and commission men, who batten on industry and who, as I have said in your Lordships' House before, erect their toll gates along the road from producer to consumer, each levying a toll for services which, in the majority of cases, are of doubtful economic value and which in any case could be performed far more efficiently and far more cheaply by far fewer. The remunerations of these intermediaries have to be found in the industrial price structure. They widen the gap between the production cost and the selling price. This field has proved so attractive that they have multiplied themselves to such an extent that they are presenting industry to-day with one of its greatest problems.
The Lancashire cotton industry has attracted perhaps more than its fair share of this element, and in it, in my view, must be placed the Liverpool Cotton Exchange. I do not deny that this Exchange fitted very well into the economy of the 19th century, but in modern conditions and in the conditions in which British industry finds itself to-day —and in the position out of which British industry has got to fight—it can only be regarded as a wasteful and extravagant intermediary. I pay my tribute to the right honourable gentleman, the President

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of the Board of Trade, for the courage he has shown in trying to rehabilitate the great Lancashire cotton industry. He has propounded and encouraged schemes for amalgamation of production into more efficient units. He has brought financial aid to the dire need of increasing its mechanization.
But the basic requirement of the Lancashire cotton industry, as is the basic requirement of all British industry, is the ability to purchase its raw material of the desired quality standards at the lowest possible cost. His Majesty's Government could not deny itself the responsibility of ensuring that the Lancashire cotton industry did in fact have this advantage. It could not leave the supply of this great industry's raw material to the capricious manœuvrings and gamblings of a speculative Exchange. In my view, the Commission which this Bill sets up will be able to provide the spinner with that raw material cheaper and better than could be provided by a resurrection of an old, out-moded and out-worn machine. The prime requirement of the spinner is a stable market in which to purchase his supplies. The speculator must have a gamblers' market in order to make his profits, and the gambling in industrial counters in British industry has been a malignant disease for years past, as antisocial in its results as street corner betting and, more recently, football pools.
The cover scheme which this Commission can provide gives an adequate and far-reaching cover to the spinner against loss on stocks by price fluctuation. It will do something else: it will relieve the spinner of the necessity for looking over his shoulder at the market, to cover himself in divers ways which he was forced to do, including leaving his real job of spinning to become a speculator himself. The shoemaker will at least be able to stick to his last, to the benefit of his business, which is to produce yarn. Noble Lords have criticized the Commission's powers for bulk buying. I fail to understand why. For years past industry has organized itself into buying groups and rings for the purpose of gaining the advantages of bulk buying. Why is bulk buying considered to be a commercial virtue when carried on by private enterprise and a vice when it is carried on by a State-sponsored organization?
LORD CHERWELL: It depends on whether you are successful.
LORD LUCAS OF CHILWORTH: The noble Lord has no evidence that it will not be successful, because that can be proved only by experience, but all the basic requirements are there for success. Why? Because the Commission will be able to save considerably upon the operations of the past. The noble Viscount who moved the Second Reading gave your Lordships' House some figures. There were 300 speculators upon the Liverpool Cotton Exchange employing approximately 3,000 persons of clerical grades and making a profit of£2,000,000 a year. Who is going to save by a reduction in this cost if not the cotton industry? The noble Viscount also said that the Commission would be able to carry on its operations with 10 per cent. of that personnel. Who is going to benefit by such a reduction in operating costs if not the cotton industry? The noble Lord, Lord Teviot, expressed alarm at the closing down of the Cotton Exchange, because it denied this country a profit on foreign exchange speculations.
LORD TEVIOT: I am sorry if that was what I conveyed to the noble Lord. What I said was this: that we were very anxious to acquire foreign exchange in this country. We did so through the Liverpool Exchange in the business that came through from foreigners. It seemed to me we would not be able to do so in future.
LORD LUCAS OF CHILWORTH: I see no difference between the statement of the noble Lord and my own—that we are to lose foreign exchange on the closing down of the Liverpool market. Is that true?
LORD CHERWELL: it has been agreed by the Chancellor of the Exchequer that the loss will probably be of the order of£1,000,000.
LORD LUCAS OF CHILWORTH: I am making my speech and not that of the Chancellor of the Exchequer.
LORD CHERWELL: I am sorry to see a divergence in the Party opposite.
LORD LUCAS OF CHILWORTH: Do not be so anticipatory. There might be no divergence at all. May I return to the noble Lord, Lord Teviot? Is not the

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real answer to the noble Lord this: that the Liverpool cotton industry exists for the purpose of producing finished manufactured goods for the home and export markets and to provide good employment for the people of this country, and not to provide a gambling house for a problematic profit upon foreign exchange speculations? The figure quoted is something in the region of£700,000.
LORD TEVIOT: I am sorry to interrupt the noble Lord. I never referred to gambling in foreign exchanges, but what I referred to was the fact that foreign exchange came through the Liverpool market which was used by foreign buyers. We wanted foreign exchange and this was a perfectly legitimate method of getting it for the benefit of our business overseas. I consider that if this Bill goes through, all that will stop.
LORD LUCAS OF CHILWORTH: The noble Lord is quite right, but you cannot get it without gambling.
LORD TEVIOT: Why not?
LORD REA: It is a legitimate commission on genuine transactions.
LORD LUCAS OF CHILWORTH: It is only a matter of opinion. I expect the noble Lord thinks dog racing is a legitimate gamble. Whether noble Lords like the term gambling or not, that is my expression, and you can take it or reject it, just as you wish. But even the speculator in Liverpool futures uses the expression "gambling," as the noble Lord, Lord Darwen, has pointed out. I have stated that there will be a problematic loss of approximately£700,000. But what is that compared to the gain that will accrue by an increase in the export of our finished goods which must follow if, through a better and more rationalized buying system, our prices are lower, and therefore we are more competitive in the export markets of the world?
LORD CHERWELL: Our argument is that prices will be higher and not lower.
LORD LUCAS OF CHILWORTH: I have tried, with the greatest respect, to follow the noble Lord's arguments, but I would sooner follow the arguments of Mr. Maskelyne, the conjuror. I have reached the stage now of not even trying. May I return to the points that were made about the basic reason for the
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existence of the Lancashire cotton industry? My experience of the industry—and it has been a fairly long one, as a working industrialist—is that if the industry would stick to its job of producing and not trying to make its money out of speculation—I will not use the word "gamble" out of respect for the noble Lord's feelings—it would do more credit to this country and bring more profit to it. I do not intend to reply to what the noble Lord said except in regard to one more point. He and other noble Lords have made the point about compensation: that the merchant should be compensated for the loss of his speculative gains. I wonder whether the arguments are based upon grounds of very great validity. Are we to compensate all the displaced intermediaries which our more sound and progressive economy proves to be redundant and unnecessary? If we are, it will soon be far more profitable to be compensated out of business than to remain in it. It is a question of where you are going to stop. We are all trying our utmost to make future war impossible. If we succeed, are we going to ask the British people to compensate arms manufacturers for loss of profits?
LORD CHERWELL: You would compensate the officers and the soldiers generally, would you not?
LORD LUCAS OF CHILWORTH: There is one more point which I wish to make. When this Bill becomes law, and the production side of the cotton industry is placed upon a sound and economic basis, I hope that His Majesty's Government will give their attention to the system of distribution of the finished product, because in that field there is a lot of work to be done. If your Lordships will give me permission, I would like to quote from the Working Party's Report. On Page 95 there is a schedule of the build-up of clothing prices in the home market, and in the following paragraph this appears:
"It is striking from this table to see that in a girl's dress selling at 12s. 5½d. the combined cost of the industrial processes (spinning, weaving and finishing) is only 1s. 9½d. or 14½ per cent. of the final price, whereas the charges for wholesale and retail distribution amount to 5s. 3¼d. or 42 per cent. of the final price."
LORD WOOLTON: I am sorry to interrupt the noble Lord, but is this really germane to the Bill which is now before the House?
LORD LUCAS OF CHILWORTH: If the noble Lord, Lord Woolton, will exhibit: some of the patience which we have shown on this side—
LORD WOOLTON: I hope the noble Lord will not take offence. It is perfectly reasonable to ask the question whether this matter arises out of the Bill which we are discussing. The noble Lord will perhaps be good enough to answer the question, or to ask the guidance of the noble Viscount who leads the House. The noble Lord need not be offensive because he is being interrupted in this way.
LORD LUCAS OF CHILWORTH: I am not being offensive. If this matter were not germane to the discussion I should not be raising it. The paragraph which I was reading continues:
"Or, again, that in the case of a man's shirt the industrial costs are 3s. 5¼and the charges for distribution 5s. 9d."
LORD HAWKE: Would the noble Lord say whether these prices relate to the pre-war period, a free economy, or whether the make up is during the war, a controlled economy?
LORD LUCAS OF CHILWORTH: They relate to the period covered by the Cotton Working Party?
LORD HAWKE: Is that pre-war?
LORD LUCAS OF CHILWORTH: I can only assume that it is pre-war.
LORD HAWKE: The Working Party were not appointed before the war.
LORD LUCAS OF CHILWORTH: The only statistics they had, I suggest, were those relating to periods up to the outbreak of the war.
LORD HAWKE: I would say, on the other hand, that they are far more likely to have had the statistics relating to the period during the war. It was only during the war that we became statistically minded.
LORD LUCAS OF CHILWORTH: Well, perhaps the noble Lord will be able to marry this up with the statistics for the war period. I quote from another part of the Report.
"A reduction in the spinning cost of ½d. per lb. of yarn may involve revolutionary changes in production methods and it is not unnatural for those doing this work to ask
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what total difference this ½d. per lb. will make in the retail price, say, of a shirt weighing little more than 8 ounces, and to compare their effort and its reward with the effort 2nd charges of the distributors."
The point I wish to make—and I say this to the noble Lord who will reply on behalf of His Majesty's Government—is that it is useless to place the production side of the cotton industry on a sound economic basis and to allow the resultant gains to be dissipated in a wasteful and extravagant distributive system.
6.5 p.m.
VISCOUNT LEVERHULME: My Lords, I would venture to address you for just a few minutes. A number of speeches have already been made in this debate, and there are other noble Lords who wish to take part in it, so I will try to be as brief as possible. I rise on this occasion for two reasons. The first is that living and spending about half my time, as I do, on Merseyside, I am brought into frequent contact with the commercial and civic life of the neighbourhood, and I am intensely aware of the opposition which exists there to this measure which will deprive Liverpool of a unique institution. I am further interested in this Bill because for the last few years I have been on the board of a cotton spinning company in my native town of Bolton. It is not a large company, but it is an independent company, unco-ordinated and very proud of its 150 years of existence, which it is going to celebrate in about a fortnight's time.
I have called the Liverpool cotton market a unique institution. I think that that epithet is justified, because it is something which this country had, and no other country had in quite the same form. It was the central market for world cotton trade, and although out of 30,000,000 bales produced annually in the world, taking one year with another, only about 3,000,000 actually entered this country, nevertheless the price of cotton in every other market was related to the Liverpool price. So, through something like a century, this market in Liverpool grew and flourished and prospered, and it did so because it rendered a service to the grower, to the shipper, to the importer and to the user of cotton. I cannot believe that it would have existed and have continued to flourish if it had not rendered this service. Messages have poured

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in from markets in other countries deploring the closing of the Liverpool market. But if and when this central market of Liverpool is closed, a central market will assuredly take root elsewhere—it may be in France, or Belgium, or Holland or somewhere else, not immediately, perhaps, but as world trade conditions recover. One of the other cotton markets will assume the central character which the Liverpool market formerly enjoyed.
What about the users of cotton? They are, after all, the customers whom the market served, and the people whom, as the noble Viscount who introduced the Bill stated, this Bill is intended to benefit. The noble Lord, Lord Cherwell, referred to the figures which resulted from the questionnaire sent to the members of the Federation of Master Cotton Spinners Associations, and I need not enlarge upon them except again to call attention to the remarkable minority or less than 1 per cent. of those who were in favour of the policy which is being followed in this Bill. Reference has also been made to the fact that this question of the Liverpool cotton market was deliberately excluded from the purview of those who sat, under the chairmanship of Sir George Schuster, on the Working Party which inquired into the cotton trade. It seems to me rather like asking a dramatic critic to criticize a three-act play, but to tell him that the first act is deliberately excluded from the criticism he is asked to make. Nevertheless, the Working Party did manage to get something into their report about the buying of cotton. This is what the report states:
"We confine ourselves therefore to making the broad observation that the Lancashire industry will not have a fair chance to recover prosperity unless it is able to buy suitable cotton in the cheapest available market, and avoid being placed at a disadvantage vis-âvis other countries so far as raw cotton prices are concerned. The importance of exports relative to home trade makes this a vital matter for the Lancashire industry."
We know that we must accept policies of centralized buying and other forms of control in war-time and in times like the present, when we are faced with shortages as an aftermath of war. But surely the Government have no justification for using the fact that the industry has readily co-operated with the Government, and accepted control in times like this, as
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being a proof that industry needs that control permanently, or would welcome it, or that it would necessarily be a good thing. I think it is fair to ask: Where do we go from here? If raw cotton is to be bought centrally, why not all raw materials in other industries? If it is a good thing for this country, why not for all countries? So we see ahead of us, I hope not in our life-time, a time when world trade will be carried on, not between the nationals of one country and the nationals of another, not between merchants in one country and merchants in another, but between Government and Government. That, I think, would be a world in which the risk of constantly recurring wars would be very greatly increased.
There is only one other point I would make. I understand that we are not to divide on this Second Reading, but when this Bill becomes an Act and the Raw Cotton Buying Commission are set up I would urge the Government to give serious consideration—even if it means a change of decision—to making the fullest possible use of those firms with long experience in the cotton trade, who have their representatives in cotton producing countries, rather than attempt to build up an entirely new organization at home and overseas. Such a policy would help to give some assurance to the spinners that there would be available to them under the new system at any rate some measure of that personal touch, and that personal knowledge of all the many varieties and types of cotton, which under the old system meant so much to them.
6.15 p.m.
LORD ROCHDALE: My Lords, my excuse for addressing you this afternoon is that, whilst I have no personal interest in the cotton trade at all, I have lived and worked in a sister textile industry in industrial Lancashire. I claim, therefore, to have some knowledge of matters dealing with that county. I claim some knowledge of its problems, perhaps some knowledge of its outlook, and, I believe, a greater appreciation of the difficulties of the cotton industry as a whole than is possible for anyone who has not worked in Lancashire. Therefore, I feel that we who have lived there have a particular responsibility—I would almost say an obligation—to try to contribute something of assistance this afternoon.

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When this Bill first came into another place, I approached it with a completely open mind. Since then I have studied it throughout all its stages and now I can say that I am profoundly disturbed at what, to my mind, are the inevitable consequences that will occur if this Bill is allowed to become law. I was overseas during the time of the General Election, but from what I can gather no reference to such a proposition was made by anyone who supported the Government. Certainly no mandate was given for it, and, except for some very vague references (which have been repeated by certain noble Lords this afternoon) to the intention of stabilizing the price of cotton, no really sound reason has been given for this measure. Was it possibly due to the inefficiency of the Liverpool cotton market? I do not think so. Nobody has said that, and it has been pointed out by other noble Lords this afternoon that the overwhelming majority of the industry in favour of continuing the Liverpool cotton market testifies to its efficiency and ability to serve the industry as best it can. Was the reason due to the cost of the services that were rendered? Even the noble Lord, Lord Darwen, has drawn attention to the very narrow margins on which the market works, and I am right in saying that the overall cost of the market was less than 1 per cent, of the turnover.
I am firmly convinced that the reason for this measure lies elsewhere, and, I am afraid, is far less reputable. Undoubtedly, some time ago the earlier glories of the cotton trade fell on evil times. During the inter-war period, after the boom at the end of the 1914–1918 war, things gradually began to get worse; short time became general, many mills closed down (many of them never to reopen again). And, even in cases where output was maintained, the weekly wage packet of the operatives was all too light. I think it is true to say that throughout textile Lancashire there settled a pall of despair, a sense of bewilderment and insecurity, and with it a bitterness of heart which dies very hard. Those of us who have lived there, who have seen the tragedy of great mills full of machinery standing idle, can perhaps appreciate some of the feelings that were in existence in Lancashire during these wretched times. We can appreciate what it meant to the operatives when they saw their very means of livelihood—the machinery in the
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mills which they had worked in for so many years—being hoisted out for export, for the cheap labour of the Far East to compete with Lancashire. Or, again, when they saw their machinery, which they knew could run perfectly well, coming out of their mills as scrap iron after the scrap merchant's hammer had done its work.
Those were conditions which I am quite sure then brought into being a feeling of bitterness, which sowed seeds which are now bearing fruit. What therefore, I think it is pertinent to ask, was the reason for the bad times on which the Lancashire cotton trade had fallen? Certain reasons have been mentioned this afternoon. But there were of course a great number of reasons. If we go right to the other side of the world, to China, there was the rising of the Chinese revolution, and the ban on British imports in 1917; there was the rapid rise of the Japanese export trade, competing with us at a time when we were at war and unable to compete with them; there were the tariffs later put on British cotton goods in India. Another factor which must not be overlooked was the return of this country to the gold standard. Those, I believe, were some of the main reasons for the serious plight of the Lancashire cotton industry, and not, as has been said over and over again elsewhere, and in your Lordships' House this afternoon, unscrupulous gambling on the Liverpool cotton futures market,
which was an essential part of the industry as a whole, and was used in by far the majority of cases—though not necessarily in all—for legitimate business transactions.
In point of fact, I would go further than that. I would say that the Liverpool cotton market can claim a considerable measure of credit for maintaining the trade of Lancashire where it was, and not allowing it to sink even lower. By making it possible for: he Lancashire spinners to obtain the exact cotton they required, at prices very competitive in the world's markets, whilst obviously they could not prevent the effects of sweated labour in the Far East, they made it possible for our higher priced and better quality fabrics and yarns which were produced in Lancashire to be sold all over the world. In point of fact—it may not have been mentioned this afternoon— between the wars, and towards the end of the peace period in 1939, the Lanca-

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shire export industry of cotton goods never dropped below 52 per cent. of that industry's production, which in 1938 was nearly 10 per cent.—by value—of the total visible exports of this country as a whole.
In the light of facts like these, and in the interests of the vast number of individuals who were, and still are, directly and indirectly concerned with this industry, one would have thought that the least that could be done would be to hold a public inquiry. But no; regardless of the fact that the study of cotton, its growth and selection, the relating of types to requirements, were all absolutely inseparable from any technical consideration of the industry as a whole, the matter was expressly excluded from the directive given to the Working Party. The bitterness of heart, to which I have referred, we can all understand; and, in so far as we can, we can do our best to make amends for it. But to take a step to achieve that, without appreciating what will be the implications, and without appreciating what we are really doing, is not, to my mind, doing a service to those we are trying to help. Rather is it doing them a disservice, and it displays, I am afraid, a measure of pride which refuses to admit it when one realizes that one has made a wrong decision.
My opposition to this measure is not because I have any feelings one way or another for the Liverpool cotton market as such, but because of the service it rendered, and can still render again, to the British cotton industry—a service which I am convinced that the proposed Commission will be quite unable to copy, let alone improve. We have all heard of the various other functions of the Liverpool cotton market in the world, when it was the centre of the world cotton market, the arbitration centre of the world's raw cotton trade and so forth. But I will say something about how the spinning and manufacturing industry was affected. I think it is true to say that to-day our industry depends more than ever before on its ability to produce a large variety of relatively high-quality goods. To make that possible, the closest supervision is called for, not only in the mill itself, but by the merchant; he must take a personal interest in the exact requirements of the cotton. That means attention not only to length and quality and to the many other characteristics
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which go to make up the cotton; that is to say, colour, seediness, character—all of which may vary not only as between district and district and even within districts, and so prevent the spinner, the manufacturer or the finisher, achieving the results that the customer wants and is relying on getting.
Previously the merchant, who probably specialized in a particular growth of cotton, and in most cases learnt his business in the country of origin of that cotton, and from his personal touch with growers, shippers, and consumers, was able to give the service that was needed. But I doubt very much, with this centralized system on which we are now embarking, whether that will still be possible. It seems clear that men with the requisite skill and knowledge will be able to be found to-day to serve the Commission, but how is that to be assured in future? Skill in this sort of work comes only as the result of a long apprenticeship, an apprenticeship with the shippers and in different parts of the country. Is that going to be possible when it is a question of that skill being found in, and facilities made available for, State employees?
In considering the experience that we have had from the Cotton Control in the war, I agree with many noble Lords that we must be strictly fair, and must not be misled by the obvious difficulties that occurred under the exceptional war-time conditions. Obviously, the users of cotton, just as the users of any other raw material, had to make do with what they could get. But the war has now been over for two years, and things are not getting any better. Yet it is essential that we get back to a far better service than we had during the war if we are to compete in a trade which, as we pass from a sellers' market to a buyers' market, will become far more competitive as it was during the inter-war period. What is the position to-day? Whereas previously spinners could contract forward, so that they could get so many bales of the exact type each week or each month, whichever they liked, even up to two years ahead, that is now not possible. The cover scheme which exists now allows them to cover themselves for price but not for quality, and not for delivery.
Therefore, the present criticism that one has heard in many cases from spinners as to the way that the Control is working

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to-day—and it applies, I gather, particularly to the finer counts—is that they cannot get the exact qualities of cotton they require. The Control buys in bulk beforehand, without reference to the spinners' exact requirements; physical types with which to compare deliveries offered on type description are very limited, if they exist at all; qualities delivered vary widely against type description, since the Control accepts the cheapest offers regardless of many important factors, including the shipper's reputation. They are therefore unable to supply the right cotton at the right time; as a result the spinners have to accept whatever is available at the time, whether it is exactly what they want or not. What are the effects of all this?
I would like to take two examples. In order to get as near quality as is required, spinners often have to take immediate delivery of such cotton as is available, because they know that if they leave it any longer it will not be there. This means having to carry a far larger stock than would have been necessary before the war, which in turn means tying up storage space and large sums of capital, and incurring much heavier insurance costs than would otherwise have been necessary. That is the first point. The second point is that, despite all the efforts that are made, the actual delivery of cotton into the mills varies and is very irregular.
This means frequent adjustments to machinery, frequent changes from one type of cotton to another owing to the lack of selection, with the inevitable waste of time, and an effect actually on the wage packet of the operatives themselves who are paid, for the most part, piece rates. This is what is happening now, and although it may be possible to bring to the Commission from the trade a larger number of skilled people who know the business, who may be able to improve on the service of the Cotton Control, I find it difficult to see how, with any centralized buying organization such as the Commission which is to be set up under this Bill, all these criticisms can be overcome. I do not think they can. From investigations I have made, I believe that if one could—of course, it is not possible—obtain an expression of opinion from the operatives themselves, a substantial proportion of them would say that their wages were suffering from the irregularity of the cotton
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that was being delivered into the mills and from which they had to earn their wages. The fact that they are not getting the type of cotton they want does not mean that it is not being grown. It is in existence in the world, but the method of buying that is now employed does not allow it to come into this country. That very same cotton is going to our competitors in other countries.
I have already mentioned the facilities the spinners have in order to cover their operatives under this cover scheme. It has been stated that Clause 10 of the Bill says that the Commission may operate a scheme for all sections of the industry. No definite statement has been made, either to-day in your Lordships' House or in another place, as to whether that cover scheme is going to be increased to cover all sections of the industry. It is not happening to-day, and it is vital that it should. I would just like to take one instance to show how important it is. A manufacturer—shall I say a manufacturer with 1,000 looms?—rather than pay his operatives off or allow them to run on short time in periods of bad trade, before the war would, if he could, build up stocks, and he would inevitably, if he could, cover himself against price fluctuations of that stock in the futures market. He could do that either to prevent short-time working of his operatives in times of bad trade or to give longer runs and so increase the efficiency in the mill itself. To-day that is not possible. It should be possible, if we are going to get back to a highly competitive export trade, as I believe we shall.
The last point I want to make, to which I have already referred, is on the question of the intention of this Bill to stabilize cotton prices. Obviously, if any action in this country could stabilize world prices there would be everything to be said for it. But, as has been said—I do not think is has been mentioned in quite this way—world cotton production was of the order of£500,000,000 sterling before the war, of which only£50,000,000 sterling was cotton which came into this country for use in this country. How manipulating cotton to the value of one-tenth of the world's production is going to stabilize the world price of cotton, I do not know, and I do not think any noble Lord knows.

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I believe it is accepted, therefore, that the price of cotton in this country must be different from the price outside the country. At times the Cotton Commission's cotton will be at a higher price than that of the world market; at other times it will be at a lower price. How is it going to work? Who is going to pay the difference when the price of the Commission's cotton is above that of the world price? Is the industry going to pay, or the taxpayer? It must be one or the other. If it is below the world price of cotton, are we going to use that advantage to undercut other countries? If we do we shall at once be accused of giving Government subsidies to our export trade, and other countries will introduce tariffs and put us out altogether. As I see it, whichever way we have it we are bound to have a further serious blow at our cotton export trade.
I realize that this is a revising Chamber and therefore one in which it would b quite out of keeping to oppose some policy with which the majority of people in this country were in favour. But, personally, I do not think that that applies in this case. With the greatest respect, I do not believe it is generally realized how this market worked and what the implications of closing it down are likely to be. During the war, when the Cotton Control took over the Cotton Exchange, the firms that went to make up the market there were, as we have been told, kept on a care and maintenance basis, so that now, if it were re-opened, it could start afresh. But that is not going to continue indefinitely. The longer we wait, not only will the skilled staffs that were employed by those firms be dispersed to other jobs all over the country, but other countries that relied on the services of the Liverpool cotton market will have had to go elsewhere for the services which they used to find here. In other words, it will mean that the Liverpool cotton market will never be able to re-open on anything like the same scale on which it used to operate before the war. I therefore hope very much that before this Bill leaves your Lordships' House His Majesty's Government, who I am sure are sincerely anxious to do anything they can to help the operatives in the cotton industry, will show a real measure of statesmanship and introduce an Amendment at the appropriate time postponing the appointed day so as to allow a full and
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impartial inquiry into the whoi matter before it becomes law.
6.39 p.m.
LORD WOOLTON: My Lords one thing on which we can always rely in your Lordships' House is that, whatever subject is raised, we shall find ourselves guided by expert testimony from men who really know what they are talking about. We have had it to-day from very practical men. We have had it from the noble Lord, Lord Hawke, who has worked in the cotton fields, and from the noble Lord who has just sat down. If I may say so, I have never heard with so much pleasure a speech that I intended to deliver as the one that I have heard from the noble Lord, Lord Rochdale. I intervene in this debate With no interest beyond the normal shareholding that all of us have in these things. I have no particular interest in the cotton trade, but I did, in the days when I was endeavouring to instruct the young in economics, make a careful study of this market; I spent a considerable time in the market itself watching its operations, and also in the warehouses. I was then really in a position to approach the subject with an unbiased mind, whatever your Lordships may think of the processes that have occurred in my mind since then. I came to the conclusion at that time that this was a market which was essential to the cotton industry of this country.
I am a Lancashire man. I have lived in the cotton towns and I know what cotton means to Lancashire. Lancashire is soaked in cotton. I have seen these people on the Liverpool Cotton Exchange. They are called clerks, but that does not mean, in the language of Liverpool, that they write things out and that they are clerical workers. It means they are people who are engaged in the Exchange. I saw them in the pre-war days, with their long ranges of samples of cotton. It was cotton that differed, and they could see the difference. I found it extremely difficult to find out what the difference was, but they knew. And, what is more, they knew just which cotton would suit which mill, not only because of what was going to be produced there, but also because of how it was going to be produced. They knew which machinery would be used, they knew the spinners, they knew the nature of their mills, and they knew just which cotton to send to which spinner.

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That was a very highly specialized and expert knowledge, and it was a commodity which was valuable to this country.
Your Lordships who sit on the Benches opposite do indeed delude yourselves if you think you can dismiss all that as though it were dog racing. Do let us have an end to all this talk about gambling. The whole of life and the whole of business is a gamble. We want people who have the pluck and the courage to gamble. Noble Lords opposite should be the last people to decry gambling, because they are gambling with the nation's fortunes; they are gambling with the whole of British industry. They come along today with this Bill which is designed to destroy a great international institution, known all over the world for its integrity —and not only for its integrity, but for its competence as well. Noble Lords opposite—I know they will forgive my saying this—with no knowledge at all of this subject, are decrying these men of Liverpool and the work they have done. I cannot help but speak with a little heat on this subject because I know these people. I have known them during two wars. I saw them go off to the last war, when they were among the earliest men to go to fight for their country. In this War I saw them go off again, and now they have come back. They have come back thinking that they are again going to take their places in an industry in which they are expert and in which they can earn their livings. But noble Lords opposite, because of some theories about the way in which this business is conducted in Liverpool (noble Lords who have never set foot in the Exchange in Liverpool, but who sit reading about it, and who form these views that it is a sort of gambling hell which has been built there), say, "No, this has all gone. This is "— let me quote—" an Exchange no longer suited to organized industry."
There is but one test, and that test is: Does it serve the purposes of the trade? What has happened to this trade in the past? The Lancashire cotton trade is famous all over the world; it is famed for its products and it has produced the finest cloth in the world. The Liverpool Cotton Exchange, which has enabled the cotton to be selected for the yarn which has made that cloth, has played its part in that trade. Your Lordships say—apparently with little concern—that you are going to
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destroy this international market. Who is going to benefit? Your theories of bulk buying? I am going to take the liberty of occupying your Lordships' attention on that matter in relation to food in a week's time, and therefore I will spare your Lordships any observations on it to-day. Do your Lordships think bulk buying is going to be cheaper than buying by an expert who knows just when to go into the market and when to keep out of it? I wonder whether your Lordships have ever been on the Liverpool Cotton Exchange when the ginners' report was coming in, and have seen what has happened. That is the time, as the noble Lord, Lord Darwen, knows, when Liverpool has operated.
What has been the result? Before the war we produced the finest cotton goods in the world, and, in addition to that, the Lancashire manufacturers had the cheapest cotton in the world. Now your Lordships are going t9 give that up. Noble Lords opposite talk about speculation, but I am appalled at the risks they are now running in being an uncovered bull for 2,000,000 bales. That is the position at the present time. How much of this country's money is going to be lost as a result of that, I shudder to think. The noble Lord, Lord Darwen, spoke about the position at the beginning of the war, and I was interested in that because I was Director-General of the Ministry of Supply in the early days of the war. The noble Lord's figures were right, but he did not finish the store—and I do like stories to be finished. He quoted the way in which prices went up on the Liverpool Exchange. Prices were going up on the Liverpool Exchange because cotton growers in different parts of the world, knowing perfectly well that we were going to want cotton because there was a war in progress, were putting up their prices. That was not gambling on the Liverpool Exchange. The price rose to 9d., and we finally closed the market at 8.9d.
LORD DARWEN: I am sure the noble Lord will agree with me that it is impossible to distinguish between the legitimate traders' effect on the market and the speculators' effect.
LORD WOOLTON: I would agree entirely that you cannot separate the sheep from the goats in that way. How much of that was due to legitimate traders' operations, how much of it was due to

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speculation overseas, and how much was due to people putting up their prices because they knew we wanted the cotton, I really do not know. I would not attempt to form a judgment on that. The only thing I know is that when the market closed the price was 8.9d. Then, with no futures market at all, we have just let it go, and it is now 23d. What argument are you going to adduce from the fact that the price rose, if you are going to say that was due to speculation on the Liverpool Market? How do you account for the fact that it has gone to 25d. now? The truth is that neither of them had anything to do with the case. It was not due to speculation, but was due to the fact that the people chose to put up their prices, not only for cotton, but in all the commodities with which they were dealing.
LORD SHEPHERD: I should like to know whether the noble Lord could inform us of the precise reason for closing the Liverpool Exchange.
LORD WOOLTON: I had no responsibility for that.
LORD SHEPHERD: Do I understand, or would the noble Lord agree, that the Exchange was closed because the situation was entirely out of hand?
LORD WOOLTON: I would not know. I am quite certain that the reason was not because the situation was completely out of hand. The noble Lord has asked me for an opinion. I had no official responsibility for that particular action in closing the Exchange, and therefore he will not expect me to take any responsibility for it.
LORD SHEPHERD: There is another point. We have been given to understand by the noble Lord that the Government are proposing to close down the Exchange. Is not the point that we are discussing the advisability of re-establishing the Cotton Exchange after being out of existence for six years?
LORD WOOLTON: Yes, I agree, on a matter of language.
LORD SHEPHERD: Of fact.
LORD WOOLTON: Language and fact are not dissociated. I agree that it is now closed, and the noble Lord will agree that he and his friends propose to have an
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entirely new system from the one which has served the country in the past.
LORD SHEPHERD: After being closed down.
LORD WOOLTON: Why you are going to do it, why you are committing this act of industrial folly, I do not know. There is no evidence that you will get increased efficiency as the result of it. If this is a part of some great moral crusade the Party have undertaken; if you believe that this evil of gambling is something that has to be driven from our midst, and you are starting on the Cotton Exchange—well, there are so many other places in which you could have taken your moral further, with less danger to the commercial life of this country.
But there you are; you are doing it against all the expert advice in this House, and you are doing it against the desires of the trade, because, of course, the noble Lord, Lord Darwen, will admit that he is in a minority. He probably takes great pleasure in that particular form of righteousness, and it may be that history will prove him to be right. But at any rate, it is not what the cotton spinners of Lancashire want, and it is not what the cotton manufacturers want. They have taken a vote on the subject, which surely is a most conclusive vote. You had 8 per cent. of the industry voting for you, and over 80 per cent. voting against you, and when you sail on and say, "But still we are right", it is surely blind courage that you have. The Federation of Master Cotton Spinners have written to the President of the Board of Trade making it abundantly clear what it is you are doing, and what will be the effect on the industry of Lancashire. So we in this House, in spite of the weight of evidence, and because this is not the occasion for creating a political disturbance, have the humiliating experience, so far as I am concerned, of letting this Bill go through. I say this in all seriousness: that it is a dreadful thing you are doing, and the time will come when you will realize the folly of your present actions.
6.56 p.m.
LORD CHORLEY: My Lords, the noble Lord who has just spoken and I are in agreement on at any rate one thing, and perhaps after that we shall find we are in disagreement on everything. We are

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in agreement that we have had this afternoon a most interesting and informative debate, and I would endorse everything he said as to the informative character of the speeches which were made by the noble Lord, Lord Hawke, and the noble Lord, Lord Rochdale. I thought perhaps he did not speak with his usual generosity when he omitted the speech of my noble friend Lord Darwen, because for me Lord Darwen's speech was, in some ways, the highlight of this debate. He spoke not only as a man of tremendous experience in the cotton trade, but with all the knowledge of a hard-headed Lancashire business man, a man Who has maintained his family business with success during an exceptionally difficult period. He spoke also as one with deep affection for his native county and for all the operatives, the men, and above the women, who crowd into the gaunt mills of these Lancashire towns and who have enlisted his sympathy and support.
In this debate to-day there has been some rather hard hitting. We on this side of the House do not in any way object to that, and I am sure that with the assistance of the noble Lords Who sit behind me we are able to give as good as we get. The hitting has, at any rate, been clean. I was rather upset at a suggestion which was made in another place, which was that the reason why the Labour Government had brought in this measure was to provide jobs for its members. That suggestion was made by one of the Opposition members in another place. At least we have not had any innuendoes of that kind here this afternoon. We have been able to discuss not only some of the particular technical problems which arise in connexion with this rather difficult matter, but also some problems of general principle which are inherent in a number of the industries and the difficulties Which confront industry in this country at the present time.
I approach this matter very much in the spirit of the speech of the noble Lord, Lord Darwen. My eye is rather on the great manufacturing industry—on the interests of the manufacturers certainly, but even more on the interests of those hundreds of thousands of operatives, whose whole livelihood is in this business. It was not for them to sell out at the boom period at the end of the last war and transfer themselves to the sunny
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climes of the South Coast to those magnificent houses of Bournemouth, Torquay and elsewhere. It is truly said that the epitaph of the Lancashire cotton industry could be found written on the tombstones in the graveyards of these places. It is unfortunate that the men and women who earned their livelihood operating the machinery in the mills were not in a position themselves to withdraw in that way, but had to stick out a difficult situation which was, partly due to the way in which the post-war gamble of the last war had been carried on. I would like to quote from the Report of the Working Party which has been referred to more than once this afternoon:
"It must be remembered, too, that throughout all the shocks which have struck the Lancashire industry the main shock absorber has been the main army of operatives. In 1924 no less than 572,000 men and women looked for employment to this industry. By 1938 the average number employed had fallen to 287,000 or less than hall."
I cannot claim to he a native of Lancashire. My family came from Lancashire, and I was brought up in a small town, not far away, to regard the Lancashire cotton industry as the queen of British industries. Before the First World War it was the largest of our exporting industries and supplied two-thirds of the world's cotton exports. It has shrunk and shrunk until, although at the beginning Of this last war I think it was still our most important export industry, it was hardly doing one-tenth of the overseas business it had done previously. It has fallen to that extent, and now, as a result of the last war, its situation is more difficult than ever.
As I have already suggested, the first step in this decline came immediately after the First World War, when there was this great outbreak of gambling. Although I should be the last to suggest—and I agree with the noble Lord who just sat down—that gambling is the whole or chief element in this business, I think there can be no doubt at all, as the noble Lord, Lord Lucas, has said, that it is a very important one. There has, unfortunately, always been an element of gambling in this industry. The noble Lord, Lord Woolton, is familiar with the saying in Lancashire that there are three generations from clogs to clogs, which indicates the sort of spirit in which the industry has been carried on. The Liverpool Cotton Exchange was one source of infection be-

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cause the gambling which took place in that market was by no means confined to people in Liverpool, though the spinners took some part in it.
LORD WOOLTON: I am sure the noble Lord is anxious to be fair. The gambling which took place in the cotton industry after the last war—I join with him with any reprimand he chooses to make on that—was not gambling on the Liverpool Cotton Exchange. It was gambling on the Stock Exchange, in the shares. That was the ruin. That is what you will find in Bournemouth on those tombstones.
LORD CHORLEY: I am perfectly well aware of the gambling and how it went on. I thought, a moment ago, that the noble Lord was lending his great weight to the value of gambling in commerce. Now at any rate he is prepared to exclude gambling at the end of the last war from his general encomium on commerce.
LORD WOOLTON: I was talking of speculation.
LORD CHORLEY: Gambling goes back right into the last century. To suggest that it was not gambling, as the noble Lord says, takes no account of the number of cases which have been decided by Judges of Assize, and how the question has turned around the point as to whether there was an infraction of the Gaming Act. It is no good trying to persuade us that gambling was not a serious part in this business.
Entrants to the cotton industry in 1924 were at the rate of 27,000 juveniles a year. In 1945 there were something under 5,000. That shows the sort of despair which had come upon this industry, and it came upon the industry long before this Bill was introduced. Operatives had not been allowing their children to go into the mills. That is why numbers went down to 5,000 and less. There has been a slight increase since the Working Party produced its Report, but it has not been a substantial one. The matter is not confined to operatives. Owners do not put their children into their businesses any longer. In the secondary schools of Manchester and Bolton, and other towns, the boy who says he is going to take a job in cotton is looked upon by his classmates as being slightly weak in the head. That is the state of despair into which this industry has got. The
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rehabilitation of this great industry is one of the essential needs in this country, and it is a matter which the Government have primarily in mind.
The President of the Board of Trade has given a tremendous amount of thought and put a tremendous amount of hard work into the problems of the cotton industry. The reason why this Bill is before your Lordships' House this afternoon is that he believes, and we believe, that it is an essential element in the rehabilitation of this great industry, so that at a time when we are more than ever before in the history of our country in need of a successful export business we may once more be able to look to the cotton industry to provide us with a great supply of money, in return for what we are selling abroad. The price of the raw material, as in all branches of the textile industry, is an exceedingly important item. It has been well brought out by a number of your Lordships, and particularly by the noble Lord, Lord Darwen, and others with such a close knowledge of the matter. The industry must be provided with its raw materials at the lowest possible cost. The market which existed in Liverpool was undoubtedly an expensive market. The profit which it is alleged to have earned has been put at£2,000,000 per annum, which is 5 per cent. of the average imports of raw cotton before the war. What the actual costs of overheads and all other items come to, in addition to the profits, I have no means of ascertaining.
LORD CHERWELL: Do you suggest that the Lancashire spinners paid more for their raw cotton than spinners in other parts of the world, taking into account the costs of transportation?
LORD CHORLEY: I suggest that the Lancashire cotton industry was paying substantially much more, a great deal more, for its raw material than it need have paid, and it is an essential element in the rehabilitation of the industry that we should get it back—
LORD CHERWELL: If we did not pay more in England than other countries paid, then whatever the cost was, it was borne by the other countries.
LORD HAWKE: May I confirm what the noble Lord has said? In my time I have paid a lot of money to Liverpool, but it was in respect of cotton which never came anywhere near these shores.
LORD CHORLEY: That may be so. Unfortunately a great many of the contracts made in Liverpool never relate to cotton which is actually in being at all.
LORD HAWKE: This was all cotton.
LORD CHORLEY: If we are to get this price down, we have to develop new methods of dealing with the situation. The old speculative market, no doubt, served a useful purpose; you have to have some sort of a market on which to hedge. But there are only two ways of dealing with the problem—either by a speculative market such as has existed in the past, or by putting into effect the proposals which the Government have embodied in this Bill. The old method was expensive and it had the element of speculation. No doubt it was useful in the times before the concentration of spinning and production, which has been gradually taking place over recent years, had developed. The noble Viscount who opened the discussion pointed out that it was expected that the number of spinning concerns in the not distant future would be reduced to something like 200. There were in the Liverpool market at the beginning of the war 350 merchants, all with offices and with the appropriate personnel attached thereto. Can it reasonably he suggested that any organization of that kind is needed for the concentrated spinning concerns which are being and have been rationalized in Lancashire over the last few years?
In the same way, the producers have been concentrated. In America, in Egypt and in Brazil minimum prices are fixed, and certainly in America there is an organization which has been established for the purpose, so to speak, of co-ordinating the efforts of these small producers all over the world. Other Governments are moving in this matter. The old Victorian situation which existed in the past, when this market grew up, has come to an end. The situation now is an entirely different one, in which even when individual capitalists are still working they are banded together in great associations; and in many countries the Governments themselves are taking part in and establishing governmental organizations to deal with cotton. Therefore, we have to see to it that bulk buying is introduced—partly because it does enable what you might call stabilized production to take place. It is infinitely better, from the
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point of view of the producer, that he should have stable prices to work for. That has been emphasized over and over again by your Lordships on the other side of the House, in connexion with agriculture in this country and in other parts of the world also. Why does it not apply to cotton? Obviously, the argument is equally good on the one side as on the other. If we can eliminate the expense of this Liverpool market, if we can—as it is clear we can—do the whole of this work with 10 per cent. of the personnel that were occupied in it before, obviously we can reduce the price of the raw cotton to the spinners by the amount we are saving on this organization.
With those preliminary observations, I turn to a number of arguments which were put forward from the Opposition side of your Lordships' House. I am afraid that I have a rather large sheaf of them, and I am sure that if I do not deal with all the points that were brought up by all the noble Lords who spoke from the Benches opposite, your Lordships will forgive me. Lord Cherwell opened this debate from the Opposition side in his usual pungent way. If I may say so, I always admire enormously the extreme accuracy with which he shoots down the Aunt Sallies which he so skilfully erects for that purpose. It was interesting and amusing today to find him devoting his statistical ability to cotton and no longer to food. He brought up his old analogy of the quack doctor and the panacea and all that sort of thing. It reminded me of the old days when almost the whole of the practice of medicine consisted of blood-letting. When doctors and surgeons with more modern training came along, and began to put new ideas into effect, the apothecaries' profession rose up against the unheard of and outrageous new-fangled medicine which was being introduced. That, if I may say so with respect, is exactly the approach to this matter not only of the noble Lord, Lord Cherwell, but of most of the other noble Lords on that side of the House who have taken part in this debate—that what was good enough in the old days for the cotton industry must remain good enough for ever. That is really what the argument boils down to. The noble Lord, Lord Cherwell, referred to the destruction of Liverpool, and this Liverpool "international asset," as he termed it. That is an argument which has been taken up and

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repeated in almost exactly the same words by other noble Lords. It is perfectly true, of course, that this Liverpool market has been quite a valuable market. It earned about£1,000,000 worth—that is the sort of estimate which has been given—of foreign currency per annum. The noble Lord was mistaken in what he said about the Chancellor of the Exchequer in this connexion. The Chancellor made it quite clear, in the debate to which reference has been made, that he did not by any means sneeze at this£1,000,000.
LORD WOOLTON: It was£1,000,000 in pre-war days. It would be about£3,500,000 now, would it not?
LORD CHORLEY: It would not exist now, because the situation has changed very greatly. Even if we had gone back to carrying on this business as before, we could not have earned anything like what we used to earn, for reasons which I have indicated. Moreover, the market has not been destroyed. My right honourable friend the Chancellor of the Exchequer did not say anything to the effect that this£1,000,000 would be lost. He said that it "might be lost." He also said that he was quite clear that when the cotton trade was reorganized—and in the reorganization this was an essential step—he looked to it to earn at least£10,000,000 more for this country, which could be set off against the loss of£1,000,000—even if that loss did take place. It is not true to say that the Liverpool international market is being abolished. The merchants and brokers are being left perfectly free to deal in cotton, provided that it is not imported into this country. They are being left perfectly free to—
LORD WOOLTON: You know they cannot do it. Where is the good of telling the country that? If you take out the futures market from Liverpool then the whole of the rest goes.
LORD CHORLEY: We shall see about that. If they have this ability and this knowledge they do not need actually to import cotton into Liverpool. I am not saying that there will be a great deal of this trade left, but such as it is, it will still be open to them to carry it on. It is not being destroyed by this Bill. If the noble Lord will look at the first clause of the Bill, he will see that it is one of
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the duties of the Raw Cotton Buying Commission to import cotton into this country for purposes of re-export abroad, and these merchants in Liverpool will be left free—and indeed will be encouraged —to continue such of their business as is still available.
It is quite obvious, from what has happened during the war and from the different organizations which have been set up by Governments in foreign countries, that there will not be anything like so much of this business in the years to come as there was in the past, but it will be open to the Liverpool merchants to take what is left. Moreover, they are still being employed by the Control on the purchase of cotton in America and India, and it may well be that the Commission will decide to continue quite a number of them in that work. While it is no doubt true to say there is not work for the whole of the 350 who were carrying on business in Liverpool before the war, there will be work and business for a substantial number of them—a number that has been put at something like 25 per cent.
The noble Lord described the cover scheme which will be operated in this Bill with very considerable scorn. He seemed to be unaware of the fact that it has been quite successfully operated since 1941, when the Liverpool Exchange was closed and the Cotton Control came into operation. I think it is generally admitted that no Control worked with greater smoothness and greater success than the Cotton Control. I spent most of the war years in a responsible position in Lancashire, and this brought me very closely into touch with cotton mills, the spinners, and weavers, and every element in that great industry. I visited many of them during the period of the war years, and I did not hear any criticism of the way in which this Control was being operated.
LORD CHERWELL: Is it not rather strange, in the circumstances, that less than 1 per cent. wanted to go on with it?
LORD CHORLEY: The Working Party pointed out that the Lancashire cotton people are not only the most conservative of people, but also the most tenacious of people. I entirely agree with that estimate of the Working Party; the people of Lancashire are most tenacious in their conservatism, just as noble Lords are on the other side of the House. The noble Lord, Lord Woolton, made a very true

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remark when he said that history might prove my noble friend, Lord Darwen, was right. History will prove that the noble Lord was right, just as, time after time, history has proved that innovators were right against the mass opposition of the conservative followings in the country.
LORD TEVIOT: I would like the noble Lord to quote one single instance, in any part of the world, where the nationalization of any industry has been a success.
LORD CHORLEY: I do not have to go beyond the General Post Office in this country. The noble Lord, Lord Cherwell, also said that bulk buying would inevitably lead to bulk selling, but, as I have indicated already, the actual preliminaries to bulk selling have been growing up, particularly in the United States. It might just as well be said that bulk selling would inevitably lead to bulk buying, and that it is intelligent anticipation on the part of His Majesty's Government to set up the necessary machinery on these lines. Then the noble Lord, Lord Cherwell, finished his speech with a touching reference to the people whose livelihood was being destroyed as a result of this Bill. Really, if he will only look at this matter from a common sense point of view in relation to the actual facts of the case, he will discover that there is really very little in that. The number of people who are out of work at present as a result of this scheme is about 150, and there can be no doubt at all that in a few weeks or months that 150 will be provided with work of a suitable character. It is quite true that a number of members may lose their businesses, but there will be work in the various directions I have suggested for something like 25 per cent. of them. Out of the 350 firms and individuals who were in this business when the Cotton Exchange was closed, something like 100 have already disappeared, and I understand that about 250 is the present number.
The question of compensation is an exceedingly difficult one, and the Government is committed to compensation in proper cases. This matter has not been dealt with in the light-hearted way noble Lords on the other side suggested. Very careful thought and consideration has been given to it. If the Government were of the opinion that this was a proper case for compensation, we should certainly say so, and, if necessary, we should be
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prepared to recant on this matter. This is not like the ordinary case, such as when the coal mines were taken over.
LORD WOOLTON: No, because there you have public shareholders, but here you have just a few people.
LORD CHORLEY: Not at all. When one takes over a coal mine, one has a business with tangible assets. This is all intangible; all you can say is that there is goodwill. A great many of these people ran composite businesses and it is practically impossible to separate many of them. It is a matter Of practical politics. This is not a question where tangible assets are concerned; it is a very intangible matter in which people are losing some goodwill because of an entirely new method of business which is being introduced.
LORD CHERWELL: I understand that the Government is going to compensate doctors for the practices they take over. Is that a tangible asset?
LORD CHORLEY: The position with regard to doctors is not the same as the position here, because the doctor is just a medical practitioner, whereas many of these people are engaged in composite businesses which include not only cotton but other sorts of products as well. This is the kind of case which occurs frequently, and has occurred frequently in the past, where some new method of doing business has been introduced, and as a result, many people have been thrown out of work or have lost the business in which they have been engaged for many years and in which they have put a great deal of money. It is quite impossible, in my submission, to introduce a principle of this kind and confine it to this particular case. Inevitably, it would have to be applied in all sorts of other cases and, before long, everybody whose business had declined would be coming to the Government with a claim for compensation.
The noble Lord, Lord Farrer, whose presence in this House we welcome and whose rather rare utterances we also welcome, made the point that this was a political question. The noble Lord said there was no mandate, and that vas also an argument put forward by the noble Lord, Lord Rochdale, and other noble Lords this afternoon. It is quite true that this mat-

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ter was not mentioned at the time of the General Election. But is it seriously suggested that His Majesty's Government are entitled to introduce only legislation to deal with matters which are specifically set out in Let us face the future, or in the election programme? The reason why this Bill has been introduced is because my noble and learned friend's examination into the position of the cotton industry satisfied him, and satisfied the Government, that a Bill of this kind was necessary. It is true that it is a political question to that extent, and, therefore, to that extent the matter has not been dealt with by the Working Party which inquired into the cotton industry. The job of that Working Party was really a technical problem, the problem of investigating the efficiency of the cotton industry and making recommendations which the industry, if it accepted them, could effectively put into practice. But here we are considering a matter which could be put into practice only by the Government. This is the only alternative to the old speculative system; it is a matter which could be put into practice only by means of an Act of Parliament. Therefore, to that extent, it is quite true to say that it is a political matter.
I think I have already referred sufficiently to the speech of the noble Lord, Lord Darwen. He threw the great weight of his practical knowledge on the side of the Bill. He referred particularly to Clause 22. I should like to say a word about that. That is the clause which enables the Government to call for information. I can assure him that the powers taken under this clause will be reasonably and moderately used. But, if the noble Lord will think about it, obviously it is essential that there should be power to call for information of this kind, because the cover scheme depends on returns being made and cannot be operated without them. Subject to that, he can rest assured that these powers will be moderately and reasonably exercised. The noble Lord, Lord Teviot, in an interesting speech, referred to a number of matters. He classified the Cable and Wireless Act with this Bill. I would remind him that the decision in that case was taken by the Coalition Government, and when the Bill came before your Lordships' House the Leader of the Opposition, the noble Viscount, Lord Cranborne, himself pointed out that that
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was so and that he himself was identified with it. Therefore, if the noble Lord will permit me to say so, his opposition to this Bill this afternoon carries no more weight than his opposition to the Cable and Wireless Bill when it was before your Lordships' House.
He said that the growers had complete confidence in the Liverpool market. I do not know where he got that information. I should think it most unlikely that the unfortunate growers over many parts of the world knew anything about the Liverpool market. They are small men. Many of them are small negro cultivators in the Southern States of America. What they did realize was the very low price which they often got, which in effect forced the American Government to come to their rescue and which, as I have already indicated, had in fact placed the selling arrangements in the United States on a very different basis by the establishment of the association to which I have referred. The noble Lord asked me whether, if the world price fell below the Commission's price, the spinners could be allowed to buy in the world markets. Of course the answer to that must be "No." It would knock the whole bottom out of the scheme. If the spinners could buy from the Commission when its price was below the world price, and then, as soon as its price rose above the world price, could throw it overboard and buy in the world market, obviously that would be the end of the whole scheme, because the Commission would be faced with bankruptcy in a very short time.
Then the noble Lord asked me a question as to whether the civil servants agreed with this Bill. With respect, I would suggest that that was rather an improper question; I will not deal with it otherwise than to suggest that. Finally he asked me whether, when the price fell last autumn, the result was that the Government lost, I think he said,£30,000,000. It is quite true that the price in New York fell during that period. I have the spot prices here, if the noble Lord would like to see them. If you take the fall in price and put it against the 2,500,000 bales which the Control held at that time, it is quite true that it shows a bookkeeping loss of£30,000,000.
LORD WOOLTON: Is it only a bookkeeping loss?
LORD CHORLEY: It is just a bookkeeping loss.
LORD WOOLTON: If you had had the futures market, then you would have avoided that loss. This is not a bookkeeping loss; it is real.
LORD CHORLEY: With great respect, this is a bookkeeping loss.
LORD WOOLTON: Have it your own way, but I cannot believe it.
LORD TEVIOT: Surely this is an element of gambling, is it not?
LORD CHORLEY: When this Bill was in another place the price had at that time actually fallen and was still low, and almost everybody who spoke from the Opposition Benches referred to that point. In the interval the price has gone up; the whole of the£30,000,000 has been wiped off and a credit balance is now shown, but none of the members on the other side of the House have emphasized that point.
LORD CHERWELL: It is gambling.
LORD CHORLEY: It is obvious that when you are establishing large reserves of this kind, if there is any sort of fluctuation in the market it must show a loss or a gain one way or the other, and really an argument of that kind does not carry very much weight. The noble Lord, Lord Hawke, talked about an international crime, which, if he will permit me to say so, I thought was rather an extreme remark. He referred to Liverpool's unique position. That is a matter with which I have already dealt. If I may say so, his speech was redolent of Victorianism and of the laissez faire economics with which one associates that particular period. He referred to the old system as a complete and perfect system, in spite of all the criticisms which he heard from noble Lords on this side of the House.
LORD HAWKE: Because they have no experience of it.
LORD CHORLEY: Actually this futures system applied to only two markets. It did not apply to the market for Indian cotton, the East or West African cotton, the Sudan, the British West Indies, Brazil or any of the others. It applied only to the United States and to Egypt, and the buyer of Indian cotton had to hedge in a particular sort of way which was a most unsatisfactory one, as anybody who was in the business will
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inform the noble Lord, if he is not already aware of that from his own experience. I do not think that I need refer in further detail to the refreshing speech of the noble Lord, Lord Lucas. The noble Lord, Lord Leverhulme, made points which had been made by other noble Lords. If I may be allowed to say so, he made them in a most delightful and lucid fashion. I hope that what I have already said m answer to other noble Lords may be sufficient answer to him.
He did ask the Government to change its decision not to employ those Liverpool experts but, of course, the Government have not made any decision not to employ them. They have, in fact, been employing them in the American and Indian markets; the Control have been employing them, and it will be equally open to the Commission to continue to employ them. Moreover, many of the spinners have been employing those members of the Liverpool Exchange; they may, and no doubt will, in a number of cases, continue to do so. The noble Lord, Lord Rochdale, repeated a number of the arguments which had been made by other noble Lords and, particular, he emphasized the difficulties which spinners are still experiencing in getting the sort of counts they require—the exact specifications which they need for their mills. Noble Lords must be aware that the facilities which existed in the great warehouses of Liverpool came to an end with the German raids on that great city. He must be aware that the great range of warehouses, where all the sampling and separating took place, no longer exists and that the cotton still has to be stacked under tarpaulins along the great arterial roads and elsewhere. It is under those difficulties that the Control has provided the spinners with the cotton which they require.
Every effort is now being made to reestablish the system of sorting, sampling and selection, and a start has been made with the fine Egyptian counts which is going on now. But it will obviously take some time before these warehouses can be rebuilt, and before the old system can be re-established. There is no reason in the world why a man employed by the Government as a sampler and sorter should not do the job just as well as a man working on his own account. That will be proved to be the case. I have no doubt the Commission will take over

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the most expert of those people, and they in their turn will train experts who will do the job equally as well.
The noble Lord, Lord Woolton, in a characteristically forcible speech, if I may say so, said the test was—and I agree with him—whether the new arrangements will serve the purposes of the industry. That is the test, and by that test the Government are prepared to abide. The noble Lord pointed out that the market had to be closed down. I think if this matter were gone into in the detail which it deserves, it would be proved that the arguments of the noble Lord who spoke from the Benches behind me as to why this market had to be closed were right. What I would like to draw the attention of the noble Lord, Lord Woolton, to is the fact that the Control, by the very skilful buying or long term contracts which it was enabled to enter into in Brazil, in Africa, in Egypt, and in other parts of the world, maintained the price at practically the price ruling at the time when the market was closed at Liverpool until after the last shot had been fired. It is quite untrue to say that the experience of the war in regard to bulk buying throws bulk buying into a sad light; in fact it is just the reverse. The experience of bulk buying so far indicates that it is the most satisfactory method of dealing with the situation under modern conditions. The noble Lord, Lord Woolton, when he speaks next week on food will no doubt refer to the bulk buying of wheat in Canada, which has enabled us to get the Canadian wheat crop, or a very large part of it, on terms which are much more satisfactory than those on which we would be buying if we were buying in the open market.
LORD WOOLTON: I will give you all the credit you can get.
LORD CHORLEY: That will be dependent on what will happen under this scheme when it comes into operation. I am content to accept the appeal of the noble Lord, Lord Woolton, to the verdict of history. I suggest that when history comes to be written it will say that this Bill was a great forerunner of new methods in the industry of this country, on which new prosperity, not only in the cotton industry of this country but in other industries, has been built up. I ask your Lordships to give this Bill a Second Reading.
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On Question, Bill read 2a, and committed to a Committee of the Whole House.

FOREIGN MARRIAGE BILL. [H.L.]
7.45 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Henderson.)
On Question, Motion agreed to.
House in Committee accordingly:
(The VISCOUNT MERSEY in the Chair.)
Clause 1:
Validation of past marriages solemnized by chaplains and other officers of H.M. Forces serving abroad. 55 56 Vict. c. 23.
1.—(1) Subject as hereinafter provided, Section twenty-two of the Foreign Marriage Act, 1892 (which validates mariages solemnized within the British lines by chaplains, officers and other persons officiating under the orders of the commanding officer of a British army serving abroad) shall, as respects marriages solemnized before the passing of this Act, be deemed always to have had effect as if—
(2) Where a marriage purporting to have been solemnized under the said Section twenty-two would, but for this Section, have been invalid, and either of the parties thereto has subsequently during the life of the other party, but before the passing of this Act, lawfully married any other person, this Section shall not render the first marriage valid or affect the validity of the subsequent marriage.
LORD HENDERSON LORD HENDERSON moved in subsection 1, to leave out "passing" and insert "commencement." The noble Lord said: This Amendment is designed to meet a point raised by the noble and learned Viscount, Lord Maugham, on the Second Reading of the Bill. He pointed out that it was essential that various Orders in Council to be made under the Bill, and in particular under the proviso of subsection (1) of the new Section 22 of the Foreign Marriage Act, 1892, should come into force simultaneously with the Bill itself. This is perfectly true, and although the point would be substantially met by having the Orders in Council ready to be made as soon as the Bill had passed, it seems better, on the whole, to postpone the operation of the Bill for a short while so that the Orders can actually be made in advance, thus obviating any danger of a serious hiatus. This, of course, is a common procedure where a Bill cannot come into effective operation without the making of Orders, Regulations, or other

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subordinate instruments. The Departments concerned are very anxious to avoid delay, and the Committee can be assured that the Bill will be brought into force as soon as possible. I beg to move.
Amendment moved.
Page 1, line 10, leave out ("passing") and insert ("commencement").—(Lord Henderson.)
On Question, Amendment agreed to.
LORD HENDERSON LORD HENDERSON moved in subsection (2) to leave out "passing of this Act" and insert "twenty-fourth day of April, nineteen hundred and forty seven". The noble Lord said: This Amendment arises out of a point raised by the noble and learned Viscount, Lord Simon, on Second Reading. Your Lordships will be aware of the reasons which he advanced in favour of this Amendment, and at the time I indicated that in principle the Government would be prepared to accept it. The justification for the insertion in Clause 1 (2) of a date earlier than the passing of the Bill is that all persons concerned receive due notice that as from the date the Bill will have retrospective effect and invalidate second marriages contracted after that date. I beg to move.
Amendment moved—
Page 1, line 21, leave out ("passing of this Act") and insert ("twenty-fourth day of April, nineteen hundred and forty-seven").—(Lord Henderson.)
On Question, Amendment agreed to.
Clause 1, as amended, agreed to.
Clauses 2 to 6 agreed to.
Clause 7:
Short title and citation.
7. This Act may be cited as the Foreign Marriage Act, 1947 and the Foreign Marriage Acts, 1892 and 1934, and this Act may be cited together as the Foreign Marriage Acts, 1892 to 1947.
LORD HENDERSON: This Amendment is consequential on the first Amendment, which has been accepted. I beg to move.
Amendment moved—
Page 4, line 47 at end insert: ("(2) This Act Shall come into operation on such date as His Majesty may by Order in Council appoint").—(Lord Henderson.)
On Question, Amendment agreed to.
Remaining clause, as amended, agreed to.
House resumed.

EDUCATION (EKEMPTIONS) (SCOTLAND) BILL. [H.L.]
Read 3a (according to Order) and passed, and sent to the Commons.

ARREST OF OBERST HESSELMAN.
7.50 p.m.
EARL HAIG EARL HAIG rose to ask His Majesty's Government why Oberst Martin Hesselman was arrested at Stillen Friden on the afternoon of February 13, 1947, and what causes led to his subsequent death on March 22 last? The noble Earl said: My Lords, I have heard with deep concern of the death of the German Colonel Oberst Martin Hesselman, who was Commandant of a camp in which I spent some time as a prisoner of war. He treated me correctly, and I formed the highest opinion of him as a man. He was never a member of the Nazi Party and he belonged to a circle of religious Germans for whom special concern should have been shown. He was doing valuable work, at the time of his arrest, as a member of the Refugee Committee of the Evangelical Church.
I would like to put before your Lordships the following information about Oberst Hesselman which has come to my knowledge. On February 13 he was arrested by a British Intelligence captain, no reason being given for his arrest. He was imprisoned in a cell in the war crimes prison at Minden, without daylight, heating, or a mattress, and his coat and scarf were taken from him. Since he was chronically ill, Oberst Hesselman immediately made a verbal and written request to see the Commandant; but both those requests were refused. On February 18, his wife visited the prison chaplain, Pastor Puffert, who promised to lay before the Commandant two medical certificates, one signed by Dr. Uebmann and the other by the United States authorities, stating the seriousness of Oberst Hesselman's complaint. On February 10 Hesselman was medically examined. On February 23, ten days after his arrest and four days after the medical examination, he was removed to hospital.
By this time the damage had been done. In his wife's words:
"For four days he had been vomiting repeatedly. He was in a condition so weak that

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he could only walk in a crouching position. Every step was agony to him."
On March 5, although they should have been fully aware of the seriousness of his condition, the British authorities allowed him to be moved out of the British Zone to Trier in the French Zone. He had still been neither interrogated nor charged. He was made to cover the journey of over 200 miles, which took two days, standing all the way in an open truck. He was vomiting repeatedly and he arrived at his destination in a state of mental and physical collapse, suffering from severe haemorrhage. On March 22 he died. His wife, who was allowed to spend the last few days with him, has written the following words:
"I know that, to the last, the uncertainty as to his fate weighed heavily upon him. He had in no way been interrogated and had received no communication as to the reason for his arrest. From a remark of the French Governor of Wittlich Prison at Trier, as a result of my bitter struggle to take my husband's corpse to his home, it was to be gathered that my husband had only been taken into custody as a witness."
I would ask how a prisoner could be arrested in this way and not be charged, and how, in his state of health, he could be subjected to such rigours as he was, and then to be handed over to the French authorities when he was obviously suffering from a very serious internal disorder?
7.54 p.m.
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I confess I wish there had been more of your Lordships here to listen to the observations which the noble Earl has just made. I understand this is the first time he has addressed your Lordships' House, and I am sure we have noticed in his speech those qualities of modesty and gallantry which we should expect from one bearing his name. I think it is typical of a soldier's record that on his first appearance in this House he should ask a question, critically, regarding the treatment of one of our enemies. I will give such answer as I can, but the noble Earl will realize that I am able only to speak the words that have been put into my mouth in this matter. I have, of course, no personal knowledge of the facts.
I am told that very full inquiries have been made into this case. To take, first of all, the reason for Oberst Hesselman's arrest, I must explain that in one of the lists drawn up by the United Nations
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War Crimes Commission he was listed as being wanted in connexion with the murder of a French General, and an urgent application for his arrest was received from the French authorities on February 3. Whether he was guilty or not, I cannot say, but I think that our authorities—assuming that the man was fit—in view of the fact that he was so listed and that he was demanded by the French, would have no option but to deliver him. He was therefore arrested on February 13, and was conveyed to the war criminal holding centre at Minden on that same day.
There was no suggestion at this time that his health was weak, and at the time of his arrest he was in fact doing some agricultural work. It was not until four days later that he complained of sickness. He was then immediately examined by a German doctor, to whom it was explained that the patient was in transit and that it was proposed to send him to the French Zone. The doctor's diagnosis was that he had an old stomach ailment—in fact, an ulcer—but that his general state of nutrition was not bad, and the doctor did not consider that there was any immediate urgency or any danger to life. He did, however, recommend that unless he could be moved very soon he should be transferred to hospital. The French war climes liaison officer in the British Zone was informed of the doctor's opinion, and said he would arrange for Hesselman to be removed at once. On February 25 a French escort came to take him away in a private civilian car. The Commandant of the prison interviewed the escort personally, repeated to them exactly what the doctor had said, and emphasized that at the end of the journey the prisoner should now be taken into hospital. Oberst Hesselman's death, which occurred in a French hospital on March 25, was due to a duodenal ulcer.
7.57 P.m.
LORD DE L'ISLE AND DUDLEY: My Lords, I will not detain the House for more than a very few minutes. We have listened with deep attention to the reply which the noble and learned Viscount has given us, and which he told us very frankly had been put into his mouth. I hope he will not take it that there is any personal criticism or any criticism of the Government in the remarks which I am about to offer. I have no special know-

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ledge of conditions in Germany, or indeed of this case, apart from the evidence I have seen. I intervene because I feel very strongly that in cases of this kind the honour of our country is deeply involved. Through no wish of our own we have perforce to administer as conquerors a large part of Germany. It is a situation which must be embarrassing to a people such as ours, who have a long history of just dealing and of love of liberty. I realize that anything we say in this House is liable to misinterpretation, and I do not wish to bandy about accusations of the Control Commission or of the military authorities in Germany. I feel, however, that this is a matter of importance, and that the facts which have been revealed by the noble Earl, or the facts as presented to him, require the most careful investigation.
May I repeat, and perhaps amplify, what he has said? This German colonel (to whose conduct, at any rate in part of the war, the noble Earl has testified) was, according to the information we have, not engaged in murderous pursuits of that kind, but engaged with some of his co-religionists in a Refugee Committee. The British officer who arrested him, according to this information, did not tell him that he was being arrested as a war criminal, but merely that he wanted him for a day or two in order to answer some questions. He was taken to Minden, which is agreed. When he was there he was taken to a prison cell; that was in the depths of the coldest weather of a very cold winter. It is alleged that his fur coat and scarf were taken from him, and they were returned to him, only after his protest, in three days' time. It is also alleged that he was put in a cell where there was no mattress and only a bare board for him to sleep on. His wife traced him after three or four days, saw the prison chaplain, a German, and put in his hands two medical certificates, one from the Oberst's own doctor, and the other from the United States prisoner of war medical officer, both showing, as I understand, that this man was suffering from a duodenal ulcer.
In the meantime, the prisoner had demanded to see the Commandant of the prison and to be told the reason for his arrest. We have been informed, whether rightly or not, that he had no satisfaction from his demand. He was then taken off and placed, as I understand, in a French
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Military Mission prison, or conclave, within the British Zone, and was then moved, in the depth of winter, not, according to our information, in a private car, but in an open truck. When he gat to his destination some 200 miles away he was in a very poor state of health indeed. He had internal haemorrhage, and finally died. It does seem to me that it is our duty in this House to inquire very carefully into the circumstances of this man's death. If the noble and learned Viscount would be good enough to make inquiries, and possibly at a later date inform the House, I should like him. to let us know upon whose warrant this man, or indeed any wanted German citizen, was arrested. Who issues the authority? How are what we conceive to be the normal rights of a citizen in a civilized country preserved? Must the prisoner be told within a specified time the reason for his arrest? Is there any formal charging or, as the control in Germany is divided among four Allied Powers, is there anything corresponding to what I believe is called the extradition procedure? Does a prima facie case have to be made out before our authorities will release a man, or is a mere certificate from an Allied Power to the effect that he is wanted sufficient?
In that case, if it is at the behest of an Allied Power, is the prisoner informed of the nature of the charge which he will have to face when he falls into the hands of that Allied Power? In particular, what are the rights of a political prisoner of this sort to see the commandant of the prison where he is incarcerated? What is the system by which a prisoner's state of health is inquired into at reception at a camp? I would have thought it would be a normal routine for every prisoner, whether political or civilian, to see a medical officer when he enters prison. I believe that to be the normal routine in our own prisons. I would ask, further, whether the report of the German doctor who did eventually examine him—as I understand from the noble and learned Viscount's reply—confirmed that he was suffering from a duodenal ulcer? If so, were the certificates given to the prison chaplain by Frau Hesselman taken into consideration, and was it taken into consideration that, as we are informed, when he was living in his home he was having special diet? All these matters appear to

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me to be of great relevance in this inquiry. I feel sure that the noble and learned Viscount will not feel affronted if I say that we are not satisfied with his reply. I certainly have no wish to make this in any way a political or partisan matter. I repeat that my sole concern is for the just administration by our country of a conquered people.
THE LORD CHANCELLOR: My Lords, of course the noble Lord is pushing at an open door when he raises any question concerning the administration of justice, and the question of proper and humane treatment of prisoners. So far as I am concerned, as I have told him, I have no knowledge, and therefore I cannot say anything in reply to his questions now. But I will undertake to see that the questions which he has raised are brought to the notice of the proper quarter —I think my noble friend, Lord Pakenham—and I will see that the noble Lord, Lord Pakenham, in due course looks into them and communicates with the noble Lord. If it is then considered desirable, I have no doubt that it can be arranged to have this matter referred to in the House on some future occasion. Further than that, I am afraid I cannot add anything.

SOUTH METROPOLITAN GAS BILL. [H.L.]
The CHAIRMAN OF COMMITTEESinformed the House that the opposition to the Bill was withdrawn. The Orders made on March 13 and March 18 last, discharged, and Bill committed.
SUNDERLAND CORPORATION BILL. [H.L.]
The CHAIRMAN OF COMMITTEESinformed the House that the opposition to the Bill was withdrawn. The Orders made on February 11 and March 18 last, discharged, and Bill committed.
NAZEING WOOD OR PARK BILL. [H.L.]
Report from the Committee of Selection, That the Five Lords appointed a Select Committee on the City of London (Tithes) Bill [H.L.] do form the Select Committee for the consideration of the Nazeing Wood or Park Bill [H.L.]; read and agreed to.
SOUTHERN RAILWAY BILL. [H.L.]
Reported, with Amendments.
HOVE CORPORATION BILL. [H.L.]
Reported, with Amendments.

STANDING ORDERS COMMITTEE.
Report from, That the Standing Orders not complied with in respect of the Petitions for Additional Provisions in the following Bills:
LONDON AND NORTH EASTERN RAILWAY BILL,
and the
LONDON COUNTY COUNCIL (GENERAL POWERS) BILL
ought to be dispensed with: Read, and agreed to.

SUNDAY ENTERTAINMENTS ACT, 1932.
Orders made by the Secretary of State for the Home Department extending Section 1 of the Act to the

City of Chester;

Borough of Lewes;

Borough of Stourbridge;

Urban District of Newmarket;

City of Bath;

County Borough of Eastbourne;

Borough of Boston;

Borough of Ryde;

County Borough of St. Helens;

Borough of Hertford;

Borough of Mansfield;

Royal Borough of Tunbridge Wells.

Laid before the House (pursuant to Act) for affirmative Resolution, and ordered to lie on the Table.

ECCLESIASTICAL COMMITTEE.
THE LORD CHANCELLOR THE LORD CHANCELLOR acquainted the House that, by virtue of the powers vested in him by Section 2 of the Church of England Assembly (Powers) Acts, 1919, he had nominated the Lord Walkden and the Lord Oaksey to be members of the Ecclesiastical Committee established under that Act, and to serve for the duration of the present Parliament, in the room of the Viscount Southwood (deceased) and the Lord Clauson (deceased).