§ 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 189 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 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
Do not be so anticipatory. There might be no divergence at all. May I return to the noble Lord, Lord Teviot? Is not the 191 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
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 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 192 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 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.
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
The only statistics they had, I suggest, were those relating to periods up to the outbreak of the war.
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 194 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 195 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 196 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.
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. 197 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 198 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- 199 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 200 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 201 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 202 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. 203 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 204 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. 205 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 206 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 207 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 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
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 208 entirely new system from the one which has served the country in the past.
§ 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 209 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 210 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- 211 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 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 212 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.
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 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 214 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 215 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 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 216 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 217 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 218 prepared to recant on this matter. This is not like the ordinary case, such as when the coal mines were taken over.
§ 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- 219 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 220 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
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
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 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 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 222 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 223 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 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.
224 On Question, Bill read 2a, and committed to a Committee of the Whole House.