§ 2.44 P.m.
§ Order of the Day for the Third Reading read.
§ LORD REA
My Lords, this Bill has had perhaps an easier passage through your Lordships' House than it deserves, but I do not think we can part with it without making it clear that to some of us, at any rate, it is neither more nor less than a gratuitious and unnecessary attack on a perfectly legitimate trade. Moreover, it is a trade which has brought into this country considerable profits in foreign credits, of which she now stands in the direst need. I want particularly to repudiate the quite baseless and rather mean charge that was at least implied during the Second Reading debate, that the Liverpool Cotton Exchange was nothing more than a sort of gambling 659 machine, in fact an inferior Monte Carlo. There was a further implication, not quite expressed but quite clear, to which I take the greatest exception: that is, that all brokerage businesses, and even merchants' businesses, are in themselves an unjust tax on the manufacturer or the consumer. I happen to have earned my living alongside the Liverpool cotton brokers in a very similar trade over a long terms of years, and I refuse absolutely to admit that the service I performed in bringing shipowners in contact with the great coal market of Cardiff was a tax on them. On the contrary, I brought them to where they could procure the keenest competition and saved them considerable sums of money, and the commission I received—sometimes one halfpenny a ton—was not an intolerable burden on the shipowners.
Equally, I feel that the Liverpool cotton trade perform valuable services to the manufacturers in searching the whole world over for suitable qualities for consumption, not only by Manchester but by the whole world. By their complicated system of grading cotton they have performed an invaluable service to the Lancashire cotton spinner, and this is shown when their position is compared with that of their neighbours in Yorkshire. I remember that when I had the honour to represent one of the West Riding divisions in Parliament, one manufacturer told me it was at least as important for him to be an expert in following the fluctuations of the wool market as to know the technicalities of his trade. That, at any rate, is something the Lancashire cotton spinner has not to do, because when he makes a sale he can, or he could until the Liverpool cotton market was closed, make his arrangements and know what his raw material was going to cost, however long it might be before he had to take delivery.
Then I object to the charge that was bandied about on Second Reading that the Liverpool Cotton Exchange was a gambling exchange. All the instances given of it were most unfair, I thought, because they referred only to the gambling—which undoubtedly did take place—in shares in cotton mills, which was largely engineered by the London Stock Exchange. That had nothing whatever to do with the Liverpool Cotton Exchange. I admit, as of course one must, that there 660 is some speculation on the Liverpool Cotton Exchange. I do not know any business which has not some speculation—not even politics. It often serves a useful purpose if there is a certain amount of speculation on a future cost in the market. I can remember, though I have only a slight knowledge of the Liverpool cotton market, that some fifty years ago there were some scandals when people attempted to corner the cotton crop. But I also remember that these attempts failed, as they were likely to fail. Since then, to my knowledge, nothing on am, comparable scale has occurred of which there could be any legitimate complaint.
As further evidence that this is not a parasitic trade, I would remind your Lordships that when Government Control came into force it was against the opposition of 80 per cent. of the cotton spinners, while something under I per cent. of them expressed themselves in favour of cotton control. That, I think, disposes of the charge of inefficiency. I would add one further point with regard to the relative efficiency of the present Government Control, because I am informed, on the best authority, that the spinners are to-day complaining that the Government Cotton Control cannot keep them regularly supplied with the qualities they require, and which they could easily get from suppliers abroad if they were allowed by the Government to do so.
Even graver than this light-hearted destruction of legitimate trade is the fact that it is destroying our foreign trade. The Liverpool cotton market not only served Lancashire; it was the centre of the world's trade in cotton. It negotiated sales of millions of bales of cotton which never came near this country, but which brought profits and commissions in the form of invisible exports, of which, as I said before, we stand in the utmost need to-day. This profitable trade was carried on with the greatest efficiency by means of an intricate system of finance, based on quite reputable bills of exchange, with a capital investment of not more than £10,000,000; whereas the Government, who are proposing to deal only with the home trade, are asking for £180,000,000 of capital. All this is being thrown away, together with a considerable amount of income to the State, because, so long as the cotton brokers of Liverpool were working, those who made profits paid Income 661 Tax and those who failed to do so did not get anything back. I do not know whether the Government Department are going to pay Income Tax on their problematical profits. I rather doubt it. But even if they do, as in the case of coal and the railways, Income Tax will be payable only on the net result—that is, on the profits made, less the losses which will mean distinct loss to the State, even if it were possible to collect the tax at all.
Finally, the essential difference between this Government experiment and their previous ones is that in banking, coal, transport and so on, if a loss is incurred, it is an internal loss. If we make a loss at home, we have only to tighten our belts and put up with it. But here, for the first time, the Government are taking steps to interfere with the foreign trade of this country, and I confess that that really alarms me. If, as has been hinted—not in this House, but by Ministers outside—this is only a beginning, and that world markets in which we have hitherto been pre-eminent, or, at least, have had the lion's share—such trades as shipping, the metal trade, the corn trade, and so on—are to be taken over by the Government, I see no hope for the nation. All those trades depend on long foresight, quick decisions, and the taking of risks of incurring losses as well as of making, profits. We who have been engaged in business have always known how impossible it is for a Government Department to do those things. I think the war experience has taught the whole country that fundamental truth, and I still hope, as a result of the knowledge which the country has gained, that, before it is too late, even this Government may learn that personal effort and private enterprise are the plain and indeed the only way to prosperity, and that this ill-starred Bill may be the last unhappy experiment in stifling initiative.
§ 2.56 p.m.
§ VISCOUNT SWINTON
My Lords, I am glad that on the Third Reading a speech so full of knowledge and experience has been delivered from the Liberal Benches. Frankly, it was somewhat of a disappointment that, during the long debate which we had on the Second Reading, silence was maintained in that. quarter. I could hardly believe that with all the tradition which we associate with Liberals in the matter of trade, that silence 662 was intended to signify consent. To-day, a voice has been heard from those Benches at the eleventh hour, although it is none the less welcome because of that. This timely demonstration has been made; and not only is it timely, but it is indeed well justified.
I am going to speak for only a moment or two. The whole of the issues were well covered in the last debate by many speakers of great experience. In vain one waited for any justification for this Bill. None was forthcoming. Nor, indeed, can I see that this raises difficult political issues for the Party opposite. We know that they feel bound—contrary to the better judgment of many members of that Party—to proceed with certain measures, because during the General Election they said that that was the kind of thing which was in their programme. But I do not believe that even the most irresponsible member of the Socialist Party put the Liverpool Cotton Exchange into his programme at the Election. I speak subject to correction; there may have been one or two. But what the Government are doing now is entirely inconsistent with the policy which they are advocating to the country at the present time, also at the eleventh hour; it would have been better if that doctrine had been preached twelve months ago.
When there is a need for foreign exchange, why cast away the foreign exchange which the Liverpool Cotton Exchange produced? It is said that it is only £1,000,000 sterling—$4,000,000. That may be rather too narrow an estimate. But are we using figures so loosely that $4,000,000 are nothing? There is a great deal more to the matter than that. We are told that we have to build up good will if we wish to get international trade going. One of the greatest things in the building up of good will, and in international trade, is the produce markets of which London and Liverpool—the great trading communities of this country—form the centre. It is not only foreign exchange that counts. It is here that the contracts come: here the contracts are made; here are the business centres. "Where the treasure there will the heart be also." In the contracts which are made there is always a clause to the effect that arbitration is to take place in London. I am not concerned merely with the fees that lawyers may get out of such arbitration. There is a great deal more 663 than that in all the business and good will that centre in a commercial enterprise of this kind.
The Government are anxious about cotton—perhaps our greatest exporting trade in the past. I do not know whether Lancashire will ever reach the pre-war volume of what I may call its large basic exports. What I am quite sure of is that Lancashire will get its share in the development of fine trade. In all the hundred and one types of export in textiles—I will not use the expression "fine counts," because that has peculiar technical significance—where you need a particular knowledge of the market, where you have to anticipate what the market is going to require, and possibly create the demand—what does that turn on? Everybody in the industry knows (even I, with only the knowledge I gained of this industry as President of the Board of Trade, know it) that it turns on getting exactly the kind of raw material you want in your manufacture.
Ministers on the Government Bench spoke last time as if the industry in Lancashire supported the Liverpool Cotton Exchange as somebody might support a football pool—a sort of Monte Carlo gambling enterprise in, which it entertained them to take part. That was not in the least the reason why hard-headed Lancashire manufacturers patronized the Liverpool Cotton Exchange; nor did they patronize it in order that they might pay an extra commission to somebody. Believe me, before the war there was enough competition in export in the cotton trade for margins to be cut very narrowly. Lancashire manufacturers used the Liverpool Cotton Exchange, and paid commissions to people on the Liverpool Cotton Exchange, to get their cotton for them, because they knew that that was the best way of getting the cotton which they needed. I think it was the noble Lord, Lord Chorley (he will forgive me if I attribute to him a brilliant observation which ought to be attributed elsewhere), said what a dreadful thing it was that brokers engaged on the Exchange were employed by Lancashire manufacturers to go searching the world to find a new kind of cotton at a cheaper price. Was that a very wicked thing to do? I should have thought that to try and find a new kind of cotton, and to buy the raw material of the right kind 664 as cheaply as possible, was the first elementary principle of manufacture.
How inconsistent are the Government! The rubber market—of which the Government seem to have made the most extraordinary nonsense while they were operating it—has been handed back to the people who previously operated it. I think the Government have been very wise in that respect. But rubber is a much easier commodity to deal in than, cotton; there is not the infinite variety which there is in cotton. Why this inconsistency? Why hand back the rubber market to free enterprise and expert knowledge, and keep the cotton market in this straitjacket of Government control? This is a matter which transcends all Party considerations. If I were thinking only of Party considerations, there is nothing I would rather have than that the Government should pass this Bill, and other Bills like it. They would be driven out of every constituency in Lancashire! But it is not that kind of victory we are after to-day. The kind of victory we are after is a victory of the British Empire and British enterprise in the markets of the world. All that is thrown away by legislation of this kind. The noble Lord said that he hoped there would not be any more Bills like this. I hope so, too.
I do not think we could amend this Bill to make it less damaging; I do not think it is any good trying to amend it. This Bill stands or falls on its merits, and it certainly will fall, if not in its passage, in its effect. Maybe the only salvation will be when a Government with wider views are able to hand the business back to the people who really know how to run it—a business which has been of inestimable value not only to the great manufacturing industry of Lancashire, but to the trade and commerce of this country. It is one thing to embark on an enterprise of this nature, but the Government may well find they are handicapped by the fact that trade ultimately depends on good will all over the world. If the Government should then come back to the House and say:" We wish to repeal this Bill," we shall not sneer at the Government for their mistake, for if they do that they will be doing more than they have yet done for British industry.
§ LORD CHORLEY
My Lords, we have listened to two speeches this afternoon. 665 which, delightfully composed and forcibly put forward as they were, I think your Lordships will agree have not actually produced any new arguments beyond those which were placed before your Lordships' House on the Second Reading of this Bill. It is not my business to defend noble Lords who sit on the Liberal Benches, but in the interests of historical accuracy, I must recall to your Lordships that we had a speech from the noble Viscount, Lord Leverhulme, who, as one coming from the middle of this business—from Merseyside itself—put the case strongly.
§ LORD CHORLEY
The arguments which I addressed to your Lordships I could repeat, but we have a good deal of business this afternoon and I am sure your Lordships would not like me to go over the ground again. The noble Viscount, Lord Swinton, has said that the interests of the cotton exporting industry of this country are at stake. That is true. That is the reason why the Government have introduced this Bill. In the view of the Government the organization of the import of the raw material on which this great industry is built up is essential, and it is only on the basis of the rationalization of those importing arrangements that the necessary raw material can be produced at the lowest cost. That is essential if the industry is to recover itself. The noble Viscount, Lord Swinton, spent many years at the Board of Trade attempting to put this industry back on a sound foundation. He failed. His Majesty's Government are engaged in the process of attempting to succeed where the noble Viscount failed, and we regard this as an essential part of that programme. On those grounds I ask your Lordships to give this Bill a Third Reading.
§ On Question, Bill read 3a. and passed.