Sitting of 7 July 1921

Preamble
The House met at a quarter-past four of the clock, The LORD CHANCELLOR on the Woolsack.

VISCOUNT BIRKENHEAD.
EARL CURZON OF KEDLESTON: My Lords, I have to inform your Lordships that His Majesty has been pleased to create Frederick Edwin, Baron Birkenhead, Lord Chancellor, a Viscount of the United Kingdom by the style and title of Viscount Birkenhead of Birkenhead in the County of Chester.
The Lord Chancellor then retired to robe, and having returned to the House—Was (in the usual manner) introduced.

MARQUESS CURZON OF KEDLESTON.
The Rt. Hon. George Nathaniel, Earl Curzon of Kedleston, K.G., G.C.S.I., G.C.I.E., having been created Earl of Kedleston in the County of Derby, and Marquess CURZON of Kedleston—Was (in the usual manner) introduced.
NATIONAL HEALTH INSURANCE BILL.
Brought from the Commons; react 1ª, and to be printed.

LANCASHIRE COUNTY COUNCIL (DRAINAGE) BILL.
THE CHAIRMAN OF COMMITTEES (THE EARL OF DONOUOHMORE): My Lords, I beg to make the Motion standing in my name, for which there are adequate public reasons.
Moved, That the Order made on the 13th day of April last, "That no Private Bill brought from the House of Commons shall be read a second time after Thursday the 16th day of June next' be dispensed with.—(The Earl of Donoughmore.)
On Question, Motion agreed to, and ordered accordingly.
Moved, That the Bill be now read 2ª.—(The Earl of Donoughmore.)
On Question, Bill read 2ª.

RHYMNEY VALLEY WATER BOARD BILL. [H.L.]
Read 3ª, and passed, and sent to the Commons.
CROYDON CORPORATION WATER BILL.
Read 3ª, and passed, and returned to the Commons.

LIQUOR (POPULAR CONTROL) BILL. [H.L.]
Order of the Day for the Second Reading read.
THE LORD BISHOP OF OXFORD: My Lords, I hope I shall not he thought presumptuous, or wanting in proper reserve—I do not know what the procedure in the House will be to-day—if I ask to be associated very closely with the feelings which must be in the hearts of many members of this House and to be allowed to express the great sense of our loss in the passing away of that wise counsellor and trusted friend, Lord Balfour of Burlegh. I do this because I knew that I was able to count, and, indeed, should have relied, upon his wise guidance and sympathetic support in that which I am about to attempt this afternoon. When I was Bishop of Southwark, and he was serving in the Duchy of Cornwall, I was brought into close contact will him in approaching the difficult problems which confronted us in that diocese, and I there learned that his rich experience, his wisdom, his large-heartedness, his transparent sincerity, and his example of devotion to public service made his friendship a rare friendship for those who enjoyed it.
I find myself in a very difficult position this afternoon. My difficulty is as great as that in which many of your Lordships find yourselves. I learned, to my dismay, that the Bill which I have had the honour to introduce, and the Second Reading of which I beg to move this afternoon, had reached your hands only a day or two ago, and it might reasonably be argued that it was quite impossible to discuss a measure of this kind at such short notice. Whatever apology is due from me I give without reserve, but I must disown responsibility for the delay, because I understood my own responsibility had been discharged last Monday week when the final draft of the Bill was submitted to the office, and I hope I may be exonerated. But I think
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I can, to some extent, relieve the situation by saying that from the first it has always been my intention, if the Bill passed a Second Reading, to ask to be allowed to proceed no further for the time being, in order that in the interval there might be an opportunity for discussion and conference with various representatives of the interests concerned upon the different parts of the Bill, and especially upon the point that has been opposed, and also an opportunity to the community at large to understand what the underlying aim is and how the Bill should be made to work. I have always attached real importance to that procedure of giving an opportunity to the community at large to understand what the underlying aim is. I hold that no measure of social reform will be effective unless it gives clear and articulate expression to what society, unconsciously, no doubt, feels ought to be done. We must at least enable the community to have an opportunity of understanding precisely what the proposal is, and no one more than I realises the importance of that being done. Then I desire also to secure an opportunity for conferences and discussions with the various interests concerned, because I hope and believe that by that procedure we shall be able to arrive at an agreed policy, and ultimately to produce an agreed Bill. I know that is a sanguine view to take, and I can assure your Lordships that before entertaining it I had very carefully explored all the forces at work and the question whether, after all, I was merely one of the unenlightened rushing in where others of a superior order of creation fear to tread.
But I believe that I have the right, and it is my duty, to be sanguine, and I will state my reasons as briefly as possible. First of all, it is natural for a person in my position to be impressed by the way in which the challenge, given by the Prime Minister to a deputation to him on the subject, has been taken up. He declared that the Christian churches of our country, when united, are irresistible. We have now a plan of agreement formulating nine distinct points, drawn up and adopted by a General Council representing sixteen Christian bodies. No one can fail to be impressed by the fact that the divisions of opinion and feeling which have for so long distracted the counsels, diverted the energies, and impaired the work of what are called the temperance agencies, have largely been healed. The question is being

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approached by them on different lines and on a different level. The cardinal point of that plan of agreement is that localities shall determine for themselves the extent to and the mode in which the liquor traffic shall be carried on.
Again, no one can fail to be impressed by the decisive attitude adopted by those who claim to befriend the interests and represent the cause of the manual workers of this country—the British Labour Party. We know how divided their opinions have been on this problem. I believe that they would admit that they have contributed as much as anybody to the confusion of issue and the impotent results which have attended the attempts to promote social welfare in this particular department of our life. We have now, in 1920, defined at the congress at Scarborough the reform policy of that great Party; and the cardinal point of that policy, as stated in their own words, is that the Liquor Trade is a traffic in respect of which people must assert full and unfettered freedom in accordance with local opinion.
Further, I am hopeful of the co-operation and support of the representatives of the trade itself. I always believe in taking men at their word, and judging them at their best. Again and again, friends of my own, who are admittedly some of the most influential representatives of the trade, have assured me that there is nothing that they more heartily desire than the means of conducting the trade in the best interests of the community, and in accordance with its real wishes and the legitimate exercise of free and independent choice; and they assert that they are too often the victims of misrepresentation on the part of extremists, faddists and agitators, through whom pressure is brought to bear against the trade not in accordance with the real wishes of the people, those wishes being, unfortunately, nearly always inarticulate. Clearly, on their own showing, they would gladly co-operate in a measure which will submit the appreciation of their services to the direct judgment of the people themselves, now provided with a proper machinery for articulating their wishes.
Then again—and this perhaps in the long run I should count as most important of all—in spite of much weariness and reaction, and the inevitable tendency to relax all efforts and live on lower levels after a period of supreme tension. there is
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a widespread desire to count the experience we have gained in the war and the lessons we then learned. I recall many occasions during the war when I was working in South London when it was stated from all sides—workers, business men and borough councillors—that after all the war had only revealed to us the measures we ought to have taken and can take now for promoting social welfare. Yes; but it revealed something better than that; the spirit in which we must, and in which we can, all unite to make these measures effective. We should, indeed, forfeit our self-respect if we turned our backs upon all that, and resigned ourselves to the old deadlock and the mere struggle of interests.
I believe that it is impossible, and for many reasons. Most of the old arguments and controversies are now obsolete in the light of the practical experience we have gained. That experience, no doubt, is imperfect and undeveloped, as yet not wholly secure, but, so far as it goes, it is more convincing and worth more than the anticipations, the apprehensions, the forecastings and the theorising that went on before the war. I say that we are in honour bound to use the experience that has been given to us by the operations of the Board of Control, by the Carlisle experiment, by the procedure taken in the garden city of Letchworth, and by the method adopted now for many years in our own Dominions overseas—Canada, New Zealand, the Commonwealth of Australia, Cape Colony and the Transvaal —which convinces me that the whole logic of events tells us we are now ready to take the next step forward, which is that of establishing the principle of trusting and training the people themselves to decide this question in their own different areas. That is the underlying principle on which the whole Bill rests.
I must tax your patience a little further in order to explain how that can be made to work. The first question, obviously, is—What choices will the people in the different areas be called upon to make? Time answer is supplied by the whole course of the controversy and issues that have been raised for many years past. There is the choice of leaving the system in that area, as a system, untouched. There is the choice of prohibiting altogether the issue of licences. There is the choice of taking the ownership and management

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of the trade wholly out of the range of private enterprise, and entrusting it to what Lord Shaw's Committee describe as "disinterested management." Those are the three choices laid down to be offered in the Bill. Disinterested management is there described, merely for the sake of being definite, as State Purchase.
I am well aware that that sounds ominous. State ownership and State control at this moment are not basking in the sunshine of general approval. But we. must riot be like children, carried away with every wind of doctrine. Because State ownership and State control along certain lines and departments has so far proved disappointing or discreditable, the fact does not prove that along other lines and other departments it may not make for success. We have to remember that there is a real difference of principle between nationalisation, in any form, of the liquor trade, and nationalisation of industries like mines or railways. The liquor traffic in this country has been for hundreds of years, in fact and in principle, a State monopoly. The licensing justices have perfect power to limit the number of licences issued, and, therefore, the amount of competition. That monopoly, as a matter of fact, has been farmed out to brewers arid licence holders, and it is only a difference of degree, not of principle when the State decides to work the whole of that monopoly itself. There is also another difference. It may well be argued that in many industries private ownership and enterprise provide a stimulus for the better conduct of the business, and produce better results, when the main, if not the only, object is to increase output. Does any one seriously contend that our main object is to increase the output of drink?
Having described the choices that are offered 10 localities I come now to the question as to how you are going to elicit these choices in a practical way. The answer, of course, is to constitute polling areas, and they are to be determined by the Secretary of State, who is given some discretion in the matter. It is important that these areas should be sufficiently large—not a parish or a ward, but a political division or town, or even groups of these—and the electors are to be those persons entitled to vote as local government electors. I ask your Lordships to notice that provision has been expressly
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made for allowing discretion to time Secretary of State to constitute as separate areas those areas in which there have been growing up, under the Housing Acts, a large number of houses, not fewer than 1,500, with the object of not allowing the areas to be compromised with vested interests until the people themselves have had an opportunity of deciding.
The next step will be to submit to the different areas, so constituted, the question which of these courses they will adopt. Occasion will be given for that, in the first instance, in the fourth year after the passing of the Act, and, again, in the eighth year after the passing of the Act. Every four years afterwards a specific question will be put; that is to say, the original question will be presented in a modified form. In the fourth year after the passing of the Act, an area will have submitted to it the choice of No Change, No Licence, and State Purchase. In the eighth year, if it has been decided to make no change, the question will he again repeated in this form. If it has already been decided to adopt State Purchase, the area will be given an opportunity of deciding whether it shall continue the system of State Purchase or adopt that of No Licence. If, again, in the fourth year, an area has decided upon No Licence, it will have the opportunity of choosing whether it shall continue under the system of No Licence or adopt the system of State Purchase. Clause 3 describes the way in which votes should be given, and what the effect of the voting is. Clause 6, which concludes Part I of the Bill, describes the procedure at an election, the time for holding the election, namely, October—not the months of July, August and September—and how provision should be made for the expenses of the elections.
I now come to Part II of the Bill, which describes the machinery to be devised and the organisation to be set up to carry out this particular method of disinterested management, which we have called State Purchase. I should like to say here, as perhaps I ought to have said when I was speaking about this particular form of disinterested management, that if, in the course of conferences and discussions with various representative bodies, it could be shown that there were more effective and better methods of providing disinterested management, I am quite certain that I and those who are with me would be

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fully prepared to consider whether it would be expedient to adopt them The machinery for providing this particular form of disinterested management is, first of all, the creation of a Liquor. Management Board, appointed by the Secretary of State and consisting of persons who are not capable of sitting in the House of Commons. They are paid out of money provided by Parliament, and they, of course, appoint their own servants and fix the salaries of the servants, with the approval of the Treasury. Their business is to produce and to distribute exclusively for the areas which have decided upon that particular form of disinterested management.
Next we have, assisting them, a Central Advisory Committee. This body is also appointed by the Secretary of State; its members serve for three years, one-third of the Committee retiring every year. Two-thirds of its members are representative of the various interests concerned. I need not take up your Lordships' time by specifying its constitution more precisely. Your Lordships will notice further on in the Bill, when it comes to explain how State Purchase is to be carried out, that those two bodies are, for the purpose of State Purchase, assisted by a local advisory committee, three-quarters of its members being distinctly representative of the various interests concerned in the locality; the remaining quarter would, I imagine, be co-opted in consultation with the Central Advisory Committee. I think this would be an extraordinarily useful and valuable body for advising both the Liquor Management Board and the Central Advisory Committee upon the particular conditions in the locality which has decided upon this form of disinterested management. They would advise, for instance, as to the reduction of licences in the locality, the best kind of buildings to erect, and the structural improvements and alterations which should be carried out.
In the fourth place there is a very important body indeed, with extremely responsible duties, the Judicial Tribunal, consisting of three Commissioners appointed by His Majesty, one an expert in the knowledge of the law, another an expert in the knowledge of the valuation of property connected with the sale and distribution of liquor, and the third a member of the Institute of Chartered Accountants. I do not propose now to summarise under heads what their
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specific duties would be, but in the course of the explanation which I now propose to give your Lordships with regard to the financial arrangements connected both with the State Purchase scheme and the No Licence scheme, the responsible duties which are laid upon them will be made clear in the natural course of things. I need not detain your Lordships by-speaking of Part III of the Bill which summarises the effect of the Resolutions.
I should like, however, with your Lordships' permission, to take Parts IV and V together. Part IV deals particularly with State Purchase and Part V with the financial arrangements and compensation. I take the two together because I am trying to economise your Lordships' time and to summarise as briefly as possible what will be precisely the arrangements made where a decision has been taken in favour of State Purchase or No Licence. I would say, before I embark upon that question, that I do not propose to raise the previous question, whether or not we admit the principle of compensation. It seems to me that if we are really going to make a practical effort to handle this problem, whatever we decide, it is idle to plough that old furrow in debate.
I observe from the Report of the Departmental Committee appointed to consider upon what terms the interests in Scotland concerned in the supply and sale of liquor shall be acquired, that the Committee, after investigating the vital differences of the problem as it is presented in England from the form in which it presents itself in Scotland, stated that, since the decision in the case of Sharp v. Wakefield, the Statute of 1904 enacted provisions, the subject of much discussion and controversy, which admitted the principle of compensation pro vided out of funds provided by the trade. I presume that no one would think of going back upon the principle of the time limit and of due notice; and that, after all, is only another way of recognising the policy of due consideration and compensation. Apart from that, however, I should indeed regret deeply if this measure were considered, or were adopted, and then carried with it any sense of hardship or sharp practice in the minds of any of those concerned. I desire above all things that the problem should be considered, and that this measure should be considered and brought into effect, as the common contribution made

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by all the parties concerned, with mutual understanding and good will, after full discussion, for the better ordering of our social life. Therefore I appeal to, and I rely upon, the temper of sweet reasonableness.
When I conic to Parts IV and V of the Bill I conic to what, of course, is much the most complicated portion of the measure, which is likely to arouse the largest number of questions, and on which I feel that both myself in speaking about it, and possibly those who take part in the discussion which may follow, are very likely to be led away upon side issues. I have, therefore, ventured to prepare a very careful statement, chiefly in order to keep myself within limits, and, I hope also, to conduce to a clear grasp of this part of the measure. It is impossible, of course, at this stage, nor, indeed, do I believe it would be in order, to discuss all the details—some of them very minute details—connected with the financial provisions for compensating the interests affected. I will, however, say that both I and others have given the matter most careful thought, with the object of making the Bill cover the ground as adequately as we could. In preparing this statement I have done my best to cover the ground fully, because I am so anxious to secure an opportunity for conferences and discussions upon all the complications and points of detail. There is no doubt that many questions of detail will have to be discussed, and certainly I myself, and those with whom I act, will be most ready to discuss the issues with all those concerned, and, where it is thought expedient, to accept amendments.
But, broadly speaking, all this part of the Bill is founded upon the recommendations of the Committee on State Purchase for England and Wales which sat under the chairmanship of Lord Sumner. It is true that in certain instances the recommendations of that Committee have been departed from, but in departing from them the object has been to adapt those recommendations to rather a different problem. Their problem was the problem of State Purchase applied universally and at one blow over the whole country. Our problem is the problem of applying State Purchase to individual areas, with repeated opportunities of voting for State Purchase—opportunities given over a long period of years; it may be, indefinitely. But the
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Bill does particularly follow the recommendations of the Committee—and it will be apparent to anyone who knows the Report of that Committee, and who studies this measure, how deeply we are indebted to the Committee—in leaving a very large amount of elasticity in the application of the terms of purchase to particular and individual concerns.
You will never be able to devise a hard and fast formula for these financial arrangements for compensation, which you can apply to all concerns indiscriminately. The object of the Bill, as it was the object before the Committee, is to establish normal standards applicable to normal cases, leaving power for those standards to be varied, either by agreement between the purchasing authorities and the vendors, or, in' default of agreement, by the Judicial Tribunal; that is to say, the three Commissioners whose business it is to settle these disputes.
In proceeding to consider how to carry out these financial arrangements in an orderly way, we have to remember that the unit which has really to be considered is not the individual licensed house but the brewing concern, with the cluster of tied houses belonging to it. Therefore, administrative convenience will be enormously promoted if the Home Secretary, ill exercising his power of determining the voting areas, arranges them so as to cover the areas covered by a given group of breweries. We shall find those areas in some eases larger than the local government units, and it is mainly for that reason that power is given to the Home Secretary to group several of such local government units together. It will then be asked, naturally: What will really happen in a given area? The majority of the licensed houses in that area will belong to local breweries, and a local brewery is a brewery which does more than 50 per cent. of its business with its tied houses in that particular area. It is possible that the local breweries concerned with the tied houses in the area will also have a few tied houses outside the area. Those houses, like those in the area, will become the property of the Liquor Management Board, which will proceed to dispose of them by sale or tenancy, according as they are advised.
Then, as to the terms of purchase. They will be based upon so many years' purchase of the true net annual profit, capitalised by a multiplier which begins at twelve

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years' purchase at the first option. It descends to nine years' purchase at the second option, to six years' purchase at the third option, and to three years' purchase at the fourth, or any subsequent, option. You will see that we have observed there the principle of the time limit as being a reasonable and fair principle to adopt, in order to avoid what would, I think, be a very legitimate hardship. Now the capital sum at which you so arrive represents the value of all the properties of the brewery in fee simple, and you consequently have constituted a corpus. That corpus has to be divided between the reversionary owners of ally property which the brewery may hold on lease or tenancy, the owners or the shareholders in the brewery concerned, and the lessees or tenants of the breweries, if any, such lessee or tenant is in enjoyment of a beneficial lease—that is to say a lease, the capital value of the rent of which, payable for the unexpired term, is less than the amount the lessee would obtain for the unexpired term in the open market. The division of that capital sum, or corpus, is to be settled by agreement or, if agreement fails, by the three Commissioners, or by one of them.
There is an important point to bring out, and to safeguard here. When that apportionment takes place debenture holders will not necessarily receive 20 s. in the £ on the nominal value of their holdings, although the corpus itself might be quite sufficient to pay 20 s. in the £. It is considered that, as brewery debentures stand, and have been standing for some time past, at a substantial discount below par, it would be an injustice to the other shareholders to pay the debenture holders as if those debentures stood at par. The majority of the present brewery debentures were issued at a time when rates for money were, I suppose, 2 per cent. less than they are now. ff, therefore, the debenture holder were now paid £100, and he could re-invest his £ 100 at 6 per cent. or 7 per cent. with equal security, whereas the yield he expected when he bought the brewery debenture was perhaps 4 per cent. or 5 per cent., to pay the debenture holders at par would be to confer upon them a substantial present at the expense of the other shareholders of the company. Therefore it is that the Bill provides that in this apportionment the debenture holder's share is to be determined on the basis of the average income obtained from the deben-
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tures by reference to their market value, to the terms of redemption, and to other factors which affect their security.
In addition to this corpus, or capital sum so obtained, representing the value of the property of the local breweries, the tenants of licensed property in a State Purchase area are to receive compensation in respect of their personal good will. That compensation is ascertained by capitalising their net annual profits, according to the methods provided in the Bill, at a rate not exceeding two years purchase; and, besides this compensation for good will, tenants will receive the value of the wet and the dry stocks, as ascertained by inventory, with valuation at the current prices.
In addition to the tied houses in the area belonging to the local breweries, there will be a certain proportion of licensed houses which are either free, or which are tied to non-local breweries, that is to say, to breweries which do less than 50 per cent. of their total trade inside the State Purchase area. Such licensed houses, if they are on-licences, will be acquired on a freehold basis, along the same lines as are applied to the purchase of the brewery —so many years' purchase of the net annual profit derived from the house itself, and apportioned as I have just stated in the case of the brewery. But supposing they are off-licences, no interest in the bricks and mortar will be acquired and their licences only will be extinguished, and compensation amounting to not more than three years' purchase of their annual profits will be paid. This matter has been gone into carefully, and the conclusion arrived at was that it was really unnecessary to vest in the Liquor Management Board any property in off-licences. The bulk of that "off" trade can easily be done from the on-licence premises, which vest in the Liquor Management Board, and, so far as it may be necessary to provide premises in which to carry on an "off" trade only, it would be possible to devote one or more redundant on-licence premises, at which the on-licences will be discontinued under the Liquor Management Board, for the purpose of off-licensed premises.
We now come to the question, with which we have to deal, of hotels, restaurants (other than those belonging to the local breweries) and railway refreshment rooms. They will not be acquired; they will

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remain in private hands, and the owners will be at liberty to carry on their business in intoxicating liquor, as incidental to all their other business, subject to compliance with certain conditions which may be imposed by the Liquor Management Board. The objects of these conditions are, first of all, to secure that such premises as do remain in private hands are conducted in a lawful and orderly manner; and, secondly, to secure that unfair competition against the Liquor Management Board, either by "cutting prices or selling liquor of injuriously high strength, or in any other way, is prevented. And it will be noticed that the vaults which are commonly attached to hotels used wholly or mainly as ordinary public bars will be acquired by the State, and paid for on the same basis as a free on-licence in a State Purchase area.
I hesitated for sonic time whether I should be encroaching too far upon your Lordships' forbearance if I were to deal with one or two separate cases which, I have no doubt, are in the minds of some of those who have studied this question—cases which have to be distinctly faced. I will take one or two instances. You have a brewery concern which does over 50 per cent. of its trade inside a State Purchase area; that is to say, what is defined strictly as a local brewery, but the brewery itself is situated outside the area. In this ease, the Bill provides that the whole concern will be acquired. The tied house outside will be sold or leased, or otherwise disposed of by the Liquor Management Board, and the Management Board may use the brewery for brewing or not, as it thinks fit, or as it is advised.
Another instance is a brewery concern which has a brewery inside the area, but which has over 50 per cent. of its trade outside the area. The brewery itself is local, but as a concern it is a non-local brewery. In this case, any tied houses belonging to the brewery which are situated inside the area will be acquired as if they were free houses, and not tied houses, while the brewery itself and the houses outside the area will not be acquired.
Then there is the question of wholesale, licences, with which we have to deal. I do not know whether I need remind your Lordships that a wholesale licence is not limited to cases where the holder of the licence is engaged in selling exclusively to retailers for the purposes of that trade. The wholesale dealer may sell to a private
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consumer also, provided that he does not at any one transaction sell less than one dozen reputed quart bottles of wine or spirits, or two dozen reputed quart bottles, or four and a-half gallons, of beer. Where a wholesale dealer has his licensed premises inside a State Purchase area, the Liquor Management Board grants him the requisite authority to renew his licence, and he will be at liberty to sell, as a wholesale dealer, to hotels, restaurants, clubs and so on, inside the State Purchase area, and to the trade and private customers alike outside the area. All that he loses is the right to sell to private customers inside the area, and for that loss he will be compensated as may be agreed or determined by the Commissioners.
Lastly, clubs in the State Purchase area are treated in the same manner as hotels and restaurants, except that they are not required to sell to the State any part of their premises, even if they may be used, wholly or mainly, for drinking purposes. Therefore no question of compensation arises, the Liquor Management Board attaching exactly the same conditions, with the same object in view, as are applied in regard to hotels and restaurants.
I need say no more, at this stage, of the working of the financial arrangements connected with the State Purchase area, but I am bound to speak of what happens in a No Licence area. Supposing an area has decided that it will prohibit, at any rate for the next four years, the issue of licences altogether, the leading principle in this case is that the State acquires only the extra values which attach to the licensed premises from the fact that they possess a licence. The owners of such premises retain the bricks and mortar of their premises and give up only their licences. Two rather important and interesting consequences follow from that principle. It is reasonable to hold that the extra values which arise from the possession of a licence are values which are entirely created by the State, and, therefore, it would be very hard and unjust if the State, after having given not only de jure but also de facto recognition to a vested property interest in licences for a large number of years, were suddenly to change its mind and decide to cancel at one stroke of the pen all such vested interests.
But if reasonably long notice of the intention to cancel is given by the State

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so as to enable proper provision to be made against such a contingency by insurance or otherwise, the State is acting perfectly within its right to discontinue the recognition of this particular vested interest. Therefore, the Bill provides that compensation for the destruction of licences shall be paid during the first sixteen years of the operation of the Act—that is practically a time limit of sixteen years—but, after the fifth option, the effect of a No Licence Resolution shall be to cancel such licences without compensation. Until the time limit has been reached provision is made for compensation for the licences suppressed under a No Licence Resolution, though the number of years' purchase allowed becomes smaller at each vote, until the time limit has been reached.
Just the same principle of a descending scale in the number of years' purchase allowed becomes applicable, and for the same reason, to the compensation payable under State Purchase Resolutions, but with this difference—that under a State Purchase Resolution the State acquires not only the licence but also the bricks and mortar values, so that under a State Purchase Resolution some payment will always have to be made to compensate for the purchase of the bricks and mortar, whereas under a No Licence Resolution you will eventually reach a point where no payment has to be made. The second consequence of the fact that under a No Licence Resolution only the values of the licence have to be taken into consideration and paid for, is that the profit which you have to capitalise in order to arrive at the compensation shall not be the total profit derivable from the licence plus the bricks and mortar, hut only the profit derivable from the licence itself. How is that to be calculated? It is believed that in the normal case about two-thirds of the total profits may be regarded as attributable to the licence itself and, accordingly, that proportion has been inserted in the Bill as the standard. But, of course, it will always be variable by agreement or by the determination of the Commissioners, if the purchasing authority can show in any particular case that less than two-thirds of the profits should be regarded as attributable to the licence, or if the vendor can show that more than two-thirds can be attributable to the licence.
In addition, in the event of a No Licence Resolution being passed, provision is made for the compensation of hotels and similar
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properties which remain free to sell drink under private ownership in a State Purchase area, but they are required to give up the sale of drink if the area in which they are situated votes in favour of No Licence. The closing of redundant breweries and public houses may have the effect of throwing out of work a certain number of persons employed in them, and Clause 29 of the Bill provides for such persons being compensated. I wish to point out, as briefly as I can, that the Bill has been so drawn in order to reduce to a minimum the calls on the Exchequer in providing the necessary amount of money for compensation.
As regards the payment of compensation under a State Purchase Resolution, the capital sums, ascertained as I have already described, are to be converted on the 5 per cent. table into terminable annuities to redeem the capital sum in a period of twelve to fifteen years. I must explain that there is a mistake in the Bill, and that where it refers to "6 per cent." terminable annuities, it should read "5 per cent." It is believed that in the majority of cases the annual profits which the Liquor Management Board will earn from its conduct of the business will suffice for paying these annuities, and that means that the Liquor Management Board, instead of having to borrow large capital sums from the Exchequer and gradually repaying the Exchequer for the sums so borrowed, will discharge its obligations for compensation direct to the persons who are entitled to it.
Besides that, the Liquor Management Board, under a State Purchase Resolution, is required to earmark any surplus profits accruing to it, after paying the annuities in any area, for the purpose of financing its compensation obligations in future years. This it does by paying the whole of such surplus profits into a Central Fund, which is available to meet any compensation obligations which exceed the income which t he Liquor Management Board receives in future years. Therefore, it is only if the income in any year, plus the balance to the credit of the Central Fund, is insufficient to meet compensation obligations that the Exchequer is called upon for any compensation in respect of State Purchase Resolutions.
As regards the No Licence Resolutions, the Bill doubles the present rate of Compensation Levy to which the trade is subject under the Act of 1904, and pays the whole of the proceeds into the Central

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Fund. The Central Fund has to pay compensation for No-Licence Resolutions, and it is only if it is inadequate for that purpose in any year that the Exchequer is called upon for any compensation in respect of such Resolution. I am quite aware of what may easily be urged about the principle of providing compensation from funds supplied by the trade itself, but the appropriation of the Trade Levy to the Compensation Fund becomes, in effect, under this measure, a State-guaranteed insurance on the part of the trade against a No Licence Resolution.
The sources of income of the Central Fund, therefore, are—first, the surplus profits of the Liquor Management Board in State Purchase areas where they are managing the business themselves; secondly, the Trade Levy; and thirdly, the proceeds realised by the Central Fund from the sale of redundant properties. It seems probable that the Central Fund will be adequate to all the demands made upon it, and the contingency of the Exchequer being called upon to make good its guarantees may be regarded, I think, quite legitimately as remote. Of course, it has been impossible in the present uncertain times to calculate the actual actuarial value of the risks to the Central Fund, but experience will enable those to be measured fairly accurately as time goes on, and, provided that we can get a fairly firm basis, the statutory provisions as to the income which it is necessary to secure to the Fund can be modified by later legislation.
There are only two further points upon which I think it my duty to detain your Lordships. The first I am anxious about, because the Bill does divert to the Central Compensation Fund the proceeds of the Compensation Levy which was established by the Act of 1901, and therefore the gradual process of eliminating redundant licences, at the combined discretion of the licensing justices and the compensating authorities, gradually comes to an end. I know that many persons would regret that, but the answer is that if the voters in any locality desire the retention of licences they have the matter entirely in their own hands by establishing this principle of disinterested management, and making it a State Purchase area. The real change effected by the Bill with regard to the reduction of the number of licences is, I am convinced, a wholeome change. It is desirable to transfer
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the initiative for such reduction from the appointed justices, and to leave it to the people themselves to decide.
The other point is one upon which I wish to say a word because of the misconceptions that exist on the subject. The number of years' purchase under the Bill for the acquisition of a brewery concern starts at twelve years, and descends by successive stages. Lord Sumner's Committee, so popular opinion seems to think, said about fifteen years, but- —the noble and learned Lord will correct me if I am wrong in what. I am going to say—as I read that Committee's Report it did not say fifteen years; it said fifteen years would have been the right number of years to fix if purchase had been effected in the year immediately preceding the war, but., having regard to the fall in capital values since 1914, the fifteen years' purchase should be scaled down proportionately to the ratio between capital values in 1911 and capital values at the date of purchase. If you compare capital values to-day with capital values in 1914, which I have taken the trouble to do, you will find that the ratio is something like twelve to fifteen— twelve now, but fifteen in 1914. As a matter of fact, therefore, the Bill says exactly what Lord Sumner's Committee says.
I have to thank your Lordships for your forbearance and patience in listening to me, and to what, I am afraid, has been a very lame, unsatisfactory and inadequate account of a measure which it is not easy, at any rate for me, to elucidate. I have only one more word to say. I observe in discussions that proposals are often misunderstood, and attention is diverted to other mid unsatisfactory issues because it is suspected from the first that there is some motive underlying the measure proposed other than the motive which appears on the surface wish to say with perfect frankness that I have absolutely no motive except the motive which is prompted by a real hope that we have at last reached a stage in our experience when we are able to go forward upon an agreed line of policy, and to accept certain agreed principles.
I attack no interests and no particular system. I desire only to see our system developed and adjusted according to the circumstances and the spirit of the age in which we live. The problem of social reform and betterment which besets us in

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these days at every turn is, when reduced to its simplest terms, the problem of how we are all going to live together, and how we are all going to make the best and the most of one another; and it is because I am honestly convinced that a measure embodying these principles will enable us to make the most and the best of ourselves as a people that I beg leave to move that this Bill be read a second time.
Moved, That the Bill be now read 2ª—(The Lord Bishop of Oxford.)
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF HEALTH (THE EARL OF ONSLOW): My Lords, this very important Bill raises a number of new and important issues, some of them of a very highly controversial nature, and in these circumstances I do not think that your Lordships will expect the Government to form an opinion as to the acceptability, or even the practicability, of the measure until considerably more time has been at their disposal to consider it thoroughly and adequately. Therefore, your Lordships will, I think, excuse me if I do not discuss the proposals in the Bill this afternoon. The right rev. Prelate told us that it is through no fault whatever of the promoters that it reached your Lordships' hands only yesterday morning. Time for its perusal and consideration has been extremely limited. The right rev. Prelate has also told us—and he was good enough to write to me yesterday to that effect—that he does not intend to take the Bill beyond its Second Reading stage, and, on that understanding, I am glad, on behalf of the Government, to be able to welcome the opportunity of obtaining a further ventilation and discussion of this most important, and in some respects highly controversial, proposal, both within your Lordships' House and outside it.
As your Lordships are aware, the Government have long been anxious to deal comprehensively with the liquor question, but hitherto they have been prevented from doing so by the overwhelming pressure of Parliamentary business and other difficulties, but ventilation of that portion of the liquor problem which is covered by this Bill will not prejudice any proposal arising out of the Conference recently held at the House of Commons, which the Government mar be able to bring forward upon the immediate problem of adapting to peace time the experience gained by the Central Control
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Board during the war. Many points of great importance arise upon this Bill, and we shall no doubt have the advantage of a full discussion on this subject in your Lordships' House, and outside it, before the Bill reappears in Parliament with any prospect of making progress.
VISCOUNT HALDANE: My Lords, I am glad that the Government have at least taken up an attitude that is not unfriendly, although it is non-committal. In Scotland we have had an Act which embodies sonic features, at any rate, closely analogous to those in this Bill, and we have had experience which has led us to conclude—what sonic of us expected to find before—that the democracy is very safely to he trusted with powers of this kind. Its action in Scotland has been of a highly conservative character, and I do not doubt that the action of the democracy in England, were this Bill to become law, would be equally careful and meticulous. I do not think that there is anything to be feared from that part of the Bill which gives the three options, nor do I think the setting up of such powers of control as are dealt with in another Part of the Bill would be very likely to lead to danger. The Carlisle experiment has satisfied many of us that steps in that direction may be taken with great advantage.
I feel that the whole question of this Bill, and of every Bill of this kind—as, indeed, the right rev. Prelate said—depends on this question—Are you going to leave these things to the public itself to regulate? If you are, I do not think you need be afraid of anything violent, and, on the other hand, the advantage is very great, because those engaged in the conduct of the liquor traffic at once become apprehensive of public opinion and proceed to raise the conduct of their business to a higher standard. That is going on everywhere, and the fact that these large powers are now being discussed has led those in the trade to take a good deal of pains to make it more conformable to the standards that are desired. In Scotland it has been so. On that ground alone I should welcome some such proposals as appear in the Bill. I recognise that the Government are right in saying that a measure so far-reaching should not be rushed through, and probably the right rev. Prelate takes no exception to the proposition that a short time should elapse before further consideration of the Bill is taken,
LORD SUMNER: My Lords, it is only the fact, that the right rev. Prelate made some reference to a Committee of which I had the honour to be Chairman, and whose Report has come to be described by my name, that leads me to intervene at all in this debate. I have had no opportunity of considering the details of this Bill for the reason which has been explained, and which, I take it, makes it impossible for your Lordships to pretend to exercise any judgment on the scheme to-day. I should have thought it was wholly impossible to take the Second Reading of a complicated measure like this after the contretemps which has led to the Bill being in your hands for but a short time. It is really rather surprising even that your Lordships should be asked to give a benevolent Second Reading to a complicated measure which, admittedly, no one has Lad an opportunity of fully considering.
I only desired to avoid any misunderstanding by reason of the reference that has been made to the Report of that Committee. It was appointed during the war, in the year, I believe, 1916, and with a very limited reference. As I and all my colleagues read the terms of reference it had absolutely nothing whatever to do with the policy of State Purchase. It, was confined strictly to considering whether a scheme of State Purchase, capable of being carried out without gross injustice, could be devised, and to ascertain what the cost of State Purchase at that time might be were not taken into the confidence of the Government as to the motives for considering such a matter at that stage of the war. I may be doing the Government some injustice, and I have not looked at that Report for a long time, but, speaking generally, the idea was that the Government restrictions on beer had watered it down so much that the compensation which would have to be paid to the brewers might be more than the price of buying out the whole thing.
The Report of that Committee was, I think, unusual in any discussion connected with the liquor trade. It was an unanimous Report; a circumstance which, if you look at the names of those composing the Committee, proves that we were not considering anything but a purely financial matter. Personally, I never, from the beginning, considered myself at all likely to be in favour of a scheme of State Purchase. The more I saw of it the more convinced
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I was that it was not likely to be a success. My reason, quite briefly, is this. It is a profound disbelief in that merit of human nature which seems to have animated the right rev. Prelate so much in the course of his address.
I was satisfied that if you had the whole liquor trade of the country in the hands of the Government you would find the Government perpetually under a triple pressure. It would be pressed by the total abstinence people, who would say: "Touch not the accursed thing. Conduct your trade so as to sell as little drink as you can. "It would be pressed by the people employed in the trade, a large number, who would say: "We are the servants of the State; let us be paid accordingly." And their wages would go up. It would be pressed by the numerous others who, I believe, would still continue to desire drink, who would say: "What is the good of having a State public house unless the price of beer goes down?" I was perfectly satisfied then, and I remain satisfied now, that having paid between £300,000,000 sterling and £400,000,000 sterling, which was the price we thought would be necessary to purchase this gigantic property, we should soon find that under political pressure there were no profits to be made, and that before long there would be an annual loss on the trade.
I want your Lordships to understand that the scheme contained in that Report had nothing whatever to do with any Local Option system. It was a scheme for a national purchase of the whole thing, whereas this scheme, as far as I have understood it, is that it should be possible for a particular area to vote that the liquor trade, within that area, should be purchased by the State at the expense of the State. See what the result of that would be. If you could depend on the liquor trade in a particular area being carried on without loss, or even at a profit, it might be tolerable for that area to vote that the Exchequer should spend a few millions to buy it, because they wished to get rid of it. But you have to face the possibility that, having bought out the trade in that area, it would thereafter be carried on at a loss and most of the money would be thrown away. I contend that it is quite intolerable that a single county, or a smaller area, should be allowed to vote away public money on a local investment which is likely to

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result in a loss. It is contrary to every principle of sound finance that the money of the Exchequer should be voted away by voters in a local area upon a limited issue like this. For that reason, I wish it to be understood that in my view the Report of that Committee has nothing to do with the scheme of the Bill, and affords no support other than what may be derived from incidental references to matters such as the rights of debenture holders, and so on.
I will not detain your Lordships with any discussion of the details of the measure, having had no opportunity of acquainting myself with them. I do, however, venture to say, first of all, that a measure of this kind ought, in my humble opinion, to be introduced by the Government of the day, and not by any private association of individuals, however representative or however devoted they may be. Secondly, this is essentially a financial matter, and, much as I desire to see legislation initiated in this House, it seems to me to be, of all measures, one which ought to be introduced in another place. The third point which I wish to impress upon your Lordships is that, at a time when even the authorities of the Treasury say that taxation can go no further, at a time when hardly anybody seriously supposes that the debit and credit sides of this year's account can be made to balance, it would be criminal to contemplate incurring any further expense on the top of our present obligations. This is no time, even for the highest and holiest causes, to contemplate a measure which will result in a purchase of property on a large scale and at an enormous further expenditure by the State.
THE EARL OF PLYMOUTH: My Lords, I will venture to make an appeal to the right rev. Prelate, and to ask him whether he cannot see his way not to press the Second Reading now. We are placed in the position—I, like most of your Lordships—that we first saw this Bill only forty-eight hours ago. The right rev. Prelate explained and apologised for the accident, and I recognise that it was not his fault; but the fact remains that we have not been able to consider the Bill. It is a very far-reaching and complicated measure. The right rev. Prelate's own explanation of it was very lucid, but, when he came to the latter part, I confess that I was unable to follow very closely. It is a very intricate matter. In that case, is it fair to ask the
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House to give a Second Reading, committing us, to a certain extent, to the principle of a Bill to which, for my part, I am bound to say that I think I am opposed? I do not think local option is the proper way of dealing with this difficult question. I will not pursue that argument any further, because I do not wish to discuss the details of the Bill, but I would appeal to the right rev. Prelate to be content with having introduced it into this House, and with having had it printed, so that it is within the knowledge of the people generally, and can, no doubt, be referred to whenever this question is discussed in a large manner with the desire, which all of us share, that all interests should he consulted, and that we should, if possible, arrive at an agreement.
VISCOUNT CHAPLIN: My Lords, if I might intervene for a single moment, may I say that there can be no doubt about one point, and that is that this is a Bill of very great importance. Notwithstanding the most able and painstaking explanation which was offered by the right rev. Prelate in support of his measure, I am bound to add that I have not been able to find from more than one member of your Lordships' House that any noble Lord has had an opportunity of reading this Bill with the care for which it undoubtedly calls. So far as I am concerned, I had never even seen it until I came into the House, and took a copy from the case close by this Table. In these circumstances, I agree entirely with the speech of the noble Lord, Lord Sumner, and with my noble friend who has just resumed his seat. I hope that the right rev. Prelate will not ask the House of Lords to commit itself to the principle of this Bill. It is impossible for the majority of your Lordships to have reached a thorough understanding of it, and I hope the Second Reading will not be pressed.
THE LORD ARCHBISHOP OF CANTERBURY: My Lords, I do not think that anyone who has listened to the discussion can feel that the request that has been made, that we should not be asked to give a Second Reading to this Bill to-day, is an unreasonable one. It seems to me a perfectly fair and right thing to demand. The Bill has not been long in your Lordships' hands, and, even if it had been, I can imagine that it might have been a little difficult to have arrived readily at a judgment upon a matter of such very great importance. Everyone

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who is interested in this subject will desire to study the extremely lucid exposition of the Bill which has been given by my right rev. brother this afternoon. In the circumstances, I think the wisest course would be to adjourn the debate. If we do so, we shall not have committed ourselves to the Second Reading. The Bishop of Oxford has already stated that it was not his intention to go beyond the S000nd Reading, if he obtained it, during the present session of Parliament. In any case, I imagine that, if we agreed to the Second Reading to-night, it would be an unreal thing, because it would be passed by those who have not had an opportunity to read and consider the Bill as they ought, owing to the accident to which I have referred. I beg to move the adjournment of the debate.
Moved, That the debate be now adjourned.——(The Lord Archbishop of Canterbury.)
VISCOUNT ASTOR: My Lords, the right rev. Prelate, in moving the Second Reading of this Bill, told us at the outset that he was bringing it forward in order to stimulate public discussion. He also Kidd that he thought it was essential that we should not lose the gains which we have obtained during the war. Perhaps your Lordships will allow me to add a few words upon the Bill, as having been one of the original members of the Liquor Control Board. Like most bodies that helped to win the war, from the Liquor Control Board to the War Cabinet, that particular body has been the subject of a considerable amount of criticism and misrepresentation recently. I think, however, that all who have followed its proceedings will agree that it; did an enormous amount to increase the efficiency of the country, and, therefore, to bring about the successful prosecution of the war.
I suppose that I was put on that body because I was not committed to any particular group of the Temperance Party, and because I had not any preconceived ideas as to how this very difficult and still unsolved problem should be tackled. It seems to me that it is just as necessary now for us to obtain the maximum amount of efficiency, as well as to have the largest amount of national economy, as it was during the war. We are not going to retain our world markets, or to gain new markets, if we relax and lose all the gains
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that we made during the war; if, for instance, we accept the advice, which is being offered to us at the present moment, to increase the night life of London. I cannot imagine anyone who is interested in the efficiency of the country, who is really concerned in reducing waste, being able to advocate seriously an increase in the night life of London and the other great cities, with all that it means.
The noble and learned Lord, Lord Sumner, said just now that he thought that only the Government should bring forward a licensing Bill. It seems to me that the Government failed signally, during the last two years, to bring forward any licensing and, therefore, that they and everybody else should be grateful to anybody who brings forward a reasonable and clear proposal for solving this very difficult question. I understand from the noble Earl who spoke on behalf of the Government that this particular Bill does not in any way cover the ground of the anticipated Government Bill, which is going to be based on the recommendations of the Licensing Committee.
THE EARL OF ONSLOW: I beg the noble Lord's pardon; I did not anticipate any future announcement as to the terms of the Government Bill.
VISCOUNT ASTOR: In any case, I understand from the public Press that the Licensing Bill is going to be based on the Report of the Commons Committee, and is to deal mainly, if not entirely, with certain Regulations and restrictions of the Liquor Control Board. I gather that it is not going to contain any new Regulations or restrictions, but is to continue the policy of relaxation which has been going on ever since the Armistice. That is to say, that if that Bill is carried into law, if a certain number of Regulations are made statutory and permanent, we shall have less restriction and regulation than we had in December, 1916.
I will explain why it is that I give that particular date. In December, 1916, the Liquor Control Board reported unanimously to the Cabinet that they had been in existence something like eighteen months, and that they had enormously improved national efficiency by their restrictive Regulations, hut that the successful prosecution of the war was still being impeded by inefficiency caused by

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drink, and that in their opinion it was impossible to get the maximum of efficiency consistent with the consumption of alcohol, so long as the liquor traffic was in private hands. It was because of that that the Liquor Control Board recommended State Purchase, which they had tried at Carlisle. It had been an enormous success there. We had been able to have more public content and more efficiency in that locality than had been possible for us even with more drastic Regulations and restrictions.
But the policy of national State Purchase was not adopted in 1917, very largely because of the activity of the German submarines. Your Lordships will remember the seriousness of the submarine menace, when this country at one time really was threatened with starvation. Accordingly, it became essential to economise in all food stuffs, and, because of that, the amount of grain used in brewing was reduced by half, and the output of spirits was correspondingly less. National efficiency increased because there was a less amount of alcoholic drink available for consumption, and the whole of that momentum, which would have enabled the Government to put forward and carry a measure so important, was lost. We are, therefore, back to where we were in December, 1916, when, in the unanimous opinion of the people who had been deputed by the Government to consider the whole question of inefficiency due to the consumption of alcohol, the progress of the country was seriously impeded by what is called the drink problem.
The Liquor Control Board reported that it was impossible really to control the drink trade while it was in private hands. It is, in fact, impossible to reconcile national interests with private ownership in liquor. Your Lordships will agree that it is not in the national interest to have the maximum consumption of alcohol. Yet it is impossible to say to an investor that he shall not try to get the maximum dividend or profit out of the money which he has invested in the industry. Accordingly, you have a perpetual and irreconcilable conflict between the national interest, which aims at reducing or checking the consumption of alcohol, and the private interest, which is hound to stimulate consumption.
LORD SALTOUN: May I point out that the noble Viscount is not speaking
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on the question before the House, but on the Bill?
VISCOUNT MILNER: May I make a suggestion? I should very greatly regret if this House had not an opportunity of considering this measure, and perhaps even more, of considering the policy of which this measure seems to me to be a somewhat inadequate expression, more carefully than we can to-day. We have not really had a fair chance, as the right rev. Prelate admits, of considering the Bill. I am, therefore, in favour of the adjournment, but I am in favour of the adjournment only if it means that this Bill is to have further consideration, and not if it means that this Bill is to be dropped and forgotten. If there was any danger of that I should feel very reluctantly compelled to vote against the adjournment and in favour of the Second Reading. I do not wish to do that, but I want the matter to be much more thoroughly considered than it would be, or perhaps could be, to-day. It occurs to me that I should like to hear the argument of Lord Astor, which I believe is not by any means exhausted, on a more suitable occasion. I really think he may be out of order now, because the Motion before the House is for the adjournment of the debate. I venture to press upon your Lordships that the best thing would be to adjourn the debate, but only if we get an undertaking from some one—perhaps the Archbishop of Canterbury will give us such an undertaking—that the discussion will really be resumed, and the matter thoroughly thrashed out, during the present session.
THE LORD ARCHBISHOP OF CANTERBURY: Certainly my intention is that the debate shall be resumed.
On Question, Motion for the adjournment of the debate agreed to.

PUBLIC HEALTH (OFFICERS) (No. 2) BILL.
Read 3ª (according to Order), and passed, and returned to the Commons.

DENTISTS BILL.
Order of the Day read for the consideration of the Commons Amendment to one of the Lords Amendments.
Moved, That the Commons Amendment be now considered.—(The Earl of Onslow.)
On Question, Motion agreed to.
[NOTE.—The reference is to Bill No. 81 as first printed for the House of Lords.]

LORDS AMENDMENT.
Clause 4, page line 22, leave out from (" shall ") to the end of line 23 and insert (" fur the purpose of this section be treated as being a registered dentist ")
The Commons propose to amend this amendment as follows:
After (" treated") insert (" in relation to that body corporate or any other body corporate. formed for the purpose of reconstructing that body corporate or of amalgamating it with any other such body carrying on the business of dentistry at the commencement of this Act")
THE EARL OF ONSLOW: My Lords, the Amendment which has been made in another place to your Lordships' Amendment is a small one. Words have been added to Clause 4 to secure that the proviso should operate in regard to existing companies, and companies formed for the purpose of reconstruction or amalgamation, and not in regard to new companies. I beg to move that the Amendment be agreed to.
Moved, That this House doth not insist upon the said Amendment and agrees to the Amendment proposed by the Commons. —(The Earl of Onslow.)
On Question, Motion agreed to.

SITUATION IN INDIA.
LORD SYDENHAM LORD SYDENHAM rose to ask the Under-Secretary of State for India whether he can state what steps the Government of India is taking to protect the lives and property of Europeans and loyal Indians in country districts where anxiety prevails. The noble Lord said: My Lords the Council of the European Association at Calcutta has lately addressed the Government of Bengal, drawing attention to what it calls the "feeling of insecurity existing among Europeans," and it has begged the Government of Bengal that "steps be taken to protect the lives and property of law-abiding Europeans and loyal Indians, and so establish law and order that boycott by intimidation may become impossible." The immediate cause of that very strong appeal was that Gandhi's agents were travelling all over the division of Chittagong and endeavouring to incite hatred and contempt of Europeans among Indians. The European Association stated its belief that this propaganda work has taken
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place with the knowledge of the Government and that the Government was reluctant to do anything which might be misrepresented as repression, for fear of prejudicing the success of the recent reforms.
The European Association is certainly not an alarmist body. On the contrary, I think it was extraordinarily slow in realising what the inevitable effects of the policy and the methods of the Secretary of State must be, of the results of which this House received plain warnings, but which have developed much more rapidly than even the greatest pessimist among us expected at the time. I therefore beg your Lordships to believe that the Association did not make this strong appeal without more than adequate reasons, and it is those reasons which induced me to put down the Question which I ask this afternoon.
India is so vast that you cannot possibly form a really true opinion of the situation in India as a whole at any time, and the public here never hears a fraction of what is happening in the country districts. In the large towns, when a riot occurs, we are immediately informed of it, and also of the number of casualties. We have two such reports, and very serious reports, to-day, from Aligarh and Madras, but in some of the country districts there has been quite a considerable loss of Indian lives, and we in this country have never known that it had occurred. The unhappy residents of Chittagong have lately described the position in which they now find themselves, and they say this:—
"The trade of the place has come to a standstill, and foodstuffs are selling in the bazaar at famine prices. The banks are doing no business, and co-operators with the Government live in daily terror of assaults. The town is picketed with non-co-operators, and law-abiding citizens are prevented from attending to their daily work by constant abuse, intimidation, and threats of violence to their womenfolk. This is called nonviolent non-co-operation."
That is a picture of flagrant lawlessness, and the residents ask: "When will Chittagong be reconquered by the British Government?"
And precisely the same conditions as those prevail in other parts of India. A European writes from Tippera:—
"Not a bungalow here has a servant, and we are having to cook our own food. The bazaar people 'sill not sell us food unless we pay double the price a native pays."

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For an Englishwoman to have to cook in the heat of India is really a most serious hardship. Your Lordships are aware of what has happened in many of the tea gardens of Assam and Bihar, where the poor, ignorant coolies have been induced to trek to the railway stations, abandoning or selling at absurd prices all their small possessions. At the stations they squatted without any food, and at length the Government provided them with passes to their native villages, where, of course, they will find themselves absolutely stranded. Cholera broke out among them, and between 300 and 400 of them have already died, while the survivors will spread the disease to the villages where they have already gone. The idea of these senseless and cruel proceedings—which are exactly the same as those which Gandhi tried and carried out in Natal some years ago—is, of course, to destroy the tea industry, which we have built up to the very great advantage of India.
One object of Gandhi's movement is to obtain control of the domestic servants, so as to be able to withdraw them whenever he chooses. In some cases this has been accomplished, and the position of our countrymen and countrywomen is becoming almost impossible. The European in India, as any of your Lordships who have been there must know, is absolutely dependent upon his servants, and during the Mutiny there were numerous touching instances of the lives of our people being saved by the devotion of their servants at the risk of their own lives. Gandhi is making great efforts to induce the domestic servants to hate their employers, and to leave them helpless whenever he chooses to give the word of command.
There are also parts of India now where the position of Europeans is becoming almost intolerable. Our women dare not go out without escorts, and they are obliged to have arms constantly by their side. Most officials and non-officials are liable in many eases to insult in open day, while in parts, where a few years ago you could go in perfect freedom, life is no longer safe. Almost the only places in which the European now enjoys freedom from insult are the Native States, where the chiefs have declined to give up their authority. In some parts of India the district officers can no longer tour because they are deprived of supplies, and they are therefore
1020
cut off from their people, with the object of rendering them contemptible in the eyes of their people, whom they have been helping to rule. In Rangoon, as a result of the Caliphate agitation, the municipal engineer was dragged out of his car, and his face was smeared with mud. The Burmans have no more to do with the Caliphate question than the Tibetans have to do with Irish Home Rule, but the great artificial agitation which has been set up in Burma, being carried there from India, has so much alarmed the Government of India that, as I said the other day, it suddenly changed its mind and demanded the instant application of the Government of India Act to Burma.
The recent outbreak at Rajshahi gaol was preceded by reports that Gandhi was going to pay- a visit, and that British rule had ceased. The Government of Bengal reported on this very serious incident, and they said the situation was saved by the European
district officers, who displayed "conspicuous energy, resource and activity." Within a very few years there will be no fearless British officers to deal in that way with situations, which will then be far more serious. The Government of Bengal went on to say that this outbreak was the outcome of the unrest and want of respect for established authority which have been so widely spread by Mr. Gandhi's propaganda. But all that is the result really of a Government which has ceased to rule. And that is a condition which, all through the East, very quickly brings its own nemesis.
The predecessor of the noble Earl had a specific for dealing with Gandhi's Satyagraha movement, which has developed since into the non-co-operation movement. Speaking, on behalf of the Government, in this House on July 19 of last year, he said:—
"Do not interfere too hastily or too violently with an agitation of this nature. Let it kill itself as, in time, it will."
The noble Earl must have learned since then that this movement has developed into far greater dimensions than it had at that time, and that the agitation now seems as if it might before long pass beyond the control of the Government. The fact is that this movement of Gandhi's is a new feature in our experience in India. It is an experience which the Government of India have never quite had before, and the Government of India may have underrated it, or they may have regarded it as too serious and too dangerous to resist.
We have never yet had an Indian leader who was accepted as of Divine origin, and now there are Many millions of Indians who believe that Gandhi can raise men from the dead by a few words, and that he is already the ruler of India. I MU afraid that the Viceroy's five interviews with him will greatly strengthen that belief among the ignorant masses of India. The success of those interviews may be judged by the statement which Gandhi subsequently sent to the Press. In it he said:—
"The Ali brothers, like me, continue wilfully to break the law of sedition, and therefore to court arrest. Sooner or later, and that during this year, if we can carry the country with us, we must bring about a situation when the Government must arrest us or grant the people's demands."
That means that Gandhi believes that if be and the Ali brothers are arrested, there will. be risings all over India, and that he will be able to say that that is entirely the fault of the repressive measures of the Government. On the other hand, if they are not arrested and are allowed to carry on their present propaganda in the way in which it is now being conducted, the time will come when our position in India will become practically impossible.
In our time I know of no parallel to the Gandhi movement, except the remarkable career of the Mahdi in the Sudan, and the Mahdi's career cost the Sudan tens of thousands of lives. Already Gandhi is responsible for the loss of many more Indian lives than was caused in suppressing the most dangerous rebellion that India has ever seen.
I must warn your Lordships that our authority in India is steadily waning at the present time, and that there is no other authority which can possibly stand in its place. Gandhi's plan of making life impossible to Europeans in India is much more dangerous than a rising, which can always be met face to face and put down, I could give your Lordships numerous instances to show what white men and women have to endure in India, where the object is to reduce their position to that of a beleaguered garrison cut off from necessary supplies and services.
The European Association has made four specific suggestions which, as the noble Earl has seen them, I will not quote. I do not for a moment expect him to give any details of the steps which are taken or
1022
to be taken, but I hope he will be able to say that the Government of. India realises the growing gravity' f the situation, understands where the stirring up of race hatred among the ignorant and fanatical masses must lead us, and is preparing to take steps to save the situation before it is too late. In parts of India now crime and corruption are steadily growing, and intimidation is rampant, as it is in different degrees in Ireland, in Egypt, and in Palestine, where also minorities are doing their best to attack the British Empire. We have even seen lately an attempt to produce a sort of terror in this country.
Before long the masses of India will acutely feel the effects of the lapse of the authority which has given them security and order in the past, and will also feel the growing inefficiency of Government in many of its Departments. Believe me my Lords, they will unhesitatingly throw the whole blame of this upon us, and then they will demand, as the extremists are now doing, that British rule in India should be brought to an end. Then, as has happened in all the long centuries of Indian history where rule has lapsed, there will come a chaos which, in my opinion, will be deeper and darker than the chaos which followed the collapse of the Mogul Empire. I beg to ask my Question.
THE UNDER-SECRETARY OF STATE FOR INDIA (THE EARL OF LYTTON): My Lords, when I first saw my noble friend's Question upon the Paper I was in sonic doubt as to what his motive could have been in asking it, because the suppression of disorder and the protection of life and property is the duty of the executive Government of India, as of the Government in every country in the world. And I feel that I might, perhaps, have answered my noble friend in a sentence by saying that in order to protect the lives and property of Europeans and loyal Indians the Government will take Whatever steps appear to them to be necessary in any situation which may develop from day to day.
Parliament is entitled to assume that the executive 'Government will fulfil this elementary duty of every Government, at any rate until it has evidence to the contrary. It is not the function of Parliament to tell the. Executive how to carry out such a duty as this, though, of course, it is the right and proper function of Parliament to

1023
criticise the Executive for any error for which they may be responsible in fulfilling this particular function. When the noble Lord's Question appeared on the Paper I was not sure whether his object was to state that the Government had failed in any respect in the past in its duty of protecting the lives and property of the citizens of India. I am not quite sure now, having heard the noble Lord's speech, whether that is really his motive. He has drawn a very gloomy picture of the state of affairs in India, and one to which, I can assure him, I am not prepared to subscribe. I cannot for a moment agree with him when he says that the only place where a European is not insulted in the streets is in the Native Indian States. Even so, I did not gather from his speech that he wished to hold the Government responsible for the picture which he had drawn, supposing it had been a true one. But I may say to him that if he will formulate a charge against the executive Government in India, so far as the Secretary of State is responsible for it, I am prepared at any moment to meet him and defend it against any criticism which he may raise.
I was rather disposed, on the whole, to believe, at any rate until I heard the noble Lord's speech, that his object in placing his Question on the Paper was to give me an opportunity of correcting somewhat the picture of the state of affairs in India which has been drawn recently in the newspapers, and of assuring your Lordships of the confidence which His Majesty's Government feel in those who are now responsible for the executive Government in India. Anyhow, with your Lordships' permission, I wish to take this opportunity of saying a few words in that sense. I can find no justification for the statements which have been recently made in the Press and for the picture which the noble Lord has just presented to the House. It is true that from time to time messages are sent by the Calcutta correspondent of the Morning Post describing in very lurid terms the situation in India; but your Lordships can judge what value to attach to this informant when I remind the House that a few weeks ago this same correspondent was responsible for circulating a story that there had been a mutiny in a Sikh regiment which had resulted in the disbanding of the unit after eighteen men had been shot. I have no doubt that report was widely believed in this country. But we found, on investigation, that there was no shadow
1024
of truth of any kind in the statement, and I can only believe that it was circulated with the direct purpose and object of discrediting the Government in India at the present time.
Then my noble friend has referred to the European Association. He says that this Association is not an alarmist body. I am afraid I find it very difficult to agree with him in that matter. But whatever may be the views of the Association itself, he will hardly, I think, deny that the paid agent and lecturer of that Association in this country at this moment is most certainly an alarmist source of information. The Rev. P. Sanderson, who is, I understand, the representative, agent, and lecturer of the European Association in this country, is now going about lecturing to the people, and inserting articles in the newspapers, to the effect that the lives of Englishmen in India are in danger, and that officials of the Civil Service are so hampered by the India Office that it is impossible for them to do their duty or to enforce the law.
Lately he has been writing to Members of Parliament to tell them that the Government are expecting a rising in Bihar this month; that inadequate protection had been provided; and that all English women whom sickness has prevented from leaving at once will certainly be murdered with every circumstance of outrage and horror. These are the words used by the European Association which, my noble friend says, is not an alarmist body. I can conceive of nothing more mischievous, and of no greater disservice, either to the Government or to the welfare of the people of India, than that the people of this country should be given a picture of that kind at the present time. Surely, it is the duty of any man who receives information which entitles him to believe that there is a critical situation in India, calling for prompt protective measures, to place the evidence upon which he relied for those statements before the Government, in order that they might take the opportunity of providing the necessary protection. The very persons from whom this gentleman withholds his information are the only people who can take the necessary steps to deal with it, if it is true.
On receipt of letters from Members of Parliament to whom Mr. Sanderson has been writing, we telegraphed to the Government of India to find out what truth there was in his statements, and we received a

1025
reply from the Viceroy to the effect that those statements had been grossly exaggerated, and that the situation, which in May was creating a great deal of anxiety, had by now been considerably relieved. We were assured that so far as the Government were concerned no rising is anticipated. Moreover, we were told that at no time did the Government, or any official on behalf of the Government, state that a rising was expected in Bihar, though such a statement was made by an officer of the Bihar Light Horse to his men. This statement, which Mr. Sanderson has been circulating with improvement of his own, owes its origin really to the fear of the planters themselves, because this Bihar Light Horse is a body composed, I understand, largely of planters. Their anxiety is very intelligible, and is an anxiety with which I greatly sympathise, but the statement did not originate, as Mr. Sanderson has been saving, from any official source. The telegram concludes by saying that, according to the latest reports, the agitation has now declined in bitterness; that the feeling against Europeans is less evident; and that the planters themselves are less apprehensive of trouble.
I do not want to err on the other side, in rebutting what I think are the grave exaggerations of my noble friend, by drawing a fanciful or in any way rosy picture of the state of affairs in India. The situation there is quite serious enough, and the anxieties of those upon whom the responsibilities of Government rest are grave enough without these calculated misrepresentations. As your Lordships are aware, the whole world at this moment is filled with a dangerous, and, I think, unprecedented spirit of unrest and disorder. There is hardly a country in the world in which the Government has not ample cause for anxiety, and where methods of agitation quite unprecedented are not proceeding.
India certainly has not escaped this epidemic. We are often told that there are 300,000,000 in India, most of whom are ignorant, uneducated, excitable and superstitious people, and the noble Lord has again reminded your Lordships this evening that there has been carried on amongst that population an intensive campaign of anti-Government and anti-British sentiment by a man who is not only a popular figure, not only revered and respected for his private life, but is, as the noble Lord has said, believed to possess supernatural
1026
powers, and, by some, to have divine origin. I think it says very much for the good sense of the people of India, awl for the wisdom and discretion of the Executive authorities in that country that, given those circumstances, the situation is not very much worse than it is.
The noble Lord has referred to what Lord Sinha said two years ago. The non-co-operation campaign has, it is true, been carried on with the greatest intensity, and with every effort which Mr. Gandhi and his followers can summon to their aid. So far as it has gone at present it has conspicuously failed in its object. Its appeal to the educated classes failed lamentably. It is true that there was a temporary success when it turned from the educated classes to the young students. Even that phase has passed by. A temporary success has been gained by helping to harness the non-co-operation movement to the labour disturbances which exist in India as in all other countries. The noble Lord has referred to the success —if it may be so described—achieved amongst the coolie tea planters in Assam. The campaign, having failed in all other directions, is at the present moment making a special effort among the ignorant and excitable masses in India. I do not deny, for a moment, that that means a very much more dangerous phase in the campaign, a phase which must occasion the gravest anxiety to the Governments who are responsible for preserving order when such a thing is going on.
I think that the worst features at the present moment are the attempts to boycott individuals, and to endeavour to withdraw from service the domestic servants upon whom, as my noble friend says, Europeans in India are specially dependent. But when my noble friend says that the interviews which Mr. Gandhi recently had with the Viceroy have only tended to increase his importance and the belief in his divine origin, I must disagree with him. I think the opposite is proved out of Mr. Gandhi's own mouth. The mere fact that he found it necessary to explain and excuse himself to his followers for having met the Viceroy to discuss the situation is a proof that the result is not, as the noble Lord said, to increase the power and popularity of Mr. Gandhi, but to make it necessary for him to defend his action.
The present phase of the campaign in India is a very dangerous and anxious one,

1027
and to ask, at such a time, whether the Government is alive to the danger seems to me to be really asking a superfluous question. There is not a single Provincial Government in India at this moment which is not fully alive to the danger, and if it is suggested that the Government are not to be relied upon to take what steps are necessary I again venture to disagree entirely from the noble Lord. If he will bring any specific charges against the Government I shall be prepared to defend their action. So far as the Earl of Reading is concerned, he certainly needs no words of mine for his defence. He has only- recently gone to India. He left this country with the complete confidence not only of your Lordships' House but of almost every section of opinion in the country, and since he has been there he has done nothing whatever to forfeit that confidence, but a great deal to enhance the reputation he took to India.
The very incident of the exodus of the coolies from Assam to Eastern Bengal is a matter which, but for the discretion, wisdom and promptitude of Lord Ronald-shay's Government, might have proved very much more serious than it was. The noble Lord has spoken of from 300 to 400 cases of death from cholera amongst the coolies. I have no official information which will substantiate those figures. We were informed of 150 deaths front cholera at the end of May. It may be that by now the figures have increased to something like double the number, hut I am unable to confirm the figures. I have no hesitation in saying that but for the prompt and effective action taken by Lord Ronald-shay's Government the situation and the casualties would have been much worse.
It may be said with regard to Bihar, where trouble has been recently anticipated, that because we have an Indian Governor we have less cause to feel confidence in his efficiency. I feel it is only right and due to Lord Sinha to say that His Majesty's Government have absolute and complete confidence in the efficiency, courage and wisdom of his administration. He has recently shown all these qualities in a circular which he issued to the officers in his Province setting forth the official attitude of his Government towards the non-co-operation movement. That document lacked nothing in the way of precision or courage, and it called forth at once very vigorous protests, criticisms and abuse, from the vernacular Press. Lord Sinha is
1028
in a very difficult position, and I think he may be trusted to deal with it with courage and discretion.
I have tried to correct in sonic respects, from information supplied to us in answer to direct questions from the Viceroy himself, the picture drawn by the noble Earl. I hope he will take some comfort from my assurance. Let me say that if he feels any anxiety with regard to the situation in India and desires specific information, I shall be always at his service. I hope Ire will seek to obtain his information from that source and will not be led astray by what I cannot help regarding as certainly the alarmist and exaggerated, and in many cases deliberately exaggerated, accounts of what is taking place in India, which appear in the Press. I beg him also not to lose confidence in those who are holding the positions of Viceroy and Governors of Provinces in India; at any rate, until they have done something to deserve it. He himself has held with great distinction such a post, and, therefore, knows what are the difficulties and the responsibilities of the Governor of an Indian Province. Those difficulties and anxieties are greatly increased at the present time. The men on the spot, in these circumstances, are entitled to the support of the people at home, and in spite of the exaggerated opinions in the Press I can assure your Lordships that, so far as the Government are concerned, they have their full and unabated confidence.
LORD SYDENHAM: May I thank the noble Earl for his very complete reply to my Question? I cannot help saying that he has attacked me for things I never said. I never spoke of the danger of a rising. I spoke of a rising as being a less dangerous thing than non-co-operation in its effect upon the lives of our countrymen. He spoke as though I had attacked some one. I was not attacking any one, still less was I making any sort of reflection on Lord Sinha in Bihar, whose recent circular I know of and who has been attacked by his fellow countrymen in consequence of it. I am glad to know that the noble Earl looks upon this non-co-operation movement, as I do, as a very serious danger. I am glad to learn that he agrees with me absolutely on that point. Therefore, I do not think I have done any harm in raising this matter this afternoon.
House adjourned at seven a clock.

BARONIES OF MONTAGU, MONTHERMER, MONTACUTE AND POLE OF MONTAGU.
Petition of Edith Maud, in her own right Countess of Loudoun, and of Elizabeth Frances, Viscountess St. Davids, praying that they may be allowed to refer in the evidence, and in the printed case to the proceedings in their claims to the Baronies of Botreaux, Hungerford, De Moleyns, Hastings, Strange of Knokin and Stanley, upon which resolutions and adjudications were made by this House on the seventeenth day of December last; read, and ordered as prayed, subject to all just exceptions and a liberty to all concerned to take objections hereafter.
EARLDOMS OF SALISBURY AND WARWICK.
Petition of Edith Maud, in her own right Countess of Loudoun, and of Elizabeth Frances. Viscountess St. Davids, that they may be allowed to refer in the evidence and in the printed case to the proceedings in their claims to the Baronies of Botreaux, Hungerford, De Moleyns, Hastings, Strange of Knokin and Stanley, upon which resolutions and adjudications were made by this. House on the seventeenth day of December last, and to use for the purposes of their printed case such evidence as may have been admitted by this House in the Petitioners' claims to the Baronies of Montagu, Monthermer, Montacute and Po le of Montagu; read, and ordered as prayed, subject to all just exceptions and a liberty to all concerned to take objections hereafter.
PRESTON'S DIVORCE BILL, [H.L.]
Returned from the Commons, agreed to.
RADCLIFFE AND LITTLE LEVER JOINT GAS BOARD BILL.
Returned from the Commons, with the Amendments, agreed to.
TITHE ANNUITIES APPORTIONMENT BILL.
Returned from the Commons, with the Amendment agreed to.
METROPOLATION WATER BOARD (VARIOUS POWERS) BILL.
Brought from the Commons; read 1ª and referred to the Examiners,
TITHE ANNUITIES APPORTIONMENT BILL.
Order of Thursday last for printing the Bill as amended on Third Reading, discharged.
LOCHABER WATER POWER BILL.
The King's consent signified, and Bill reported with Amendments.
EAST SURREY WATER BILL.
  SLOUGH TRADING COMPANY, LIMITED (CANAL) BILL. [H.L.]
    DE TRAFFORD ESTATES BILL. [H.L.]
    Reported, with Amendments.
MINISTRY OF HEALTH PROVISIONAL ORDERS (No. 4) BILL.
  MINISTRY OF HEALTH PROVISIONAL ORDERS (No. 5) BILL.
    MARRIAGES PROVISIONAL ORDER BILL.
    Reported, without amendment, and recommitted to a Committee of the Whole House on Tuesday next.
PILOTAGE PROVISIONAL ORDERS (No. 4) BILL.
  LOCAL GOVERNMENT (IRELAND) PROVISIONAL ORDERS BILL.
  Reported, without amendment, and recommitted to a Committee of the Whole House on Tuesday next.
MINISTRY OF HEALTH PROVISIONAL ORDERS (WATER) BILL.
Reported, with an Amendment, and recommitted to a Committee of the Whole House on Tuesday next.
ST. HELENS CORPORATION BILL.
Reported from the Select Committee, with Amendments.

SUNDER LAND AND SOUTH SHIELDS WATER BILL.
Reported from the Select Committee, with Amendments.
The LORD CHANCELLOR The LORD CHANCELLOR acquainted the House, That the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that the Standing Orders applicable to the following Bills have been complied with:

Ministry of Health Provisional Orders (No. 7).

Ministry of Health Provisional Orders (No. 9).

Ministry of Health Provisional Orders (Shaftesbury Extension).

Also the Certificate that the further Standing Orders applicable to the following Bill have been complied with:
London County Council (Money),
The same were ordered to lie on the Table.

COLNE CORPORATION BILL.
Reported, with Amendments.
LANCASHIRE COUNTY COUNCIL (DRAINAGE) BILL.
Committed: The Committee to be proposed by the Committee of Selection.
SWANSEA GAS BILL.
  NUNEATON CORPORATION BILL.
  Committees to meet on Tuesday next.
POLICE PENSIONS BILL.
Report of Amendments (which stands appointed for this day) put off to Tuesday next.
CORONERS (REMUNERATION) BILL.
To be read 2ª on Thursday next.
EDUCATION (CONSOLIDATION BILL. [H.L.]
House to be in Committee on Tuesday next.