Sitting of 26 April 1928

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.
Shropshire, Worcestershire, and Staffordshire Electric Power Bill,
Read the Third time, and passed.

ORAL ANSWERS TO QUESTIONS.
  NAVAL AND MILITARY PENSIONS AND GRANTS.

    ANNUAL REPORT.
    Mr. ROBINSONasked the Minister of Pensions whether the Annual Report for the year ended 31st March, 1928, will be presented before the end of April; and, if not, when it is anticipated that it will be available?
    The MINISTER of PENSIONS (Major Tryon): Much of the material required in the Annual Report of my Department is not available until some time after the end of the Financial Year. I could not therefore undertake to issue the Report by the date suggested. I took steps last year to expedite the issue of the Report for 1926–27, and the Report for the Financial Year just concluded will be issued with the least avoidable delay.

    DISABILITY PENSIONS.
    Mr. SMEDLEY CROOKEasked the Minister of Pensions if he will consider the advisability of amending the War Pensions Regulations to provide that a claimant may qualify for pension if the evidence available indicates the probability that his disability was due to, or aggravated by, war service, although such evidence may fall short of definite proof?
    Major TRYON: Positive evidence in a legal sense has never been, as is suggested, a condition of the admission of a claim under the Royal Warrants. Every case is considered on merits in the light of all the evidence available in regard to it and it is the practice of my Department to give every claimant under the Royal Warrant all possible assistance in procuring the necessary evidence.

  PRISONERS (ESCAPES).
  Mr. DAYasked the Secretary of State for the Home Department whether he can give the exact number of convicts who have escaped from any of the prisons under his control for the 12 months ended to the last convenient date; and whether he will also state what changes have been approved by him to strengthen the precautions to prevent the escape of prisoners?
  The SECRETARY of STATE for the HOME DEPARTMENT (Sir William Joynson-Hicks).: I gave the hon. Member, in reply to his question of 23rd February last, figures as regards prisoners generally. If his present question refers to convicts as distinct from local prisoners, the answer is eight. It is the practice, whenever an escape occurs, to hold a careful inquiry into the circumstances, and as a result of such inquiry detailed measures of various kinds are taken.
  Mr. DAY: Have the precautions which the right hon. Gentleman said he was approving in order to strengthen the measures to prevent these escapes been put into operation?
  Sir W. JOYNSON-HICKS: Different precautions are being put into effect in prisons; since the hon. Member addressed his previous question to me, there have been no escapes, and I hope that the precautions have been sufficient.

  ARRESTED IRISHMEN (RUSSIAN MONEY).
  Major KINDERSLEYasked the Home Secretary whether he can give the House any further information as to the transmission of money to Communist agents by a Russian bank in this country?
  Sir W. JOYNSON-HICKS: No, Sir. My inquiries are being conducted with all possible expedition, but they cannot be completed for some days yet.

  EDUCATION.

    INSTRUCTION BY CINEMA.
    Sir ROBERT THOMASasked the President of the Board of Education in how many schools the cinema is more or less regularly used in imparting instruction; and how many of these schools are in Wales, giving the numbers for each county?
    The PRESIDENT of the BOARD of EDUCATION (Lord Eustace Percy): I am afraid that I cannot give the particulars asked for by the hon. Member. The cinema is, of course, used occasionally in a number of schools as a means of supplementing and reinforcing the ordinary class-room instruction.

    ELEMENTARY SCHOOL CURRICULUM (ECONOMICS).
    Mr. RYEasked the President of the Board of Education whether he will consider the advisability of including in the elementary school curriculum, Standards 6 and 7, a primary course of economics?
    Mr. SMITH-CARINGTONasked the President of the Board of Education whether he has considered the advisability of including a primary course of economics in the elementary schools curriculum; and if he can make any statement as to the practicability of doing so?
    Lord E. PERCY: The Board do not prescribe the subjects to be included in the curricula of schools. Economics is, however, taught in many secondary schools, particularly those which provide commercial courses, and also in a considerable number of technical and continuation schools; but its teaching as a distinct subject is not really suitable for children of elementary school age, and simple lessons on the elementary principles of economics are more generally and, I think, more effectively given in connection with lessons in history and geography.

    WORKERS' EDUCATIONAL ASSOCIATION (GRANTS).
    Mr. CULVERWELLasked the President of the Board of Education what is the nature of the Board's grants to the Workers' Educational Association; and if he is satisfied with the manner in which these grants are expended by this association?
    Lord E. PERCY: The Board do not pay grants to the Workers' Educational Association as such, but to the district organisations of that Association in respect of the salaries of tutors conducting one-year and terminal classes approved by the Board under their regulations. These grants are limited to a maximum of 75 per cent. of the salary of the tutor, exclusive of his expenses. Where the classes are conducted under the direction of the local education authority the authority's approved expenditure in aiding them is recognised by the Board for grant. In addition to compliance with the Board's regulations, classes assisted from public funds are required to satisfy certain general conditions which were laid down in 1920 by the Associations of Local Education Authorities and accepted by the Workers' Educational Association. I will circulate a copy of these conditions in the OFFICIAL REPORT. The classes are visited and inspected by the Board's inspectors, and I believe these conditions are generally observed by the tutors and by all those directly concerned with the organisation of the classes. Members of the Association not directly concerned with the organisation of classes in the district will, I am sure, realise, on their side, the desirability of abstaining, in the pages of the "Highway" or otherwise, from expressions of opinion on matters of current political controversy which may give the public a wrong impression of the character of the Association's strictly educational work.
    Mr. W. THORNE: Has the Noble Lord at any time received reports from his inspectors making complaints about the work done by this Association?
    Lord E. PERCY: I have received criticisms from my inspectors in the same way as I have received criticisms of all classes of education, but, as regards any serious complaint of political bias in teaching, I have received no such complaints.
    Mr. CULVERWELL: Is the right hon. Gentleman not aware that the Workers' Educational Association was at one time intimately connected pith the National Council of Labour Colleges, which is avowedly an extremist organisation; that comment has been aroused by the fact that in one class a Communist, teacher is employed; and that considerable doubt exists in the minds of Members on this side of the House as to whether the educational classes are conducted in the way in which he has said they were.
    Lord E. PERCY: As regards the last of these supplementary questions, I hope that, if there be any doubt in the minds of the people, it will be allayed by the answer which I have just given; these classes are carefully inspected. As regards the second supplementary question, if my hon. Friend has any instance where he thinks a class is not properly conducted, and he will give it to me, I shall be glad to go into it. In reply to the first supplementary question, I really think that my hon. Friend is misinformed. So far from being closely connected with the National Council of Labour Colleges, an organisation which is not concerned with education, but with pure political propaganda, the Workers' Educational Association has always, in its published aims and in its activities, tried in every way to dissociate itself from the ideals of the National Council of Labour Colleges.
    Following is the copy of the Conditions:
    "The following conditions should be satisfied before financial assistance is given to W.E.A. classes by local education authorities:—

    (a) Courses of study assisted out of public funds must aim at freedom from party bias and from any flavour of political propaganda.

    (b) Such courses must be conducted by teachers who have a thorough knowledge of the subject and have the experience and training, as well as personality and understanding of the students' needs, necessary to impart that knowledge. It is by these tests alone that the qualifications of teachers should he judged.

    (c)Such courses must he open to all students who desire to take them and are able to profit by them.

    (d) In order to ensure the proper observance of the foregoing conditions, it is essential that each class aided by a local education authority should be
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    open to inspection by the authority and that the syllabus and tutor should be approved by the authority or by such other body as the authority may consider qualified to exercise those functions."

  PUBLIC HEALTH.

    MIDWIVES.
    Mr. DAYasked the Minister of Health what steps he has taken to set up a committee to inquire into the general question of the training and supply of midwives; and have any members of this committee yet been appointed?
    The MINISTER of HEALTH (Mr. Chamberlain): I have invited certain ladies and gentlemen to serve on this committee.
    Mr. DAY: Can the right hon. Gentleman say when the names of the committee will be announced.
    Mr. CHAMBERLAIN: I have not yet received replies from those I have invited, but as soon as I have, I shall be in a position to announce the names.

    MATERNAL MORTALITY.
    Sir BASIL PETOasked the Minister of Health whether his Department has any statistics of the number of deaths of women in pregnancy from septic peritonitis; and whether he proposes to take any steps to safeguard them against the onset of this condition at maternity welfare centres?
    Mr. CHAMBERLAIN: The last year for which a detailed classification of the deaths due to pregnancy and childbearing is at present available is 1925, and in that year there were 84 deaths from septic peritonitis, perimetritis, and pelvic peritonitis. As regards the second part of the question it is one of the duties of the doctors at ante-natal clinics to detect and remedy any focus of infection which might later be a cause of septic infection.
    Sir B. PETO: Can the right hon. Gentleman have the returns of his Department kept a little more up to date—those are for 1925—and, further, may I ask whether he is not aware that septic peritonitis almost always supervenes upon attempted abortion, and is not that brought about by the policy of his Department in denying information on birth control at maternity and welfare centres?
    Dr. VERNON DAVIES: In what way is it possible to get rid of septic peritonitis by anything that is done at an ante-natal centre?
    Lieut.-Commander KENWORTHY: Will the right hon. Gentleman deny the suggestion that his policy, approved by this House, of refusing Government information on birth control is in any way responsible for this state of affairs?
    Mr. CHAMBERLAIN: Yes.
    Mr. THURTLE: Is it not the fact that the lack of information as to restriction of families does cause these cases?
    Mr. SPEAKER: Question time is not the time at which to pursue these controversial questions.

    TUBERCULOSIS.
    Captain BOURNEasked the Minister of Health the estimated number of persons in England and Wales suffering from tuberculosis on 1st January, 1928, or on the latest convenient date?
    Mr. CHAMBERLAIN: According to the returns furnished to my Department, the total number of notified cases of tuberculosis which remained on the registers of Local Authorities on the 31st December last was 363,187.
    Captain BOURNEasked the Minister of Health the total number of sanatoria for the treatment of tuberculosis in England and Wales, distinguishing between those maintained wholly or partially from public funds and those supported by fees paid by the patients?
    Mr. CHAMBERLAIN: The number of institutions approved by my Department for the residential treatment of tuberculosis under the schemes of local authorities in England and Wales (excluding general hospitals) is 349, of which 215 have been provided by local authorities and 134 by voluntary bodies. These are all maintained wholly or partially out of public funds. I have no complete information regarding those institutions not so maintained.
    Captain BOURNEasked the Minister of Health the number of persons in England and Wales who underwent treatment for tuberculosis in sanatoria during the year 1927, and the average duration of such treatment?
    Mr. CHAMBERLAIN: Complete particulars for the year 1927 are not yet available. During 1926 the number of persons who received residential treatment for tuberculosis under the schemes of local authorities was 63,680, and the average duration of treatment was approximately 150 days.

    DEAF AND DUMB PERSONS.
    Mr. RAMSDENasked the Minister of Health whether it is his intention to appoint a Departmental Committee to investigate and report upon the social and industrial position of the deaf and dumb?
    Mr. CHAMBERLAIN: I would refer my hon. Friend to the reply given to a question put on the 4th instant by my hon. and gallant Friend, the Member for Basingstoke (Sir A. Holbrook) of which I am sending him a copy.

  POOR LAW.

    HOLLESLEY BAY COLONY AND BELMONT INSTITUTION.
    Mr. DAYasked the Minister of Health the last occasion on which the in specters of his Department visited the Hollesley Bay colony and the Belmont institution when the last reports were made by his inspectors on the administration of these establishments; and whether the improvements recommended by his inspectors have been carried out in accordance with their recommendations?
    Mr. CHAMBERLAIN: As regards the Hollesley Bay colony I would refer the hon. Member to the answer given to the hon. Member for Bow and Bromley (Mr. Lansbury) on the 21st March last. The Belmont institution has been inspected from time to time, the last occasion being on the 28th February last, and suggestions made for improvements in points of detail have been adopted. I am not, however, satisfied that the best use is being made of the institution, and conferences between my officers and the committee of management have taken place with a view to reorganising the arrangements.
    Mr. DAY: Have the improvements recommended by the inspectors of the Institutions been adopted by the right hon. Gentleman's Department?
    Mr. CHAMBERLAIN: Many of them have.
    Mr. DAY: Can the right hon. Gentleman say whether the rest will be, because what is the use of sending inspectors dam there to make suggestions if they are not carried out?
    Mr. CHAMBERLAIN: I am not in a position to say that every single detail has been carried out, but the majority of the recommendations have been.

    CASUAL WARDS (SMALL-pox).
    Mr. KELLYasked the Minister of Health whether arising out of the necessity to continue the arrangements for the detection of small-pox amongst casuals and the issue of Circular 830 pointing out that casual wards should not be closed except in the most exceptional circumstances, he can give any indication as to the extent the advice contained in the circular is being carried out by boards of guardians who have closed, or were contemplating the closing of, casual wards?
    Mr. CHAMBERLAIN: The circular in question deals with the detection of smallpox among casuals and advises boards of guardians that in the event of a case of small-pox being found in a casual ward the temporary closing of the ward should not be necessary if certain precautions are taken; the circular does not in any way deal with the question of the permanent closing of redundant casual wards.
    Mr. KELLY: To what extent have the Minister's views been accepted by these hoards of guardians?
    Mr. CHAMBERLAIN: I shall very soon have to say.

    VAGRANCY.
    Mr. WALTER BAKERasked the Minister of Health whether his attention has been drawn to the proposals made by the Yeovil Board of Guardians for the solution of the vagrancy problem; and whether he will consider the advisability of appointing a Departmental Committee to study these and similar proposals and report on the problem?
    Mr. CHAMBERLAIN: Yes, Sir. The proposals of the guardians are not essentially new, the question of establishing labour colonies and of detaining casuals for prolonged periods having been con-
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    sidered on several previous occasions. I doubt whether there would be any advantage in the appointment of such a Departmental Committee as is proposed at the present time.

  CONTRIBUTORY PENSIONS ACT.
  Mr. KELLYasked the Minister of Health whether he is aware that the Highways Committee of the Aldershot local authority are recommending that the wages of all employees over 65 years of age should be reduced by the amount of the pension under the Widows', Orphans', and Old Age Contributory Pensions Act: and whether he will make representations to the local authority in question as to the undesirability of such a policy?
  Mr. CHAMBERLAIN: I am not aware of this case and I have no authority to intervene in the matter. I would refer the hon. Member to my remarks during the discussion on the 22nd February last on this Act.
  Mr. KELLY: In view of the advantage which has been taken by the Aldershot Council of this Act of Parliament, will the right hon. Gentleman make some representation to this particular council?
  Mr. CHAMBERLAIN: No, Sir; I do not think I can do that.
  Mr. ROBINSONasked the Minister of Health if steps will be taken to expedite the dealing with claims made by widows for pensions under the Widows', Orphans' and Old Age Contributory Pensions Act; and whether it is possible to make such staff arrangements as will permit of the pension being issued within 14 days of the application instead of the average five weeks, which it now takes, before the pension is issued?
  Mr. CHAMBERLAIN: Every effort is being made to dispose of claims for pensions without avoidable delay, and it is hoped as the pressure is relieved to make some reduction in the time at present taken. I do not, however, think it possible, in view of the investigation which every claim entails as regards the insurance history of the deceased husband and the verification of marriage and of the dates of birth of children, to make such arrangements as will ensure that the award is made within 14 days after the application.
  Mr. DALTON: Can we be assured that there will not be cases of four or five months' delay?
  Mr. CHAMBERLAIN: The hon. Member will appreciate that the extraordinary number of claims that have come in has put a very heavy strain upon the resources of the Department, and they are working almost night and day, but the work is now beginning to clear, and I do not think that there is likely to he any repetition of long periods of delay.
  Mr. L'ESTRANGE MALONE: Would it not be a good thing to defer the dismissal of many hundreds of officials from Acton, and put them on this work?
  Mr. CHAMBERLAIN: No, Sir, that will not facilitate this work.

  HOUSING (RURAL WORKERS) ACT.
  Lieut.-Colonel ACLAND-TROYTEasked the Minister of Health whether, in cases where the operation of the Housing (Rural Workers) Act are held up by delays caused by county councils, he will give authority to rural district councils to work the Act?
  Mr. CHAMBERLAIN: If such cases as those to which my hon. and gallant Friend refers should arise, I will certainly consider whether different administrative arrangements should be made in those areas. I have, however, issued a Circular making various suggestions to county councils with regard to the administration of the Act, and I hope that more rapid progress will be secured.
  Sir EDMUND TURTON: Is the right hon. Gentleman aware that there are no delays whatever on the part of county councils in England and Wales?
  Mr. CHAMBERLAIN: No, Sir, I am afraid I cannot quite say that.

  AGRICULTURE.

    FARMERS' PRODUCE (TOLLS, EXETER).
    Lieut.-Colonel ACLAND-TROYTEasked the Minister of Health whether he is aware that, under Acts of Parliament of 1834 and 1841, farmers delivering goods at shops in Exeter have to pay tolls whereas goods arriving by train escape
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    these tolls; and whether he will consider the introduction of legislation to repeal these Acts?
    Mr. CHAMBERLAIN: I presume that the provisions which my hon. and gallant Friend has in mind are those under which persons selling from door to door certain articles of agricultural produce, etc., are liable to pay the same toll as if the goods had been taken into the market. The Acts in question are private Acts relating to Exeter, and any proposal for the alteration of these particular Acts would have to be by Private Bill, or by Provisional Order.
    Lieut.-Colonel ACLAND-TROYTE: Is not the right hon. Gentleman aware that these tolls act as a. direct tax upon home grown produce and that they are escaped by foreign produce? Cannot the Government take any action to do away with this injustice?
    Mr. CHAMBERLAIN: I think this is rather an ancient survival from other times. I suppose the toll in question was intended to protect local markets. As I have pointed out, the remedy is in the hands of the local authority.
    Mr. W. THORNE: Will the Minister be good enough to make representations to the Minister of Transport advising him to get rid of these tolls?
    Mr. CHAMBERLAIN: This has nothing to do with the Minister of Transport.
    Lieut.-Colonel ACLAND-TROYTE: Is the right hon. Gentleman aware that these Acts were passed at a time when there was no foreign competition and when the produce was sold in the streets?

    QUARANTINE STATION, EAST LONDON.
    Mr. EVERARDasked the Minister of Agriculture which countries are now prepared to receive animals from the new quarantine station; and whether negotiations are in progress to endeavour to extend this arrangement to all countries?
    The MINISTER OF AGRICULTURE (Mr. Guinness): I understand that the Union Government of South Africa (with the Mandated Territory of South-West Africa), Northern and Southern Rhodesia, Kenya Colony and the Govern-

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    ment of Palestine are prepared to receive animals from the quarantine station. Other Dominions and Colonies have been informed of the provision of the new station but have not yet indicated their readiness to accept animals which have passed through the station.
    Mr. EVERARDasked the Minister of Agriculture how many animals can be accommodated at the new quarantine station at the East London Docks; to whom the applications for accommodation should be sent; and what is the cost per animal whilst they remain there?
    Mr. GUINNESS: The Station contains 28 boxes and 18 pens, and the maximum accommodation, which depends on the size of the animals, would be about 50 cattle and 36 sheep and pigs. Applications for admission should be sent to the Secretary, Royal Agricultural Society of England, 16, Bedford Square, London. The charges for care and maintenance are £3 per head for cattle and £1 for sheep and pigs for the quarantine period of 14 days. For each separate consignment of animals from the same premises there is a fee of 10s. to cover the Ministry's out-of-pocket expenses.

    SMALL HOLDINGS, SCOTLAND.
    Mr. HARDIEasked the Secretary of State for Scotland how many applicants for small holdings are on the waiting list in Scotland?
    The UNDER-SECRETARY of STATE for SCOTLAND (Major Elliot): The total number of applications for small holdings outstanding at this date is 4,996 and for enlargements of existing holdings 3,299.
    Mr. HARDIE: What is the intention of the Department in regard to giving a greater outlet for those who are standing idle?
    Major ELLIOT: My right hon. Friend has made his policy and the policy of the Department very clear on more than one occasion.
    Mr. RILEY: When was the list revised and how old is it?
    Major ELLIOT: I am afraid that must ask for notice of that question.

  PROVINCIAL ART GALLERIES AND MUSEUMS.
  Sir HARRY BRITTAINasked the Finnacial Secretary to the Treasury whether any steps can be taken to inform provincial art galleries and museums as to what art treasures the National Gallery, the Tate Gallery, and the British Museum have to lend to them if proper application he made in the interests of education?
  Captain BOWYER (Lord of the Treasury): So far as the Tate Gallery is concerned, I would refer the hon. Member to the answer given to the hon. Member for the Devonport Division (Mr. Hore-Belisha) on 28th February last. The statements there made apply also to the National Gallery. Communications between those Galleries and provincial Galleries are constant, and the latter can always obtain a list of pictures available for loan. The British Museum sent a circular a few days ago to all provincial museums about loan facilities, and are now taking special steps to draw their attention to the matter again.
  Sir H. BRITTAIN: I thank the hon. and gallant Member for his answer, and would ask him if it is not the fact that up till now, at any rate, the facilities offered by South Kensington have been known and appreciated throughout the country, and have been of immense benefit to provincial museums and art galleries, but that the facilities offered by the British Museum, the Tate Gallery and the National Gallery have been entirely unknown?

  TRANSPORT.

    MOTOR CAR REGISTRATION NUMBERS (TANSFE FEE).
    Lieut.-Commander KENWORTHYasked the Minister of Transport if attention has been called to the fact that the fee for transfer of motor car registration numbers is a flat rate of £5; if he is aware that this is a prohibitive sum for many owners of small cars who may wish to transfer their old numbers: and whether he will consider allowing a sliding scale of charges for the transference of motor numbers in the same ratio as the annual taxation of cars?
    The MINISTER of TRANSPORT (Colonel Ashley): The registration numbers are required as identification marks, and it is not desirable that transfers should be numerous. While the fee of £5 is sufficient to act as a deterrent against unnecessary transfers; I do not think that it can be regarded as prohibitive in cases where, for sentimental or special business reasons, it is desired to transfer a registration number from an old car to a new one, and I do not propose to disturb the existing arrangement.
    Lieut.-Commander KENWORTHY: Is the right hon. Gentleman aware that I put down this question before the Chancellor of the Exchequer's Budget statement, and now that motorists, and especially small motorists, are to be called upon to contribute so much money to the revenue, could not this concession be made to them, even in sentimental eases?
    Colonel ASHLEY: I confess that my personal sympathies are rather with the hon. and gallant Gentleman in this matter; particularly as I was obliged to pay £5, but on going into the matter I saw the justice of the claim and reluctantly agreed with it.
    Mr. B. SMITH: The latter part of the question specifically asks that the concession may be made in the case of lighter cars. The Minister has agreed that the charge more than meets the cost of the transfer. Is it not neither more nor less than a system of profiteering at the expense of motorists?
    Colonel ASHLEY: No, I cannot agree with the hon. Member. The registration system is a very useful help to the police in identifying cars, and, if it were changed, it would make their task very much more difficult.

    MOTOR CAR LICENCES.
    Mr. JOHNSTONasked the Minister of Transport whether he is aware that a merchant who is compelled by the exigencies of his business to keep a spare motor for use in the event of a breakdown in his regular car transport, is forced to take out a full quarter's licence for his spare ear should it be called into use, although only for one day; and
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    whether, in view of the hardship thus caused, he will make provision for the sale of temporary licences of short duration, either by the police or the post offices?
    Colonel ASHLEY: By taking advantage of the provisions for the surrender of a licence made under Section 18 of the Finance Act, 1924, the owner of a motor vehicle can, in effect, limit his payment of duty to the cost of a licence for any one licensing month in the year. I am not prepared to make provision for the issue of licences for any shorter period.
    Mr. JOHNSTON: Does not the right hon. Gentleman consider that it is a gross injustice in a case where a man's car is not in use, although he has already paid the licence fee for it, that he should be compelled to pay even a month's licence fee for a substitute car for, possibly, only two days' work?
    Colonel ASHLEY: No, Sir, I do not.
    Sir H. BRITTAIN: is not this a very sensible question, and would it not be a sound business proposition to issue a weekly licence at a price which would pay his Department and be of advantage to the user?
    Lieut.-Commander KENWORTHY: Are not all Labour questions very sensible questions?

  ELECTRICITY CHARGES, WANDSWORTH.
  Mr. HANBURYasked the Minister of Transport what action he proposes to take with regard to the application which has been made by the Wandsworth Borough Council for the revision of the maximum prices which may be charged for electricity in that borough?
  Colonel ASHLEY: I have directed an Inquiry to be held into the application of the Wandsworth Borough Council and certain consumers for a revision of the maximum prices which may be charged for electricity in that borough.
  Mr. W. THORNE: Can the right hon. Gentleman state whether this council is governed by what is known as the "Reds" or the "Blues"?

  ROYAL AIR FORCE.

    ACCIDENTS.
    Sir R. THOMASasked the Secretary of State for Air how many Royal Air Force pilots have been killed while flying since 1st January, 1928, both in this country and overseas; and will he give a detailed statement of the various causes which led to their deaths?
    The UNDER-SECRETARY of STATE for AIR (Sir Philip Sassoon): As regards the first part of the question, the number of Air Force pilots killed while flying since 1st January is 15, of whom one was shot down in action. In addition, the following fatalities to personnel of the three Services were involved in these accidents: Royal Air Force, six; Army, two; Navy, two. As regards the second part of the question, I would deprecate, for the reasons given by my right hon. Friend the Prime Minister in his statement regarding Air Force accidents on 10th March, 1927, the giving of detailed particulars of the causes of the various accidents.
    Captain GARRO-JONES: Is the Under-Secretary aware that frequently the Air Ministry reports in cases of individual accidents the cause of the accident such as "an error of judgment," and why can be not classify these accidents so that hon. Members may be in a position to decide what is the main cause of accidents as a whole?
    Sir P. SASSOON: I am afraid that I cannot add anything more to my answer.

    DISPLAY, HENDON.
    Mr. RENNIE SMITHasked the Secretary of State for Air if he can supply particulars of the forthcoming air display at Hendon?
    Sir P. SASSOON: The final details of the programme have not yet been decided, and I cannot add anything at present to the reply which I gave the hon. Member on 27th February.
    Mr. B. SMITH: Is it intended to follow the example of last year and have a bombing expedition?
    Sir P. SASSOON: That has not been settled.

  FLYING ACCIDENT, CHESHIRE.
  Mr. EDMUND WOODasked the Secretary of State for Air whether his attention has been called to an aeroplane fatality which occurred at Dukinfield, Cheshire, on 25th March; whether any inquiry has been held by the Ministry into the causes of this accident; and, if so, with what result; whether there are any Regulations in force governing the landing of aeroplanes on private property in similar circumstances; and, if so, what steps are taken to enforce these Regulations?
  Sir P. SASSOON: The circumstances connected with the accident referred to have been fully investigated by the inspector of accidents, but a complete report has not yet been made. It may be stated, however, that the primary cause of the accident appears to have been the attempt to land in a field which was unsuitable for that, purpose. The conditions under which flying can lawfully be practised in this country are laid down in the Air Navigation Act, 1920, and the Air Navigation Order, 1923, as amended by various subsequent Orders. The enforcement of these Regulations is a matter for the police, who are acquainted with their terms.
  Mr. HARDIE: Is it known that in this accident the pilot in the aeroplane had to come down in this field and what justification is there for saying that the machine came down in a field that was not suitable? Surely the pilot would not have come clown unless it had been compulsory for her to do so.
  Sir P. SASSOON: We have not yet received the report, and consequently I am not able to add anything to my answer.
  Mr. RILEY: Is the Air Minister taking any steps whatever to avoid a repetition of accidents of that kind?
  Sir P. SASSOON: The Air Ministry is not responsible for a private aeroplane coming down in an unlicensed field.
  Mr. JAMES HUDSON: Is the Minister taking any action to prevent accidents like this which occur as the result of stunts? Is he not aware that on this occasion an attempt was made to carry a film to a local picture theatre, and had not that stunt been tried the accident would never have happened?
  Sir P. SASSOON: When the report comes in, I shall know more about it.
  Captain GARRO-JONES: Is it not a fact that in this case the landing in an unsuitable field was only the approximate cause of the accident, whereas the real cause was something else; and will he not sub-divide the explanations in which they are all classified as "errors of judgment" when some other cause precedes the error of judgment?
  Sir P. SASSOON: I must have notice of that question.
  Mr. WOOD: Can the Under-Secretary say when he expects to get the report.
  Sir P. SASSOON: I hope very shortly.

  GOVERNMENT DEPARTMENTS

    MINES DEPARTMENT.
    Mr. KELLYasked the Secretary for Mines how many qualified mining engineers with underground experience are now employed by his Department as mine surveyors apart from the inspection staff?
    The SECRETARY for MINES (Commodore Douglas King): One
    Mr. KELLY: Is that one engaged in the Mines Department, or is he in the country at the present time?
    Commodore KING: He is engaged in the Department.

    MINISTRY OF HEALTH.
    Mr. KINGSLEY GRIFFITHS (for Mr. FENBY)asked the Minister of Health the terms of employment of the temporary women staffs engaged for work in connection with the Central Index Committee and the number of occasions on which their period of employment has been extended?
    Mr. CHAMBERLAIN: I would refer the hon. Member to the answer given to the hon. Member for Leith (Mr. E. Brown) on the 5th instant.
    Mr. GRIFFITHS (for Mr. FENBY)asked the Minister of Health how many members of his staff are now engaged on overtime duties?
    Mr. CHAMBERLAIN: 78 members of the staff of my Department are at present employed upon overtime, of whom
    1070
    29 are typists or messengers, 24 are employed in regional and provincial offices, and 25 at headquarters.
    Mr. GRIFFITHS (for Mr. FENBY)asked the Minister of Health whether he has received the accredited representatives of the ex-Service temporary clerks employed in his Department who are liable to a week's notice terminating their employment; and, if not, whether he is willing to receive a deputation in order that he may hear the men's side as well as the official side?
    Mr. CHAMBERLAIN: I would refer the hon. Member to the answer given to the hon. Member for Leith (Mr. E. Brown) on the 5th instant.

  COAL INDUSTRY.

    MIDLAND MARKETING SCHEME.
    Lieut.-Commander KENWORTHYasked the Secretary for Mines if his attention has been called to the operations of the so-called five counties coal-marketing scheme, which came into operation on the 2nd of April last; if he is aware that this combine is restricting output, with consequent loss to the coal-export ports of the Humber; that during April the collieries affected were only allowed to raise 65 per cent. of their basis tonnage of output; and that, in consequence, since the 10th of April last it has not been possible for coal-exporting firms at Hull to obtain best South Yorkshire hards and washed smalls either for cargo or bunkering purposes and buyers have not been able to purchase either what is known as subsidised or non-subsidised coal, and ships of regular lines trading to Hull have been refused supplies and their custom driven elsewhere; whether he was consulted before this scheme was put into operation; and what action he proposes to prevent this artificial creation of unemployment and loss of trade and shipping to British seaports?
    Commodore KING: I was not consulted before the Midland Marketing Scheme was put into operation, but I am aware that a quota of 65 per cent. of basic tonnage has operated for April under that scheme. I am informed that there has been a shortage of South Yorkshire bards and washed smalls for shipment from the Humber during the current month. This shortage is probably due

    1071
    partly to the closing of the pits for the Easter holidays and partly to the initial difficulties connected with the launching of the scheme. Further experience of the working of the scheme is, therefore, necessary before its effects can be judged. As the hon. and gallant Member may be aware, one of the principal objects of the scheme is to stimulate the export trade from the Humber.
    Lieut.-Commander KENWORTHY: Is the hon. Gentleman aware that during the last 50 years we have never had a shortage of this kind; that the present scheme is driving British ships for bunkers to Rotterdam; that, since I gave notice of my question, small parcels of the best Yorkshire bards and washed smalls have been available at an advance in price of 3s. 6d. a ton for the hards and 2s. 3d. a ton for the smalls, and that, unless he does something, this is going to ruin a very important export trade?
    Mr. GEOFFREY PETO: Is not that an argument against nationalisation and amalgamation?
    Lieut.-Commander KENWORTHY: May I have an answer to my question?
    Commodore KING: I have nothing to do with that matter. I was not consulted about the scheme, and I have no responsibility whatever for its effects. I am watching the scheme, and the answer I have given correctly describes the position. The Hull exporters are in close communication with the coalowners under this scheme.
    Mr. B. SMITH: Is the Under-Secretary aware that the shipments are exported to a specification, and the holding up of any particular parcel for the mixing of that coal automatically has the effect not only of filling an empty road with full trucks of coal but of putting men out of work for the day?
    Commodore KING: I am sure those responsible are fully aware of the facts.
    Mr. PALING: Is the Under-Secretary aware that at a conference of these people yesterday it was stated that in fifteen days there has been 30,000 tons short of the quota in Hull alone, and that the price had been advanced by 3s. 6d. a ton. Is he also aware that at the same conference it was stated that in con-
    1072
    sequence of that thirteen pits in South Yorkshire would not work again this month?
    Mr. SHINWELL: Having regard to the serious effect upon the trade of this country, and particularly upon the shipping trade, is it not desirable that the Department should keep in constant touch with the coalowners on this matter, and will he see that the coalowners are consulted in connection with schemes of this sort before they are put into operation?
    Commodore KING: As I have already stated, I am in close touch with the coal-owners.
    Mr. PALING: Is the Secretary for Mines going to do anything to increase employment in those pits and endeavour to keep prices down?
    Commodore KING: One of the objects of the scheme is to increase prices for export coal.
    Lieut.-Commander KENWORTHY: I give notice that I shall raise this question on the Adjournment.

  HOUSE OF LORDS.
  Mr. WARDLAW-MILNEasked the Prime Minister whether he is now in a position to make a statement as to the intention of the Government to implement the pledges given in respect of the amendment of the Parliament Act and the reform of the House of Lords?
  The PRIME MINISTER (Mr. Baldwin): I would refer my hon. Friend to the answer which I gave on the 3rd April last in reply to a question by the hon. Member for Northampton (Mr. Malone).
  Mr. THURTLE: May we take it that, although the Prime Minister is not at the present time able to specify the time and manner in which this is going to he carried out, his Government is still firm in its intention to keep its pledge in this matter?
  The PRIME MINISTER: I have nothing to add to the answer I have already given.
  Mr. SHINWELL: Does the right hon. Gentleman's answer mean that in his opinion the House of Lords is beyond reform?

  TRANSJORDANIA.
  Lieut.-Commander KENWORTHYasked the Prime Minister whether this House will be invited to approve of or ratify the agreement between the United Kingdom and Transjordania (Cmd. 3069).
  The PRIME MINISTER: As has been explained before, the ratification of treaties and agreements is the function, not of Parliament, but of the Crown.
  Lieut.-Commander KENWORTHY: Does not the right hon. Gentleman think it necessary that we should have a Debate in this House, in view of the fact that we are subsidising a country to which we have given a free Constitution?
  The PRIME MINISTER: I am always in favour of a Debate, and it will be possible to raise the subject at any time on the Colonial Office Estimates.
  Colonel WEDGWOOD: Would it not be possible to get out of this habit of giving free Constitutions to peoples before their Budgets balance; and what opportunity now have we of recovering from Transjordania the money which the taxpayers of this country are spending on it year by year?
  The PRIME MINISTER: That would be a very admirable democratic principle.
  Captain GARRO-JONES: When the Prime Minister says that the ratification of treaties is the prerogative of the Crown, does he mean that the prerogative can be exercised without the advice of His Majesty's Ministers?
  The PRIME MINISTER: No, Sir.
  Captain GARRO-JONES: In that case, how is it that we are not to be allowed to raise the matter in Parliament, and ask Ministers as to their responsibility?

  UNEMPLOYMENT.

    MINIMS, SCOTLAND (TRAINING).
    Captain FANSHAWEasked the Minister of Labour if he will cause centres to be established in Scotland without delay to train miners who are out, of work, both for home and oversea employment?
    The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Betterton): This matter is at present under consideration.
    Mr. PALING: Can the hon. Gentleman give us any idea when the centres will be established?
    Mr. BETTERTON: No, Sir, I cannot.
    Mr. SHINWELL: Is it not the business of the hon. Gentleman to ascertain when this important Committee, which is undertaking such an important function, will report to his Department on this matter?
    Mr. BETTERTON: No, Sir; that is not a matter for me, but is a matter for the Committee themselves to decide.
    Mr. STEPHEN: Can the hon. Gentleman give us a pledge that there will be a statement before the House rises at Whitsuntide?
    Mr. BETTERTON: Oh, yes; I understand that the Ministry of Labour Estimates are to be discussed on Monday, when, no doubt, a statement will be made.

    TRAINING CENTRES.
    Mr. MALONEasked the Minister of Labour what is the nature and length of training given on the Ministry's farms at Claydon and Brandon; how long these farms have been in being; how many men are at present in training there; where and in what industries these trainees were previously employed; whether they receive any payment whilst training; what employment is subsequently offered to them; and what is the cost to the Government of these farms?
    Mr. BETTERTON: I am sending the hon. Member copies of leaflets with details of the courses of farm training given at the Claydon and Brandon centres, which were established in November, 1925, and February, 1926, respectively. There are at present 483 men in training for farm work overseas-240 at Claydon and 243 at Brandon. These men are drawn from every part of Great Britain and from many types of occupations. Some have never had regular employment. On arrival overseas they are placed on farms by the Dominion authority concerned. The estimated current expenditure averages about 45s. per man per week.
    Mr. KELLY: Is it compulsory on a man to accept training under penalty of losing his unemployment benefit?
    Mr. BETTERTON: No, Sir.
    Mr. MALONEasked the Minister of Labour what is the nature and length of training given at the Ministry's handicraft training centres at Bristol, Birmingham and Dudley; how long they have been established; how many men are at present in training there; where and in what industries these trainees were previously employed; whether they receive any payment while in training; what employment is subsequently offered to them; and what is the cost to the Government of these training centres?
    Mr. BETTERTON: I am sending the hon. Member a leaflet with details of the training. The Birmingham centre was opened in October, 1925; that at Dudley in January last, and the Bristol centre on the 12th of this month. There are at present 964 men in training at these three centres. The bulk of the men at Dudley and Bristol are drawn from the South Wales mining areas; those at Birmingham are local men representing many types of unskilled labour. The employment obtained by men after training covers more than 100 different occupations. The estimated current expenditure averages rather less than 30s. per man per week, apart from the benefit drawn by the men.

  TRADE AND COMMERCE.

    TARIFFS.
    Commander BELLAIRSasked the President of the Board of Trade whether any foreign countries have lowered their tariffs since the resolution of the Economic Conference at Geneva last summer in favour of lower tariffs; and what countries have since raised their tariffs?
    Mr. DOUGLAS HACKING (Secretary, Overseas Trade Department): Reductions of Customs duties of varying magnitude have been effected since the Economic Conference, mainly as the result of the conclusion of Tariff Treaties, in Czechoslovakia. Germany, Greece, Hungary, the Serb-Croat-Slovene Kingdom, Switzerland and Turkey. On the other hand, tariff increases covering a wide range of goods have been brought into operation in France, Chile, Salvador and Poland. Tariff increases of a less extensive character have taken place in Italy and Portugal. In Austria, Cuba and
    1076
    Belgium there have been changes in both directions. In most other countries there have been no changes of duty of importance.
    Mr. W. THORNE: May I ask how it is that the hon. Gentleman does not mention the tariffs that have since been put on in England?
    Mr. HACKING: I am sure the hon. Member knows that our import duties are countervailed by Excise duties, and are, therefore, purely for revenue purposes.
    Brigadier-General Sir HENRY CROFT: Has my hon. Friend's attention been called to the desire of numerous Members on the Opposition side for prohibition, and may we take it that that is a suggested solution?
    Mr. A. V. ALEXANDER: Is not the hon. Gentleman aware that the majority of the duties imposed by the present Government carry no countervailing excise, and can he say whether the Government propose to reduce the duties and follow the good example of these countries?
    Mr. HACKING: Those duties which are protective in character only apply to some two or three per cent. of our total imports.

    PATENTS (EXTENSION).
    Mr. CROOKEasked the President of the Board of Trade if he is aware that, at the time of the War period, all patents were automatically extended by two years, but that a further extension can only be obtained pursuant to an originating summons in the High Court, involving the expense of retaining counsel, solicitors, and patent agents; and whether, as a means to assist industry and stimulate employment, he will consider an amendment of the Law to provide facilities for such further extension of patents to be obtainable in appropriate cases without involving the expenditure of time and money necessitated by the present procedure?
    Mr. HACKING: I am aware that by the Patents and Designs Act, 1919, the normal term of all existing patents was extended from 1.4 to 16 years, and that, with a view to cheapening the cost of obtaining an extension of this term when the patentee had suffered loss or damage

    1077
    through the War, the same Act provides that such application for extension may be made to the Court by way of originating summons instead of by petition. I regret that I do not consider it practicable to introduce legislation to alter the decisions made, after the most careful consideration, in 1919.

  ROYAL PARKS.
  Mr. R. RICHARDSONasked the Under-Secretary of State for the Home Department, as representing the First Commissioner of Works, whether all the Crown parks have free lavatory accommodation for boys and girls, respectively; which of the drinking-fountains in those parks do not supply water; whether any of the lavatories for children are open only for a part of the year; whether water is supplied to the drinking-fountains for a part of the year only; and whether it is proposed that the lavatory accommodation and drinking-water supply shall be made continuous throughout the year in the grounds adjoining the Houses of Parliament and the Crown parks.
  The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Lieut.-Colonel Sir Vivian Henderson): Lavatory accommodation is provided in all parks, and a proportion is free to both sexes. In addition, conveniences limited to use by children are open all the year round, except in St. James's Park and the Victoria Tower Gardens, where the accommodation is of a temporary character to meet the demands during school holidays. Water is available at all fountains except during the winter months, when there is no appreciable demand and there is also danger from frost. The present arrangements appear to be satisfactory, as no complaints have been received. To provide permanent accommodation for children in St. James's Park—they can, of course, use the free accommodation already provided—would cost a considerable sum, on account of difficulty of connection to the sewer. In the Victoria Tower Gardens permanent children's conveniences will, it is hoped, be provided in the scheme for rebuilding Lambeth Bridge, which is now under consideration.
  Mr. RICHARDSON: Is it not a matter of public interest that all these places should be open all the year round, and
  1078
  would not various dangers be obviated thereby?
  Sir V. HENDERSON: I think that the arrangements, when they have been amended as I suggest, will be quite satisfactory.

  BRITISH ARMY (OFFICERS' TRAINING CORPS).
  Mr. RENNIE SMITHasked the Secretary of State for War the total number of boys who are now in the officers' training corps and the junior cadet corps?
  The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Duff Cooper): As stated on page 63 of the current Army Estimates, and page five of the Memorandum, the numbers of cadets in the Junior Division of the Officers' Training Corps and the Cadet Corps, according to the latest information available, were 33,363 and 47,391 respectively.

  INDIA (STATE-OWNED COAL MINES).
  Mr. JOHNSTONasked the Under-Secretary of State for India whether he can place in the Library of this House any balance sheet or statement giving details of the financial results of the working of the State-owned mines in Bokharo, Ramgarh, Kurhurbaree, Kargali, Mohpani, and Sawang, other than are given in the Report of the Railway Board on Indian Railways for 1926–27?
  The UNDER-SECRETARY of STATE for INDIA (Earl Winterton): I have no information other than that contained in the Report referred to.
  Mr. JOHNSTON: In view of the widespread public interest in the results of all experiments with regard to the most efficient working of coal pits in this country, could not the Noble Lord see that we are supplied with the fullest possible information in regard to this experiment in India?
  Earl WINTERTON: I do not think the Government of India ought to be asked to supply information for the purposes of domestic controversy in this country. It would not be possible to give actual balance-sheets in these cases, because a great many of these mines supply coal

  1079
  to the railways which is not charged for. I can hold out no hope that it will be possible to give statistics of the kind for which the hon. Member asks.
  Mr. JOHNSTON: Is not the Noble Lord aware that, in the Report on the railways of India, no financial results are given whatever?
  Earl WINTERTON: If the hon. Member would be good enough to read the statement, of which I shall be pleased to send him a copy, made by the Member in charge when he introduced the Railway Budget in the Assembly, he will see that a very careful account was given of the railways of India including the financial results of the railways as a whole, which are what the public of India are interested in; but the public of India are not interested in the domestic controversies of this country.
  Mr. JOHNSTON: May I point out that my question is directed to securing information, not about the general results of railway nationalisation in India, of which we can get full particulars in the Library, but about the great experiment in the public ownership of coal mines?
  Earl WINTERTON: The Report in question does give a great deal of information about these particular coal mines, but it is difficult to give a balance-sheet or statement of detailed financial results, because, as I understand, the railways themselves use a great deal of coal from these mines which is not charged for in the balance-sheet.
  Mr. J. HUDSON: Is not the Noble Lord aware that this is not merely a question of national or domestic controversy in this country, but is a question of national and Imperial development, and that it is for that purpose that we require this information?
  Earl WINTERTON: No doubt the information, if it is available, and is asked for in the Assembly, will be given there.
  Mr. JOHNSTONasked the Under-Secretary of State for India whether he is aware that the average cost per ton of coal at the State coalfield in Bokharo, Ramgarh, for the year 1926–27 was about 4s. 2d.; and how this price compares with the price at private enterprise mines in Bihar and Orissa, and what proportion of it went to the labourers employed in and about the mine?
  Earl WINTERTON: In 1926–27 the average cost of a ton of coal raised in the company and State collieries at Bokharo, Ramgarh, was Rs.2.71 (nearly 4s. 1d.). It is only since the Government took over the East Indian Railway from the company at the end of 1924 that the State has had any direct interest in these collieries. The information asked for in the last two parts of the question is not available. The Indian Coal Committee in 1925 estimated the average raising cost per ton in the Jharia coalfield at Its.5. The hon. Member will, of course, understand that the cost of production must depend largely on the nature of the seam encountered in particular mines.
  Mr. JOHNSTON: Could the Noble Lord get this information for the benefit of the House?
  Earl WINTERTON: If it is available I will get it, but I cannot undertake to make arrangements which would involve unnecessary cost to the Government of India to obtain information unless it is required in India itself. I will supply the hon. Member with any information that is available, but I do not think there is information available as to the number of private enterprise mines in Bihar and Orissa.
  Mr. WA R DLAW-MILNE: Is it not the case that the mines in question are, from the point of view of results, merely in the same position as any private enterprise mines inasmuch as they were only recently taken over?

  CHARITIES (REGISTRATION).
  Colonel WOODCOCKasked the Home Secretary whether he has considered the avisability of introducing legislation for the registration of all charities, as is now done for war charities and charities for the blind, in order to prevent collections for unsatisfactory charities, cases of which were shown by the evidence given before the Departmental Committee of 1925?
  Sir V. HENDERSON: The Departmental Committee considered this matter in all its aspects, and after thorough examination came to the conclusion that it could not recommend a system of registration for all charities. I am not prepared therefore to introduce legislation for the purpose.
  Colonel WOODCOCK: Is my hon. Friend aware of the large number of prosecutions which have taken place since this Committee reported in connection with frauds in unsatisfactory charities, and does he not think registration would assist to prevent these frauds?
  Sir V. HENDERSON: I am not aware that the number of prosecutions justifies any change by my right hon. Friend's decision.
  Mr. HORE-BELISHA: When was this matter last investigated?
  Sir V. HENDERSON: I cannot say exactly. If is comparatively recent.

  FACTORIES AND WORKSHOPS (OVERCROWDING AND INSPECTION).
  Mr. B. SMITHasked the Home Secretary whether he proposes to proceed with legislation for extending to workshops the procedure relating to overcrowding in factories?
  Sir V. HENDERSON: This is a matter to be dealt with in the forthcoming Factories Bill.
  Mr. SMITH: Can the hon. and gallant Gentleman give us any approximate date when the Factories Bill is coming before the House, and can we have an assurance that workshops will be dealt with in the same Measure?
  Sir V. HENDERSON: I said the matter is one that will be dealt with. How it will be dealt with obviously I cannot say. I cannot forecast the legislation for next Session.
  Mr. B. SMITHasked the Home Secretary whether, seeing that factory inspectors are responsible for enforcing Section 116 of the Factory and Workshop Act, 1901, relating to particulars of work and wages, while trade board inspectors are responsible for enforcing compliance with awards of trade boards, and that inter-departmental action results from this dual administration, he will consider the question of amalgamating these duties so as to avoid overlapping and duplication of inspection?
  Sir V. HENDERSON: No, Sir, I am not prepared to accept this suggestion. The duties of the Factory and Trade Board Inspectors are quite distinct and do not really overlap, and the industries covered do not coincide except to a limited extent. The bulk of the work under the Section occurs in industries such as cotton and wool, for which no trade boards have been established, and conversely there are a number of industries for which trade boards have been set up to which the Section does not apply.
  Mr. SMITH: Is the hon. and gallant Gentleman aware that in fact interdepartmental action is taken, and will he see that this redundancy is done away with?
  Sir V. HENDERSON: I will look further into the matter.

  TEXTILE FACTORIES (TWO-SHIFT SYSTEM).
  Mr. RENNIE SMITHasked the Home Secretary if he can give a list of the textile factories, with names and addresses, where the double shift of work is in operation under amending legislation passed during the late War?
  Sir V. HENDERSON: I would refer the hon. Member to the answer to the question asked on this subject by the hon. Member for Rochdale (Mr. Kelly) on Monday last. Two Shift. Orders are made under Section 2 of the Employment of Women, Young Persons and Children Act. of 1920, and since that Section came into force, Orders have been made in respect of about 160 textile works. I could not, however, say without special inquiries which of these works are in fact operating the system at the present time.
  Mr. KELLY: Can we have any indication as to the districts, if not the names of the firms, where this two-shift system has been given permission to operate?
  Sir V. HENDERSON: I will look into the question and see.
  Mr. RILEY: Do the Orders for two-shift include young persons under 18 years of age?
  Sir V. HENDERSON: It relates to young persons and women.

  CORPORATION PROFITS TAX.
  Colonel WOODCOCKasked the Chancellor of the Exchequer the amount of Corporation Profits Tax collected during the year ended eth April, 1928; and what amount had been refunded?
  The CHANCELLOR of the EXCHEQUER (Mr. Churchill): The gross receipt of Corporation Profits Tax in the year ended 31st March, 1928, amounted to £1,968,000, and the repayments to £177,000, leaving a net receipt of £1,791,000.
  Mr. SNOWDEN: Can the right hon. Gentleman say what is the amount of recoverable arrears?
  Mr. CHURCHILL: With notice.
  Colonel WOODCOCK: What does my right hon. Friend estimate will be the further loss next year in connection with the refundment of this tax?
  Mr. CHURCHILL: I have not been specially concerning myself with that preoccupation recently.

  ROYAL NAVY (FUEL).
  Sir R. THOMASasked the First Lord of the Admiralty whether, seeing that the present dependence of the Navy and a large proportion of the mercantile marine upon imported oil fuel is national danger, he will, through the Fuel Research Board, undertake an exhaustive investigation into the whole question of devising or adapting new methods of utilising coal for steam-raising at sea?
  The PARLIAMENTARY SECRETARY to the ADMIRALTY (Lieut.-Colonel Headlam): The importance of utilising coal to the greatest extent possible is fully appreciated, but the prospect of its effective use as fuel in naval vessels is so problematical that the Admiralty would not be justified in undertaking the expense involved by an exhaustive investigation as a charge on Navy Votes.
  Sir R. THOMAS: Will the hon. and gallant Gentleman apply himself to the question, when he is making investigations, in what respect it applies to the mercantile marine?
  Lieut.-Colonel HEADLAM: We are closely following all investigations that are being made, but we are not conducting investigations of our own. We think that the development of processes such as this, which offer much hope of commercial gain, are best left to industry.
  Sir R. THOMAS: Does the hon. and gallant Gentleman not think it sufficiently important to initiate some inquiry into this very important matter?
  Mr. SHINWELL: Is the hon. and gallant Gentleman aware that the Fuel Research Board was instituted at the request of the Admiralty in the later stages of the War, and is it not desirable that the Department should continue to stimulate its activities in every direction and furnish it with the necessary funds?
  Mr. PALING rose—
  Mr. SPEAKER: This is not the time for debate.

  RUBBER (PIVOTAL PRICE).
  Brigadier-General CHARTERIS(by Private Notice) asked the Secretary of State for the Colonies whether his attention has been directed to a statement made by the Under-Secretary of State of his Department at Kuala Lampura to the effect that Lord Stevenson and the Advisory Committee were to blame for the raising of the pivotal price of rubber from 1s. 3d. to 1s. 9d.; and whether the Advisory Committee had been consulted before this decision was arrived at; and, if so, whether there is any record of the advice that they gave and what was the nature of the advice?
  Captain MARGESSON (Lord of the Treasury): I have been asked to reply My right hon. Friend has seen the report in question and has since ascertained by telegraph that the Under-Secretary of State's remarks were incorrectly transmitted; the latter has since issued a statement to the local Press, in the course of which he made it clear that the matter was one in which the Government acted on its own responsibility. I understand that the fixing of the new pivotal price in April. 1926, was done without formal consultation of the Advisory Committee.

  HEBRIDEAN STEAMER SERVICES (CONTRACT).
  Mr. JOHNSTON: I beg to ask you, Mr. Speaker, whether you are aware that the contract signed between the Secretary of State for Scotland and the MacBrayne Steamship Company stated on the Votes and Proceedings of the 20th April to be printed and laid upon the Table has not yet been circulated and is not yet in the Library of this House?
  Mr. SPEAKER: I have made inquiries into the matter, and I am informed by the Stationery Office that the papers are in the printers' hands and will be delivered in the Vote Office at Eleven o'clock on Monday morning next.

BUSINESS OF THE HOUSE.
Mr. RAMSAY MacDONALD: May I ask the Prime Minister what business he proposes to take next week?
The PRIME MINISTER: Monday: Supply, Committee (5th Allotted Day) —Ministry of Labour Vote.
Tuesday, Wednesday and Thursday until Half-past Seven, Report stage of the Budget Resolutions.
Thursday's business after Half-past Seven will be announced later; and on any day, if time permit, other Orders will be taken.
Mr. MacDONALD: Does that mean that the right hon. Gentleman proposes to get his Report stage on the Budget Resolutions finished by Half-past Seven o'clock on Thursday?
The PRIME MINISTER: hope so. We are allotting a whole sitting more than the right hon. Gentleman gave us in 1924, and we are allotting rather more time than we have given at any time during the last six years, except two years.
Mr. MacDONALD: Is it not the case that last year, when there was much less controversy, the time that was allotted was 2½ days, and that on those days we ran up to 8.15 instead of 7.30?
Mr. RUNCIMAN: May I ask the right hon. Gentleman whether he does not consider that this is an abnormal Budget and that therefore it is entitled to abnormal time for discussion?
The PRIME MINISTER: I gather that the right lion. Gentleman's party is going to treat it as such, and I am perfectly prepared to consider the question. I have given what I considered a reasonable allowance, but I do not steel my heart against more if it is found necessary.
Ordered,
"That the Committee of Ways and Means have precedence this day of the Business of Supply." — [The Prime Minister.]

REORGANISATION OF OFFICES (SCOTLAND) BILL,
Reported, with Amendments, from the Standing Committee on Scottish Bills.
Report to lie upon the Table, and to be printed.
Minutes of the Proceedings of the Standing Committee to be printed.
Bill, as amended (in the Standing Committee), to be taken into consideration upon Monday next, and to be printed. [Bill 107.]

SHOPS (HOURS OF CLOSING) BILL,
Reported, with Amendments, from Standing Committee A.
Report to lie upon the Table, and to be printed.
Minutes of the Proceedings of the Standing Committee to be printed.
Bill, as amended (in the Standing Committee), to be taken into consideration upon Friday, 29th June, and to be printed. [Bill 106.]

REPRESENTATION OF THE PEOPLE (UNIVERSITY OF READING) BILL,
"to make provision with respect to the representation of the University of Reading in Parliament," presented by Mr. Somerville; supported by Sir Martin Conway, Sir Alfred Hopkinson, Mr. Morgan Jones, Mr. Ernest Evans, Sir Charles Oman, Mr. Withers, Mr. Cadogan, Brigader-General Clifton Brown; and Major Glyn; to be read a Second time upon Monday next, and to be printed. [Bill 108.]
LAND VALUES RATING BILL,
"to give to local rating authorities powers to levy Rates on Land Values," presented by Colonel Wedgwood; supported by Mr. Alexander, Mr. Dalton, Mr. Henderson, Mr. Arthur Greenwood, Mr. Kelly, Mr. Lees-Smith, Mr. MacLaren, Mr. Riley, Mr. Snowden, Mr. Trevelyan, and Mr. Whiteley; to be read a Second time upon Thursday, 17th May, and to be printed. [Bill 109.]

STANDING ORDERS.
Resolution reported from the Select Committee;
"That, in the case of the Dagenham Urban District Council Bill [Lords], Petition for Bill, the Standing Orders ought to be dispensed with: That the parties be permitted to proceed with their Bill."
Resolution agreed to.

CAERPHILLY URBAN DISTRICT COUNCIL BILL.
Reported, with Amendments, from the Local Legislation Committee (Section B); Report to lie upon the Table, and to be printed.
SELECTION (STANDING COMMITTEES).

  STANDING COMMITTEE A.
  Mr. William Nicholson reported from the Committee of Selection; That they had discharged the following Members from Standing Committee A: Major Elliot, Captain Gunston, Sir George Hume, and Mrs. Philipson; and had appointed in substitution: Captain Fairfax, Sir Alfred Hopkinson, Sir Douglas Newton, and Sir Alexander Sprot.
  Mr. William Nicholson further reported from the Committee; That they had added the following Twenty Members to Standing Committee A (in respect of the Racecourse Betting Bill): Mr. Ammon, Captain Bourne, Sir Leonard Brassey, Mr. Brocklebank, Sir Warden Chilcott, Mr. Compton, Mr. Crawfurd, Major Glyn, Mr. Hayday, Lieut.-Colonel Sir Vivian Henderson, Major Hills, Mr. James Hud son, Sir Ellis Hume-Williams, Major MacAndrew, Mr. March, Sir Basil Peto, Mr. R.entoul, Sir Berkeley Sheffield, Mr. Somerville, and Lord Stanley.

  SCOTTISH STANDING COMMITTEE.
  Mr. William Nicholson further reported from the Committee; That they had added the following Ten Members to the Standing Committee on Scottish Bills (in respect of the Betting (Juvenile Messengers) (Scotland) Bill and the Education (Scotland) Bill): the Lord Advocate, Lord Balniel, Sir Henry Cowan, Mr. Evan Davies, Captain Garro-Jones, Mr. Mac-kinder, Mr. West Russell, Major Steel, Mr. Viant, and Mr. Charles Williams.
  Reports to lie upon the Table.

MESSAGE FROM THE LORDS.
That they have agreed to,
Army and Air Force (Annual) Bill, without Amendment.
That they have passed a. Bill, intituled, "An Act to approve an Agreement concluded between His Majesty and the Sultan of the State and Territory of Johore." [Straits Settlements and Johore Territorial Waters (Agreement) Bill [Lords.]
Dover Gas Bill [Lords],—That they have appointed a Committee consisting of five Lords to join with a Committee of the Commons to consider the Dover Gas Bill [Lords], and request the Commons to appoint an equal number of their Members to la; joined with the said Lords and they propose that the Joint Committee de meet in Committee Room No. 4 on Tuesday., the 15th of May next, at Twelve o'clock.

ORDERS OF THE DAY.

  WAYS AND MEANS.
  Considered in Committee. [Progress, 25th April.]
  [Captain FITZROY in the Chair.]

  WAYS AND MEANS.

    AMENDMENT OF LAW.
    Question again proposed,
    "That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance."
    Sir ROBERT HORNE: I do not think I am exaggerating when I say that the present Budget marks the turning point in our post-War fortunes. For a considerable period, we have been struggling in a morass of misfortune, now and again striking better patches of country, but never really observing ahead of us a solid, hopeful path along which our essential industries could move towards a state of prosperity. In my belief, the Chancellor of the Exchequer has this year disclosed to us the beginning of the road out. I, for my part, would desire to congratulate him upon putting a new heart into many depressed industries and opening up much better prospects for them for the future. There are few indeed who could conceive a scheme of such great vision and pure skill, or who would have adopted a plan which has required so much courage to carry out. I believe myself with complete sincerity and a profound conviction that he has imparted a new spirit of encouragement to the country, and its results in the future will prove the value of his foresight and the wisdom of his judgment.
    I do not think that my right hon. Friend will be unduly depressed by the speeches which were made in the Committee yesterday afternoon. I had not the privilege of listening to them, but I have had since the enjoyment of reading them, and the colour and the vehemence of the language which was used by my right hon. Friend the Member for Colne Valley (Mr. Snowden), as I judge, indicated the fear he has of the effect of this Budget upon the prospects of his party. As to my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George), it was indeed a reviving ex-
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    perience to find again the good old catchword that any relief in agricultural rates would go into the pockets of the landlord. It recalled to me memories of the times of rare and refreshing fruits, and indeed bridged over the gap of years which have intervened during which the right hon. Gentleman not only discovered, but disclosed to an astonished world that the landlords of Great Britain were a very severely burdened class and that upon the whole they had not acted selfishly by the country.
    What, in fact, is this Budget going to do? I should have said: What is its intention? Its intention is to carry out plans of tackling a problem, which, I should think, has been more often raised in this House by the right hon. Gentleman the Member for Carnarvon Boroughs and myself than by any other Members who sit on these benches. I think that, of all Members of Parliament, we have most often directed attention to the appalling burden of local rates and taxes upon industry. We did not meet with sympathy, and until now we have never met with success, but, for my part, I do not propose to reproach my right hon. Friend on that matter now, because I realise that he has produced a scheme which I could never have imagined, and which, I think, is conceived on broader and more comprehensive lines than any yet envisaged.
    The right hon. Member for Carnarvon Boroughs is in an entirely different position. He cannot express the admiration which I am sure he must feel at the way in which the Chancellor of the Exchequer is dealing with this problem. He has been responsible for issuing a perfect rainbow of documents to his followers, brown, green, blue and yellow, instructing them upon the politics of the day. I do not know the colour of the document which deals with the rating question, but at any rate he was evidently oppressed yesterday when he was speaking by the fact that already that book has become a, back number and can now be sold only on secondhand bookstalls as a damaged volume. Before I deal with the main subject of this Budget I should like to say a word or two upon some of the smaller issues which are raised. In the first place, let me express my approval, for what it is worth, of the reduction in the Sugar Duty, which will not only benefit a large section of the

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    population but also do something to retrieve the position of an industry which was fast going over the precipice. Of the additional reliefs which are given to Income Tax payers who have a number of children, I confess that I can only take a, detached view. I suppose it will involve me, with other bachelors like me, in paying a little more for other people's children, but I accept that fate not only with resignation but with a certain degree of sympathy and appreciation.
    On the matter of the restatement of the nation's accounts, I think we owe a debt of gratitude to the Chancellor of the Exchequer. The insertion, for example, of the Past Office figures in the ordinary balance sheet of the year's working has tended towards confusion and has never really exhibited a true picture of Me revenue and expenditure of the country. We shall greatly gain in the future if we have the amount that is expended on the Post Office given separately from the rest of our expenditure, and also the amount of revenue from the Post Office.
    I entirely agree with the course taken on the matter of the consolidation of the Note Issue, and I have none of the apprehensions which the right hon. Member for Carnarvon Boroughs expressed yesterday. It is greatly to the advantage of this country that this Note Issue should be consolidated and I see no reason at all why in the regulations which are made in regard to them there should not be adequate provisions for creating elasticity sufficient to servo all the needs of industry and commerce. The right hon. Member for Carnarvon Boroughs complained that the Government were giving away a weapon which they ought to hold for use as against the power of the banks, but I rejoice that they have done so. I cannot imagine any circumstances in which it would be an advantage to the Government to have that weapon ill their hands, and I can conceive many circumstances in which the interests of the country might easily be put in jeopardy by ill-judged action on the part of the Government against the financial institutions of the country. There is this last point, the question of the formation of a Debt Charge. I feel certain doubts on this question as to whether the Chancellor of the Exchequer has provided sufficient money to meet all
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    the obligations he has undertaken. It may be that he has not, but I hope that his "luck will be in" in the years immediately to follow. At any rate, it is an excellent thing that the nation should know what are the obligations of these Debts and have before their eyes the happy prospect of their being paid off in the course of a period of time not too remote.
    I turn now to what is after all the pièce de résistance of the Budget. The distinctions which were pointed out yesterday and the difficulties which were foreseen with regard to the definition of productive industries do indeed raise very troublesome questions. I do not propose to examine these questions to-day, as we shall have further opportunities to examine them on appropriate occasions, but I do not think they present any greater difficulties than were presented to the Government at the time of the 1909 Budget, and I have not the slightest doubt that similar ingenuity will drive away all these difficulties of definition. Let us look at the position of productive industries. People have often pointed to the prosperity of the distributing trades as an indication of the successful conduct of business. It seems to me that there is some slight confusion in the public mind as to why this is the case. The fact is that during these times of depression, when so many trades have been suffering severely, the distributing trades have not suffered nearly so acutely, and for this reason, that the State and local authorities have been spending something over £100,000,000 in the country each year which has gone into the tills of the shopkeepers of the country. The truth is that there has been much more money in the pockets of the people out of work during the last period since the War than at any time before the War and, accordingly, there has been much more expenditure in the shops of the country. The distributing trades are exhibiting a prosperity unknown amongst the other commercial industries of the country. The truth is that you are dealing with this position; that you have not to provide for the distributing trades in the same sense that you have to provide for the productive trades. The distributing trades have been indirectly subsidised by the Government and local authorities of the country.
    Mr. MONTAGUE: What do they buy in the shops?
    Sir R. HORNE: They buy all the ordinary things they would purchase whether they are in employment or not. No doubt their purchasing power is restricted, but not so much as in former days during periods of great depression. There has been much more money flowing through the country in the present time of depression than at any time before.
    Mr. MONTAGUE: This is rather an interesting point. The point of the right hon. Gentleman is that the prosperity is in the retail and distributing trades. If that does not reflect the prosperity of productive industries, what is the money spent on?
    Sir R. HORNE: There are all sorts of things purchased in the shops which are not at all the product of the great industries of the country. The hon. Member must realise that. There is sugar, and flour, and many other articles which are not at all the actual product of the industries of this country, and the money spent on them does not go in the payment of wages in this country at all. If the hon. Member reflects for a moment he will realise that what I am pointing out is fundamentally true; and there has been a bigger circulation in favour of the distributing trades during the years since the War than ever before during previous times of depression. I will leave the matter there for his contemplation.
    4.0 p.m.
    I pass now to the main problem of the Budget. Undoubtedly its great feature is that an attempt is being made for the first time to save the heavy industries of this country from a position amounting almost to disaster. The main way in which this is being done is by the relief of local rates, but I would beg the Committee not to think that these are the only or even the chief burdens on industry. There are many others which, I think, are being left out of account at the present time. There are, for example, all the payments which are made in respect of social services. When I talk of social services, I do not mean merely what is paid in Poor Law, but in national health insurance, unemployment insurance, workmen's compensation and the widows' and orphans' pensions. All these things are a vast burden upon industry, and, of course, do not come at all within the
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    purview of this Bill. But reflect for a moment what that burden amounts to. Since the year 1914, that burden has increased by over £125,000,000 a year, and the great bulk of the money has to be found directly by industry. None of that is really being touched by the Bill, so that the case for the relief of industry is something very much greater than the presentation of this Bill involves.
    Let me put it in another way. I find, from the Report of the Government Committee upon Industry and Trade, that the burden of social services upon industry in this country amounts to between 2 and 3 per cent. of the value of the output. Anyone who knows how very small is the margin for profits or new equipment for business in an ordinary industry will realise what the burden of that becomes. To put it in a still stronger light, let me remind the Committee that the burden we bear in this country in respect of those services is two and a-half times that which is borne by Germany, five times that borne by France and 20 times that borne by Belgium or Italy. The Committee will realise that those are our rivals in trade and during all this period of depression our industry has been meeting their competition in foreign markets burdened with these enormous imposts, which there was no way of avoiding, and which have had to be paid for by industry.
    I turn now to the immediate problem of local rates. I do not propose to dwell long on this matter. The figures which were given by the President of the Board of Trade yesterday, I think, illuminated the whole topic as clearly as it could be possibly done, and while I have in my mind many other comparable figures, it would, obviously, be quite improper to delay the Committee with them. There is only one point in his speech to which I venture to draw special notice. He referred to the fact that the local rates in this country amounted on the average to a charge of 4s. a ton on steel. Although I suppose he has better means than I have of arriving at correct figures, I should have thought that that figure was low. At any rate, the Government Committee who sat upon this subject came to the conclusion that it was 6s. per ton which, I think, would probably be nearer the mark, But even if that be the true figure, it does not really exhibit the

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    problem in its true light. It is the abnormal places that most require the help that is to be given by the Chancellor of the Exchequer. There are many places, for example, with mixed trade, where a particular industry has a certain amount of unemployment, and that is borne with comparative ease by the rest of the community. But in great centres, where everybody is engaged in the same trade, which is in a state of depression—and there are many in this country at the present time—then you realise that any unemployment means a large amount of unemployment, because they are all in the same trade, and, in the end, the burden grows and accumulates, and is borne more and more by comparatively few, whose costs are put up to a far higher degree than what the President of the Board of Trade described yesterday.
    Take, for instance, Sheffield, where, as everyone knows, unemployment reached very severe figures, there the cost per ton of steel for local rates has been, not merely a figure of 4s. or 6s. a ton, but as high as 17s. 6d. to £1. Consider what happens. As unemployment increased, fewer people bore the burden. Others went down, and added to the figure, and still fewer industries were left to bear what is a cumulative burden. In fact, what we have been doing is that, finding a man drowning in the water, instead of throwing him a lifebelt, we have thrown him a sinker, with the result that many trades have gone out of business which, in other times, in better circumstances and with better organisation, would still be serving the country. I value the proposal under this scheme more on this ground than upon any other, because it is obvious that where the costs have gone up so enormously as I have described, if you give a relief of three-fourths of the rates, you will not only immediately help the people who have been worst hit, but, at the same time, you make it possible for other industries to come back, and you have a wider spread of the whole cost of local rates, with the result of not merely reducing the rate by three-fourths, but, in the end, by very much more.
    The subvention to railway rates is also, I think, a proposal of very great merit. One of the greatest handicaps from which trade and industry have suffered in the
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    last few years has undoubtedly been the very high railway rates, and the relief in respect of the carriage of raw materials in the heavy industries of this country will be of the greatest possible service to those industries. I pass from that to say that it is a mistake to suppose that the postponement of these reliefs until October next year, is going to have no immediately good effect upon industry. I am not now referring merely to the psychological effect of the encouragement given to people to keep going on longer than they might otherwise endeavour to do, but I am taking it from the sordid and practical aspect. Supposing persons in some difficulties want further advances from their bank. It will greatly affect the minds of bankers to know that by the end of next year, from figures which can he shown in a schedule, their business will greatly appreciate, and that the borrower will be able to carry on then in very much better shape than now. Or, again, take the case of people who want to raise capital, or get debentures on their business taken up. It is obviously what one would call in the market "a bull point" for the borrower that he is able to show that by the end of next year his business will he earning substantial profits. Accordingly it is an entire error to suppose that the postponement until October next year is going entirely to frustrate the supposed object of this Budget.
    The fact that the taxation to provide the funds for this great scheme can only be obtained by a tax on petrol is in itself a misfortune. I do not think we can conceal from ourselves that it is a great pity we have to have recourse to a commodity which is more and more being used by very large numbers of people in this country for the purposes of their innocent enjoyment. I think, in other circumstances, if petrol were at the price it was at one time, it might be something of a tragedy to some of these people to meet this new impost, but I am sure that if they could have got rid of the power tax upon their cars, which, as the Committee must have gathered from a petition to this House, they very seriously grudge, and if it had been put in some other shape, I believe they would have been much more reconciled to the new burden which they have got to bear. The reason I say that is this: It is perfectly plain that the power tax upon motor ears is an inequitable tax. I am not now

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    dealing with another matter, which is a larger one, and to which I shall come in a moment, but it is an inequitable tax, because if you take the man who is only able to use his motor car—as multitudes are only able to use their cars—really over the week-end, he is taxed much higher in proportion than the man who is constantly using the road. If that tax really is what it is meant to be, a method by which the revenue to keep the roads in order should be raised from those who most use the roads, it is perfectly clear that the tax is not operating at all according to the original scheme, and I remember a speech of my right hon. Friend the Chancellor of the Exchequer in which, I think, he admitted that very fact.
    On the other hand, a petrol tax puts the burden exactly where it ought to be, because the petrol used is a correct measure of the use that is made of the roads. It applies both in the case of weight and speed, and also to the occasions of use, and, accordingly, it is the fairest way you can select for taxing the people who use the roads for the maintenance of the roads. But there have been objections stated to this change. One of the objections stated was that you could not administer a petrol tax without doing great injury to certain interests. How futile that objection was has been shown by what the Chancellor of the Exchequer has done, because he has just swept that all away, and he has proceeded to make a tax which he regards as fair, and he has done exactly, as I understand his proposal, what the preliminary Report of the Departmental Committee which sat in 1920 suggested, namely, that the tax upon petrol should be a flat rate. Again, objection is taken to the change from a motor-power tax on the ground that this tax afforded protection to the British-made car, without which the British-made car could not live as against the American importation.
    That, I understand, was the view put before the Committee yesterday by my hon. and gallant Friend the Member for Chatham (Lieut.-Colonel Moore-Brabazon). Upon a matter of this kind, I should hesitate to offer any contradictory view to that which he holds, because he is a well-known expert on these matters, and has had considerable experience at the Ministry of Transport.
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    But I have authority for my opinions even more formidable, I think. I have the authority of Mr. Morris and Sir Herbert Austin—who, between them, I should think, make two-thirds of all the light cars in this country—to say in this House, that not only are they not against taking off the power tax upon cars, but that they would welcome it, and they would ask Parliament for it. Only a few days ago, Sir Herbert Austin wrote an article for the "Auto-Car," in which he made it perfectly plain that he regarded the present taxation of power as being a great handicap to the motorcar industry. These gentlemen do not believe they have anything to fear from taking off the power tax as against the competition of American cars in this country, and they see in it an absolute essential if they are to make any expansion in our Dominion markets.
    I should like to explain why it is that the power tax prevents the British motor trade from making any advance, not only in places like Australia and NOW Zealand, but in all the new countries of the world. It is simply this: Since our tax is on power, the British car makers have devoted their efforts to making a car which would attract as little taxation as possible, and accordingly they have made a car which is suitable for British roads, for the easy conditions on British roads, but, which is very inadequate upon the rough roads of new countries. They have made a car which has a small bore and a long stroke, but all the cars which are operating in America and these other countries are cars with a large bore and a short stroke, which, they tell me, at once gives an easier running car, which may not be very important, but which, on the other hand, enables them to provide a car with much more power. Somebody says, Why does not the British ear-maker make a separate car for the Australian market? It must be obvious that, if he does so, he loses all the benefits of mass production and his entrepot charges are greatly increased, and competition, which is difficult enough already with the American car, enjoying an enormous home market, would become impossible in these circumstances. Accordingly, I believe, from my experience in the Dominions, that if we are to have any success in the motor car business outside our own country, we have to make an alteration in this form of tax.

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    It is surely an impotent thing to say to-day that we are going to be kept out of the markets of the world because of the particular way in which the Government put a tax on vehicles. We cannot be sure that we cannot find some other method of taxation which will enable us to enjoy as fair a chance in the markets overseas as our American rivals. Let me tell the Committee exactly what it means. Are these markets worth while? All I have to say is this, that in Australia last year they bought 104,000 motor cars, of which only 18,000 were British, in spite of the fact that we have a 20 per cent. preference in the Australian market. Go to New Zealand, and the story is the same. They bought last year over 13,000 cars, of which only 27 per cent. were British, although we have a preference in the New Zealand market of 25 per cent. And if you ask why this is, you will get the universal answer—you will also get some smaller things mentioned, that are easy to deal with—that the British cars are not equipped with sufficient power. I am sure that that has been the experience of all who have visited the Dominions, and the situation is one which it is imperative that we should remedy.
    These American cars passing through the streets every day are the very best advertisements for American business. Not all the money we can spend in advertising British goods in Colonial markets is nearly equal to this advertisement of American ears constantly presented through the streets, living in the eyes of the whole population all the time. Everybody asks you—I am not exaggerating when I tell the Committee that everybody in these countries asks—Why is it that British makers cannot manufacture a car which will compete with the American ear? A British visitor to these countries feels it a positive affront that every day and all day this ostentatious demonstration of American superiority and efficiency should be going on before his eyes, but, believe me, the Australians and the New Zealanders, who are 97 per per cent. British, feel the affront even more than we do, and they much more poignantly ask that some remedy should be found for this quite abnormal situation. It has many repercussions. If you take our trade with these countries, you will find that they are our best markets
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    in the world. I am not meaning per capita; I am meaning in the bulk. If you take Australia to-day, it is buying £65,000,000 worth of our goods in a year, and New Zealand is buying over £20,000,000 worth.
    I see in certain brochures from the Liberal party that it is thought that the Colonial and Dominion markets may be neglected because they have not very large populations.—[AN HON. MEMBER: "No."]—Yes. It is pointed out that the populations are small, and we are directed to look to the great populations on the Continent, But let me point out that Australia and New Zealand, with only 7,500,000 people, buy from us in a year, in bulk, more than the 150,000,000 people to be found in Germany, France, and Italy all put together. Why should we pay attention to these markets in preference to those of our Dominions? This demonstration by America in the shape of motor cars is having a detrimental effect—I say it without question—upon our trading prestige, our commercial prestige, in these countries. I have given you the figures of what our trade was last year with Australia and New Zealand, but it is worth while looking at the trend of the trade, and you will find that during the last five years, while our share of Australian imports has gone down from 51 per cent. to 43 per cent., the share of the United States of America has gone up from 18 per cent. to 24 per cent. Exactly the same thing applies to New Zealand. While our share of New Zealand's imports has gone down during five years from 01 per cent. to 48 per cent., the share of America has gone up from 9 per cent. to l9 per cent. That trend, I am assured in my own mind, will steadily go on and grow unless we are able to demonstrate to our people overseas that we are as fit, and as capable, and as efficient as are our cousins in the United States of America.
    What are we to do about this? hoped, before I heard the Chancellor's statement, that we would be able this year to get the tax transferred from motor power to petrol, but I should certainly realise, now that 4d. has been put on petrol for another purpose, that it is quite futile to ask that something more should be added in order to save this trade with our Dominions, at least just now, but I am glad the Chancellor

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    of the Exchequer has not closed the door. Sir Herbert Austin, writing to the newspapers yesterday, suggested another method of taxation, which, he said, would help our cars in Dominion markets, to wit, that the taxation should lit upon the capacity of the engine instead of upon the power. He suggested indeed that instead of 21 per horsepower, the taxation should be £1 per 10 cubic inches capacity of the engine. I do not know whether or not this is a good method of taxation, I do not know whether it would be better than the present method, but at least it is put forward by an expert on motors and one whose whole interests in commercial life are invested in this motor car business.
    But I say this, that it is the duty of the Government, in view of the circumstances which I have presented to them, to discover whether there are other ways of levying this taxation, in order to avoid the vast loss from which we are suffering at the present time. It is not merely a present loss, because if any of us were asked what is the most promising trade for the immediate future, should we not all say the motor car trade? It has much more infinite possibilities than any other trade of which we know, and if you think of all these young countries which are growing up, which require motor transport, and which indeed are requiring it as rapidly as they can get it, you will see what a tremendous market there is awaiting us if we only take advantage of our opportunities. If we do not do something to alleviate the position, then we shall undoubtedly arrive at the disastrous condition which we shall deserve. Of one thing I am certain, and that is that just as the strength of this country ultimately rests upon the united power of the British Empire, so, in the long run, the trade of this country is going to depend upon the reciprocal relations which we establish with our Dominions.
    Mr. RUNCIMAN: The right hon. Gentleman the Member for Hillhead (Sir R. Horne) has dealt at some length, and quite properly, with the effect of the new imposition upon the motor trade in this country, both internal and external. I do not propose to follow him into a discussion of that subject, but let me assure him in disposing of two purely party points which were quite gratuitous
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    in his speech—one an inaccurate statement in regard to the Liberal party's attitude to trade in general, and the other with regard to a publication that came from a Committee of Liberals, out of which, by the way, the Government have not found it improper to make some very valuable extracts—that we heartily agree with him, and I think with all those who have spoken in this Debate, as to the great importance of relieving the rating burdens on our producing industries. He and the right hon. Member for Carmarthen (Sir A. Mond) are not the only persons who have brought this question up again and again in the House of Commons. I would remind the Committee that our colleague the late Mr. Trevelyan Thomson used to repeat it once a week. He used the illustration of Middlesbrough over and over again, and there was no more striking illustration to be found in the country. I myself have drawn attention to the effect on some of the producing industries on the North-East Coast, and I do not wish to repeat to the House some of the illustrations I gave, but on more than one occasion I pointed out that the increase of rates since the War has represented in the building of tonnage on the Tyne, on the Wear, and on the Tees, no less than 7s. per dead weight ton—very often enough to put our shipbuilders out of competition with those who build in Rotterdam, Stettin, or Scandinavia.
    There is no doubt that the great burden on the producing industries, in its increase, synchronising as it has with the great slump which came during the period of deflation, has had more to do than any other external cause with the depression in the great manufacturing areas of this country. That depression is local, not general. The right hon. Gentleman pointed out, quite truly, that in the distributing trades there has been a remarkable degree of prosperity, but I doubt very much whether he has given a full explanation of that prosperity. It is not only prosperity in the multiple shop companies and among the small shopkeepers and the merchants who distribute to the wage-earning classes, but there have been amazingly large profits made in establishments that never see a working man or woman. I need only refer to the re-building of Regent Street and to what has happened with all the

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    companies up there to draw attention to the fact that the profits of the distributing trades have not depended on the distribution of the dole or upon any of those ancillary assistances to the wage-earners or those who are not able to earn wages.
    The full explanation of the profits in those industries has yet to be disclosed, but I think there is one explanation to which we certainly need not shut our minds, and that is that in the distributing trades there has been a process of amalgamation going on with great success all over the country. There is, first of all, the gigantic amalgamation in the cooperative organisations. Then there are the multiple shops with their outposts in every town of any importance. They have, by superb organisation, by skilful buying, and by being free to purchase what they require in any of the markets of the world, without import duties, been able to stock their shops cheaply and to make their goods attractive to their millions of customers. The effect of this Budget upon those distributing trades will not be small. I think it will be extensive, and I propose to point out the directions in which it will fall most heavily.
    Let me, in the first place, say that, while we are all agreed that the rate burden is too heavy for the productive industries of this country, we are not all agreed as to the best method of relieving those industries. What is in controversy over this aspect of the Budget is how you are to do it. The Government have chosen one way, which we believe to be wrong. We think that by picking out, as they have done, certain specified industries they will undoubtedly do injustice to other industries and other interests. It is impossible for them to think of relieving these picked industries without thinking where the money is to be raised. Where is the three-quarters relief in rates to come from? It must come from those industries which are not within the productive class. It must come very largely from the householders, the shopkeepers and the general taxpayers of the country. I am quite sure that none of the right hon. Gentlemen opposite would for a moment use the loose language in regard to the Exchequer paying, which one hears so frequently on the platform. When the
    1108
    Exchequer pays, it means that the taxpayers pay. It does not mean that the Chancellor of the Exchequer provides the money out of some mysterious fund. It means that he has to impose taxation. The very tax to which the right hon. and learned Member for Hillhead has referred is an example of the way in which somebody is having to pay for the relief which is to be given in these productive occupations.
    Who are the people who will have to pay? A great deal will be obtained at the cost of the motorists. The right hon. Gentleman referred to the motor industry as though it were one which depended purely upon those who enjoy motoring at the week-end to get fresh air and refreshment, who go to and fro between their own homes and more attractive places, who visit golf courses and the like, and who find an entirely new amenity added to their lives because they have at their disposal motor cars of the light type. That is where the main increase is coming from, but it is not the only source. This impost falls upon the owners of 274,000 commercial vehicles. It means really that this duty, this oil tax, or whatever it is to be called, falls upon some very important sections of commerce. These 274,000 commercial vehicles are not owned merely by companies who trade, say, between Manchester and London and advertise themselves like liners or cater for the carriage of goods and pick up where they can like tramps. They belong to very large numbers of companies, organisations and concerns which are just as much entitled to the benevolence of the Chancellor of the Exchequer as any of the great productive industries. This is going to be a tax upon their raw material of motive power. The Chancellor of the Exchequer knows perfectly well that there is no impost which does more harm than an impost upon raw material. He would not for a single instant think of putting an impose upon raw cotton, raw wool or iron ore. Motor carriage has now become just as essential to a very large number of concerns as the raw materials which I have mentioned are to their respective trades.
    The money has to he found somewhere. Where is it to be found? The right hon. Gentleman is going to get most of this money by way of a tax upon oil, and he

    1109
    is also going to add to his funds for the purpose by diminishing his Sinking Fund; by taking some other sources of national income which are not annual revenue, in order to swell the amount which he can distribute. I should like to discuss the means by which he attempts to do this. He does it not with the idea of giving direct benefit at the present time to these particular industries but of giving a postponed benefit. For 18 months at least there will be this taxation in operation without any immediate benefit being given to the productive industries. It is true that the prospect of that relief being given in October, 1929, will undoubtedly weigh heavily in the minds of those who have been financing many concerns which are in a precarious condition at the present time. I wonder whether the right hon. Gentleman has seen the statement which has been published this morning from the Monmouthshire and South Wales Coalowners' Association. They are pleading for some immediate assistance or for some immediate consideration of the plight into which their trade has fallen. They say:
    "The loss on the working of the South Wales mining industry is at present at the rate of over £3,000,000 per annum. There are 70,000 men already unemployed, and the number is daily increasing. During the past 15 months nearly 60 collieries have closed down, several concerns have none into liquidation and nearly all are in the hands of the bankers. Whatever relief is to he granted should be immediate, and the urgency of such relief to the export trade brooks no delay."
    It is the immediate necessity of giving relief to these districts which the Government is postponing until some later season. Is it possible that in South Wales, on the north-east coast and in some portions of the West of Scotland these concerns will be able to survive for 18 months, without assistance? Surely, some consideration must be given to the immediate necessities which we know, in these great coal areas in particular, are so urgent. Unless assistance is to be given now, not only will these industries drop quite certainly into the hands of the mortagees, but even the great banks themselves, which are the most necessary agents in national enterprise are bound to be very cautious in their financing during the next 18 months, when reorganisation and reequipment are most
    1110
    necessary, and as a result real damage will be done to these industries.
    I have pointed out that other trades and other commercial interests are going to suffer by the distribution of this new charge. I would not like to leave that aspect of the problem without pointing out that the way proposed by the Chancellor of the Exchequer is not the only way in which the local authorities can reduce their expenditure. These local authorities are great self-governing Parliaments. In many of our great towns they assume almost the dimensions of our own Parliament, and they have control of a considerable part of their own local expenditure. It is because the spirit of extravagance during the period of inflation somehow or other infected them, just as it attacked this House and private individuals outside, that a great many local authorities are having to go through the painful process of cutting down, economising, scraping and scrapping in their local organisations. If we are to deal with this problem we must not think of it only by way of giving block grants to these local authorities, because if that is done injudiciously it will tend to extravagance rather than economy. I would beg of the Minister of Health to devise some means by which to put a premium upon economy and not a premium upon extravagance. If the scheme of the Chancellor of the Exchequer does not meet with general approval, may I ask whether the Government have considered other means of relieving the burden upon the local authorities?
    The CHANCELLOR of the EXCHEQUER (Mr. Churchill): The burden upon the local authorities?
    Mr. RUNCIMAN: Yes. Have the Government considered making the charge for the able-bodied poor a purely national charge? Have they contemplated making a larger contribution to road expenditure? On the contrary, they have taken some of the available road funds for the purpose of providing this pool. Have they devised any scheme for rate abatement in those areas where industries, in order to keep going, in order to keep together their own workmen and their own organisation for external trade, are working short time? Cannot they devise the means whereby there can be an abate-

    1111
    merit in those short-time working industries? One, in particular, which comes to my mind is the cotton trade. If the cotton trade, by working short time in order to keep their men and women employed, are to be rated just as though they were working full time, it stands to reason that they cannot survive the period of depression without going deeper and deeper into the mire. I would ask the Minister of Health to see whether he cannot make the rates have some direct relation to this short-time employment, which is one of the best ways of keeping our workpeople together in times of bad trade.
    I should like to offer some remarks on the Chancellor of the Exchequer's sympathetic reference to the railways. He, quite naturally, takes a lively interest in the preservation of that vast industry, in which about £1,000,000,000 of British capital is invested. All classes of the community hold railway shares and debentures, and there are a very large number of men who are directly dependent upon that industry for their employment. But if the railways cannot keep themselves alive on their merits, if they cannot by cheap carriage retain traffic, then the right hon. Gentleman will find it a very costly procedure to make up the difference by doles or artificial arrangements. I do not believe that he can do it, and lie ought not to try to do it. It. is a remarkable fact that when the right hon. Member for Hillhead was referring to the industries of this country and railway rates, he overlooked one rather startling feature. The most depressed areas, with the exception, possibly, of that immediately surrounding Sheffield, are quite near to the seaboard. Some of them are actually at the ports. It is not expensive carriage which has hit them hard. It is not railway rates which have depressed them. They are not dependent upon railway rates. They can get cheap sea rates, which are far too low. Let me give a few contrasts to show the difference in rates between seaborne and rail-borne traffic.
    Sir R. HORNE: The dock rates are also high.
    Mr. RUNCIMAN: I want to point out the difference between the cost of car-
    1112
    riage on the railways and by sea. I looked up only this week the cost of the carriage of sugar to the United Kingdom from Mauritius, 6,700 miles, and I find that it is carried 24 miles for every penny of freight. A railway company at the cut rate between Bristol and London only carries it three-quarters of a mile for one penny. What chance have those who manufacture in Bristol in competing in the London market with those who carry on a certain degree of refining in Mauritius when there is that vast difference in the cost of carriage? The right hon. Gentleman cannot get over that. It is one of the facts of nature, and it is no use struggling against it. Powerful as he is, he cannot alter it. Take flour. Flow-which is milled in Lincolnshire can be brought by rail 107 or 110 miles at a cost of 11 lbs. for one penny, while flour milled in the United States of America comes by ship at the rate of 10 lbs. for one penny. Take coal, and you will find almost exactly the same contrast between sea-borne and rail-borne charges. From some of our best coal areas the cost of carrying coal by sea is about one-tenth the cost of carrying coal a short distance by rail. Take iron ore, the raw material of the very industries which the right hon. Gentleman aims at helping. Iron ore can be brought from Algiers to West Hartlepool, 1,900 miles, at a cost. of 6s. 6d. a ton, while iron ore carried from West Hartlepool to Darlington, only 15 miles, by rail costs exactly one-half of that, and if it has to be taken on to Leeds it costs 6s. 2d. These contrasts explain to a large extent why it is well nigh impossible in the inland areas to keep alive the industries which depend upon the cheap carriage of raw material.
    There is one direction in which the right hon. Gentleman will help the seaboard areas if this scheme goes through. There will be a reduction of their dock dues. That will be of some assistance. I do not know how much it will be, but it will have to be a very considerable drop if it is to enable a port like London to compete with a port like Antwerp. May I be allowed to commend to the Chancellor's consideration the enormous advantage which comes from a big turnover even in a port? The port which has a very large transhipment trade can

    1113
    obviously do business far mere cheaply than the port with a small transhipment trade. I beg the right hon. Gentleman, when the occasion arises, to prevent some of his colleagues from destroying our transhipment trade in the Port of London.
    I would like to say, with regard to industry, that these artificial arrangements made by Parliament, whether by way of altering our tariff system or making a change in the incidence of local rates, or by the imposition of taxes, of themselves are of comparatively little moment—I do not say that they are to be despised; far from it, for they are of great importance—compared with one or two things which can be done within these very industries themselves. Let us be quite frank in dealing with some of them. Take the iron and steel trade. With the exception of cotton there is probably no industry in this country which was so inflated during the boom period. The very painful process of squeezing out the watered capital has to be gone through, and unfortunately a great many people will suffer severely in the process. But until we get on to a rock bottom capital basis, we shall not be able to return to prosperity.
    Then a large number of our big staple industries require new plant. They will not be able to get new plant unless they can get cheap money. They must be able to borrow on an economical basis. They want more capital, both in the sense of money and in the sense of machinery. They must be able to buy the best and the latest, wherever they can get it, whether at home or abroad. Above everything they must have the best management that the brains of the country can supply. The time when the old proprietors can fit in their sons because they are their sons and not because they have the capacity to run great concerns, has long since passed. A more drastic clearing out of incompetent men at the head of great concerns will be of boundless benefit to the trade of this country. There is no room for incompetence in any walk of life.
    Finally, anything that can be done to add not only to the skill of workmen, but to their contentment and the feeling that they have an equal share and an equal degree of knowledge in the industries in which they are engaged, will
    1114
    have a boundless effect for good in nearly all our great staple industries. One of the things essential for the expansion of our industries and the improvement of their condition is that they should be able to obtain cheap money; the rate of interest imposed on them should not be too high. Some of them will require assistance during the next 18 months or two years. What have the Government done in that respect? There is nothing that they have done with regard to rates which will be of such wide-reaching benefit to the whole of the industry and commerce of the country as a lowering of money rates. The Chancellor of the Exchequer had it within his power to do it. I hope that he will not resent my now criticising somewhat freely his dealing with our redemption of debt.
    Mr. CHURCHILL: I hope my right hon. Friend is going to tell me how. That is what I am anxious about.
    Mr. RUNCIMAN: I shall not shirk that task for a moment. I shall point out the directions in which, by his policy during the last four years, he has failed to lower our money rates. Unfortunately for him and for us, he had a deficit at the end of his first year. He had a deficit at the end of his second year and at the end of his third year. In every one of those cases that diminished the Sinking Fund which was available for redemption of debt. The effect of that was very marked. I do not hold the right hon. Gentleman responsible entirely for the first year, as he was a residuary legatee, but the others he was directly responsible for. What happened? In those first two years—
    Mr. CHURCHILL: There have been only two deficits. In the first year there was a surplus which my right hon. Friend the Member for Colne Valley (Mr. Snowden) has been boasting about. In the second year there was a deficit owing to the coal subsidy, and in the third year a deficit owing to the coal strike. This year there is a surplus.
    Mr. RUNCIMAN: I do not agree that there was a surplus in the first year, for the right hon. Gentleman took into his revenue account a good many capital sums which had come into his pocket but ought to have been used for redemption of debt and were originally paid for out of capital. In the second and third year the figure was very much larger than was

    1115
    admitted. This year, I venture to say, the right hon. Gentleman has not a surplus, and for the very same reason. He has not a surplus out of current revenue, but only because he counts as current revenue some of the capital realisations which he has been able to indulge in in the last 12 months. They ought to have been used for redemption of debt. Now he has a record of a series of deficits. He wants to know how he could have altered it. I shall give two instances. One was the coal subsidy. Who was responsible for that? His Majesty's Government; the Opposition were not and His Majesty's Government were. They could have said "No," and if they had said "No" there would have been no more evil consequences in that autumn than there were in the year following.
    Mr. CHURCHILL: We would have had the strike a year earlier.
    Mr. RUNCIMAN: If the right hon. Gentleman regards a strike as inevitable, I have nothing more to say on that point.
    Mr. CHURCHILL: The Liberal party would have stopped it, of course?
    Mr. RUNCIMAN: I do not agree that all strikes are inevitable.
    Mr. SUTTON: It was a lock-out, not a strike.
    Mr. RUNCIMAN: Really the right hon. Gentleman does not dispose of the thing by merely saying that it would come a year earlier. Suppose that it had, we should have been £23,000,000 in pocket, and that is not a stun which we can afford to despise. The right hon. Gentleman had as much responsibility as any Minister of the Government for the fact that the strike came when it did. I do not say that it was entirely unavoidable at that moment, but if it had come a year earlier and without the expenditure of the subsidy we should have been £23,000,000 richer to-day, even if the strike had lasted as long. Whatever the causes are, let us go through the figures. The right hon. Gentleman must not smart under this examination, because I do it with the coolness of an auditor. This is what actually happened. In the first two years he had £110,000,000 of nominal Sinking Fund—that is adding the two years together. There were two deficits to be
    1116
    deducted from that—I think there ought to have been three—of £50,000,000. That left him with, roughly, £59,300,000 in Sinking Fund. While that made an apparent net debt reduction, he had not allowed, as he admits now, for the interest on Savings Certificates, which were not provided for out of revenue in the course of the year. That ought to have been provided for and it is going to be provided for. He admits the error and is going to make up for it.
    Then there was the sale of assets in those two years. [Interruption.] I am not saying who was responsible for it. I am giving an analysis and the reason for it. No one need be uncomfortable about that. There was in those two years a sale of assets, £40,000,000, leaving in all a deduction to be made from the net apparent debt redemption in the two years of £71,000,000. In other words, we work out at £11,000,000 on the wrong side in the matter of redemption. Actually we were £11,700,000 more in debt at the end of the year. I am taking the real debt, not the nominal debt, the artificial debt which my right hon. Friend the Member for Colne Valley (Mr. Snowden) referred to. We were over £11,000,000 worse. That is not the only thing. Owing to the way in which the accounts are drawn, the capital portion of the United States debt redemption, which is naturally not available in the London market for us here, came to £10,000,000 and is included. There were Trade Facilities guarantees of £20,000,000 issued during that period. There was Local Loans Stock issued of over £40,000,000 during that period. So that the total, when you allow for additional guaranteed loans for Ireland, provided you with a sum absorbed by the Government in these various ways and for these various purposes, drawn largely from the gilt-edged investor, of no less than £93,000,000 more than the sum which we had anticipated he would be able to repay.
    Take the next year, the year just closed. I take exactly the same figures in the same classification, and what, we find is this: Deducting the deficit of these two years and not interfering with the controversial deficit that I think I see in this year's figures, but only the admitted deficits, there remains £65,000,000 net apparent debt redemption

    1117
    in three years. But then we have to provide once more for the Savings Certificates interest not provided for, £40,000,000; sale of assets, about £15,000,000, as far as we know. We have not had the exact figures yet. Perhaps the right hon. Gentleman will give them to us. Then there are some other items represented, which come to no less than £35,000,000. In other words, during the last year, instead of there being a reduction of £65,000,000 in the National Debt, or the redemption of debt by that amount, the total amount is only £1,000,000. What has been the effect of that when you take these other things into account? It has had a direct effect on national credit.
    Do not let the right hon. Gentleman imagine that it is easy to dismiss these matters lightly. You can measure them by the actual quotations on the. Stock Exchanges here in London and in New York. I am sure the Committee knows that if there is a larger amount of money available for investment in gilt-edged securities than the amount of securities on sale, they naturally bring a larger price. In other words the rate of interest paid by the Government is lower. The higher Government stocks are, the better it is not only for the rate of interest in which they are involved, but for all the industries which are dependent on new money for the extension or re-equipment of their enterprises. In fact, nothing could be of greater benefit to the industries of this country than a lowering of the interest rates for the money which they require. The right hon. Gentleman leads the way on that. These real markets are not political. After all, the Stock Exchange and banks of London are not political, and the Stock Exchange in New York is not political; it values these things as it finds them; it goes to the root, and says, "What are they worth?" and pays accordingly. Sellers have been fairly free lately. What is the result?
    We are able to see what has happened in the last four years. During the last four years the credit of nearly every country in the world has improved. There are exceptions. China is one, Chile is another and New South Wales is a third. They can all be accounted for in their own several ways. But with these exceptions there has been an improvment in the credit of all these various
    1118
    countries. The country enjoying the finest credit in the world now, according to the quotations on the Stock Exchange, is the United States of America, and very naturally, for that country is overflowing with wealth; there is a great demand for gilt-edged securities and a limited supply, and a very active and potent Sinking Fund.
    Mr. DIXEY: A protected country.
    5.0 p.m.
    Mr. RUNCIMAN: It is only recently that Americans have begun to invest outside their country. They have recently invested in the Funding Loan. They have done so to the extent of about £5,000,000, with the result that the Funding Loan has gone up three points. What would have been the result if the right hon. Gentleman had gone on the market to buy £50,000,000 of Government stock? The right hon. Gentleman must be well aware that there are many illustrations of that kind and they ought not to be lost on the high authorities who are in control of our national finance. I have said that you have the United States of America at the head of the list. They have been able to reduce the yield on loans which they have floated by 95 per cent.—a very considerable improvement. Then take the case of Holland and its internal loans—Canada, Switzerland, Sweden. All these have improved their credit. They have reduced the rate of interest on their Government stock. They have been able to make their flotations on better terms than ours and they have been able to do it at a better rate than the United Kingdom.
    Mr. CHURCHILL Mr. CHURCHILL indicated dissent.
    Mr. RUNCIMAN: The right hon. Gentleman shakes his head. I am bound, therefore, to read the figures to him. I take first Canada. The reduction of the yield in the case of Canada is 55 per cent.—a very considerable sum. The improvement in the credit of Switzerland may he measured in the yield of their stocks—1.45 per cent. Sweden is 8 per cent. and United Kingdom 45 per cent. If the right hon. Gentleman thinks these figures are not accurate, let him employ the Financial Secretary to the Treasury to check them before the Debate closes and let us see if they are correct. He knows perfectly well that they are reliable. They cannot be disputed. They are taken from the quotations of the

    1119
    leading stocks of these various countries and there is not one which does not show that United Kingdom credit has not improved as rapidly as the credit of the other countries which I have quoted.
    Mr. ALBERY: Does the right hon. Gentleman take into account in arriving at this credit basis, the net yield on securities? Does he take into account the fact that the United States have been able to reduce taxation and, therefore, the net yield on their securities is higher than in this country? He must not compare gross yields with net.
    Mr. RUNCIMAN: Certainly, we are bound to compare like with like. That is the only way to do it, but if the hon. Member goes into the figures he will find that what I have said is correct. There is no controversy about the facts. The one thing which is clear is that the credit of this country has not improved as rapidly as the credit of the other countries I have quoted. That is the really important fact. I go further and say that you can if you like run down the whole list—Denmark, New Zealand, India, Spain, Argentina, Siam, Norway—large and small, take them all alike and you will find that the same thing is true. With the exception of China, Chile and New South Wales, the improvement of our credit has been slower than the improvement in the credit of any other country. It is no satisfaction to me to point out that the credit of our country is not as good as it might be but we are bound to draw lessons from that and we are bound to draw attention to the fact that unless the Sinking Fund is made operative and effective, unless these neutralising influences are brought to an end, the credit of the country will continue to wane. One of the best things which the right hon. Gentleman could have done, would have been to have lowered expenditure. The means of doing so were perfectly open to him. By spending less, by entering into commitments in a much smaller degree, by getting rid of such absurd subsidies as the sugar beet subsidy—running away with nearly £5,000,000 a year—and a good many other things which have been pointed out to him from time to time, the right hon. Gentleman could have made his revenue exceed his expenditure. That is the only way in which the Sinking Fund can do any good.
    1120
    It is only right that the Chancellor, in reforming the accounts of this country, should take the trouble not only to take out two or three controversial figures like the Road Fund and the Post Office, but that he should, if he is reforming the accounts, show in the accounts what is capital expenditure, and what is annual expenditure and what is capital income, or return of capital, and what is annual income. I beg of him to consider this matter and I have no doubt that before the next Budget he will be able to let us see clearly what is to he done, and that his revenue is not swollen realisation of assets but is, without exception, revenue raised in the normal way through the taxing authorities. If the debt is not reduced, the cumulative effect of that Sinking Fund which the right hon. Gentleman announced on Tuesday will be reduced. He is actually reducing its effectiveness below the Baldwin Sinking Fund level. If he has to pay more for his Treasury Bills, that will reduce it still more. He is making a gamble on rates of money in the next few years. If he is going to make that £355,000,000 fund entirely effective, he will have to succeed, by hook or by crook, in making his revenue exceed his expenditure. All other measures which he may suggest as Chancellor of the Exchequer for the alleviation of our depressed trade, are mere palliatives. The savings which are made by him will constitute an addition to the credit of this country, and the way in which he can best increase the savings of our people, on which alone we can depend for the extension of our industry and commerce, is by the reduction of the National Debt.
    Major LONG: I rise to address the Committee for the first time, and, in the circumstances, I trust that I may receive the indulgence which is usual on such occasions. The Division which I have the honour to represent is 60 per cent industrial and 40 per cent agricultural, and I take the opportunity of congratulating the Chancellor of the Exchequer upon the relief which he has been able to give to agriculture. Speaking as I do on behalf of the farmers and cultivators in my Division, I am convinced that this measure of real and practical aid will receive the approbation of all agriculturists and the gratitude of all farmers. At the same time, may I, with

    1121
    due humility, ask that this relief should be extended to the great industry of agriculture with the least possible delay? Further, may I ask that a proportion of that one-fifth which will eventually be allocated for the use of agriculture should go towards meeting the demands of the English farmers for their share of the meat contracts and other contracts in connection with the Services in this country? I have had the opportunity of meeting many farmers, and I am convinced that if, in addition to this proportion being granted to them, there were closer co-operation between the Government buyers and the farmers, the question of price would be more readily and easily met.
    With regard to the Petrol Duty, I do not believe that any hon. Member on either side of the Committee can quibble about 4d. a gallon on petrol, but, speaking for the wage earners in my Division, I desire, again with due diffidence, to point out what I believe will be a great hardship to the working masses. That is the difference in the price which they will have to pay for kerosene oil. In my Division great quantities of this oil are used for fuel and light. It is used mainly by agriculturists, but I believe, to a certain extent, is used as well by industrialists. The proportion of this extra 4d. per gallon which will probably be paid by the petrol users is far lighter than that which would be paid by the wage earners of this country in the way I have just mentioned. If it be not too late, I suggest to the Chancellor of the Exchequer that some rebate might be given to those who use kerosene oil for household purposes.
    The question of safeguarding has been debated here many times. I am one of those who regret that, apart from the button-making industry, no industry has been safeguarded on this occasion by the right hon. Gentleman. I desire to bring to the notice of the Committee two definite cases of safeguarding in connection with my own division—the cases of gloves and of tyres. I would first recall to the memory of hon. Members the fact that my Division has been for the past 30 or 40 years mainly Liberal, and that the leaders of industry in it are largely of the Free Trade school of thought. Prior to the last General Election the position there in regard to the glove
    1122
    industry was very serious. The industry was practically at a standstill and unemployment was growing day by day, week by week, and month by month. I am sure that hon. Members of the Socialist party who represent great mining areas, and who live among such despair and despondency as that which is created by unemployment, will agree with me that on all sides our one desire is to see this great problem relieved.
    I have lived among my people all my life and it was with the one desire of relieving unemployment in my Division that I advocated a policy of safeguarding, a policy from which I have never swerved. From the moment that the glove industry was safeguarded the position became one of hope for every man and woman employed in it. The figures for the first year showed that unemployment had decreased to an extent which passed even the most sanguine expectations. The commodity itself has not risen in price and in this connection I should like to point out that hon. Members of the Liberal party, at a by-election, took the opportunity of going from shop to shop in an endeavour to prove that there had been an unfavourable variation in the price of leather gloves, but in not one single instance was such a variation found. On the contrary, in every instance it was found that the price of leather gloves in my Division had decreased, and, since my election, the price of gloves is being further decreased. Within the last two months a new glove factory has been started in the Division, which shows that those Who are going into the industry are not alarmed for the future, but see hopes of prosperity for the industry and of employment for the unemployed.
    If I may turn to the question of the tyre industry, I would point out that, previously, this industry was not in such a bad way, but was at a stage in which a certain amount of work could not be guaranteed week by week. The employers in the industry were not satisfied nor was the lot of the employés a good one. From the moment the industry was safeguarded, however, they have been working to full capacity, and an old factory which had been derelict for many years has been purchased and re-equipped with new machinery, and will, within the next three months, be producing tyres. I should like to say a few words with

    1123
    regard to the question of exports. I have, I think, proved to the House that safeguarding of industries has indeed relieved the unemployment question. It has not increased the price of the commodity, but decreased it.
    I have said little about the exports. During the past three or four months, the exports from my Division have risen by leaps and bounds. The glove industry has a great connecting link with agriculture, for, in the past, it was the custom for the wives of agricultural labourers to come in week by week, and to take away so many pairs of leather gloves which, at their leisure, and when it suited them, they were able to make into hand-sewn gloves. To-day, that link has been re-formed, and they are earning as much as 30s. a week. This is indeed an augmentation of the labourers' wages every week, and is a fact to be taken into consideration. A hundred years ago, farmers and their wives had their own little industries, whether it was the ladies with their spindles, or the men with their brew-houses. To-day, these small industries have gone, because of mass production and other reasons, but here is an example of how the safeguarding of gloves has actually helped the industry of agriculture. The greatest country at the present moment in regard to the export of leather gloves is that hard-headed country, Germany. They are taking our gloves in greater volume week by week. I maintain that this trade is a definite link between agriculture and the industry itself, for these gloves are made by the wives of agricultural labourers.
    Hon. Members of the Socialist party claim that they alone have the right to represent the views of the working-classes. Their policy of opposing safeguarding and the giving of employment shows only too clearly how hollow are their pretensions. I submit, as a very junior Member of the House of Commons, that this great scheme, which the Chancellor of the Exchequer has brought before Parliament, probably the greatest scheme of modern days for the relief of rates, is for the year 1929, and not for the year 1928. It is for that reason that I submit to His Majesty's Government, that this policy of safeguarding can be summed up in a few words, "It is never thus; it is never now"; and that, if it
    1124
    were right in the days of Cobden and Bright to adopt the policy of Free Trade to alleviate the conditions of that day, surely it would have been far more expedient on the part of the Government to have adopted the policy of safeguarding more industries, and to have done that in conjunction with this great Budget. Therefore, if it be necessary, as I believe it is, to re-submit the White Paper in which the pledges of the Prime Minister and the Government were made, the sooner that White Paper is re-submitted to this House, the better it will be for the unemployed in this country. In conclusion, may I say that the few brief remarks that I have made, it may surprise the House to know, have given me grave consideration, for had my father been alive and sitting in that Gallery, my sole idea would have been to have made my maiden speech worthy of one bearing his name.
    Mr. SHINWELL: I am sure the Committee will desire me to offer congratulations to the hon. and gallant Member, who has just sat down, upon his remarkable maiden effort. I am far from agreeing with him, but we on this side are always charitably disposed towards an hon. Member making his maiden speech, and, whatever we have to say to him in respect of the controversial issues which he has raised with us, can be said on some other occasion. It is an amazing admission of incompetence on the part of those who have been associated with British industry for so long that they should require to come to the British Government and ask for a measure of relief for British industry. That is the issue now before the Committee. In that respect, both the right hon. Gentlemen who have contributed to the Debate on this Budget are in perfect agreement. The right hon. Gentleman the Member for Hillhead (Sir R. Horne) said pretty much the same thing as the right hon. Gentleman the Member for West Swansea (Mr. Runciman). One, it is true, spoke for a variety of interests—banking, steel, iron, coal, and, as I gather from his observations, motors. The other spoke, as he usually does, with great lucidity for the ship-owning interest. One might have imagined, when both right hon. Gentlemen were deliberating one with the other that we were present at a directors' meeting; and I wondered, as they spoke,

    1125
    what is the contribution that is to be made by the proposals embodied in this Budget to the hulk of the working-class population. That is the sole test of a good Budget.
    As I understand the orthodox conception of national finance common to right hon. and hon. Gentlemen on the other side and on the Benches below the Gangway on this side, they believe that the purpose of national finance is to reduce taxation, or, if it cannot be reduced, to manipulate it. We on this side hold an entirely contrary view; we believe that the primary purpose of national finance is to improve the standard of life of the working-class population. There is nothing in this Budget, not a word, not a clause, not a line, that in any sense can be regarded as contributing to the well-being of the workers of this country, unless it be, as I assume from the speech of the right hon. Gentleman, that the workers are likely to become enthusiastic about the relief in the form of a farthing off the pound of sugar. The normal consumption of sugar in a working-class household is about 4 lbs. a week, so that this may be regarded from the working-class standpoint as "the penny-a-week Budget." The penny may not be forthcoming; it is highly speculative. What is quite definite is that the shares of prominent sugar-refining companies in this country are rapidly rising. The shares of Tate and Lyle have gone up by 1s. 6d. to-day. Something is passing into the pockets of speculators, and, obviously, there must be something in the offing for the sugar-refiners, but for the workers there is a promise of a farthing in the pound off sugar—perhaps, and perhaps not.
    Much might be said on that head. For example, reference might be made to the relief accorded to the agricultural industry. I am far from desiring to withhold any relief from an industry which has become depressed in more recent years, because of the neglect and incompetence of Tory and Liberal Governments; but whatever measure of relief can be afforded should be granted quickly. We desire to know whether any portion of that relief is to pass into the pockets of the agricultural labourers. Under that head, no assurance is forthcoming from the other side. Moreover, if agriculture is to be assisted. something must be done in respect of the character of food pro-
    1126
    duction, and some assurance provided that the landlords will not ride off with the bulk of the relief. Upon that point, hon. Members on the other side are strangely silent. These are matters which we can discuss at greater detail at a later stage.
    In respect of the promise of relief to the depressed industries, there is a matter of common agreement in this House. We on these benches have always desired the Government to come to the assistance of depressed British industry. The Government are now converted, but it is a belated conversion. What have they said in the quite recent past? It is not so long since the Prime Minister himself declared that it was not the business of a British Government to interfere in industry. He was fortified in that view by the right hon. Gentleman the Minister of Labour, whose absence we all deplore, and who, we hope, will soon again be with us. He said, quite definitely, that the Government had no intention of interfering in British industrial affairs or operations. That is the orthodox view. We have always taken the view that it was the function of the Government, as it is now the function of this Government, to interfere in industry where the national well-being is concerned. However, the Government have now responded to that appeal; they are coming to the assistance of British industry, but in what fashion!
    I listened with concentrated attention to the speech of the right hon. Member for Hillhead. As I understood him, he said, "I thank the Government, speaking, of course, on behalf of the business interests of this country with whom I am associated"—and his devotion to business is well known—"for their promise of relief to British industry, but I do ask the Government not to impose taxation for such a purpose; at any rate, if taxation is to be imposed, it must not be imposed on those who are to receive this measure of relief." In other words, the right hon. Gentleman wants it both ways, which is quite characteristic. Business interests have always wanted it both ways. They will take what they can get from the Chancellor, reluctant though he may be to satisfy them, but they will steadily, constantly and persistently evade, by means well within their power, any attempt to fasten further taxation upon them. I ask the Chancellor, now that he

    1127
    is in his place, to note the challenging declaration made by the right hon. Member for Hillhead. He said to the Chancellor, who, I hope, took note of his words, "The Government must not antagonise the financial interests of this country. The Government must be careful. Financial interests are all powerful." I should have thought the right hon. Gentleman had no occasion to mention that to the Chancellor, for the whole purpose of the Budget is to avoid a clash with the financial interests of this country.
    At all events there is this measure of common agreement. We are all agreed now—the benches opposite, the benches below the Gangway, and we here—that the Government must come to the assistance of British industry. In what manner is that assistance to be afforded? By a subsidy—plainly and bluntly put, by a subsidy. Right hon. Gentlemen opposite have persistently declaimed against subsidies. They had their experience of a subsidy in 1925—to which reference has already been made—unscientifically provided, with no regulations whatever. We on this side regard subsidies as economically unsound; in the main we should prefer to avoid them; but in the existing circumstances of British industry it is necessary to resort occasionally to artificial respiration. We do not oppose some measure of relief, but we do ask, just as we asked when the previous subsidy was provided, that it should be scientifically regulated and not distributed over a wide field to the good and the bad, the white and the black spots, the flourishing industries and the depressed, because that is not a scientific method of providing relief. In any event, whether the relief will be provided is hypothetical.
    I listened yesterday with great respect to the right hon. Member for Carmarthen (Sir A. Mond), who dilated at some length upon the relief which is likely to be afforded to the coal industry. There is common agreement on this head, that if there is one industry requiring relief it is the mining industry. The right hon. Gentleman said the rates now levied upon coal amounted to something in the region of 6d. per ton. Personally I think that is too high an estimate, but for the purposes of my illus-
    1128
    tration I will concede that 6d. is right. I will turn to the loss per ton on coal in South Wales, and I hope the Chancellor will for a moment give me his attention. In January of this year the loss per ton on coal in South Wales was rather more than 1s. 7d.; we need not trouble ourselves about fractions. I hope the Financial Secretary to the Treasury, when he replies, will tell the Committee how taking away three-quarters of the rates now levied upon every ton of coal can assist this impoverished industry, now sustaining such severe losses? It cannot be done in that way. Moreover, as has already been pointed out, this relief is not to be afforded until October, 1929.
    Mr. WALLHEAD: It will be operative later than that.
    Mr. SHINWELL: As to that, I do not pretend to have any more knowledge than the Chancellor himself, but the point at issue is whether such a small measure of relief can be of the slightest assistance to this impoverished and depressed industry. In my belief it will be of no assistance. I should like to have said more on this head, but my time is limited, and I wish to say something upon a matter which is, from my point of view, much more substantial, namely, the oil industry and the petrol duty. I hope I may have the ear of the Committee for a few moments longer. I yield to no one in my desire to secure a measure of relief for the shale oil industry, but while I agree that relief will be afforded by the imposition of a duty on petrol with exemption for shale oil, I feel there are other means, less dubious, which might have been employed to secure that relief. But to enable me to come to my point I require further enlightenment as to the intentions of the Chancellor. I gather from the Parliamentary report of the Chancellor's speech that he proposes not only to exempt imported crude oil, but to exempt the derivative of crude oil from the duty. If that is the position, then, clearly, shale oil will not benefit to the extent indicated by the Chancellor, for it will be in constant competition with refined oil. If, on the other hand, he proposes to impose a duty of 4d. on refined oil, then in all likelihood the existing oil concerns, other than the Anglo-Persian Oil Company, which already has established refineries and undertakes refining operations here, will tome to this

    1129
    country and establish such agencies, and to that extent the Chancellor will suffer a loss of revenue. He cannot have it both ways. On that point I think the Committee are entitled; to further information, because in discussions with hon. Members I gather that the point is obscure.
    I said a moment ago there is a less dubious expedient which might be employed to relieve this depressed industry. I indicated that remedy the other day in a question I put to the First Lord of the Admiralty. If he could guarantee that the shale oil produced in Scotland were purchased by the Admiralty in larger quantities, it would be unnecessary to provide this exemption. The total annual production of shale oil at the present time is in the region of 60,000,000 gallons, and the amount of relief from taxation afforded by its exemption will be something like £100,000. I think it would be quite possible for the Admiralty to purchase larger quantities of shale oil. It would, of course, be more expensive, but the additional cost would not be more than the relief from taxation provided by the Chancellor's proposal. In any event this is another form of subsidy. I am far from objecting to it in this particular instance because, quite frankly, I recognise that the Scottish shale industry, which is interlocked with the Anglo-Persian Oil Company's undertaking, which is largely dependent upon the prosperity of the Anglo-Persian Oil Company and, to some extent upon its charity, would go under if a subsidy of some kind were not provided, and that expeditiously. So while I offer my objection to the method of taxation imposed by the Chancellor, I recognise that in the absence of reorganisation in the shale oil industry and having regard to world prices, it is essential to provide some measure of relief.
    There is one further question I wish to put to the Chancellor. I am sorry to weary the Committee with these details, but I must ask it for the purposes of enlightenment. I gather he proposes to exempt the oil supplies of fishing fleets. I offer no objection whatever to that. The fishing service has suffered considerably in recent years; I shall not enter into the reasons for that, because this is not the proper occasion; but the fishing fleets, particularly in Scotland, have
    1130
    purchased their oil supplies from the Scottish Oils Company until in recent months, perhaps in the past year, they have ceased to purchase Scottish shale oil because of the reduced prices obtaining elsewhere. If the fishing fleets are still to be exempted and are to he permitted to purchase imported oil at lower prices, it will obviously confer no advantage upon the shale oil industry, and I ask the Chancellor to consider that aspect of the matter. I am not asking that the oil used by fishing fleets should be made chargeable in respect of this duty, far from it, but I do ask the Chancellor to direct the attention of the Government to the desirability of purchasing larger supplies of Scottish shale oil for naval purposes.
    I must come now to my conclusion, but, before doing so. I invite attention to this point. The Chancellor has introduced four Budgets. In every one of those Budgets new taxes have been imposed. I have a list of them beside me, but I shall not trouble the Committee with them. The Chancellor of the Exchequer is the most prolific tax imposer the Treasury has ever known. I do not care to suggest that the Chancellor of the Exchequer himself is perhaps the worst tax that has been imposed upon us. That suggestion has been made elsewhere, but I do not share it entirely. This Budget is about as good as the previous Budgets which were introduced by the. Chancellor of the Exchequer and as bad. So far as the bulk of the working-clam population is concerned, it affords no measure of relief; in fact, they are exempted from relief. The business community is to benefit and the right hon. Gentleman the Member for Hillhead advises us that the banking interest will benefit. Those people with incomes of over £400 per annum are also to benefit, but the working classes of this country will receive no benefit whatever. Applying that test, we on these benches regard the Budget proposals of the Chancellor of the Exchequer as of no value whatever to those who in existing circumstances require whatever relief can be afforded by this House.
    Captain MACMILLAN: I think I ought to congratulate the last speaker upon the skill in which he has attempted to extricate himself from the position in which he finds himself in relation to his

    1131
    constituents. I never heard a more ungracious way of showing his gratitude in my life; and the one thing for which he ought to be thankful is the date at which the by-election for Linlithgow took place. All those who have listened to this Debate must have been struck by one peculiar fact. Here we have the introduction of a Budget which, whether we agree with it or not, or whether the proposals made in it will have the sympathy or opposition of a majority of the Members of this House, is admitted to be one of the most important, and I would say the most comprehensive and the most daring and the most progressive series of proposals that have ever been put forward by a Conservative Government in office. No other Budget can rank equal to it in regard to its importance and effect upon the system of government and upon the whole industrial system of the country.
    The right hon. Gentleman the Member for Collie Valley (Mr. Snowden) surprised the House by making practically no reference to the main proposals which characterised this Budget. It is true that the right hon. Gentleman made a series of criticisms in his usual somewhat pedantic style and his favourite role of financial purist. We all appreciate the powers of criticism and the great knowledge possessed by the right hon. Gentleman the Member for Collie Valley, who is a kind of mixture between a sort of Grand Inquisitor of political economy—a kind of economic Torquemada—on the one hand and a political Mrs. Gummidge on the other. The right hon. Gentleman is always "thinking of the old' un"—of the year 1924; practically the whole of his political life has been and will be devoted to proving that the administration of public finance in that year was better and more effective than it has ever been under any Chancellor of the Exchequer. When it came to the question of the reconstruction of local government and our rating system and the important issues involved, the right hon. Gentleman had only a few sneers and a few prophecies to make of equal unimportance.
    The late Chancellor of the Exchequer is fond of making prophecies, and last year he made two. One of them was that there would undoubtedly be a deficit, and in that he was wrong. He also said that there would undoubtedly be a great
    1132
    international strike owing to the introduction of the Trade Disputes Bill, and there again he was wrong. His prophecy on this occasion is that the proposals in the Budget will not meet with the approval of the country at the next election, and I think time will show that once more he will be wrong. The method in which the right hon. Gentleman the Member for Colne Valley treated this subject was not worthy of himself or the importance of the proposals which have been put before us. I can only attribute that to the fact that the party opposite have not made up their minds what they are going to say about the proposals of the Budget.
    We have had very little criticism from hon. Members opposite of the Budget proposals, and I should like to make a reply to what seems to me to be the important criticisms which came from certain speakers on the Liberal benches. The right hon. Gentleman the Member for West Swansea (Mr. Runciman) who spoke. this afternoon made a rather more sympathetic criticism of the Budget proposals than were made by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). But unlike the late Chancellor of the Exchequer the right hon. Gentleman the Member for Carnarvon Boroughs at least took the initiative. He did not wait until there was a party meeting before making a definite series of criticisms and counter-propositions; and I will therefore venture to examine one or two of them. The great plan put forward by the Chancellor of the Exchequer deals with the whole rating situation under two heads. First of all there is the finance required for it and then there is the method chosen of carrying it out. Hon. Members may criticise the finance and the method of providing the money which will be necessary. On that point the right hon. Gentleman the Member for Carnarvon Boroughs practically reverted to the old policy of the taxation of land values.
    We have had an interesting controversy between the leader of the Liberal party and the right hon. Gentleman the Member for Carmarthen (Sir A. Mond) as to the exact way in which that policy was dropped, hut I do not suppose that we shall ever discover the truth of that episode until we have a further instalment of Lord Beaverbrook's memoirs.

    1133
    At any rate if there is one right hon. Gentleman who has no right to talk about the taxation of land values it is the right hon. Gentleman the Member for Carnarvon Boroughs because it was he who abandoned this great engine of finance, this formidable fiscal weapon. What is more, the right hon. Gentleman abandoned it not during the period of the War but after the War. Therefore if there is one person who is precluded from advancing that argument it is the right hon. Gentleman the Member for Carnarvon Boroughs.
    The Leader of the Liberal party agreed that it was very important that there should be some relief given to the local rates and referring to -the scheme of the Chancellor of the Exchequer he really stated a single tax policy. He said there would he no relief to rates and that the system proposed by the Government must necessarily prove in the long run merely an addition to rental values. As regards the right hon. Gentleman's own policy of lowering rates by the nationalisation of certain services surely the same must be true and it will prove according to his theory to be a mere sop to the landlords. The result is that the right hon. Gentleman is a single taxer when he is dealing with our policy and he adopts an orthodox economic attitude when presenting his own policy. The only way in which the right, hon. Gentleman differed from our policy was that we had not chosen the right method for the relief of the pressure of the rates, and that the sector of the front upon which we had chosen to make our attack was not most useful for the purpose. We had also a series of detailed comments made upon the Budget proposals, some of them not altogether happy in their illustration. We heard that the tithe is paid by the tenant and that the coal mines arc rated upon a rental value basis. That illustration was singularly inappropriate to the argument which was presented to us as neither of those statements is accurate; in fact, the right hon. Gentleman then made a series of important criticisms of the effect upon local government of our proposals.
    What they really came to was this. The right hon. Gentleman said that by the change which is now proposed in local government we are not going to confer any real benefit and we are going to
    1134
    inflict a hardship. He also tried to show that by increasing the area we were going to increase the rates. He told us that by throwing non-county boroughs in with counties we should be sure to get an increase of rates. I think the right hon. Gentleman completely missed the main part of the statement made by the Chancellor of the Exchequer. The scheme for the enlargement of local areas and the reimbursements to local taxation in order to compensate the people is not to be an absolutely equal reimbursement. There has to be a reconsideration of the whole position of the area, and, I quote the speech,
    "a gradual and continuous adjustment of the resources of individual local authorities to the needs and character of the population for which they are responsible."
    Under that very important proposal we have got for the first time in our system of the relation between local and national taxation a very powerful and flexible instrument to achieve the removal of burdens upon those areas where they are now pressing so hardly. The main argument that has been advanced, especially by the Liberal party, was in fact an argument consisting of an appeal to the selfish interests of those who were not directly beneficiaries in this matter. We have been asked what is a trader and the workmen going to get out of these proposals? What does the workman want? He wants wages and employment.
    Mr. KELLY: He will not get them under these proposals.
    Captain MACMILLAN: Oh, yes, he will! What does the shopkeeper want? If a town is prosperous and the men are earning good wages the trade of the shop keeper is all right. What the right hon. Gentleman the Member for Carnarvon Boroughs said was merely an attempt to revive the Liberal party upon the basis of the selfish interests of the middlemen and the rentier class. We have had presented to us a great and important scheme, and I think all hon. Members on this side of the House will be ready to congratulate the Government for their courage in presenting a Budget of this character for our consideration. No doubt there will be immense difficulties found in making the necessary adjustments, and carrying out

    1135
    the great task of reconstruction to which we have put our hands.
    The criticisms which have already been directed against these proposals do not seem to me to have shaken them to their foundation. I do not think the appeal which has been made to selfish interests will transcend the desire to see that the basic industries on which our happiness depend are given a chance of doing their best for those who are engaged in them, and which we all want them to do. Wages, employment, the whole chance of getting our fellow-countrymen upon a more prosperous and better basis, and raising the whole social life and character of our people—surely that is going to be a better appeal to the men with the motor car who has to pay a few pence more for his petrol, or to those who may not be direct and immediate beneficiaries. I am sure that all those who really are prepared to support these proposals with fervour and faith will be able to rally the finer instincts of the people in support of the main underlying principles which have gone to make up this important and progressive scheme, which constitutes, to my mind, a landmark in the history of Conservatism.
    6.0 p.m.
    Mr. WILLIAM GRAHAM: The Budget statement may be conveniently divided into two parts, the first of which concerns the ordinary run of our public finance, and the second of which is devoted to the important scheme of rating reform and its consequences, whatever they may be, which the Chancellor of the Exchequer outlined in his introductory statement; and I make no apology fur devoting the whole of what I trust will be a comparatively brief speech to the rating plans which the Government have suggested. I entirely agree that it is extraordinarily difficult to make a great party controversy of rating reform. The subject is very often left to the experts—wrongly named—or it is regarded, historically and otherwise, as so complex as to be altogether inappropriate for the purposes of discussion on a public platform, or even on the Floor of the House of Commons. There is, however, a very great deal in the scheme of the Government which, even in a kind of Second Reading Debate, lends itself to fundamental criticism, although I trust that it will be possible
    1136
    for us, here and there at all events, to suggest alternative schemes.
    We on these benches have repeatedly, in recent years, drawn attention to the enormous increase in the burden of local rates. For some time now that aggregate burden has settled down at a figure between £160,000,000 and £180,000,000 per annum, or, roughly, double the pre-War total. A certain school of thought suggests that that is a very much smaller increase than the great increase which has taken place in the burden of national taxation, and that, on paper at all events, ratepayers appear to have gained at the expense of taxpayers in the obligations which have settled upon us following the War. There is no real validity in an argument of that kind, because great blocks of the expenditure fall inevitably to the State—the burden of our National Debt and other contributions—and in any event the effective reply would be that our national taxation does approximate more nearly to the principle of ability to pay, especially in the case of direct taxes, than anything resembling a local rate can ever achieve. Broadly and generally, therefore, this has been a very heavy burden for the great masses of our people, and we have constantly urged that either certain services should be overtaken wholly, or at all events more largely, from national funds, or that, at the very least, no additional obligations or burdens should be heaped upon the local authorities.
    By way of preliminary discussion, therefore, there is a certain difficulty in taking a purely party line, because I imagine that the Government would suggest that the object of their scheme is, in assisting these productive industries, also to assist the local authorities, although many of us are satisfied that that result is by no means what will be achieved. The Committee must observe, in the next place, that all this plan is, so far, of the nature of a subsidy; it is an attempt, from resources provided mainly in this case by motor car users, to give assistance to certain productive industries in necessitous and other areas, whose condition the whole House of Commons frankly recognises and admits. I will not waste any time in debating the desirability of a subsidy, or the ordinary economic merits of any such plan, because, whatever view we take, there is a large element of subsidy in the whole

    1137
    scheme of taxation in this country, and all kinds of concessions have been made in the past to specific interests, for reasons and objects which were defended in the House of Commons and elsewhere at the time. We on this side, however, suggest very strongly that, before any kind of further contribution is given, Parliament should be satisfied that it is strictly required, and that it is going to work out in the direction of maximum contribution to our industrial recovery and the employment of our people.
    A preliminary to that end is to be perfectly sure that we have got the facts of the situation. Let us take the illustration of the removal of what remains of local rates payable by the agricultural or farming classes in Great Britain. We do not dispute that agriculture has passed through a very difficult time. I have no claim to speak in any sense as an authority on that problem, but, having heard agriculturists and others, I have always understood that a very large part of their difficulties lay in price stabilisation and a claim for Protection which the Government could not concede; and many of them have said that, while local rates are important., they are not by any means, in many districts, a vital part of the problem through which they are passing. If, however, the Government propose, at the end of next year, to sweep away all that remains of local rates on agriculture in Great Britain, surely their first duty would be to apply some of the recommendations of the Royal Corn-mission on Income Tax in 1919, and find out exactly the position in which the farming class stands. That can only be found out when the agricultural community is on the ordinary basis for Income Tax contribution.
    At the present time, as the House is well aware, the basis for Income Tax purposes is one time the annual valuation or rent, and the Royal Commission, which included people who were very sympathetic to British agriculture, unanimously recommended that that should be replaced, after appropriate notice, by the ordinary profit basis, and that agriculturists should be asked to make that return and to proceed on a method which is capable of complete defence, in that, if profits are not earned, tax will not fall to be paid. It is perfectly true that the option exists under present conditions, but I have always been impressed by the
    1138
    markedly limited extent to which the option of transfer to the Schedule D basis has been exercised, even in times of agricultural depression, and it seems fair to suggest that at least some part of the agricultural community is doing well enough to continue to make payment on the basis of one time the annual valuation.
    Here is a contribution which sweeps away all that remains, as at the end of next year, of agricultural rates, and I do press upon the Government very strongly this consideration, that, before that step is taken, justice should be done to the taxpayers, and, in fact, to other ratepayers, by applying that unanimous recommendation of the Royal Commission —a recommendation with which no farmer could quarrel, since he is merely placed on the same basis as all other industrial classes in the land. That is the first line of suggestion in this controversy; but another preliminary point of great importance arises. Part of the Government scheme is to give assistance to these productive industries by certain reliefs in railway charges. The railway amalgamations will benefit when these proposals are introduced, and they are to pass on that benefit to selected industries in the form of a reduction of the charges which they make to them. But the Chancellor of the Exchequer went rather beyond an argument of that description, and seemed to suggest that it was the duty of the Government to hold the balance between railway transport in Great Britain and the growing competitive power of the motor transport system, or road transport in general.
    Broadly, of course, that is true so far as the House of Commons is concerned, but the Chancellor of the Exchequer and the Government cannot overlook the practical revolution which has taken place in the whole railway structure in Great Britain under the Act of 1921, because, even if we make the largest allowance for the argument as to what the traffic will bear, it remains true that a specific direction has been given to the Railway Rates Tribunal so to fix rates and charges as to yield, with efficient working, the standard revenue, that is to say, the net revenue of 1913, the last pre-War year. In other words, this industry has been made a regulated industry, and, moreover, under the Rates Tribunal, certain allowances have been given on the capital

    1139
    expenditure of these amalgamations. It has been argued, even by friends of the railway companies, that they have been placed in that regulated or, if you like, sheltered or so far preferential position. The road transport of this country, however, is not on that basis at all. All kinds of comparisons may be made in regard to the respective burdens of the two great forces, but Parliament has just passed by an overwhelming majority the Second Reading of Bills designed to give to the railway companies road powers. I entirely agree that that is an economic development which this country could not possibly avoid, but we must be very careful that the Government, in the scheme which they are now proposing to apply, do not, so far from holding the balance, push matters very far in favour of four great amalgamations which, after all, have certain preferences as compared with ordinary road transport in this country.
    The view that we on these benches take, until our economic principles are applied, is that at all events the two services should be regarded as complementary, that is to say, they must work to one another's hands, and I am by no means satisfied that that is going to he the effect of the Government's proposals. Even if we remember that the railway companies are a channel for this contribution, they must gain to some extent in overhead and other charges by the increased volume of traffic which, presumably, they will be able to carry, and so, in the second place, I ask the Government whether they have taken that legislation into account, and whether all these factors have been kept in view in the differential treatment of railway charges. These are preliminaries, and I am afraid that, for reasons connected with an interruption which will come almost immediately, I must summarise rather more briefly other parts of this speech. We come now to the actual plan of the Government for the relief of the productive industries. The Government propose to pay three-fourths of the local rates on what they describe as productive industries, as distinct from the distributive trades. That involves them in a preliminary ascertainment, to extend over the next year, as to what parts of
    1140
    the undertakings are productive in character, and therefore entitled to this relief.
    This method is going to involve the Government in very great technical and even administrative difficulty, and I cannot for the life of me believe there are not ready and convenient alternatives to hand even if the Government proposal is adopted. First of all, of course, the attempt to draw a distinction between a productive and a distributive trade is notoriously hard, and the problem will increase when you come to individual factories and establishments, and seek to say which part exactly belongs to its productive side. Over and above that, you have a whole year of this valuation ascertainment, with, presumably, a good deal of effort by the central authority and other bodies which could have been avoided. I cannot help thinking there is an alternative already in the differential rates that are, in fact, now imposed on certain classes of public utility and other business undertakings. For example, in the Scottish Rating Act, 1926—I have no hesitation in pleading my native land, which leads in all technical and financial matters—there is a Schedule under which certain undertakings are rated for the purposes of local assessment on a proportion of the annual valuation, for reasons which were defended at great length by the very Government that is now proposing this remarkably complicated scheme. Is it possible for the Government to proceed on that basis and not to embark on this valuation ascertainment, but to work out some scheme of relief in terms of a Schedule of that description, which, after all, operates with apparent success in the kind of public utility and other undertakings to which I have referred?
    I observe, going beyond that, that the Government do not propose to draw any distinction at all in relief between industries of a productive character which are quite successful and those which are admittedly not. The Government reply might be that it would be practically impossible to establish any such distinction, and that they had far better run the risk of spreading the contribution over a wide field where it may not be particularly required, than endeavour to separate particular undertakings or concerns. There are the difficulties, as the

    1141
    Chancellor of the Exchequer remarks, of picking and choosing, but from the very start this is a very, complicated and highly technical matter. The difficulties along that line are very likely greater than the difficulties of certain other proposals in which some kind of differentiation might be introduced. After all, if the contribution is put at £15,000,000, £20,000,000 or £25,000,000 per annum, I do not dispute that that is important, but it is only a part of a great rating field covering between £160,000,000 and £180,000,000, and the declared object of the Government is to give the assistance particularly to those exporting concerns which most urgently require it. If that is the state of affairs, what is the position of many of these exporting businesses to-day? When we make an analysis, from purely official returns, we find that they are confronted with exchange difficulties in their export trade; they are confronted also with the depressed labour and employment conditions in other countries with which they compete; and they are exposed to a whole mass of external problems upon which a contribution of this kind, spread over a wide field, including those who do not require it, will make probably in many cases only a faint impression. I am not disputing that a large percentage of the people employed are covered by these industries; but if the object of the Government is to assist the export trade, let them make a bee line for those people in the export trades who undeniably require the help, and not distribute relief to those who do not require it at all. After all, if we must have subsidies in our national taxation and rating system, it should be on that basis. I suggest to the House of Commons, and even to business men, that that argument would be supported by an analysis of a great deal of the material supplied by the Department of Overseas Trade and by other authorities.
    May I pass to the position of the local authorities under the financial and administrative proposals that are in the mind of the Government. This scheme makes no direct appeal to the necessitous areas. Their position has been discussed at great length within recent years. All kinds of formulae for the express assistance of such districts have been considered, but they have been systematically rejected. The Government will con-
    1142
    tend that indirectly the scheme is designed to assist such localities, but, for all we know, they are to trade on for at least another year and a half or nearly two years in their plight, subject perhaps to some trade modification of the position in which they find themselves to-day. The last analysis of the Public Accounts Committee for the complete year of the Appropriation Accounts shows debts to the Ministry of Health by these local authorities of approximately £7,000,000, and that, of course, is only a fraction of the burden resting upon them in existing conditions. Directly, therefore, under this plan they get no contribution. They are left precisely where they were, in spite of all the Debates we have had on this subject. Then as regards the local authorities, the Government indicate that they propose to introduce some system of block grants, by which we understand as a rule a fixed contribution, and that within this block grant presumably the existing percentage system will operate. The question that immediately arises is whether in the stabilisation of a block grant for five years covering all local authorities, you may not take away with one hand such assistance as you propose to give with the other.
    Some most awful rubbish, I am bound to say, is. spoken on this question of the percentage grant system in much of our public Debate. If the Committee will forgive a personal word, some of us spent two years in the Meston Committee on a detailed analysis of this great controversy in the relations between national and local finance. The right hon. Gentleman the Member for West Swansea (Mr. Runciman) argued to-day that these local authorities have been misled by inflationist conditions following the War into a great deal of expenditure, hardly visualising the burden that would rest upon them in a time of depression. That is a very misleading statement of the case. By far the greater part of the task of these local authorities was forced upon them by legislation initiated in the House of Commons, and more particularly certain services were, if I may use the word, nationalised, such as police and teachers' remuneration and the rest, in this sense, that representative Committees laid down the terms which these local authorities were to observe. They were, therefore,

    1143
    deprived of any kind of local initiative or control. I am not disputing the principle. I believe it was essential. But let the House of Commons be perfectly just in this problem in analysing the percentage grant system. Of course the local authorities were influenced by the enormous rise in prices, a state of affairs which continues now, and with which many of them are fighting to the very best of their ability. But we gain nothing at all in the proposals of the Government if by any chance they involve the institution of a block grant system. such as will, in fact, place a larger burden upon local rates, although, as I gather from the Chancellor, that is not the intention which he, at all events, has in mind.
    Let us look into this question at rather closer quarters. If by any chance a block or fixed grant is to be introduced, I am going to argue that it should be introduced under very definite conditions. The House of Commons has had the advantage since 1896 of the proceedings of at least three representative bodies, the Royal Commission on Local Taxation, the Committee that reported in 1911, many of whose proposals were embodied in preparatory legislation but abandoned because of the War, and at least the experience of the members of the Meston Committee, although their document has not been formally presented to the House of Commons. What is the kind of case that emerges from the three investigations? First of all, there is the very powerful argument against increasing the burden of the local authorities, and, in the next place, we must do everything in our power, not to encourage them to waste money—none of us would suggest that—but to develop social services. There are vast problems in social progress still to be overtaken, and it is no economic gain to the country for the moment to undermine a contribution of that kind. But, beyond that, I am going to suggest that there are steps that can be taken. The State admittedly should know the limit of its liability, and I believe in a, quite ready and convenient way it can know the limit of its liability.
    In the next place, some definite effort must be made to deal with the whole ques-
    1144
    tion of administrative areas, and, above all, with what I may describe as units of cost. Many of these administrative areas are far too small in existing conditions, and they lead to a great deal of overlapping and waste and unnecessary competition, even in the financial field. They operate against the best interests of the ratepayers in these localities. So prima facie there is a very strong case for larger areas, although I am not sure the Government intend to cover the whole field, because, as I understand the speech of the Chancellor of the Exchequer, at this stage, at all events, he has specified only two services. It must apply to all services. The very best effort must be made to apply to these areas the kind of principles which are every day being applied in the industrial community. Whatever we think of the industrial future of the country, amalgamation, rationalisation, larger scale production, all these are perfectly inevitable forces, and I have found it difficult to understand why our local administration should not march in step, especially in view of the loss that the existing system entails. But if you are going to apply a new method of this kind, you must insure that you are getting the best value for your money. If these larger areas are enforced, you get a kind of basis of comparison, and your basis must become effective.
    Whereupon, the GENTLEMAN USHER OF THE BLACK ROD being come with a message, the Chairman left the Chair.
    Mr. SPEAKER resumed the Chair.

  ROYAL ASSENT.
  Message to attend the Lords Commissioners.
  The House went; and, haring retwrned,
  Mr. SPEAKER announced the Royal Assent to—

  1. Army and Air Force (Annual) Act, 1928.

  2. Bromborough Dock Act, 1928.

  3. Mersey Tunnel Act, 1928.

  4. Barnet District Gas and Water Act, 1923.

  WAYS AND MEANS.
  Again considered in Committee.
  [Mr. JAMES HOPE in the Chair.]
  Question again proposed,
  "That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance."
  Mr. W. GRAHAM: Very little time will suffice to cover the remaining ground which I had in mind. The Committee will recall that we were arguing the position of the suggested block grants scheme to which the Chancellor of the Exchequer made reference in the Budget statement. I was pleading from these benches that any plan which, in fact, limited the contribution of the State to the local authorities, especially in the social services, would go far to undermine the very contribution that the Government intended to make to the locality. I was just at the point of trying to lay down conditions which should he observed if by any chance the Government persist in that proposal. We admit that the liability of the State should be known, and it may be that within limits in existing conditions there is a difficulty from year to year in ascertaining exactly the call upon the National Exchequer.
  Mr. CHURCHILL: Hear, hear!
  Mr. GRAHAM: But we have also to recognise that the whole of that expenditure proceeds, or practically all of it, under Act of Parliament and that, in any case, it is subject to a great deal of centralised control. I believe that emerging from the Reports of the three bodies—of the Reports of two of them, and what might have been the Report of the third—certain quite business-like proposals might be suggested. First of all, the Government must aim at some kind of standard of efficiency in these services. In the second place, they must pursue, as I think, the system of larger areas, and, in the third place, on the basis of those larger areas, it is entirely in the public interest at the present time to work out units of cost. I quite recognise that these Commissions have not been particularly attracted to a unitary basis, but may I just explain simply and as clearly as possible what is involved. There are certain services
  1146
  at the present time in which the unit of cost may be per bed in hospitals or per head, where a system is worked out on a comparable basis covering certain local authorities or areas. That obtains to only a comparatively limited extent in the wide field of this social expenditure covered by the Exchequer contribution to the local authorities.
  I have never been able to agree that you cannot develop the system beyond the limited point which has just been reached and I make that suggestion for these reasons, broadly, because we want to get the very best return for the money which is contributed; in the next place, because these wider areas will give you a basis of comparison, and, in the third place, that if you are going to fix by any chance the State contribution, the increased efficiency of a unit of cost method will so far relieve the load and the difficulty of the local authorities. We do not know until the Minister of Health has spoken whether a plan of that kind is in view. But, summarising the position, I say this, that we on this side of the House oppose any policy failing to deal with necessitous areas and any alteration in the system of the State contribution which penalises local authorities with this burden already round their necks, but that, subject to these two conditions, we, for our part, will support any scheme making for the efficiency of the contribution.
  May I say one general word with regard to the Budget as a whole? It is plain from the facts before us, and including for the moment the self-supporting services, that our expenditure is still rather more than £800,000,000 per year. I am taking the old basis for the purpose of a comparison with preceding years, although I agree that the amended form which the Chancellor of the Exchequer has introduced is in every way a much more accurate presentation of the case. Many people believe that this is a very heavy burden for this country to carry, but, in all the circumstances of the case, I think we are equal to the task, and we gain nothing by undue exaggeration. Experts have stated that the total income of the British people to-day is about £4,000,000,000 per annum, and, everything considered, the prospects for our industries and commerce are perhaps rather better now than they have been for some years.

  1147
  There is one consideration that I would press. Each year our Department of Overseas Trade is presenting us with a mass of material of the most practical kind, analysing our position in the markets of the world. It has directed attention to the stronger appeal which we can make to specific markets, notwithstanding all the tariff restrictions. If this is the plan of the Government, applied to the productive industries, it must be related to that material which that Department is constantly supplying. My chief regret, in existing conditions, is that there is not in the House of Commons, or in public debate in this country, a consistent effort to relate these contributions for the public good. If by any chance we improve that in the future, I am by no means pessimistic regarding the result; and this is all the more urgent to-day because of the very static character, to which the Chancellor of the Exchequer referred, of the problem of 1,000,000 people who are denied regular and remunerative employment, in our midst.
  The MINISTER of HEALTH (Mr. Chamberlain): I desire, first of all, to express to the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) my appreciation of his courtesy in somewhat compressing his remarks in order to enable me to reply, and I am sure hon. Members who heard him will share my regret that in any way his very interesting and thoughtful contribution to this Debate has been curtailed by circumstances over which we have had no control. I hope he may be given some further opportunity in our subsequent Debates to elaborate his suggestion. Listening as I have to the greater part of this Debate, I have conic to the conclusion that my right hon. Friend the Chancellor of the Exchequer has every reason to be gratified at the reception which has been given to his far-reaching and far-sighted proposals. Not only has the great majority of the speakers found something at least to approve in the Budget, but from many quarters have come the most wholehearted appreciation of the statesmanlike vision and courage which has been displayed in the whole conception. Although, of course, there have been criticisms from one quarter or another, what has struck me as singular in this Debate has been that almost every critic has
  1148
  directed his criticism to a different point, so that one who has to reply to the discussion finds it difficult, if not impossible, to select any feature of the Budget which has concentrated upon itself that volume of disapproval which generally emphasises a weakness in any Budget statement.
  In the wonderful speech of the Chancellor of the Exchequer in which he painted so vividly a picture of the conditions with which we are faced and the proposals of the Government for dealing with them, even he could hardly be expected to convey to those who were beforehand unfamiliar with the scheme, all the details and all the possible implications and bearings of the proposal. Therefore, I am not surprised to find that there has been, even after three days' discussion, a certain amount of misunderstanding and misapprehension as to the whole scope and field of the proposals we are presenting to Parliament. Take, for example, the speech of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). He began by saying that this was a serious question which ought to be treated in a purely non-party spirit. Then he went on to say that having applied this judicial and impartial examination to the scheme, he discovered it to be a thoroughly vicious method, and proceeded to deal with it in what, I think, I must describe as a thoroughly vicious speech. So much so that I was rather left wondering what further he could have found to say if he had applied the ordinary methods of party controversy, instead of the strictly non-party spirit in which he approached it.
  I make no complaint against the right hon. Gentleman. Indeed, I am grateful to him for his speech. After all, the Liberal party are entitled to be heard with some respect on this subject. They have instituted considerable investigations into the matter; they have even gone so far as to formulate a policy, and though their policy, to our ideas, may be
  "sickled o'er with the pale yellow cast of thought;"
  yet their investigations have fortified them with a fairly intimate appreciation of what are the intricacies and difficulties of the problem we have to face. They cannot expect us, however, to adopt their policy. The Chancellor of the Exchequer invited for this

  1149
  great national scheme the general cooperation of the Committee, of all parties in the House, but I do not think he extended his generosity so far as to commit him at once to throw his own scheme into the fire and take on someone else's, especially when, as appears to us, the scheme advocated by the Liberal party is open itself to some of the criticisms which have been levelled against ours, is one which, in many respects, will be difficult if not impossible to carry into operation and, lastly, and most important of all, would be quite ineffective to achieve the purpose we ourselves have in mind.
  I shall recur to that scheme again in the course of my observations, but let me, first of all, remind the Committee of the manner in which the right hon. Member for Carnarvon Boroughs described the problem. He said it was three-fold. First, that of the depressed industries, secondly, the distressed areas, and, thirdly, the wear and tear on the roads occasioned by excessive motor traffic. That description of the problem is altogether inadequate to do any sort of justice to the great conception embodied in the scheme of the Chancellor of the Exchequer. The problem is very much larger than that outlined by the right hon. Member for Carnarvon Boroughs. What we have to consider is the condition of the country in all the years that have elapsed since the War. It is in a condition of protracted and constantly disappointed expectation. Again and again we have tried to make ourselves believe that at last the long anticipated boom was coming. Again and again we have had to admit that the signs which we believed we had seen had flickered away, and once more we were back again in the trough. No one has more often called attention to this fact than the right hon. Gentleman himself, and no one has taken a more gloomy view of the situation.
  It is true that we have made some progress. All industries are not under a cloud, many of them are comparatively prosperous, but, taking the situation of the country as a whole, we have to confess that the recovery has been disappointingly small, that the progress has only been by fits and starts, and that we have constantly had to contemplate the stagnant pools of industry and areas
  1150
  which appear to be rapidly becoming totally derelict. The right hon. Member for 'Central Edinburgh has told us that at the present time the indications seem to be more favourable than perhaps they have been for some time. I think that is a correct appreciation of the present situation, and that seems to us to be just the moment when by some large gesture we should do something which will once more restore confidence and hope and vigour and courage to industry, something that may give just the stimulus which is necessary to give it a fresh start and bring back the fertilising stream of capital; something which will give the depressed industries a chance of obtaining something like stability and those which are a little more prosperous a chance of still further extending their operations. What we have in mind is not merely the nursing of sick industries, still lees of placing on prosperous industries the burden of maintaining those industries which are depressed. It is something bigger than that. It is to help all productive industries in the country, whether manufacturing or agricultural, by some rearrangement of the national burdens, which the right. hon. Member for Central Edinburgh might call a subsidy but which is really a rearrangement of the burdens so that they may be borne more easily and give relief just where these burdens press most heavily.
  7.0 p.m.
  The right hon. Member for Shettleston (Mr. Wheatley) yesterday made a speech which was of considerable interest, not merely because he stated again, as he or some of his particular associates have stated before, that he was no Free Trader and that he fully appreciated the desirability of keeping British trade for British workers, but for the further proposition which he advanced that all these schemes of ours for assisting industry would have but a transitory effect because, as he said, the greatest problem before us was to increase the purchasing power of the people. Surely, the purchasing power of the people is not to he measured by any amount of cash which is at the disposal of the people. In order to ascertain what the purchasing power of the people is, you must consider also what that cash will buy and if, by a system of increasing' its production and of reducing the costs

  1151
  upon industry, we can help industry to compete in the markets of the world, and we enable industry to lower its costs and to produce articles at cheaper prices, then surely we are thereby increasing the purchasing power of the people.
  When he pointed, as he did, to the example of the United States and to the phenomenon which has been witnessed there of considerable numbers of people being thrown out of work on account of the more rapid increase in the means of production than in the purchasing power of the people, I might remind him, or any of those who are moved by that argument, that we are still a great way from the condition of prosperity in the United States which has brought about such a phenomenon as that. It is not much consolation to the man who is underfed to say, "We will give you nothing more to eat because somebody across the street has over-eaten himself." The working people in this country will be willing to run the risks of over-production in the distant future, if, in the meantime, they can see a movement which is going to bring steadier employment and higher wages to themselves.
  The problem of the depressed industries, the heavy industries, is only part of a wider problem with which we are faced. It is true that they derive particular importance from the fact that they are our basic industries, that they in normal times give rise to larger numbers of employed persons than the younger industries which to-day seem to be supplanting them. That is, undoubtedly, a reason for giving special attention to their particular needs. What are the complaints of industry to-day and particularly of these depressed industries? They say they are weighed down by the burden of two things in particular. One is the burden of local rates, and the other is the burden of railway freights. We are dealing with both those points and, so far as the reduction in railway freights is concerned, I do not think there has been a single word of disapproval or objection to it in any speech that has been made, if I except, possibly, the last speech to which we listened and that of the right hon. Member for West Swansea (Mr. Runciman), who was unable to see how any advantage could accrue to these industries by reducing land freights,
  1152
  although he thought there was something to be said for a reduction in dock and harbour duties provided that the transshipment industry was not injured by a safeguarding duty on buttons.
  The assistance to industry to which so much attention has naturally been given during the discussion is only half our plan. In addition to this, we have got in this scheme another great conception —the idea that we are going to make a radical alteration in the system which now regulates the relations between local and national expenditure. The Committee will understand that any such rearrangement must carry with it some rearrangement of the functions of local authorities, but those rearrangements will be in the direction contemplated by the right hon. Member for Central Edinburgh, and they will mean a wider spreading of charges over larger areas, and by that means we believe we shall be able to bring about a great leap in the efficiency of some of the most important of our social services.
  I am not going to-night, in the comparatively short time at my disposal, to enter into any detailed description of the system, or want of system, under which the Exchequer contributions are made to local expenditure. They are a collection of survivals from the past, without order and without logic. The right hon. Member for Central Edinburgh has protested against any wholesale charge of extravagance against local authorities in connection with the great increase of local expenditure which has taken place since the War. I admit that it is easy to exaggerate the charges of that kind, and that much of that enormously increased expenditure is due to the improvement of conditions cast upon local authorities which have been largely imposed upon them from outside and, without any discussion of the merits of those proposals, it is quite true that it must not be laid entirely to their charge. But the system under which grants are given to local authorities upon a percentage basis carries with it certain obvious disadvantages. Whatever may be said to the contrary, I do not think it can be denied that, to a local authority, the fact that any expenditure upon which it embarks will be met by a contribution of 50 per cent. automatically derived from the Exchequer is an encouragement to that local authority to embark upon

  1153
  that expenditure, without perhaps that regard to its own resources which it would necessarily exercise if it had to find the full amount itself.
  Further, any such percentage contribution by the Exchequer must mean necessarily a detailed and meticulous examination of the items of expenditure by the officials of the central authority and must, to that extent, mean a continuous interference with local autonomy. Lastly, and this is perhaps the most important of the three points 1 want to make, the expenditure of the local authority is the measure of relief which it gets from the central authority, and therefore those local authorities, which are the wealthiest and which can afford to spend money upon their local services, are the ones that get the most from the central authority, whereas the poorer authorities, which cannot afford to develop their services even perhaps to the minimum point of efficiency, get less, and not more, from the national resources. Those are very grave defects, and those are the defects which it is the purpose of our great scheme entirely to remove.
  We are taking advantage of this scheme, under which, by reason of the fact that we arc going, to a large extent, to de-rate productive industry, the contribution of the Exchequer to the locality must be largely increased, to alter the method of allocation. We shall have, under our plan, to allot from the central Exchequer to each authority a sum which will take the form of a block grant payable at the same rate for a fixed number of years, the period suggested being five years. Part of that sum will be in lieu of the rates of which local authorities have been deprived; part of it will be in lieu of the percentage grants for health services which have been hitherto paid; part of it will take the place of the agricultural rates grant and part of it will supersede the old assigned revenues. Taking all those items together, we get a mass which we shall have to replace by a grant from the national Exchequer. What we are aiming at is that the distribution of that money shall not be in proportion to the expenditure of the local authority, but that it shall be in proportion to its needs. It shall be in proportion, first of all, to the population—for it is the population, in the first instance, that makes the need —and, secondly, it shall have some refer-
  1154
  once to the ability of the locality to pay, so that the poorer locality, by reason of its poverty, shall have something more than the richer locality which can better afford to provide for its own needs. That is the ultimate aim to which we are directing our energies.
  The Committee will see that it is quite impossible at one step to jump from the present arrangement into a system of that kind. If you are going to take away from the local authority what may be in some instances a very considerable proportion of their revenue, and allot to them a compensatory grant from the Exchequer on these new principles, you might, if you applied it in toto at once, bring about a total disorganisation of the local authority's finance. Therefore, to begin with, in discussing with local authorities the basis upon which the first quinquennial grant is to be given, the first thing we have to take into consideration is the rateable value of this authority which has been lost, and how much of the existing rate the local authority will be deprived of by reason of the fact that industry is only to pay one quarter of what it paid before. Therefore, that must be the basis of the negotiations in the first instance, so far as the loss of rateable value is concerned. The local authority must be assured that it is not going to be the worse off by reason of any-loss of rating value brought. about by this scheme.
  We are not contemplating merely a period of five years. We are contemplating the introduction of a permanent new system. We have to look, not merely at to-day, or even at five years hence; we have to look at, 10 years, 15 years, 50 years hence, and to consider, therefore, how this new principle can be adapted to the future as well as to the present. The further we get away from the starting point, the further we get away from the time when it is possible-to calculate what will be the difference between the old system of rating and the new, the more academic all those considerations will become, and it will be possible gradually to shift one proportion after another of the total grant from the first basis on which it is allocated, which has special reference to the amount of rateable value and rate loss, to the general overriding principle which, I have named, under which the needs of

  1155
  the locality will be the first consideration.
  If I have made that clear, I think hon. Members will sec, what some of them perhaps have not seen before—and I include in that both the right hon. Member for Carnarvon Boroughs and the right hon. Member for Central Edinburgh—that any statement that in this scheme we have had no regard to the needs of the so-called necessitous areas, that there is no direct appeal to the necessitous areas, that necessitous areas are going to get no more than any other areas, is absolutely unfounded, because that is the essence of our scheme, that not only is industry going to get this direct relief of three-fourths of its rates, but that by the new arrangement of allocation of the Exchequer grant the money from the Exchequer is going to be directed to those very necessitous areas which have pleaded with us so long, and for which it has been found difficult before to find a remedy.
  This is a solution of the necessitous areas problem which I myself have constantly advocated in this House. The right hon. Gentleman referred to the time when I came to him on a deputation. I did not know then, but I knew the moment I got into office, what the practical difficulties of finding a method of distributing this money were, and those difficulties were present to the mind of the hon. Member who was Parliamentary Secretary to the Ministry of Labour in the Labour Government. The hon. Member could not find a formula for the distribution, and why not? Because there was no uniformity of valuation throughout the country, and that much-abused Rating and Valuation Act of 1925, as I have stated to this House over and over again, was the first essential preliminary step to the possibility of finding a formula which would enable us to carry out a scheme which at last we are able to undertake to-day.
  I want to address myself to one or two criticisms which were made by the Tight hon. Gentleman the Member for Carnarvon Boroughs. He spoke of the unfairness, as he said, to the other members of the community of a system under which you might get new factories springing up, throwing new burdens upon the
  1156
  community, but only contributing a quarter of what other people were contributing, and he said that three-quarters are going to be thrown on the rest of the community. Is it a fact that new factories always bring with them a troop of workpeople into the area into which they come? Is he not aware that you can find many cases where a factory is in one local authority's area and a population which works in that factory is in another local authority's area? How is this scheme going to remedy that? tinder a scheme which at every quinquennial valuation takes into account the population of the area, that area which has to carry the burden of that population, which has to supply its needs, will get the increased grant from the Exchequer under the formula, and the fact that it will provide at least a quarter of the rates in its own area may be taken, I think, to constitute at any rate a reasonable contribution to the direct services which are necessitated by the presence of the factory there.
  Mr. LLOYD GEORGE: I am sorry to interrupt, but this is very important. Does this mean that the Exchequer will contribute in respect to the new factory the three-fourths which is lost to that particular area?
  Mr. CHAMBERLAIN: No, but the right hon. Gentleman is picturing a sort of migration of the Children of Israel with every new factory that starts, whereas the fact is that, assuming even that it does employ the population in the area, it probably begins by employing only some people who are already there. It may no doubt in time attract a larger population, and in time that population will have children, who will require new schools to be built for them, but in the meantime the quinquennial period has elapsed, and there is a revaluation of the situation, under which all these inequalities will be redressed; and the right hon. Gentleman must not assume that the local authorities are going to begin their five years period with the very minimum amount which they can derive from their rates at the beginning of the period.
  My right hon. Friend the Chancellor of the Exchequer mentioned that, included in the finance of the scheme, was a sum, which he had put at £3,000,000, which was to ease the way in the transition. The right hon. Gentleman said that that was

  1157
  grossly inadequate, but how does he know it is grossly inadequate? He apparently based that opinion upon some extraordinary misapprehension which led him to suppose that, because railway assessments had been reduced to an extent which would reduce the rates obtainable from railways by a sum of £2,000,000, that £2,000,000 out of the £3,000,000 would be absorbed for that purpose. But surely the right hon. Gentleman must see that he is confusing two entirely different things there. The question of the lowering or raising of the assessment at a recurring valuation has nothing to do with this scheme. If the assessments of railways had been lowered, as they no doubt will be lowered, on a. new valuation, the local authorities would have to bear the burden of that themselves in any case. It is not affected by our scheme, and as matter of fact the net result of a revaluation will not be a lowering, but a raising on the balance of assessments throughout the country.
  This £3,000,000 which my right hon. Friend is setting aside is for a different purpose entirely. It is for the purpose, which I will come to in a moment, of enabling larger areas to be constituted, and it is for the purpose of assuring the local authorities that in the block grant which they are to receive there is a margin for the development of their services during the five years. I entirely agree with the right hon. Gentleman opposite that we must take care, while we discourage extravagance, at the same time not to curb the opportunity of local authorities at least to bring their services up to a minimum standard of efficiency. We have provided for that. As to whether the £3,000,000 is inadequate, I say that at this stage nobody can say whether it is adequate or inadequate. I could not say myself, although I have naturally, I think, better sources of information than has the right hon. Gentleman. I do not know whether it is enough or too much. All that. I know is that my right hon. Friend has told me he has put that sum aside, and that he hopes I shall not want the whole of it!
  I must hurry through the rest of what I have to say, but I will add a word about the valuation ascertainment. I cannot help thinking that the right hon. Gentleman, in putting conundrums to us about the butcher, baker and candlestick-maker, was really descending to rather small
  1158
  trivialities. There are difficulties. I am not denying that for a moment. There is the question of the definition of a productive industry, which is one of very great difficulty, but surely he is not going to suggest that a huge, comprehensive, beneficial scheme of this kind is going to be held up by difficulties of that sort. We had exactly the same sort of difficulties put up to us over the question of the rating of machinery, where there was to be a distinction made between one kind of machinery and plant and another, but we got over them, and we can get over these, and, although I do not doubt that it will be o., question which will have to be carefully discussed and on which we shall be glad to have suggestions, on the other hand, I am quite convinced that it is not a problem which it is beyond the wit of man to solve.
  The right hon. Gentleman made a more serious suggestion, which, though I am not easily surprised by anything which he says, I must say did a little shock me. He suggested that the fact that the Exchequer was going to pay three-quarters of the rates of productive industry would lead the assessment committees and quarter sessions to raise the assessments of the industrial concerns in order that they might draw to their districts a larger contribution from the Exchequer. I almost think the right hon. Gentleman must be basing that singular view on some local experience with which I am not familiar, but I cannot think that considerations of that kind would really influence such responsible bodies as assessment committees and still less quarter sessions. But I would say this to him further, that, of course, in a matter of this kind the Treasury must be protected. I am not suggesting that they must be protected against a wilful abuse of power, but there might easily be a mistake, which, if it were made, would cost the Exchequer money, and, therefore, of course, the revenue officer will have to have a part in these proceedings, and he will have to have a say and be entitled to protest, if he thinks the assessment of a factory is being put too high.
  What are to be the results of these block grants in the larger areas? It will mean that there will be a greater incentive upon local authorities, a greater opportunity to develop their services, and I believe it will provide

  1159
  that check upon extravagance to which the right hon. Gentleman the Member for West Swansea encouraged me to devote my attention. Under this system the local authority will know that a fixed contribution is coming to it every year for a period of years. I hope that will result in their making their balance-sheets, not for one year, but for five years, and that they will draw up regular programmes of expenditure, and I am quite certain of this, that as any rise in expenditure will have to come out of the pockets of the local householders and shopkeepers, who will be responsible, that will be an even greater inducement to economising, to seeing that they get the best value for every penny that they spend, than any other system that could be devised.
  I wish I had more time, but I should like to say this upon some concluding phrases in the speech of the right hon. Gentleman. He drew attention to the amount of the burden of rates upon the working people, and his own illustration was drawn from the case of men who are working short time. He pointed out that in their case the rates might mean a considerable proportion of their income. Does he not see that a system like his, which fritters away the resources at our disposal by spreading them out all over the community, which does not supply sufficient stimulus to industry and which gives merely trifling relief to the working man, cannot be half as good as a plan that is going to give more employment? That will make all the difference. I commend this scheme to the Committee, imperfectly outlined as it may have been, as one that is going to bring fresh life and hope into our industry, percolating through all our community and through every section of industry, and at the same time bringing about the long-needed and much desired reform of our local government, which will strengthen instead of weakening it, which will give it fresh initiative, and which will go down in history as one of the great landmarks in our legislation.
  Question put, and agreed to.

  WAYS AND MEANS.

    BRITISH INCOME TAX AND IRISH FREE STATE INCOME TAX.
    Motion made, and Question proposed,
    "That an agreement making such alterations in the agreement made the fourteenth
    1160
    day of April, nineteen hundred and twenty-six, between the British Government and the Government of the Irish Free- State in respect of double Income Tax as may be necessary in consequence of the alterations in the British Income Tax Acts effected by the British Finance Act, 1927, and of the alterations contemplated in the Irish Free State Income Tax Acts be confirmed."—[Mr. A. M. Samuel.]
    Colonel HOWARD-BURY: Two years ago, a very elaborate agreement was arrived at between the Free State authorities and the British Government, and I should like to ask the Chancellor of the Exchequer what are the alterations contemplated in the Irish Free State Income Tax that will be brought into force under this Resolution? As the right hon. Gentleman knows, people living in the Irish Free State and also in this country are subject to double Income Tax, with certain rebates, and I would like to ask him whether the present conditions are to be continued in exactly their existing form, and what are the principles of the new Resolution which he is proposing to-day? Can he tell me exactly what they are, as the present system is very complicated? Is he going to make them more simple, or can he say whether there is likely to he additional difficulties in getting the rebates?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Arthur Michael Samuel): Broadly speaking, the effect of the relief provisions of the new Agreement is to make the double resident liable, in all, to Super-tax, Income Tax and Surtax for 1925 to the same extent as if that taxpayer had been resident only in the country with the higher rates of tax. The Resolution makes practically no alteration in the position under the Agreement of April, 1926. As I anticipated that my hon. and gallant Friend would ask a question of this kind as to the Agreement which the Chancellor of the Exchequer signed yesterday, and as it is complicated, I have taken the precaution of writing a précis, which gives an explanation of the position, and, with the permission of the Committee, I will read it:
    "The new Agreement gives double Income Tax relief to double residents for the year 1928 on a different basis from that on which relief would have been given if the Agreement of the 14th April, 1926, had remained in force unaltered. Under the 1926 Agreement, relief would have been given for 1928 by reference to double Income Tax

    1161
    and Super-tax payable for that year. Under the new Agreement, which has been rendered necessary by the introduction of Surtax, relief for 1928 will be given as follows:

    (a) relief from double Super-tax payable for that year, and

    (b) relief by reference to double Income Tax and Surtax payable for that year.

    Relief under paragraph (b) will be given in two instalments—against the Income Tax payable on the 1st January, 1929, and the Surtax payable on the 1st January, 1930, respectively."
    No change of principle has been made. In order that my hon. and gallant Friend may be in full possession of the explanation, I will send him a copy of the précis.
    Question put, and agreed to.
    Resolutions to be reported upon Monday next
    Committee to sit upon Monday next.

  RUBBER EXPORT RESTRICTION SCHEME.
  Motion made, and Question proposed, "That this House do now adjourn."—[Commander Lyres Monsell.]
  Mr. RAMSAY MacDONALD: In the previous Debate the right hon. Gentleman the Minister of Health said that the Budget statement had been the subject of attacks at so many points that it was impossible for him to reply to them all. By some curious process of thought on the part of the right hon. Gentleman, that was considered to be a commendation. That being so, I will take the consideration of Government action out of that field and bring it into contact with the criticisms which have been showered at the Government during the last two or three days in connection with another matter. I would call attention to the extraordinary transaction for which the Government are responsible, affecting a very important industry in this country and in certain of our Colonies. I refer to what the Government have done in removing the restrictions of the Stevenson scheme from the rubber industry, the result of which, according to the experts in the trade, has been to depreciate the value of stocks in hand by something between £25,000,000 and £30,000,000, and reducing the market value of shares by something like onehalf—a sum equivalent to £100,000,000. It may be that those figures are a little
  1162
  bit doleful and that the position in which the industry finds itself to-day may be, at any rate, partly temporary; but no spokesmen of the Government can deny the fact that awing to a statement made by the Prime Minister outside this House, on the 8th February, the rubber trade was thrown into a most tragic panic on the 9th. Not content with that, on the 4th April, by a statement which the right hon. Gentleman made in this House, he renewed the panic. A suspension took place in the business in rubber shares and the stock-in-hand had to be sold at prices of a most sacrificing kind on account of the panic state of the market. We must add to the survey of our own losses the losses borne by the growers in Ceylon and Malaya, because we were responsible for them.
  What was the occasion of this disastrous action, handled so extraordinarily badly by the Government? There had been an agreement imposed by legislation, which we prompted and for which we are responsible, that exports of rubber from Ceylon and Malaya should be determined in a special way. The rubber industry had been subject to far more speculation than was good for it, and it also suffered far too many feverish episodes in the interests of its own good health. Uncontrolled, two clear things happened. First of all, the agricultural side of the rubber industry had been neglected, trees were badly planted and the economic resources of the industry were being wasted. The second thing that had undoubtedly occurred was that the industry had never been allowed to settle down to normal conditions. Such was the effect of private enterprise and unlimited competition in this industry. Everybody engaged in it saw, before 1922, that prices had to be stabilised somehow or other, that agricultural economy had to be encouraged, arid that as far as this House was concerned British industry must be protected in a way that it had not been protected before. Therefore, the Stevenson scheme was adopted.
  I will not go into the details of the Stevenson scheme, but it meant that exports were controlled and that protection was given by an official declaration that certain percentages of rubber might be exported, but a penalty in export duties was imposed which made further

  1163
  exportation prohibitive. That scheme was accepted and was worked. There were, of course, certain interests in the rubber industry who did not accept the Stevenson scheme. We always find that. Our economic text books are always telling us that if we were only wise, farseeing, deep-seeing and high-seeing we should find that all our economic interests would be saved; but in a society which was created in rather a destructive way that is not quite so apparent, and it does not always square with experience, especially if the experience is a narrow-visioned one. In this rubber industry the producer had his interest, the financier had his interest, and the user had his interest. Nevertheless, it was perfectly certain, and I do not think anyone would deny it, that the general effect of the Stevenson scheme was to stabilise the industry and to protect British interests in that industry. Answering a question on the 10th May, 1927, the Secretary of State for the Colonies said:
  "I see no reason to suppose that in the long run the effects"—
  that is, the effects of the Stevenson scheme—
  "will be disadvantageous to British interests."
  An hon. Member who sits on the Government side of the House asked the question:
  "Is it not a fact that the Stevenson restriction scheme has saved British rubber plantations from ruin and bankruptcy?"
  The answer of the Colonial Secretary was:
  "That is undoubtedly the case."—[OFFICIAL REPORT, 10th May, 1927; cols. 199 and 200; Vol. 206.]
  That was as recently as 10th May, 1927. That was the Colonial Office view at that time, after all these rival interests in the industry had said everything they had to say. The Colonial Office had weighed them all up, had listened to them, was in possession of all the statistics regarding exports, both British and Dutch, and had come to the conclusion that this particular scheme had undoubtedly saved British rubber plantations from ruin and bankruptcy. It is perfectly true that the scheme was in that way one created by what we might call artificial economic and industrial conditions. It also was true that nearly everyone assumed that
  1164
  the scheme was a temporary one. It was created for a specific purpose, and as soon as that purpose was effected the rubber industry by its own internal organisation, control and discipline, and by the wisdom it had gathered during those years, could run without anyone interfering.
  First of all, let this House remember that for this scheme the Government alone were responsible. The Government got the necessary legislation passed in Ceylon, and it got the necessary Orders issued in Malaya. If there were any artificial conditions imparted to this industry, the Government were responsible for those conditions, and when those conditions had to be removed it was the Government's duty to see that the conditions were removed in such a way that the rubber industry would not suffer grievously by the change. The trade had reacted to them; it had accommodated itself to them. Shares had been sold on these conditions. The price of material had been regulated and determined by them, and the distributive methods and the competition of the various sections of the trade had been determined by them. That is the thing that we have first of all to remember. For what happened the Government alone are responsible. Whether this scheme was a good scheme or a bad scheme, a workable scheme or an unworkable scheme, it was the Government's scheme, and the Government have to take the responsibility for taking it off in the same way as they took the responsibility for putting it on.
  How has the scheme worked? Again, I am not going into all the details. I am going to mention only two features which are essential to an assignment of the heavy responsibility that now rests on the Government's shoulders. First of all, in every quarter surveys were made as to prices. Reassessments of the exportable quota were made. Then at stated intervals the Secretary of State for the Colonies announced what was going to happen to the industry under the scheme during the succeeding three months. Another feature was that the Secretary of State had an Advisory Committee to guide him in the working of the scheme. I assume that he selected the members of the Advisory Committee because he had confidence in them.

  1165
  Every member of the Committee was an expert of some kind or other in the operations of the trade. Then what happened? What was the, course of events that the Government should have made up its mind that its work had come to an end, had reached the apex of its beneficence and had to be taken off?
  The trade, I think very reasonably, expected that when the proper announcements were made—I might almost call them statutory announcements—if the Government contemplated any change, the announcements would be communicated to the country. The trade also was surely justified in the most reasonable way in assuming that if any change was to take place, certainly any big change like the removal of the whole scheme, the Secretary of State for the Colonies would have consulted the Advisory Committee that was supplied to him for the purpose of guiding 'him on matters like that. On the day to which I have referred, 10th May, 1927, when this question was brought to the notice of the Colonial Secretary by the questions of hon. Members belonging to' his own party, he used this expression:
  "I have the advantage of advice from a strong committee representing the various interests concerned, and I am continually taking the advantages or disadvantages of a scheme into consideration."—[OFFICIAL REPORT, 10th May, 1927; col. 199, Vol. 206.]
  What is that statement meant to imply? That whatever action he agreed to he would take the advice of his Advisory Committee first of all. It does not mean, of course, that he would act on the advice of his advisers. No Minister who has held office would say that. I do not accuse him of not doing that, but I do accuse him of not taking the advice of the Advisory Committee at all. The fact of the matter is that the Advisory Committee was ignored altogether. The right hon. Gentleman himself told us the other day, very unwillingly—I sat and not only listened but saw him—that he did not take the advice of his Advisory Committee but that the members of that Committee were communicated with privately. Is the right hon. Gentleman going to get up this evening and say that that carried out the pledge implied in the answer by him which I have just read. He has an Advisory Committee
  1166
  and what he tells them he tells them individually and separately, never asking them to come and see him. He writes a letter to them and he admits that he did it privately. At any rate he has removed privacy from any communication he made to them. He writes them individually a letter saying that he proposes certain things, "But you are not going to be consulted, and I am: only giving you the information so that you may know."
  That is not the function of an Advisory Committee. The Colonial Office were ignored. It was not only that the right hon. Gentleman ignored his Advisory Committee, but he himself was ignored, for apparently when the Government made up its mind to take some action in this matter, the prompting did not come from the Colonial Office; it did not come from the Advisory Committee. The prompting came from some interests outside, and those interests have not yet been disclosed. Therefore, when it came into the hands of the Government, as opposed to the Colonial Office, a new Committee was brought into operation, and that new Committee, brought into operation without any knowledge of what had gone before, without any expert knowledge to guide them in weighing the value of evidence presented to them, began its work. That Committee was the Civil Research Committee. Regarding that Committee, there is a good deal of mystery, The names of its members have not been disclosed. Its report is not to be published, and its advice, either in specific terms or in general, is not to be communicated to this House. There have been speeches made in public regarding the Committee and the House is entitled to take some notice of them. There was a speech made by Mr. James Fairbairn at the Annual General Meeting of the Barrier and General Finance Company. That company is interested in rubber. I quote from the public press and so I am not giving any thing away. Mr. James Fairbairn said about the Committee:
  "Those who gave evidence before this Committee were asked that, should they recognise any of 'the members of the Committee, they should not divulge their names."
  What a childish thing! What an absurd and childish thing! It shows the spirit and the capacity for the handling

  1167
  of great financial interests like this. The quotation goes on:
  "As to Sir Herbert Hambling, who is the Chairman, had the Prime Minister made the smallest inquiry as to his personal leanings, he would have found out quite readily that Sir Herbert Hambling, from pronouncements made as Vice-Chairman of Barclays Bank, had clearly indicated that he was opposed to any form of restriction such as the Stevenson scheme."
  That is published. The Government ought to tell us whether that is true or not. Did the Government deliberately appoint as Chairman of this special Committee, after having set aside the Advisory Committee, after having put the Colonial Office on one side—did they knowingly and deliberately appoint as Chairman of this Committee a gentleman who had already in public and in private expressed his views that the Stevenson scheme ought to be terminated? Whoever speaks for the Government to-night must give a categorical reply to that question. This gentleman goes on to say:
  "I am credibly informed by a member of one of the groups who gave evidence that he found Sir Herbert Hambling a distinctly hostile chairman."
  8.0 p.m.
  Is that true? So much for the committee. The evidence given to the committee was private. It has never been published, and those of us who are outside know nothing about it. Questions have been put to the Prime Minister, again and again, to which he quite frankly gave the reply that committees of that character are not public committees, that their evidence ought not to be communicated to the House, and that the Government took upon themselves the responsibility of acting upon their recommendations or not doing so. From the Constitutional point of view, if I may use the term, I range myself alongside the Prime Minister in that respect. But unfortunately the evidence in this case has got out, and if Ministers, especially Prime Ministers, in relation to these national economic matters, are going to make this claim to a purely personal advisory committee—which anyone who has occupied even for a day, the position of Prime Minister knows is of enormous value, and no Prime Minister I hope will ever go into that place without having such a committee to advise and assist him—they must be exceedingly careful as
  1168
  to how they use that committee. They cannot possibly use that committee in the rough and ready way in which a public committee is used, and that is what the right hon. Gentleman has done.
  Surely if the right hon. Gentleman had sat down for five minutes by the fireside and thought over what he was doing and the consequences and had said to himself, "If I appoint this Committee to take evidence and this gentleman of known opinions is going to be chairman, can I regard that Committee as one whose evidence will not only be considered by me as private, but whose evidence, as a matter of fact, will be kept private?" I am perfectly certain that if the right hon. Gentleman had given five minutes' consideration to that simple practical problem, he would have come to the conclusion that it was absolutely impossible. As a matter of fact, those in the trade know who gave evidence. Everybody knows now who gave evidence and they do not only know that, but they know what the evidence was. Just as in the case of a committee or a commission which is taking evidence, let us say on the question of lunacy, I do not require to waste my time in reading through all the evidence of certain witnesses in order to know what the effect of their evidence will be, so, in this case, if Mr. Smith is a witness the trade know precisely what his point of view will be and the same thing applies to Mr. Brown and Mr. Robinson. Therefore, the trade know precisely what was the evidence submitted to the Committee. They also know now that either the Committee reported against the evidence, or that the Prime Minister refused to take the advice of the Committee which was set up to advise him. Either one or the other is bound to be true. The evidence was unanimous in its main features, so they say. So I have read again and again and so I am told by those interested in it. There were certain variations, there were slightly different angles of viewing matters, there were variations in method, but what I may call the trunk, the main fundamental body of evidence was unanimous, and it was opposed to the decision to which the Prime Minister came.
  Then we have to consider how the Government handled the situation. We have

  1169
  brought it to this point. With all the operations of the Committee, and the queer judgment used in the appointment of the Committee, and the equally strange judgment used in the kind of Committee appointed, we have got to this point—that the Government had made up their mind, either in accordance with or contrary to the advice of that special Committee, that the Stevenson scheme must go. And how is it to be done? Let me remind the House that as late as 21st October last year the Colonial Secretary issued the following notification through the Colonial Office:
  "It is officially announced that it is not proposed that any change shall be made on 1st November next in the Regulations which operate at present governing the export of rubber from Ceylon and Malaya. The Governments of the territories concerned will be asked to overhaul the machinery of the scheme with a view to increasing the efficiency of its working."
  So far from their being any indication there that the Government were changing their mind against the scheme, not a single person could read that statement without coming to the conclusion that the Government's determination to support the scheme had been strengthened rather than weakened and that it was, as a matter of fact, communicating with the Governments concerned in order that the scheme might be so amended that its continuance would be made certain:
  "The Governments are being consulted on the question of whether any, and, if so, what alterations are required in the Regulations now in force."
  Then comes another sentence of even greater importance:
  "If it is considered that any changes are necessary, full right is reserved to make them as from 1st February, 1928, as long notice being given as may be practicable in the circumstances."
  That is an intimation to the trade that, if, in spite of these inquiries which the Government are making, in spite of these attempts which the Government are making to enable the Stevenson scheme to continue, the Government in the meantime should change their mind, then that change will be announced on 1st February, 1928. On 1st February, 1928, when what I have taken the liberty of calling the "statutory" announcement was made, that announcement was that the scheme was to be continued and that the proportions had been settled as
  1170
  so-and-so, but no indication was given that any change had taken place in the Government's attitude. The Colonial Office knew perfectly well when it made the announcement on 1st February that the industry expected that if there was to be any change it would be announced then. The industry concerned expected that if the Government contemplated any change it would be announced then. No announcement being made, the industry assumed, quite rightly, that there was to be no change during that quarter and that the Government contemplated no change. Then on 9th February came the Prime Minister's announcement. It was made on a special day. He did not wait for the statutory date of announcement, but within eight days after 1st February he announces that an inquiry is going to be made. Of course, a panic took place. Of course, all the fears and suspicions that enter the heart of the City were aroused, and the City is open to more fears and suspicions than any other quarter of the world. The City is the easiest upset body in the whole world and any rumour immediately becomes revolutionary in the City provided it deals with finance.
  On 9th February, the Prime Minister went out of his way to make an announcement which was bound to create suspicion. He did not even take the trouble to study the psychological effect of that announcement or seek to diminish the evil results by choosing a normal day. He did it as a special matter, of special importance, on a special date. He was questioned on the 13th March as to what he meant to do, how the machinery was to be operated, how the Committee was constituted and so on. These were very proper and legitimate questions and if he had been able to give definite and specific answers to several of them, he would have allayed a good deal of the panic that was raging. What was his attitude? On 13th February he answered a series of questions, and every answer he gave was a suspicion in itself. He was either unwilling to answer or did not know the answers to the questions, but the sum total of the effect of his answers on 13th February—and he can refresh his memory by looking up the OFFICIAL REPORT as I have done—was to make the industry more and more suspicious of what he had in mind and what the result of his inquiry was going to be.

  1171
  On 15th February he was again questioned, and he gave a pledge that every consideration of the industry would be taken into account. He gave another curious pledge, namely, that the Treasury interests would be watched. On 20th February, he renewed his pledge that in the time and the manner of the earlier proposal all British interests would be considered. On 5th March he gave precisely the same assurance and on 4th April he made his announcement of a scheme with which nobody agreed and which brought a second panic upon the market. Could any handling of a situation be more maladroit than that? It was a delicate question. It was like a surgeon touching the inflamed nerve of a patient. He must have known that he could not play fast and loose with an industry like this which had been rather notorious for its feverishness. He must have known, as a man who can look at things fairly and objectively, that when 1st February had passed without an announcement and when he chose 9th February, an odd date, an unexpected date, on which to make this announcement, what effect it would have. He must have known that the way in which he answered these questions was adding to the difficulties of the industry. Then on 4th March, as I say, he made an announcement with which nobody agreed. He announced that the Stevenson scheme would be terminated. A good many people agreed with that. A good many of the rubber interests never believed in the Stevenson scheme, though the Colonial Office said the Stevenson scheme had saved British rubber interests from bankruptcy. But that was not the importance of the Prime Minister's announcement. The importance of the announcement was how the Stevenson scheme was to be stopped. Sir Eric Geddes, who is not in favour of the Stevenson scheme, and who is very glad that it is going to be stopped, made this statement after the Prime Minister's announcement. I quote from a paraphrase of his speech in the "Economist." It says:
  "Sir Eric Geddes revealed the interesting fact that the Rubber Growers' Association, the India Rubber Manufacturers' Association, and the Society of Motor Manufacturers and Traders had unanimously suggested to the Committee"—
  that is the Committee which the Prime Minister set up—
  1172
  "which decided the fate of the scheme, that if restriction was to be abrogated, its demise should be delayed sufficiently to enable the industry to liquidate its stocks. To this end, an interim period of three years was suggested. While Sir Eric regretted that the joint advice of the growers, the manufacturers, and the principal consumers of rubber' in this country had not been followed,"
  he nevertheless made no objection. While making no objection to the Prime Minister's scheme, he did regret the method by which the scheme was to be terminated. This is not a question whether the Stevenson scheme should be terminated or not. It is much more than that. It is an accusation made against the Government for mishandling the situation. It is an accusation that the Government, by their own action, have depreciated stocks and diminished share values by a sum, which is estimated between £120,000,000 and £150,000,000. It is perfectly clear from this recital that, first of all, the Prime Minister ought not to have made his announcement when he did; that if he wanted advice about the rubber industry, and wished to be put into possession of the facts, he ought to have done it in the ordinary quiet way. To announce an inquiry at that time was, at any rate from the financial point of view, tantamount to a criminal act. The second point is that the Advisory Committee of the Colonial Office ought not to have been overlooked, and no scheme of decontrol ought to have been launched without the advice of that Committee and without its consent. The third point is that the time when the change took place was so badly chosen, that anybody who had any knowledge of industrial sensitiveness, would never have chosen it at all.
  It is clear that when this scheme was to come off, the Government's action. preparatory to taking it off, ought to have been to try and get the 100 per cent. exportable quota approached; they should also have chosen the time when stocks in hand were low. As a matter of fact, they chose a time when the exportable quota was not especially high, and when stocks in hand were especially high. They chose a time when balance-sheets were being made out, when the stocks had been valued in the balance-sheet at something like 1s. 6d. a lb.; and before the winding-up of last year's business had been given effect to. They

  1173
  depreciated the value of those stocks from 1s. 6d. to something like 8d. or 9d., thus taking off 10d. for every lb. of rubber value in the stocks which had been entered in the balance-sheets that had just been made out, and were on the way from Ceylon and Malaya to London. They did things that may have been necessary in time, but they did them with the maximum of clumsiness and the maximum of loss.
  If this party had been sitting there, and if we had been in office, and had done it in this way, a howl of execration would have gone up from one end of the country to the other. We would have been told that we were the enemies of everybody who is investing money, that we were absolutely indifferent to the loss of anybody who has invested money in anything; we would have been told, especially by the Home Secretary, that we were prompted by Moscow influences and suggestions, and he would have wanted even to raid our private houses, for somebody would have told him, probably the hon. Member for Hitchin (Major Kindersley), that we had documents in our private possession to prove that what we had done with the rubber industry was done because we had been asked to do it from Moscow. What is more, every Tory Member of this House would have gone into the Division Lobby against us. There is not a single member of the Government party, if they had been in the House with us sitting on that bench, and having done what their own Government has done for them in this industry, but would have gone into the Lobby against us, and would have gone in honestly because they would have fully believed it. They would have been perfectly justified in taking the maximum political activity to show us up both in the House and in the country. There would have been quotations for the next generation published by the Conservative headquarters about how we mishandled the rubber industry and lost the hard-working thrift investors a sum of from £120,000,000 to £130,000,000, and they would have finished up with a great peroration: "Labour again has proved itself absolutely unfit to govern." I confess that if that accusation could have been made successfully against us for once in my life I would have agreed
  1174
  with what was published by the Conservative headquarters.
  Sir FRANK NELSON: The House will perhaps allow me at the outset a brief personal explanation. I have in my commercial career been a director of only one rubber company, and I resigned that four years ago, when I retired from the East. Incidentally, it was a British company in Java, and we voluntarily restricted ourselves in 1922. Ever since I have had any money to invest I have invested it in rubber, but my present disapproval of my own party's action is in no way prompted by the small losses which I have experienced, in common with all other investors, as, fortunately, my investments are most moderate. I believe I am one of the few Members in the House who have any first-hand knowledge of the Straits Settlements, Ceylon, and the Federated Malay States, with especial reference to the rubber industry. It was my good fortune in 1904, when I first went out there, to make the acquaintance of the pioneers of this great industry. Many of them have passed on, but some of them are working in London to-day, and it is through my acquaintanceship with them that I retain my interest in the industry, and such knowledge as I possess of the parlous conditions into which this great industry has been thrown since 9th February.
  My case can be stated in a sentence or two. I have no word of disapproval to say about the removal of the rubber export restrictions. I have always been an anti-restrictionist, and I always shall be. I hate Government control, because I have seen a great deal too much of it in other directions. It always results in trouble to the industry which is destined to be benefited by it, but all my case is summed up in one small question. Could this removal of the rubber export restriction scheme have been done in such a way and at such a time as would not have inflicted these appalling losses on a very valuable industry, and not have thrown tens of thousands—if you like, hundreds of thousands—of perfectly inoffensive investors in this industry into anxiety, and in many cases into something worse, as I shall show later if I retain the patience of the House? I will only say this regarding restriction. There is no doubt that in 1922 it was adopted as a desperate

  1175
  remedy, as a desperate alternative, to prevent bankruptcy. I was in the East at that time, and a director of the only rubber company of which I have been a director, and I saw the repercussions out there. There was a miasma of utter gloom and despondency over the whole rubber world, and waiting on the outskirts of that miasmic zone, if I. may use that term, were three or four syndicates with unlimited money behind them, of which I had personal knowledge, and I will ask the house to accept my word for it. They were waiting to buy up such plantations as had no alternative except bankruptcy in front of them. [Interruption.] The right hon. Gentleman the Member for Derby (Mr. J. H. Thomas) says what I had hesitated to say quite openly, but it was American money. I know that. It was a question of days, a question almost of hours—until the restriction scheme was approved.
  What has that scheme done? If I may be permitted to give the only figures with which I propose to weary the Committee, in 1922 there were 460 British rubber-producing companies, and 21 per cent. of them only were paying any dividends at all. In 1927 there were 512 British rubber producing companies, and 95 per cent. of them were paying dividends. That is what restriction has done for the rubber-producing industry. There is one more fact which I think is lost sight of by a great number of people who have taken part in discussions in and out of the House, and that is that the rubber-producing industry is owned for the most part by tens of thousands, or hundreds of thousands, of small investors. That is a fact which is beyond dispute. You may call them what you like, call them greedy, say they are speculators, but the fact remains that for the most part the industry is owned by hundreds of thousands of small investors. It has been my lot to read countless letters and a number of articles in the Press, and to hear statements made by people in conversation who, with great respect, should know better, using as they do ponderous platitudes—this is the only term to apply to them, though I hope I shall be acquitted of any desire to be offensive—where they say that restriction must go at some time—it is perfectly true; that restriction is uneconomic—perfectly true; that re-
  1176
  striction enables the Dutch to reap where the British have sown—perfectly true; where it is said that in a year or two the British industry will be on its feet again and be sturdier and healthier—perfectly true; and when they finish by saying that for the next two or three years there will be no dividends, that it will be a very difficult time and that uneconomically-managed estates will go bankrupt, again I agree. Those are all platitudes which have appeared, with great respect, in the Press. Those statements, however true, lose sight of one salient fact, and that is that it is no earthly good saying to hundreds of thousands of small investors who, rightly or wrongly, own this very valuable British industry, that in two or three years everything will be all right again, that though in the interim they will have no dividends, and some of their concerns will go bankrupt, that in the long run it will be all right.
  I am quite sure that in the long run it will he all right. I am perfectly and absolutely certain that nothing except the production of synthetic rubber can possibly hurt this valuable British industry. But here we have this great industry, which has been of incalculable benefit to this nation in helping us to pay the American debt, treated in this way, without—subject to what we shall hear from my right hon. Friend— any reasons being given for that action. I should like to say at once that these objections which I am putting forward and the profound disapproval I am expressing, must all be regarded as subject to any explanations we may have from the Secretary of State for the Colonies. The right hon. Gentleman the Leader of the Opposition has made it perfectly plain that we who thought we knew something about the industry were very disgruntled by the sequence of events from November, 1927, to February of this year. The shareholders who own this great industry are, after all, very reasonable people. If they had been given some reason or reasons for this very drastic action, I am convinced that there would have been no outcry. I am convinced, classing myself as a rubber shareholder—I have already made a clean breast of my small holding—that we should have taken the ordinary course that every ordinary citizen does take. We should have said "This is done in the public interest." But we have been given no

  1177
  reasons at all other than those which the Under-Secretary of State for the Colonies gave in Kuala Lampura some weeks ago, in which he said that certain facts and figures had been. placed before the Cabinet in the early part of this year.
  Again, subject to what my right hon. Friend may say, may I also give certain facts and figures? A great deal has been said about the on-coming of the Dutch producers. It has been said that the Dutch are reaping where we have sown. I admit that that is so, to a certain extent. In 1922, the year in which the restrictions came on, the world produced 400,000 tons of rubber. The British share of that was 75 per cent., and the Dutch and other rubber, that is Brazilian, Indian, and so forth, was 25 per cent. In 1927 the world's production was, roughly, 605,000 tons, and the British share of that was 63 per cent, and the Dutch and other rubber, 37 per cent. I agree that those figures are ominous, very ominous indeed, and I think they ought to cause us to think whether it was not time that this restriction scheme should be raised; but I do not agree, with very great deference, that they call for the precipitous raising of the rubber restriction scheme. It may not be known to the House, though I feel confident it is known by my right hon. Friend, that at the time when the Government, in their wisdom, chose to come into the rubber situation in February, that the Council of the Rubber Growers' Association had evolved and practically completed. with the exception of one or two negligible details, a scheme which would have raised restriction over a period of about two and a-half years, or a maximum of three years, without, so far as it is humanly possible to say, any disturbance in the rubber market at all.
  I come to the question of reclaimed rubber. There has been an enormous amount of uninformed criticism on the subject of reclaimed rubber. Anybody who knows anything of this industry knows perfectly well that the chief uses of reclaimed rubber are such that crude rubber would not be used for them even if it were 4d. or 3d. or 2d. per lb. The degree to which reclaimed rubber is in competition with crude rubber is about 15 per cent. [Interruption.] Well, I give it as 15 per cent., and if my right hon. Friend would like my reference for that it is in
  1178
  the "India-Rubber Journal" of 15th April. It is given by the trade, and I can see no possible reason why the trade should under-estimate or over-estimate such an important figure. The figures which appear in the very admirable Blue Book issued by the Government show that in the year 1927 the ratio for reclaimed rubber was about 50 per cent. That bears out my statement that there has been a good deal of misinformed criticism upon this subject. The degree to which reclaimed rubber is a competitor with raw rubber is 15 per cent. Reclaimed rubber is a manufactured compound of rubber and several minerals, and is not directly in competition with crude but is complementary.
  I would like to say a word as to the inadequacy of the chosen method of investigation of the industry. I feel that here again the Government must have been up against a very great difficulty. By means of a private notice question to the Prime Minister which I put the day after the appointment of this Committee, I endeavoured to show that the uncertainty while this Committee was sitting would be such as to throw the whole industry into confusion, and that is what happened. On the other hand, I pointed out that if the Committee carried out their duties as quickly as they have done —I admit that frankly, and I have the greatest admiration for the way in which they handled a most difficult task—they could not possibly give an adequate Report. You cannot give a decision on a matter in which £200,000,000 of capital is involved in six weeks by the investigations in London of a committee of Men who have not been on the spot, and who have not had an opportunity of cross-examining those who have borne the heat and burden of the day. Most of the evidence considered by the Committee has reached them by cable from the East, and it would be almost impossible to do justice to a question of such magnitude in this way. If the Committee had taken adequate time, it would have taken them six months, because they would have had to go out to the East. Under those circumstances, during that time the whole of the industry would have been in confusion and even worse than what has happened. I really do not know what would have happened during that time.
  I have two more observations to make on this question. May I put two definite

  1179
  questions to the Secretary of State to the Colonies? Some people who have not been out to the Far East are a little confused in their geography. Singapore is quite distinct from the Federated Malay States. It is within the recollection of the House that the rulers of the Federated Malay States gave a battleship to this country, "The Malaya," and a short time ago they gave £2,000,000 to the Singapore base. May I ask the Secretary of State for the Colonies whether, before the Committee was appointed, and before they decided to remove the restrictions, the rulers of the Malay States were consulted? May I tell my right hon. Friend—I know he would not contradict the source of my information if I disclosed it, but I am not at liberty to do so—that it is estimated that the revenues of the Federated Malay States will be depreciated 40 per cent. this year as a result of the action of the Government in this matter. Perhaps my right hon. Friend will tell the House whether they were consulted or not.
  On evidence which I believe is correct, I am told that the issued capital of the rubber companies registered in the United Kingdom is £92,000,000—that figure is quite distinct from the dollar companies and the rupee companies registered in India or the Straits. The dividends declared in 1927 amounted to £17,000,000. I hope that the Chancellor of the Exchequer, who is the Minister originally responsible for putting in force the Stevenson Scheme—I am certain the Minister had no alternative at that time having regard to the fact that he sat as a Member of the Coalition Government—will be able to show us that it was a matter of extreme urgency which thus necessitates him using millions of valuable revenue. I am wondering what effect this is going to have on our revenues, and whether the right hon. Gentleman was specially consulted in regard to this very desperate step which has been taken. There is a great responsibility resting upon the Secretary of State for the Colonies, and 'I sincerely trust that the right hon. Gentleman will be able to give us some explanation which will enable me to recant everything I have said to-night. There is nothing I want more than to be placed in the position, at the end of the right hon. Gentleman's speech, to say that I
  1180
  have been misinformed and that I am wrong in my conclusions. If that turns out to be the case, I shall be prepared to support my party in the Division Lobby on this question. If, on the other hand, I am not satisfied in this respect, I shall go into the Lobby against my party.
  Major-General Sir ROBERT HUTCHSON: I do not want at this stage to repeat what has been already said on this subject. I would remind the House that the deplorable disaster which overtook the rubber industry came immediately after the announcement made from 10, Downing Street, that the conditions of the Stevenson scheme were to be referred to the Committee of Civil Research. I think, if the Prime Minister had to handle this question again, he would do it in an entirely different manner. We have been told by the Leader of the Opposition and by my hon. Friend the Member for Stroud (Sir F. Nelson) that various faults were committed by the Government in this matter. I would like to point out that the rubber industry in 1922 put itself voluntarily into the hands of the Colonial Office. We had the Stevenson scheme and the rubber industry consented voluntarily to accept the regulations issued by the Colonial Office. The Colonial Office was used because of its power to enforce. regulations on the various Colonial Governments abroad.
  The rubber industry was perfectly satisfied to continue with the Colonial Office. They had an advisory committee, who were advising the Minister of that Department in all the intricacies of the trade, but here you have, entirely outside the Colonial Office, entirely outside the people to whom the industry had voluntarily given powers, another body coming along and upsetting the apple-cart by issuing further restrictions and further orders. I doubt whether that is really legal. After all, the industry went voluntarily into this scheme, accepting the various Regulations in a very loyal and gallant way, and I must say, knowing the industry as I do, that the Colonial Office have every reason to be thankful to the various companies for the loyal way in which they carried out the orders which were given. Now you get another body outside the voluntary committee, a body whose chairman's views were well known in the City of London to he opposed to the scheme. It

  1181
  was really a loaded body before it sat, and I, for one, think that the Government as a whole are very much to blame for the present situation in which the rubber industry finds itself.
  There is another point in regard to the question of legality, as to which I should like to ask the Colonial Secretary. How far is the Colonial Office in a position to give orders to the various Legislative Councils abroad? I understand that the official majority has now disappeared from those councils, and that resolutions are now carried by the unofficial members. How far are the councils in the Malay States and Ceylon going to carry out the wishes of the Colonial Secretary in regard to giving up the restriction scheme? They have been given full powers in regard to legislation, and I should like to know to-night how far the Colonial Secretary can impress his will on them. Another point in regard to this intricate question is as to how far the revenues are going to be affected by this sudden reversal of policy. Are the rubber companies going to continue to pay the two cents per pound export duty, or are they going back to the old system of an ad valorem duty? It is all very well to charge two cents per pound with rubber at is. 6d. or is. 3d., but, when it comes to producing rubber at less than cost, it becomes almost vital to a great many companies if they have to pay an export duty of two cents per pound.
  How far is the Colonial Office going to keep on the advisory committee? Is the advisory committee still in existence, and is it going to continue to advise the Government on matters connected with rubber? I understand that the criticism which was largely made in the rubber industry of the fault of raising the pivotal price from 1s. 3d. to 1s. 9d. was directed at the advisory committee. It is all very well to blame the advisory committee for one decision, but what about the other decision, on which they were never consulted? Are we going to keep the advisory committee still in commission? Are they going to advise the Government, and are the Government going to take their advice? It is a very serious matter when a large industry dike this is in the hands of people who do not take the advice of their advisers. What other industry would be handled
  1182
  in this way by the Government without consulting the leaders or the various trade associations of the industry?
  I understand that the trade associations of the rubber industry tendered a definite form of advice, which, however, was not taken. I wonder whether the Government really know what they are doing in this industry—whether the experts who have been advising them really know what they are talking about? We hear that the real reason given for the change is the large increase in the use of reclaimed rubber; but reclaimed rubber is used for entirely different purposes from raw rubber. If you take £100 invested in the ordinary rubber-producing industry on a good estate, 350 lbs. of rubber are produced for the £100 invested, representing something like 1½ per cent. on the amount invested for every penny above the cost of production. But the same amount of money, namely, £100, invested in reclaimed rubber machinery, is an entirely different proposition. The more reclaimed rubber is used, the more cheaply can the product be produced, and the rubber producing industry can never compete with reclaimed rubber, simply because the reclaimed rubber is used for entirely different purposes—for flooring and other purposes where the elasticity of raw rubber is not required. The American tried to do that about a year-and-a-half ago, and they failed miserably. They put reclaimed rubber into tyres and tubes, and the whole of the tyres produced from that material were returned on their hands; and now, as everyone knows, buyers of cars in the American market insist on a clause specifying that all tyres must be made from fresh material. I, for one, think that the whole of the evidence given as to the competition of reclaimed rubber with raw rubber has been misleading from the beginning, and my friends in the rubber trade tell me the same thing.
  There is another point that I should like to raise, and that is as to what the companies which at present are producing rubber as a loss are going to do in regard to their finances for next year. The large companies, with large reserves, seem to think that, if there is a flood of cheap rubber on the market, they will be able to knock out the native production of rubber and the use of reclaimed rubber, and get rid of the weak companies; but,

  1183
  in doing that, even though they may be successful for a time, they will be using up their reserves, and their position at the end of that period will be far worse than it is to-day. The Government are postponing the taking off of the restriction scheme for another eight months, but, if they had made up their minds to take it off, why did they not take if off now and be done with it? Instead of that, they have done a second bad thing by keeping it on till the 1st November. The result of that, as every rubber producer knows, has been that telegrams have gone out to the East telling them to produce to the full. Every one of the companies in the East is now producing to the full, and all the surplus rubber over and above the exportable allowance is being collected out there in Malaya and Ceylon. The result will be that on the 1st November, when the release comes, there will be this flood of rubber further depressing our already hopeless market.
  Surely, anyone who knew anything about the market—and I am sure the Colonial Secretary does, though evidently he will be superseded in his supervision of the industry—must know that such a state of affairs will exist on the 1st November. I wonder if the Government can tell the trade how much rubber is at present lying in the Colonies over and above what they can export, and how much will have been accumulated by the 1st November next. We shall then know in what kind of position the industry is going to be. As far as I can see it is going to be in a very parlous condition for the next year. What about the unfortunate people who have invested their small savings in rubber companies? I reckon on a very conservative estimate the loss caused by the announcement of 8th February last is something like £75,000,000 or £80,000,000. I am certain it will be a long time before those who have interests in rubber companies will put their faith in the business capacity of the present Government. The question of Income Tax is a very serious one. This year companies will be assessed either on the profits of the previous year or, in the case of new companies, on the average of the past three years' profits. Many of these companies will have no profits
  1184
  at all, and where are they going to get the money wherewith to satisfy the demand of the Chancellor of the Exchequer? Are we going to get a grant from the Treasury to help them as producing industries? The more one looks into the position of the industry, and its future position, as the result of Government action, the worse it becomes. I should be glad if the Colonial Secretary can clear up some of the points which have been raised, and especially the last one about Income Tax.
  Mr. CAMPBELL: I am very glad to be able to intervene, because I believe the public as a whole, and a great number of my friends in the City, have been grossly misled by exaggerated statements, and statements which in many cases are without foundation. I should like to take one or two criticisms which came to my notice immediately after the announcement that restriction was to he taken off. The first was that owing to leakage of information, for which the Government are held responsible—Governments are held responsible, even sometimes by their own supporters, for all sorts of things—America had made lots of money at our expense. The figure was given as £50,000,000. I have it oh the very highest authority that there is no truth whatever in that statement. It may have been a few millions, but £50,000,000 is an absurd figure.
  Sir R. HUTCHISON: How many millions were lost?
  Mr. CAMPBELL: According to the statement, over £50,000,000.
  Sir R. HUTCHISON: What do you say they have lost?
  Mr. CAMPBELL: A few millions.
  Mr. J. H. THOMAS: What paper are you quoting from?
  Mr. CAMPBELL: I am speaking from personal information which I have from someone who is not in the House but is an expert, and one of the best experts in the country.
  Mr. THOMAS: What is the extract from?
  9.0 p.m.
  Mr. CAMBPELL: There is no extract at all. I am simply saying it has been stated, even I believe between these four walls, that there has been a loss very nearly totalling to that amount. Number

  1185
  two is that the announcement should have been made on 1st February together with the Colonial Office routine announcement. I have never denied that I think that was a very great misfortune indeed. I wish to be quite fair. I am giving my opinion as one who has for many years had some interest in rubber. I have been a big shareholder and have taken an interest in it in various ways. I have been to a certain extent in rubber in the Dutch East Indies and have lived there 21 years, and have probably seen a great deal more of rubber than anyone who sits in the House. I agree it was an unfortunate thing that those in charge of this Committee did not keep in closer touch with the Colonial Office so that the announcement could have been made on the same day. The third one was that none of those who sat on the Civil Research Committee were rubber experts. That is a very proper thing. It would have been perfectly absurd to have had one rubber expert, we will say, who came from one particular group of planters or estate managers and sat on the Committee and gave it as his opinion. I know a great number of rubber people, managers and company directors and others, and, however much I may appreciate their advice from time to time—and naturally if one is trying to find out everything possible about rubber one listens to all one can hear—I have failed to find a great number of them who have the same opinion. The hon. and gallant Gentleman who has just spoken is rather inclined to think it was a. wrong thing that restriction was taken off. His predecessor who spoke said he had always been in favour of taking it off. I may be exaggerating to a certain extent, but my point is that the opinions expressed by those two gentlemen are not identical. If you go to Mincing Lane and see these men individually you will find that their opinions are not identical. Of course, one reads in the papers the opinions they put before the Committee, which I thought they gave under secrecy. I believe they were not published by the Civil Research Committee or by Members who sat on the Committee. How they were published I leave it to the House to guess. Last year I asked the Colonial Secretary:
  "Does the right hon. Gentleman not think the time has Dome when it would he advisable to form a small independent committee to go into the whole question and
  1186
  advise him as to the advantage or otherwise of retaining the Stevenson scheme?"
  To which I got the reply:
  "I have the advantage of advice from a strong committee representing the various interests concerned, and I am continually taking the advantages or disadvantages of the scheme into consideration."—[OFFICIAL REPORT, 10th May, 1927; col. 199, Vol. 206.]
  At that time evidently he did not think it was right to set up the independent Committee I suggested. The only possible Committee to set up was an absolutely independent Committee. [Interruption.] I am not here to speak on the question of the Committee. None of the gentlemen is an acquaintance of mine. The hon. and gallant Gentleman has referred to the delay in the removal of the restriction scheme. After all, that was their own fault, and it was the hon. and gallant Gentleman who himself asked the Prime Minister that restriction should not be removed. He asked:
  "Whether, in view of the long time which must elapse before the Committee of Civil Research can report on the rubber restriction scheme, he will issue a considered statement on the whole situation and, if possible, include in it a declaration that no change in the present scheme can take place before 1st November of this year."
  On the same day my hon. Friend the Member for Streatham (Sir W. Lane Mitchell) asked something very similar:
  "Whether the Prime Minister has received any communication from the Rubber Trade Association with regard to allowing the present restriction scheme to remain in force until 31st October, and whether he is now able to give the assurance asked for?" —OFFICIAL REPORT, 20th February, 1928; col. 1192, Vol. 213.]
  I understand that those questions, although they were asked in that form, were intended otherwise.
  Sir R. HUTCHISON: Not at all.
  Mr. CAMPBELL: I understand now, from discussions which I have had with friends of mine in the City, that what they meant to ask was that if there was to be a modification of the existing Stevenson Scheme it should not come into force until the 31st October. But that is not what they said. What they actually asked was, that, if anything was done, for goodness sake do not do it until the 31st October. I remember at the time that the whole House—and I was, perhaps, as capable as other Members of reading the questions—took

  1187
  it for granted that the rubber growers were anxious that whatever was done nothing should not be done until 31st October. I stated in a letter which I wrote on the very eve that restriction was taken off that I believed it must have been in the minds of the Committee. I did not know, and I never heard a word about the Committee, and I took no interest in it. It was my opinion that if they were going to take off restriction, they ought to have taken it off there and then. The hon. and gallant Gentleman said: "Why did they delay it until 31st October?" The right hon. Gentleman the Member for Derby (Mr. J. H. Thomas) keeps on laughing the whole time. He may laugh, but I am stating facts.
  Mr. THOMAS: I am sorry. I thought you were unduly flattering the hon. and gallant Member for Montrose (Sir It. Hutchison).
  Sir R. HUTCHISON: May I ask the hon. Gentleman to read the question? Owing to the long time which must elapse before the Committee on Civil Research could report, I asked for a considered statement from the Prime Minister. I asked why no alteration could be made in the Stevenson Scheme before the 1st November, and I asked for a statement from the Prime Minister at that time in order to do away with the uncertainty in the industry. The Prime Minister was not in a position to make a statement.
  Mr. CAMPBELL: If the hon. Gentleman is not satisfied with that, we will take the question of the Member for Streatham (Sir W. Lane Mitchell). He asked practically the selfsame question. In any case, in my opinion, the restriction should have been taken off at once. I believe that there is a great measure of agreement in the City that even now it would he advisable to take it off, say, on 1st May. Naturally, one can understand that my right hon. Friend the Colonial Secretary will he averse to doing anything at present, because, whatever is done, probably there will be a great number of people who will say once again that the Government are wrong. — [AN HON MEMBER: "The Colonial Secretary was never consulted"]—I do not blame the speculators for getting cold feet as soon as they heard that an inquiry was to be set up,
  1188
  especially when one realises that rubber is, probably, one of the most speculative articles with which anybody can deal.
  Nobody can deny that the market was full of people who knew nothing whatever about the article of rubber. They had been led on, as many of us have been led on, to speculate by putting in money which they never had.—[HON. MEMBERS: "Oh!"] You may say "Oh!" I have done it myself very often. "This is a thing which is going to make you money. Put it in my dear fellow. It does not matter. Put in your last bean, and I promise you, you will make money out of it." They were led on to do it, and they have suffered these terrible losses. I do not for a moment minimise the fact that many speculators have lost a great deal of money. The fact is, that when an inquiry was set up the whole thing went panicky; everybody went panicky. I only regret that during that panic some of those who were in a position to do so did not try to stem that panic and that in the maelstrom many genuine investors were brought down and they lost their money. That is the shame of the thing. Not only that, but many dealers and reputable firms who have year in and year out done good, solid business, and many plantations and many manufacturers have been sacrificed. Why should the Government be blamed for this?
  Sir WILLIAM LANE MITCHELL: They should keep their hands off.
  Mr. CAMPBELL: Were they originally asked to keep their hands off when the Stevenson scheme came in? I have heard, and all of us have heard, during the last year or two, and read in the papers, of the various criticisms of the Stevenson scheme. "The Stevenson scheme was not elastic enough." "The pivotal price was wrong." "There was laxity with regard to smuggling." "The unused coupons ought to have been cancelled." "It is no use unless the Dutch come in." And so on and so forth. From those interested in the industry and all around, we have heard these criticisms. Surely, it was time that the Colonial Office, who were then responsible, should say to themselves: "Well, after all this confusion among those who are experts in the trade, surely it is time that we looked into the matter."
  Sir R. HUTCHISON: They did not act.
  Mr. CAMPBELL: The great majority of people were saying that the time had come when the question of restriction, whether it was good or whether it was bad, should be investigated. I presume, though I have no right to speak on the subject, that the Colonial Office decided that they would set up this independent Committee.
  Sir R. HUTCHISON: On 1st February.
  Mr. CAMPBELL: I presume that they thought of it long before the 1st February; otherwise, it would not have been appointed. I was in Java when the question of restriction was first mooted. I attended a meeting as the representative of mid-Java when the question was discussed. This was before the Stevenson scheme was formulated. A meeting was called of all Dutchmen except two. The chairman asked our opinions. He asked three Dutchmen first, and he asked me also in Dutch, and I gave as my opinion that unless they could compel people to restrict it would be useless. We were told that there were no means of compelling them. The following gentleman who was asked said he did not speak Dutch, but that he agreed with the Dutchman who had just spoken, which was myself. We all came to the conclusion that unless there was compulsion it was useless. I was at that time entirely against restriction, because I do not believe in Government interference with business. I have never believed in it, and I never shall. I have made up my mind since that the restriction scheme did save the rubber industry in the Straits Settlements. It came at an opportune moment; but it has outlived its usefulness. The only advantage to be gained from a restriction scheme will be gained by the Dutch East Indies and, to some extent, by America.
  Figures have already been given as to production, from which it will be seen that the Dutch East Indies was fast increasing its output. In 1926 they had 1,100,000 acres of rubber land, of which only 800,000 acres were in production; therefore they had still 300,000 acres of rubber land to be brought into production. We have also the production of the Javanese. In 1922 the natives of the Dutch East Indies produced some 20,000 tons of
  1190
  rubber, but in 1926 it had grown to 80,000 tons. It is possible, indeed it has been predicted, that they will produce up to 200,000 tons, but personally I do not think they will because of the difficulty of labour and expense, and I do not think the Dutch will allow native grown rubber to come under restriction. Having once helped the natives to build up this industry they are very unlikely, and I know the Dutch Government very well, to curtail the output of the natives. I had hoped that the Dutch would be tempted to see that it was to their own advantage to come in under the restriction scheme, but I learn that the negotiations will not lead to this result and we shall have to fight our own battle. I believe we shall be able to do so, excellently,
  I regret that for a long time, for a year or more, the rubber industry will have a very difficult time, but the less this House interferes, the less talk there is amongst the rubber people themselves, the less panic there is, the better. Those engaged in the industry must go on calmly and reorganise it; must consider the best way in which they can meet competition, and then they will within a reasonable time come through all their difficulties. All that we can do here is to support all kinds of research and methods of using rubber. To the trade I say "keep calm"; to the shareholders, "sit tight, do not throw your shares away. Better times must come, if not this year at any rate we hope next year." In any ease it is absolutely useless for people to throw their shares away imagining that the rubber market can never return. An expert told me only two days ago that the low prices ruling for rubber are the only thing which will lead to an improvement. I support the action of the Government. I believe the reports are exaggerated. I commiserate with the rubber trade. They have been through a very difficult time indeed, but I consider that the Prime Minister, having once made up his mind that the rubber restrictions should go, did a brave and manly thing in saying that they should go all at once.
  The SECRETARY of STATE for the COLONIES (Mr. Amery): I am rising at this early period in the Debate in order to afford time for the right hon. Member for Derby (Mr. J. H. Thomas) to speak; also the question which has been raised is one of such complexity that I could

  1191
  not possibly do it justice unless I dealt with it at some length. I must apologise to the House on account of this, but the Government have been attacked very bitterly on this question not only from those who are their normal opponents but by some of their friends, and it is essential that I should endeavour to remove the misapprehensions of both sections. If I might turn from the very helpful speech which has just been delivered by the hon. Member for North Camberwell (Mr. Campbell) to the opening speech of the Leader of the Opposition, I should like to refer to what the right hon. Member said as to the origin of the whole matter. His conception of the origin of the restriction scheme was that the effects of private enterprise upon this industry were so bad that it was necessary for the State to intervene. I am afraid it was the necessary State intervention during the War which prevented rubber from Malay reaching its market and piled up stocks, followed in 1920 by the depression in the United States, which created a situation of the utmost gravity in Malay.
  It is perfectly true, as my hon. Friend the Member for Stroud (Sir F. Nelson) has said, that the great majority of producing companies in Malay at that moment were in a position of such extreme difficulty that outside syndicates might quite easily, for a mere song, have got possession of a very great part of that important industry. It was in that very difficult crisis that the Colonial Office appealed to the late Lord Stevenson, whose ability and resource were ever readily at our disposal, to see whether some way could be devised of helping the rubber growers to do what they had failed voluntarily to achieve—namely, ration, or restrict, the industry over a period of exceptional difficulty. The Committee under Lord Stevenson met and came to the conclusion that the position of the industry at that moment was this: that the production amounted to some 400,000 tons a year as against a consumption of about 300,000 tons; that there were surplus stocks in hand, over and above the normal stocks likely to be absorbed, of 110,000 tons. That was, indeed, a position of extreme gravity, but, even confronted with that position, the first conclusion to which the Committee came in
  1192
  the spring of 1922 was that unless the Dutch joined in a restriction scheme could not succeed. The leak in the vessel would be too large to enable it to hold water.
  The situation continued even more serious, and towards the end of the year, having meanwhile ascertained that the Dutch Government absolutely refased to come into any scheme, but that a considerable number of British planters in the Dutch East Indies, representing something not far off one-third of the actual estates as apart from the native rubber producers, were prepared to cooperate voluntarily, Lord Stevenson recommended that undoubtedly it was a risky business but that prices were such that the attempt should be made. At that moment the British exports from Malaya represented over 70 per cent. of the total exports, and voluntary assistance from British companies represented fully 5 per cent. more. In other words, we were restricting with a 75 per cent. control and with 25 per cent. leakage. However, even with that open sore, the effect of which was bound to be felt ultimately, at the time the Stevenson scheme did undoubtedly help the industry.
  During the year following the application of the scheme, the price of rubber was kept up, on an average, to just below the pivotal price of 1s. 3d. which was aimed at. In the. following year the scheme was not quite so successful, and prices for a considerable part of the year were substantially below it. Then came those unforeseen developments which will always affect the State when it endeavours to try to control all the complexities of industry. They have beaten the most ingenious manipulators on the market again and again, and they will always beat the State. There was an enormous increase in the demand of the United States, the demand cleared off the stocks and entirely ran away from production. At once prices began to rise, not to a normal, sensible figure, but to a figure fantastically beyond the normal cost of production and normal profits. By the end of 1925 the price of rubber had run up to 4s. 6d. per lb.
  Mr. THOMAS: I am sorry to intervene, but this is rather important. The right hon. Gentleman has just quoted the OFFICIAL REPORT regarding the answer

  1193
  which was referred to by the Leader of the Opposition. I want him to say whether the answer was the answer given, not in 1924 or 1925, with which he is now dealing, but in May of last year, 5½ years after the scheme?
  Mr. AMERY: I gave that answer in May, 1927, and I repeated it in April, 1928. The scheme did save the industry at that critical moment. I am not saying that in May, 1927, it was still saving it, because the situation had by then altered, and it has altered still more since then, but undoubtedly the scheme was of value at the commencement. Now we come to 1925, when it was discovered that the scheme was quite unable to secure stability of price, and that prices ran right away from the scheme. At that stage there were those who recommended the abolition of the restriction, and those who, like Sir Eric Geddes, strongly urged it, or, at least, urged an entirely fresh and independent inquiry.
  Sir R. HUTCHISON: Was not production 100 per cent, then?
  Mr. AMERY: I will come to that. No, it was not. Production was not adjusting itself to the demand, because the scheme was too inelastic. It could only be modified by 5 per cent. steps, but, as an emergency measure, I myself broke the scheme and brought up the release to 100 in order to give time to look about and consider with the Advisory Committee what we were to do. The conclusion we came to then, rightly or wrongly, was not to abolish the scheme, but to endeavour to make the scheme more elastic. We approved of a modified scheme giving wider steps, and enabling the control to adjust itself more rapidly to the rise and fall of prices. At that stage we also altered the pivotal price.
  Mr. MacDONALD: Without the advice of the Advisory Committee.
  Mr. AMERY: I will deal with that. From first to last I was in close touch with Lord Stevenson as Chairman of the Advisory Committee and, as I understood, he was either formally meeting or informally keeping in the closest and continuous touch with the members. I also, personally, attended more than one meeting of that Committee. I will say this. The general view of all those I had to deal with, and as reported to me by Lord Stevenson, as well as of the
  1194
  great American consuming interests, was that the essential thing was stability, and that to declare, when the price for over a year had been well above 3s., that 1s. 3d. was our pivotal figure would have no relationship to reality at all. At that time large forward contracts were being made for long periods, and more than that, being refused, at over 2s. At that time it seemed entirely proper and reasonable if you wished to secure stability to secure it on a figure somewhat nearer than 1s. 3d. to that which the industry thought would be the price for years to come. I say that, if there be any blame for fixing the figure of 1s. 9d. I will take it myself. I will also say it was only after weeks of discussion with Lord Stevenson that I persuaded him to come down from the figure which he wished and to make the pivotal figure is. 9d.
  Scarcely had we fixed it when once again the incalculable element entered. How far the development of reclaimed rubber entered into it—the increased figures for the period were phenomenal—I am not prepared to say. Certainly the development of native rubber in the Netherlands East Indies, and the general unforeseen elasticity of the whole supply from the Netherlands East Indies, defeated all calculations. We had scarcely settled the pivotal price at 1s 9d. when in the next quarter prices, which had been over 2s. 4d. in the last quarter and 3s. in the past year, dropped away again, and it was with the greatest difficulty, and only by considerable special manœuvring, as may be seen from the closeness of the figures, that the price was just kept to is. 9d. in the quarter July to October, 1926. Already by then the scheme, as modified in the Summer of 1926, was showing grave signs of weakness, and I was beset by hosts of counsellors suggesting new and independent inquiries and modifications. But I thought it highly desirable in the interest of stability that the modified and more elastic, scheme with the 1s 9d. pivotal figure should be given a full run, and at that date, 1st November, 1926, I announced that the scheme would run at least for 12 months, though I made it perfectly clear in my answer that it was a temporary scheme and might be modified at the end of that 12 months.
  During those 12 months naturally, and afterwards, every answer I gave in the

  1195
  House was with a view to giving confidence and not prematurely upsetting any section of the community. At the same time, I can assure the House that the Colonial Office was getting increasingly anxious as to the actual effect of the restriction scheme in 1926 and still more in the course of 1427. For one thing, it was becoming increasingly clear that the scheme no longer had the same effect in actually influencing or stabilising the price. It had that effect in the first two years. We endeavoured to remedy, in 1926, the failure to secure stability in 1925, but we found that it was not able to keep up the price which we had fixed. The reason was the inevitable reason, inherent in the scheme from the beginning, that restriction in the British area inevitably encouraged increased output in the Dutch area, where they got all the benefit, both of the increased price and of economic production. At the beginning of the scheme the British control of production was 75 per cent., but now, with restriction, it is only about half. When you have 75 per cent. of the industry under your control, you can achieve a 20 per cent. total reduction by restricting yourselves to the extent of 30 per cent. When you have only 50 per cent. under your control and the other 50 per cent. outside, you have to restrict yourself to the tune of 40 per cent. to effect even a 20 per cent. reduction in the total output. We were discovering that our power to fix the price was growing, less and less day by day.
  Lieut.-Commander KENWORTHY: When did you discover this?
  Mr. AMERY: We were discovering it increasingly during 1926 and 1927. But the price, after all, is not the main or the only factor with which we were concerned. As the Colonial Office, we were concerned with the prosperity of British territories under our control and with the development of a great Empire industry. We were concerned, above all, to see that the industry in Malaya should grow and flourish. During the period 1922–1927 the output of rubber in the Dutch East Indies increased by 145 per cent., and in Malaya and the Straits Settlements it increased by 13 per cent. The Netherlands East Indies' share in the world export went up from 23 to 38 per cent. The Dutch native production, the really incalculable factor
  1196
  in the whole business, went up from 17,000 tons in 1922 to 100,000 tons in 1927, and all the evidence placed before the Hambling Committee, led them to the conclusion that that figure might before long easily reach from 150,000 to 200,000 tons a year. British industry stationary, the industry of our main competitors growing by leaps and bounds.
  More than that, we are concerned in this great industry with the question of competitive efficiency. The restriction of production inevitably means a loss of productive efficiency. The overhead charges on the plantations remain the same, but they work out very much more per pound of rubber when production is reduced; and the other day, on the occasion of the meeting of the Dunlop Company, Sir Eric Geddes, who after all has not shown too friendly an attitude to us in this matter, pointed out that with the restriction at a nominal 60 per cent. but really, owing to various causes, nearer 50 per cent., what would be an overhead charge of 3d. a pound on full production is to-day an overhead charge of 6d. a pound. That constitutes a very serious handicap to the British producer, not only in reducing his profits to-day, but still more in reducing his chances in the future. More than that, while the Dutch producer, with a free field in which to produce, not only saves on those overhead charges, but has every inducement to study every conceivable new developmerit—seed selection; bud grafting, anything which would increase the output—the British producer under restriction has no such incentive to efficiency.
  Lieut.-Commander KENWORTHY: Could not the Minister of Mines have these arguments put before him?
  Mr. AMERY: May I put another point, which concerns not so much the Colonial Office as the Treasury? The hon. and gallant Member for Montrose (Sir R. Hutchison) asked what the Treasury was doing. The Treasury is undoubtedly concerned with the fact that this great export industry in British hands, of which the product is largely consumed in the United States, plays a most important part in our balance of trade and in the maintenance of the gold standard. But it is not in virtue of the profits on the individual pound of rubber sold, not in virtue even of the profits made by companies, but

  1197
  in virtue of the total amount of money spent in British territory or paid to British producers on their product of British rubber; and any position which steadily undermined the British producer and transferred the rubber industry to Dutch hands was certainly not helping Great Britain in the task of holding her own in the world's exchanges. All these and other considerations, such as the very great difficulty of dealing with smuggling, the corruption of native staffs, and, in one part of the Colonial Empire at any rate —Ceylon—the growing opposition of the Legislature, made it very difficult to know how long we should be able to carry on. The hon. and gallant Member for Montrose asked by what method I was going to control those Colonial Legislatures which had an unofficial majority. The question of control does not arise now, because they are opposed to restriction, but it might have arisen in a very definite form if I had been resolved to continue to impose it indefinitely.
  All these considerations weighed in our minds, and finally, as from the Colonial Office, we approached the Cabinet towards the close of last year and asked the Cabinet for an independent, impartial inquiry. The right hon. Gentleman the Leader of the Opposition suggested that the prompting in this case did not come from the Colonial Office. I am sorry to say that he made, I think, a very unfair suggestion that there were influences outside, not disclosed, which affected the position of the Government in this matter.
  Mr. MacDONALD: May I ask why it was that the statement that is now being made was not made when questions were put in this House as to who prompted the action that has been taken?
  Mr. AMERY: The prompting in this matter came from the Colonial Office, and from nowhere else.
  Mr. MacDONALD: Is there any reason why that answer has been delayed until now?
  Mr. AMERY: The right hon. Gentleman has the answer now, and I give it him in the most explicit form. To suggest that a matter of this sort should originate from any Department other than the Department concerned or that the Prime Minister and the Cabinet
  1198
  should take action over-riding the views of the Department concerned, is absurd.
  Sir R. HUTCHISON: Why did the right hon. Gentleman give out one advice on the 1st February and another on the 8th February?
  Mr. AMERY: I will deal with that point in a moment: I will only say now that it is not true. The Colonial Office owes a great debt to Lord Stevenson and Sir Matthew Nathan and the advisory committee. They gave their services ever readily and with great ability, but we have to remember the fact that these gentlemen were concerned throughout the initiation and working of the scheme of restriction itself. Moreover, they were persons directly financially interested in the rubber business. It was obvious and reasonable that in this matter we should endeavour to get the opinion of the ablest impartial inquirers that we could obtain.
  Mr. THOMAS: This is a very serious statement which the right hon. Gentleman is making. Will he deny that the right hon. Member for Stafford (Mr. Ormesby-Gore), in explaining the Government's attitude in Malaya, distinctly stated that the previous alteration was the responsibility of this committee alone, and not of the Cabinet? If the committee can be blamed in one connection, surely the responsibility must be transferred in the other.
  Mr. AMERY: If the right hon. Gentleman had been in the House this afternoon and had listened to an answer which was given to a Private Notice question, he would have heard that my right hon. Friend the Under-Secretary of State for the Colonies never made that statement. He made it quite clear that the change was made on the responsibility of the Government and not on the advice of the Committee. We did not take the view which the right hon. Gentleman the Leader of the Opposition takes that we could not appoint an impartial committee without the consent of the advisory committee. Moreover, practically every member of the advisory committee had the opportunity of appearing before the Rambling Committee and had every opportunity of putting his experience and views most fully forward.
  There is one further point which the Leader of the Opposition made. He

  1199
  suggested that we were appointing a loaded committee, a committee as to whose views we were already informed; that we deliberately appointed it with a view to putting an end to the restrictions. That is not true. I believe that I can say for my right hon. Friend the Prime Minister that he had no information as to any previous views of any members of that committee. They were appointed purely on their personal ability, and they entered upon the investigation absolutely free and with open minds. The result of that investigation was to convince the Government that the restrictions as they are operating now, owing to the rapid growth of supplies outside the spheres of restriction and partly owing to the immense development of the reclaimed rubber industry, are becoming increasingly ineffective as a means either of stabilising prices or even of keeping them up in the interests of the British producer. On the contrary, the effect of them is adverse to our interests to-day and will be increasingly so. Hitherto, what we have had to deal with has been the extension of Dutch production on estates already planted, but now every year we are going to be confronted with an ever-increasing output from new plantation in these territories since 1922. To-day, the continuance of that scheme is most disadvantageous to our growers and appears to threaten the dominant position which the British Empire occupies in the producton of the raw material of one of the world's great key industries. These restrictions to-day discourage progress in management, raise the cost of production and severely handicap our producers, compared with the foreign competitor.
  To-day, those who are benefiting most are the Dutch and those who feel all the disadvantages are the British producers, and the time has come to remove a scheme which, admittedly, served its immediate purpose at the time, but which to-day is a severe handicap to the British producer. We then had to consider how the scheme should come to an end. We received, and the committee received, advice from many quarters, in favour of a long-ranged tapering scheme taking two or three years to wind up. It was obvious that once we had settled upon such a scheme we were bound to carry it
  1200
  through and adhere to it. During the whole of that period the increasing disadvantage of our position would have gone on and our producers would have been in no position to deal with it, except in one respect which was indicated by the hon. and gallant Member for Montrose. He asked: "What is the good of your six months notice? Every firm is telegraphing out to its people to produce more, and before the 1st of November there will be a great mass of rubber sent over." As a matter of fact, they cannot produce much more, immediately. It will take them several months to get their labour supply, to build new coolie lines, and to send their recruiters to Southern India. Therefore, for the first few months they could not produce more. If, however, we had adopted a scheme extending over two or three years, we should have had the very process which was so indignantly denounced by the hon. and gallant Member for Montrose in operation, not for a few months but for nearly two or three years, with still more disastrous results.
  Sir R. HUTCHISON: Does the right hon. Gentleman know that at the present time companies have robber in store which they cannot export?
  Mr. AMERY: if so, that situation would have been still further aggravated over a two or three years period. A more practical alternative was that of immediate withdrawal suggested by the hon. Member for Camberwell, but we were up against the difficulty of personnel and recruiting which I have already mentioned. The immediate cessation of restriction could not for some months give our producers the benefit of full scale production. It could not give the Governments time to make their various arrangements. On the other hand, I was besieged throughout February and March by hon. Members on all sides and by many people outside saying: "Cannot you give an undertaking that, at any rate, the scheme will continue up to the end of the restriction year—the let November." That was the date urged on me from every quarter. That was the date which, after the fullest and most careful consideration, the Hambling Committee recommended to the Government and which the Government, with full responsibility, have accepted.
  Sir R. HUTCHISON: What about the eighth?
  Mr. AMERY: I have dealt with the really serious issue, the main issue. Now I come to what has been magnified into a great charge, the real gravamen against the Government, and that is that we made certain announcements, that the Government announced that we were going to have a Committee of Inquiry. I have been a good many years in this House, and I have never known an an-announcement of a Committee of Inquiry seriously to perturb the equanimity of the House as a whole. Such an announcement is usually met by the taunt, "Oh, another Committee, another postponement, another failure on the part of the Government to recognise its responsibility to deal with the matter!" Why should an announcement of the appointment of an independent and impartial inquiry to look into the whole matter, to consider whether restriction should be maintained or modified or abolished, create such a sensation? Why Because the whole position was already beginning to topple. The whole situation in the rubber market, in the share market, was entirely artificial, and all those values about whose loss such talk has been made, were not real values, but were fictitious values which were bound to come down and disappear in the very working of the scheme if it had been allowed to go on. The hon. and gallant Member for Montrose asked whether the losses would have occurred if we had not made that announcement, whether it would have been possible to make an announcement that would not have created these losses. I say "No "No announcement at any time would have failed to be followed by those losses, unless we had postponed the announcement until after the losses themselves had occurred.
  Lieut.-Commander KENWORTHY: In that case, why did you let the New York "bears" get the advantage of the announcement?
  Mr. AMERY: I will deal with those animals very shortly. Meanwhile, I will give to the hon. and gallant Member an experience of mine, not taken from "bears," but in another field of sport. It has often been my fortune and my anxiety to thread my way through a great and broken glacier with towers and pillars of ice 50 or 100 feet
  1202
  high in danger of toppling over at any moment. There comes a time when the guide says to you, "Do not speak; do not even whisper, because the concussion of the air may have some effect on these ice blocks. Pass quickly and silently. "You do, but then, if the ice has not come down from your whisper, the effect of the sun will bring it down in the next few hours. If we had made no announcement whatever these losses were bound to come sooner or later as the inevitable result of the thoroughly unhealthy position in which the whole industry was.
  Sir R. HUTCHISON: Why did the Colonial Office say that they were going to continue the scheme on 1st February and then alter their mind on 8th February?
  Mr. AMERY: The hon. and gallant Member displays a great measure of impatience. I am dealing with this question stage by stage. First of all, I will deal with what the right hon. Member opposite, in his eloquence, described as tantamount to a criminal act—the announcement of the fact that we were going to have a committee of inquiry. This announcement, I say again, would have produced no effect whatever unless the whole industry had been in a precarious and unsound position, and unless those who knew most about the industry were convinced that the outcome of any impartial inquiry would be the termination of the present scheme. Now I come to the even more criminal charge that the announcement, was made on 8th February and not made in the ordinary routine way by the Colonial Office on 1st February, with the announcement of the figure at which restriction would stand in the following quarter. The Colonial Office announcement was a perfectly routine announcement, based on the calculated average prices through the quarter. Anyone who took the trouble to study these prices could have made that same announcement on the same day. It proceeded from the Office purely as a matter of routine.
  10.0 p.m.
  On the other hand, the appointment of the special committee of inquiry, made at the instance of the Colonial Office and accepted by the Cabinet, which takes the full responsibility for that as for everything else that is done by any Depart-

  1203
  ment of the Government—that committee naturally took some time to set up. It was essential to find the right men as members and to suit their time and convenience as to the beginning of the committee. To meet them and in order to fix as early as possible a date to get the committee started, the announcement was made the very first moment after we got all the names together and ascertained that the members of the committee were really ready to begin. That date was a week after the ordinary routine announcement by the Colonial Office. it was obvious from the routine announcement that no change would be made in the course of the quarter, and from that point of view, the point of view of giving the largest possible notice it was obviously desirable that a notice about the inquiry should come as soon as possible after that date. There was no essential reason why it should appear on the same day, and no inconvenience was caused except in a market already in a state of unreasoning nerves and panic.
  The right hon. Gentleman opposite made a very elaborate argument—for which there is no foundation whatever—drawn from the fact that, in answer to a question some months before, I said that no change would be introduced before the beginning of February, and that, if it were, ample notice would be given beforehand. He drew from that the inference that when the routine notice came out on 1st February, the public would at once know that no inquiry would be held in the matter. It was obvious that, if a change had been determined upon as from 1st February, I should have given notice long before that, and equally obvious that when it was known that the quarter figure for February to April was 60, there would be no change in that, quarter, and even more obvious to anyone who knows the amount of investigation required in this matter that the announcement of 8th February of the appointment of the committee could not possibly mean any change in the whole situation before at least July. As a matter of fact, no change is going to take place before November.
  I am reminded by the Prime Minister of certain wild animals to which the hon. and gallant Member opposite referred.
  1204
  Talking of wild animals, I find that the charge that we caused ruinous losses to the investor and the trader owing to the leakage of news to the United States was given, as one would expect, in its most vigorous, most picturesque and, I might add, loosest, form by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). This is what he said:
  "The Government have dealt with this matter in such a way as to inflict the maximum of injury upon British investors and British traders, and the minimum of injury upon foreign investors and foreign traders. They first of ail fumbled about the date. Then they suddenly made up their minds to do something and they issued a statement to the Press about six o'clock. They said that is two hours after our Stock Exchange has closed.' They forgot that it was two hours before the New York Stock Exchange closed. Mr. Baldwin forgot that, even under a stable Tory Government, this old world was still engaged in revolution once every 24 hours. Having made that astronomical discovery, which has been known to every child in a first form for many generations, he then felt pained that there should be men so sordid in the United States of America as to take advantage of the marvels of the universe. But his pain was not comparable to that felt by the poor investor who found his money swept away by this blunder."
  I need not quote any more. [HON. MEMBERS: "Go on!"] I will quote another less picturesque passage from that well-informed organ, the "Daily Mail," which declared on 10th February:
  "British traders and 230,000 British shareholders of all parties suffered a serious financial reverse yesterday as a result of New York knowing in advance of London of the Government's intention to institute an inquiry into the existing scheme of restriction on rubber exports. The losses are estimated at about £1,170,000."
  It will be noted that the figures have grown a great deal since then. Let me deal with those statements. The announcement made by the Government was one for publication in the Press on the morning of 9th February. It was given, as such announcements usually are, at six o'clock in the evening to the representatives of the Press, and I think the right hon. Gentleman opposite will agree with me, as would the right hon. Gentleman the Member for Carnarvon Boroughs if he were in his place, that the confidence of the Government in the Press on these occasions has always been justified. That at any rate has been my experience —that if you take the Press into your confidence you can do so with safety.
  Captain GAR RO-JONES: Did that arrangement include the foreign Press? Was the statement issued at the same time to the representatives of the foreign Press?
  Lieut. - Commander KENWORTHY: And to the United Press—The B.U.P.?
  Mr. AMERY: As I was saying, these confidences are almost invariably honoured by the Press.
  Mr. THOMAS: This is very important, and we do not want to indict our own Press. We may as well face what is common gossip. Is it not true that the Government, quite honestly—I make no charge against them for it—invited representatives of the American Press with the other Press representatives?
  Mr. AMERY: The foreign Press were not invited. Reuter and the four Press agencies were. These were all that were invited.
  Captain GARRO-JONES rose—
  Mr. AMERY: I think I can explain the whole position very clearly in a moment if the hon. and gallant Member will restrain his impatience. The Press were given that communication at six o'clock in the evening. Whether there was any misunderstanding, or whether, in one of the Press offices, there was a leakage, I cannot tell, but apparently someone did, by telephone, communicate this information to New York before the New York rubber exchange had closed. Now let us consider how anyone in New York, receiving that information, was going to proceed with the lucrative and pleasant enterprise of spoiling the British. How would the right hon. Gentleman the Member for Carnarvon Boroughs or the hon. and gallant Gentleman the Member for Montrose have proceeded if they had been in that position in New York? I can conceive anyone receiving that exclusive information, if he thought it was going to depress the market, spoiling some of his fellow Americans. He could deal with them. They were with him on the Exchange or he might have telephoned to Chicago and other Exchanges and possibly have fleeced some of his fellow-citizens. But how was he going to fleece anyone in this country? He could not, by any telegraphic sale, deal with them until the following morning, when their information would be as good as his.
  1206
  There is one exception only. There is one set of circumstances in which a British trader in rubber could conceivably have been worsted by an American speculator. That is if a British firm, at the close of the market in London, had telegraphed to its agents in New York to say "Buy for us, while the market is still open, at such and such a price. Telegraph to us in the morning when we will confirm. "But that is not a position which was occurring to any great extent. Taking into account the immense disproportion between American rubber requirements and British rubber requirements, the volume of dealing was not by British users buying rubber from the United State, but by Americans buying here for their own already very considerable stocks. However, all this is a rather hypothetical consideration. What happened as a matter of fact? The right hon. Gentleman the Member for Carnarvon Boroughs and the hon. and gallant Member for Montrose might, conceivably, have rushed in with their information, to see what use they could make of it. They are bold and sanguine and possibly credulous persons. But your Yankee is a shrewd speculator and a careful man. I am told that those who got the information in the United States were very doubtful as to how far it was all right, and how far it was an attempt to get them to alter their prices. Those to whom they communicated the information were still more doubtful and, as a matter of fact neither American citizens nor British investors were fleeced at all. Practically no business took place on that information in New York, and to all intents and purposes the position of the investor or trader in the United States was where geography and astronomy have always put him—some six hours behind the opening of the market in London.
  Captain GARRO-JONES: May it not be the case that the very fact that a limited amount of business did take place, shows the losses which were caused, as considerable offers may have been made by cable to American interests to purchase at a certain price which they refused when they heard this news, tending to show that the price would fall still further.
  Mr. AMERY: That is a very hypothetical question, based on a hypothetical fact which did not occur. No business did in fact take place. The fall

  1207
  in prices—real or fictitious prices—took place upon the announcement, here and in America, for the very same reason in both countries, namely, that the whole position in the rubber share market was top heavy and unsound and was bound to come down heavily the moment anyone knew the facts of the situation. I hope that I have now dealt with both the mare's nest and the more serious issue. With regard to the mare's nest, I would only repeat that there was nothing in the manner or the hour of the Government notification of the initiation of the inquiry by a Committee, which could have any effect whatever if the market had been in a sound position, and if the whole position had not been, as I have already described it, top-heavy and unsound. As regards the real merits of the case, and the whole difficult and complex problem with which the Government have had to deal during these years, I hope I have made it sufficiently clear that the Government which initiated the scheme, the Government of the right hon. Gentleman the Member for Carnarvon Boroughs, the Government of the right hon. Gentleman opposite, and ourselves throughout have been concerned with one issue only, and that is the prosperity of the British rubber industry, and the prosperity of the British colonies which depend upon it. They have been concerned throughout with that position.
  From that point of view, they regarded the initiation of the scheme as a necessarily temporary expedient. They are still satisfied that, in its initial stages, that scheme served its purpose. As the scheme proceeded and failed to serve its purpose, we became increasingly conscious of the difficulties and disabilities which that scheme has been imposing, with growing momentum every year and every month, upon this great British key industry and we were finally reluctantly forced to the conclusion that the matter had to be inquired into. When all the information, had been obtained and submitted to us, we were still more definitely forced to the conclusion that, however beneficial in its initial stages, that scheme had become a stranglehold, fettering development and initiative, fettering progress, and endangering the future prosperity of a great British industry. The hon. and gallant Member opposite asked two questions
  Sir R. HUTCHISON: The Two Cents Exports Tak—are you going on with that?
  Mr. AMERY: That question would have to be considered by the Governments of both Ceylon and Malaya in connection with the whole revenue position. It is the permanent interests of our Colonies that have weighed most with our Colonial Office, and, from that point of view, nothing could be more distressing to those Colonies, either the Straits Settlements and territories immediately under British control, or to the territories ruled over by sovereign native potentates, than to see the great industry, to which they owe so much, being steadily transferred to foreign hands. The hon. and gallant Member asks whether we communicated directly with those rulers whose interests are affected, and who have shown themselves throughout the period of the British connection with them, the finest friends that Britain has had anywhere in the world. The answer is that we communicate in all these matters with the High Commissioner, whose normal and ordinary duties on any of these issues is to get into touch with the native rulers, and to keep them informed of all that affects them. I have no doubt that they were kept fully informed all along, and they, like the British territories directly administered, will, I believe, inspite of immediate difficulties, benefit greatly in the long run.
  We know quite well that there is no decision we could have taken which would not have affected the market, not involved loss to many people who in good faith, but often with wonderful innocence, invested their money in all kinds of rubber companies about the working of which they know nothing whatever. If that illustrates anything, it only illustrates the converse of the point made by the right hon. Gentleman at the beginning, showing how dangerous and difficult a thing it is for a Government to try to interfere and control an industry direct, and how much better it is that such a question should be left to the industry to settle for itself. I believe this great industry, which owes so much to British science, to British ability and to British energy, is going to win its way through in spite of the difficulties of the next year or the next few years. At any rate, we are giving it a fair field.
  Sir W. LANE MITCHELL: No.
  Mr. AMERY: In the last year or two we have not been giving it a fair field, but we have been giving all the favours to its opponents and competitors.
  Mr. THOMAS: I think it is only fair, before the division is taken on this question, that the House should clearly understand the object of the Motion. We have heard a good deal about the merits and demerits of restriction, but my right hon. Friend throughout the whole of his speech carefully avoided discussing that issue, and I therefore want to say quite frankly that we are not concerned at the moment with whether restriction is a good or a bad thing; but it is only fair to say, when the Liberal Benches are quiet—I presume the hon. Member is answering the questions which apparently my right hon. Friend did not answer—that I do not think there can be any dispute about this: Not only did restriction save the rubber industry at the time, but it was of immense benefit to the British revenue. I presume that Lord Stevenson gave the same advice to the right hon. Gentleman that he gave to me, and I think everyone connected with the rubber industry will admit the tremendous loss suffered by the death of the great public servant, who rendered immense services to all Governments. I think it only fair to say that not only was everything that the right hon. Gentleman has said to-night in the mind of Lord Stevenson, but that there is nothing which has happened since which the Committee, even when they determined this question, had not clearly in mind. It is fair to say that in their first Report they said in substance—I am summarising it—"We favour restriction, but we are afraid of its effect unless we get Dutch co-operation. "They made an effort to obtain Dutch co-operation and to bring the Dutch in. They failed, and, having failed, they then examined the situation in the light of that fact.
  With all the facts before them, with the certain knowledge that the Dutch did not intend to come in and would ultimately benefit, they made that recommendation, and the Government of the day accepted it. Therefore it is idle for the right hon. Gentleman to stand here to-night and say the Government cannot interfere, and that what has happened only shows how dangerous it is for the Government to interfere. The fact remains that the Government did interfere,
  1210
  that the Government of the day were responsible, and therefore the Government must bear the responsibility for the action taken. I have no hesitation in saying that, on the advice of Lord Stevenson and the Committee, I took the view that it was a good thing. I still believe it was a good thing, but, unlike the Colonial Secretary, who merely says to the House "Do the Dutch benefit?" I say that the best experts in rubber must have told him, as they told me, that the heavy tapping of rubber by the Dutch might have given them a greater output, but the ultimate benefit of the industry is on our side.
  Mr. CAMPBELL: No.
  Mr. THOMAS: All I can say is that people who have as much expert knowledge as the hon. Member for North-West Camberwell (Mr. Campbell) as growers take that view. They are people engaged in the growing of rubber, and they definitely take the view that restriction on the whole has benefited the agricultural side of the industry. At all events, we are not concerned to-night whether restriction is a good or a bad thing, but what we are concerned about is whether the Government, accepting the restriction scheme, handled it in the Tight way, and in the best interests of the country. The Colonial Secretary's speech can be summarised in a few sentences. The right hon. Gentleman said that from 1924 gradual pressure was being put upon him, and he himself became so apprehensive that every year and every month convinced him that the restriction ought ultimately to be removed. Is that a fair summary of the speech of the right hon. Gentleman?
  Mr. AMERY: From 1925 onwards, I realised that there were difficulties, and I endeavoured to meet them by modification. We came gradually to the conclusion, in the course of 1927, that, whatever the difficulties were, the situation had become so difficult that a fresh inquiry was necessary, and that definite conclusion was put before the Cabinet at the end of 1927.
  Mr. THOMAS: On the 10th flay, 1927, the Colonial Secretary was asked:
  "If he has any information tending to show that the policy of restriction of output imposed upon British rubber plantations is enabling other rubber producers,

  1211
  particularly the Dutch, to expand at the expense of British producers?"
  That is not May, 1925 or 1926, but it is May, 1927, when he had all the information and all the accumulation of evidence that we have heard about in his possession. At that time, the specific question was put to him having regard to the Dutch position0: Do they benefit? What was his answer with all the knowledge in his possession? He said:
  "The hon. Member is no doubt aware that a large proportion of rubber producers in the Dutch East Indies are voluntarily adherents of the restriction scheme. The stabilisation of prices at a not unremunerative level in consequence of that scheme must obviously benefit all producers who are not subject to restriction, but I see no reason to suppose that in the long run the effects will be disadvantageous to British interests."
  What is the meaning of "in the long run" In 1924, says the right hon. Gentleman, he was becoming disturbed; in 1925, he was alarmed; in 1926, the evidence was pouring in on him—that is his own statement to-night; and in May, 1927, he said: "Yes, but notwithstanding all the evidence, in the long run I am sure restriction is good." That is his answer. He shakes his head. On the same afternoon, a supplementary question was asked by the hon. Member for North-West Camberwell, and that is the gentleman who has been giving his blessing to-night, so we will assume that he was on the right lines then. He asked:
  "Does the right hon. Gentleman not think that the time has come when it would be advisable to form a small independent committee to go into the whole question and advise him as to the advantage or otherwise of retaining the Stevenson scheme?"
  That was two and a-half years after the right hon. Gentleman, according to his statement to-night, became disturbed; that was two and a-half years after the accumulated evidence that there was something wrong. The hon. Gentleman gave him a chance to get out of it. Let us see what he says:
  "I have the advantage of advice from a strong committee, representing the various interests concerned, and I am continually taking the advantages or disadvantages of a scheme into consideration.
  Then the hon. Member for Withington (Dr. Watts) intervened, and asked:
  "Is it not a fact that the Stevenson restriction scheme has saved British rubber plantations from ruin and bankruptcy?"
  1212
  And the right hon. Gentleman replied:
  "That is undoubtedly the case."—[OFFICIAL REPORT, 10th May, 1927; cols. 199-200, Vol. 206.]
  I would ask any hon. Member who heard the right hon. Gentleman's speech this evening whether I am putting it too high when I say that the substance of the speech, and, indeed, its intention was to convey to the House the impression that from 1924 onwards he was apprehensive, and ultimately came to the conclusion that the only way to deal with the matter was the way in which he did deal with it? Therefore, I would ask, how can he reconcile that position with the conclusive statement that he made last year?
  "But," the right hon. Gentleman says, "I have the advantage of a strong advisory committee whom I consult from time to time." Let us see how he treated this strong advisory committee. In December of last year, according to the Prime Minister's statement, they were privately informed that the matter was to receive consideration. That was while the right hon. Gentleman was away. They replied to that communication saying that, in their judgment, it was disastrous to do anything at that stage. The reply of this strong advisory committee was that it was not only wrong, but dangerous, and for this very good reason, that the accumulation of stocks in London at that moment was in the vicinity of 60,000 to 70,000 tons. They took the view, rightly, that between then and the middle of this year those stocks would gradually have been worked out. This strong advisory committee gave that information when they received the first intimation of the appointment of the committee. The next they knew was that on 1st February the ordinary announcement was made by the Colonial Office. I ask the House what interpretation could be put upon that situation? What did they have a right to expect? There was the advisory committee. They were informed that the matter was under consideration. They protested. To put it another way, they gave their views as practical men and as an advisory committee, because if we are to be told, as we were told incidentally, that they were interested parties, the answer to that is that they ought never to have been put

  1213
  in the position. They were either there to advise or they ought not to have been there at all.
  They gave their advice, and they were told nothing could be done. The, 1st of February arrived. There is the announcement of the ordinary continuation which led everyone to believe there was no change contemplated, and then on 8th February came the bombshell. I ask the House whether we are not entitled to say that is not a fair handling of the situation and that people were deceived. "Ah" says the right hon. Gentleman, "What do the investors in rubber know about the working of the business?" A more absurd and ridiculous statement was never made. What do the investors in railway companies know of the working of the railways? What do the investors in mines know about the working of the mines?
  That argument might be applied to every industry in the country with the same result. The fact remains that the Government, by their handling of the situation, not only did incalculable harm to British investors, but certainly helped American investors. The right hon. Gentleman was waiting for someone to give him an opportunity for that quotation. I could see him waiting for someone to say something to give him the chance of the quotation he made about those people who took advantage of the announcement. I do not think he put it quite high enough. I agree entirely that some of the statements made were not only grossly exaggerated, but, on the face of it, could not possibly happen, because at the worst the American situation was such that if they wanted to deal they had to deal with us and not with themselves. Therefore the time could not possibly have given them the benefit it did.
  There is another thing the right hon. Gentleman did not mention. Here I do not blame the Prime Minister, because, if representatives of the Press are called in and told something confidentially, the Minister has a right to expect that they will honour his confidence. If they do not, he is not to blame, and the responsibility must rest with them. In any case, the right hon. Gentleman failed to observe that the way British people were hammered and badly hit was not alone the way he indicated but in the orders that failed to materialise here, because the orders that came to the London
  1214
  market the next morning would naturally have been cancelled, and that was a big contributory factor to the break in the market in London the next morning. The Government were not to blame for that, if their confidence was broken, but equally it is fair to say that the British people suffered in consequence.
  I want to put this question to the right hon. Gentleman. He has said all through that the Colonial Office must bear the responsibility. I believe that the Colonial Office are not entirely responsible for this matter. I go as far as to say that the Treasury were not only parties to it, but that at the initiation of the scheme they were, and they have been since, jointly concerned with the Colonial Office. No one has benefited out of it, as I have already said, more than the British Treasury. The right hon. Gentleman was aware of it. What I ask, and what many people are in doubt about at this moment, is: How does it come about that the Colonial Office, who had issued the clear and specific notice on the 1st February, merely sent this question to the Treasury without advice of any sort or kind, and that on the 8th February the Prime Minister announced the decision, which is under the direction of the Colonial Office?
  Mr. AMERY: I think I can answer that question. I thought I had really answered it before. I thought that I had made it clear that the request for an inquiry was made by the Colonial Office. In view of the effect on the Exchequer, the Colonial Office has always been in close contact with the Treasury. In any case, the Cabinet, of which the Chancellor of the Exchequer is a member, accepted the Colonial Office proposal and decided to have this inquiry. The decision was held up for a short time for the reason the hon. Member has mentioned, namely, to allow stocks to work off to some extent. When the Colonial Office made its announcement on the 1st February, it was perfectly well aware that the inquiry was not only settled, but that; the personnel had been settled and that the announcement about the inquiry would be made in the course of a few days. It issued, and always does on the first of every quarter, the ordinary routine announcement, and was equally well aware that the announcement of the committee of inquiry would be made very shortly.
  Mr. THOMAS: Now we have this position, that the Colonial Office was aware of this and was a party to it, and that when it issued the notice on let February it had knowledge of what was going to take place. That is the statement of the right hon. Gentleman. Let the House observe this. There was an Advisory Committee set up for this purpose, and for this purpose alone. In December this Committee were told that there was to be an inquiry. They objected.
  Mr. AMERY: The Committee as a Committee never made any objection, but the point was informally put and consideration was given to it. The Advisory Committee, as such, never made any objection to the institution of an inquiry. It knew that an inquiry was going to take place.
  Mr. THOMAS: Observe what the right hon. Gentleman has just said: that the Committee, as such, never made a recommendation. I ask: Was the Committee, as such, ever consulted? The Committee, I repeat, were never consulted as a Committee; they were told individually, privately and separately, and for the right hon. Gentleman to say that as a Committee they never object leads the House to believe that they here formally consulted, which is absolutely contrary to the facts. The facts are these. The Committee were told privately and individually, and as individuals they replied pointing out the difficulties and dangers. Then they were told that the matter was dropped. The next thing that happened was the Colonial communication of the 1st February, followed by the communication of the 8th February. All these facts clearly demonstrate that the Government did not have the interests of the industry in mind. They could not have had. They must have known the utter and absolute confusion which would be created by their attitude, and it is because we think that they have badly blundered by not availing themselves of the best advice which was at their disposal and have totally disregarded the interests of the British public in this matter that we are going into the Division Lobby to-night.
  Sir W. LANE MITCHELL: It is not very easy to speak against your own Government and party, but the right hon. Member for Derby (Mr. Thomas) has put the case in the way I know it.
  1216
  Let me remind the House of the real position. British investors, whose shares before the 9th of February were worth £200,000,000 find that to-day they are worth £100,000,000. The stocks in this country are 60,000 tons, and the price has dropped over £100 per ton; which means a loss of £6,000,000. The Advisory Committee consider that if the scheme had been allowed to work on for the next two or three years that the consumption of rubber would overtake the supply and we should have got to the 100 per cent. stage, when it would have been able to drop the restriction scheme altogether. Instead of those in the industry being allowed to control it, those who know the conditions, amateurs come in who know nothing about it. The industry has not received anything from the British Government. They did attempt to get a voluntary scheme to regulate shipments in some way in 1920; but the voluntary scheme did not work because the Malay States did not come in. In 1921 we were still in the same position. In 1922 the present Chancellor of the Exchequer was Colonial Secretary, and he had as his commercial adviser Sir James Stevenson. He said to Sir James Stevenson that if he could get a scheme which would be likely to work, the Government were prepared to back it. That is all the Government. did. If any hon. Member on this side goes down to his constituency, in which I have no doubt there will be many who have made investments in rubber, he will find that they have lost very much money in rubber, and the moment you make excuses they will only say that it is because the Prime Minister and the Colonial Secretary have put them into this trouble and that there is no explanation at all. The hon. Member for North-West Camberwell (Mr. Campbell) gave certain advice, saying that people should not sell their shares. I have here a letter which has been addressed by one of these banks in London in connection with a poor shareholder who had an advance on his shares. This is what it says:
  "Referring to our conversation yesterday, I have received a letter from my head office this morning which contains definite instructions that, unless further securities are produced, we shall at once proceed to sell the shares."
  That is the kind of thing which is going on all over the place. The hon.

  1217
  Gentleman spoke of £50,000,000 being lost in two hours. Nobody suggested anything of the kind. What was suggested was a loss of £50,000,000 on the industry. It is difficult to handle this matter. You have had an illustration of the way in which the Government have blundered over the whole business. You cannot get any information. We come here to discuss it to-night, and we have the only statement which has been made, by the Colonial Secretary. What is it that has been done. Here you appoint a Committee of Civil Research. You cannot get any information about it. It is under the Board of Education, and you cannot put any questions about it or get any information at all, and you do not know what the names are. You cannot see the evidence. Sir Eric Geddes has said that he did not believe that weight had been given to the evidence put before the Committee, because of the unanimous opinion of every section of the trade. With regard to this evidence, you have it defended, because there is nobody in the trade who is against it. It is said the Rubber Growers' Association are unanimous. You get certain elements in every trade and certain individual men who come and give evidence. These have been taken by a Committee in the same way. Sir Eric Geddes was perfectly straight in saying that judgment had been given against the weight of evidence. Practically every section of the trade was in favour of it to tide over this period, and it passes the wit of anybody to realise how the Government ever took the step they did in the way they did. You cannot see the Report of the Committee of Civil Research or the evidence put before it.
  I hope that hon. Members when they go back to their constituencies will realise that the Government have sold the trade, though they may say they are doing it in the best interests. The one advantage from all this is that the trade is clear of them and will not have the Colonial Secretary again, and, if the trade can get through, it will not be because of the Colonial Secretary or the Government. I bitterly regret the way in which this matter has been handled. From start to finish the answers to questions on this subject have been given with a curtness and a callousness that everybody realises, and when it came to the finish the same brutality was shown
  1218
  all through. I feel it bitterly, because I happen to be in the trade, but I do not hold a pennyworth of rubber or of rubber shares, so that this is nothing to me except as a broker with a good deal more business passing through, but one does regret that a Conservative Government, that is supposed to have some respect for the interests of investors, should put it in this particular way. If the Labour party had brought this forward, they would have been hounded out of the country. I was speaking to a Scottish friend of mine the other day on this subject, and he said that if we did not get any Report from the Committee and if we did not get any evidence, the Government ought to be hounded out of the country. One does not like to say these things, but they are said all over the place, and it is just as well that they should be said by a Member of the Conservative party, who does not feel any pride in the position he is now in, and who regrets that those who ought to lead the party should be leading it in such a miserable way.
  Captain GARRO-JONES: What would have been the position if this had been done by the Labour party or the Liberal party? I venture to say that, great as has been the criticism of the Colonial Secretary to-night, he has got off very lightly compared with the treatment which would have been accorded to one of the other parties if they had made this mistake. The Colonial Secretary did not know whether the foreign Press had been invited to receive this information or not, and he appeared to cast some aspersion—
  Mr. AMERY: I did answer that Reuters and the other Press agencies had, but not the foreign Press.
  Captain GARRO-JONES: The right hon. Gentleman appeared to cast some aspersion on the British Press, who might have given this information abroad.
  Mr. AMERY: No, I did not.
  Captain GARRO-JONES: In any case, the right hon. Gentleman ought to have known that the foreign Press is represented in this country also by members of the British Press, and that they have not only private correspondents, but that information of any specific character of this kind is always given to the foreign

  1219
  Press. They work in the closest liaison with the British Press, and the British Press has completely fulfilled its obligation of secrecy if it sees that this information is not published in British papers until the following morning. That is the only obligation they have to maintain, and they carried it out to the full, and
  the Government., by not realising that, made a gross blunder, for which the Colonial Secretary has offered no satisfactory defence to-night.
  Question put, "That this House do now adjourn."
  The House divided: Ayes, 194; Noes, 94.

  Division No. 91.]

  AYES.

  [11.0 p.m.

  Acland-Troyte, Lieut.-Colonel

  Fremantle, Lieut.-Colonel Francis E.

  Moore-Brabazon, Lieut.-Col. J. T. C.

  Agg-Gardner, Rt. Hon. Sir James T.

  Ganzoni, Sir John

  Morrison, H. (Wilts, Salisbury)

  Albery, Irving James

  Gates, Percy

  Morrison-Bell, Sir Arthur Clive

  Alexander, E. E. (Leyton)

  Gilmour, Lt.-Col. Rt. Han. Sir John

  Murchison, Sir Kenneth

  Allan, J. Sandeman (L'pool, W. Derby)

  Gower, Sir Robert

  Nicholson, Col. Rt. Hn. W. G. (Ptrst'ld.)

  Amery, Rt. Hon. Leopold C. M. S.

  Graham, Fergus (Cumberland, N.)

  Nuttall, Ellis

  Apsley, Lord

  Grant, Sir J. A.

  O'Connor, T. J. (Bedford, Luton)

  Ashley, Lt.-Col. Rt. Hon. Wilfrid W.

  Grattan, Doyle, Sir N.

  Oman, Sir Charles William C.

  Astbury, Lieut.-Commander F. W.

  Greene, W. p. Crawford

  Percy, Lord Eustace (Hastings)

  Atholl, Duchess of

  Grenfell, Edward C. (City of London)

  Perkins, Colonel E. K

  Atkinson, C.

  Gretton, Colonel Rt. Hon. John

  Perring, Sir William George

  Baldwin, Rt. Hon. Stanley

  Grotrian, H. Brent

  Pownall, Sir Assheton

  Barclay-Harvey, C. M.

  Guinness, Rt. Hon. Walter E.

  Raine, Sir Walter

  Barnett, Major Sir Richard

  Hacking, Douglas H.

  Remer, J. R.

  Bellairs, Commander Carlyon

  Hall, Lieut.-Col. Sir F. (Dulwich)

  Rhys, Hon. C. A. U.

  Benn, Sir A. S. (Plymouth, Drake)

  Hall, Admiral Sir R. (Eastbourne)

  Ropner, Major L.

  Bentinck, Lord Henry Cavendish.

  Hall, Capt. W. D'A. (Brecon & Rad.)

  Ruggles-Brise, Lieut.-Colonel E. A.

  Betterton, Henry B.

  Hammersley, S. S.

  Salmon, Major I.

  Birchall, Major J. Dearman

  Hanbury, C.

  Samuel, A. M. (Surrey, Farnham)

  Blundell, F. N.

  Harrison, G. J. C.

  Sandeman, N. Stewart

  Bourne, Captain Robert Croft

  Hartington, Marquess of

  Sanders, Sir Robert A.

  Bowyer, Captain G. E. w

  Harvey, G. (Lambeth, Kennington)

  Sanderson, Sir Frank

  Brasa, Captain W.

  Harvey, Major S. E. (Devon, Totnes)

  Sandon, Lord

  Bridgeman, Rt. Hon. William Clive

  Headlam, Lieut.-Colonel C. M.

  Sassoon, Sir Philip Albert Gustave D.

  Briscoe, Richard George

  Henderson, Capt. R. R. (Oxf'd, Henley)

  Shepperson, E. W.

  Brocklebank, C. E. R.

  Henderson, Lieut.-Col. Sir Vivian

  Simms, Dr. John M. (Co. Down)

  Broun-Lindsay, Major H.

  Heneage, Lieut.-Colonel Arthur P.

  Skelton, A. N.

  Brown, Col. D. C. (N'th'l'd., Hexham)

  Henn, Sir Sydney H.

  Slaney, Major P. Kenyon

  Brown, Brig.-Gen. H. C.(Berke, Newb'y)

  Henneesy, Major Sir G. R. J.

  Smith-Carington, Neville W.

  Buchan, John

  Hills, Major John Waller

  Smithers, Waldron

  Buckingham, Sir H.

  Hilton, Cecil

  Spender-Clay, Colonel H.

  Burgoyne, Lieut.-Colonel Sir Alan

  Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.

  Sprot, Sir Alexander

  Cadogan, Major Hon. Edward

  Hohler, Sir Gerald Fitzroy

  Stanley, Lieut.-Colonel Rt. Hon. G. F.

  Campbell, E. T.

  Hopkins, J. W. W.

  Stanley, Lord (Fylde)

  Carver, Major W. H.

  Hudson, Capt. A. U. M.(Hackney, M.)

  Stanley, Hon. O. F. G. (Weatm'eland)

  Cassels, J. D.

  Hunter-Weston, Lt.-Gen. Sir Aylmer

  Stuart, Hon. J. (Moray and Nairn)

  Cayzer, Sir C. (Chester, City)

  Huntingfield, Lord

  Sugden, Sir Wilfrid

  Cecil, Rt. Hon. Sir Evelyn (Aaton)

  Iliffe, Sir Edward M.

  Tasker, R. Inigo.

  Cecil, Rt. Hon. Lord H. (Ox. Univ.)

  Inskip, Sir Thomas Walker H.

  Templeton, W. P.

  Chapman, Sir S.

  Jackson, Sir H. (Wandsworth, Cen'l)

  Thomson, F. C. (Aberdeen, South)

  Charteris, Brigadier-General J.

  King, Commodore Henry Douglas

  Thomson, Rt. Hon. Sir W. Mitchell

  Churchman, Sir Arthur C.

  Kinloch-Cooke, Sir Clement

  Tinne, J. A.

  Clarry, Reginald George

  Knox. Sir Alfred

  Titchfield, Major the Marquess of

  Cochrane, Commander Hon. A. O.

  Lane Fox, Col. Rt. Hon. George R.

  Tryon, Rt. Hon. George Clement

  Colfox, Major Wm. Phillips

  Lister, Cunliffe-, Rt. Hon. Sir Philip

  Turton, Sir Edmund Russborough

  Colman, N. C. D.

  Little, Dr. E. Graham

  Vaughan-Morgan, Col. K. P.

  Cope, Major William

  Locker-Lampson, G. (Wood Green)

  Waddington, R.

  Courthope, Colonel Sir G. L.

  Lougher, Lewis

  Wallace, Captain D. E.

  Croft, Brigadier-General Sir H.

  Lucas-Tooth, Sir Hugh Vere

  Ward, Lt.-Col. A.L.(Kingston-on-Hull)

  Crookshank, Col. C. de W. (Berwick)

  Luce, Major-Gen. Sir Richard Harman

  Warner, Brigadier-General w. W.

  Culverwell, C. T. (Bristol, West)

  Lumley, L. R.

  Warrender, sir Victor

  Cunliffe, Sir Herbert

  MacAndrew, Major Charles Glen

  Watson, Rt. Hon. W. (Carlisle)

  Dalkeith, Earl of

  Macdonald, R. (Glasgow, Cathcart)

  Wayland, Sir William A.

  Davies, Maj. Geo. F. (Somerset, Yeovil)

  Macintyre, Ian

  White, Lieut.-Col. Sir G. Dairymple.

  Davies, Dr. Vernon

  McLean, Major A.

  Williams, Herbert G. (Reading)

  Dixey, A. C.

  Macmillan, Captain H.

  Wilson, R. R. (Stafford, Lichfield)

  Drewe, C.

  Macnaghten, Hon. Sir Malcolm

  Winby, Colonel L. P.

  Eden, Captain Anthony

  MacRobert, Alexander M.

  Windsor-Clive, Lieut.-Colonel George

  Edmondson, Major A. J.

  Manningham-Buller, Sir Mervyn

  Winterton, Rt. Hon. Earl

  Elliot, Major Walter E.

  Margesson, Captain D.

  Withers, John James

  Ellis, R. G.

  Mason, Colonel Glyn K.

  Womersley, W. J.

  Everard, W. Lindsay

  Mailer, R. J.

  Wood, E. (Chester, Stalyb'ge & Hyde)

  Fairfax, Captain J. G.

  Merriman, Sir F. Boyd

  Fielden, E. B.

  Milne, J. S. Wardlaw

  TELLERS FOR THE AYES.—

  Ford, Sir P. J.

  Mitchell, W. Foot (Saffron Walden)

  Captain Viscount Curzon and Mr. Penny.

  Forestier-walker, Sir L.

  Monsell, Eyres Com. Rt. Hon. B. M.

  NOES.

  Alexander, A. V. (Sheffield, Hillsbro')

  Grundy, T. W.

  Riley, Ben

  Ammon, Charles George

  Hamilton, Sir R. (Orkney A Shetland)

  Roberts, Rt. Hon. F. O. (W. Bromwich)

  Attlee, Clement Richard

  Hardie, George D.

  Robinson, W. C. (Yorks, W.R., Elland)

  Baker, J. (Wolverhampton, Bliston)

  Harris, Percy A.

  Saklatvala, Shapurji

  Baker, Walter

  Hartshorn, Rt. Hon. Vernon

  Salter, Dr. Alfred

  Barr, J.

  Hayday, Arthur

  Scrymgeour, E.

  Bondfield, Margaret

  Henderson, T. (Glasgow)

  Scurr, John

  Bowerman, Rt. Hon. Charles W,

  Hirst, W. (Bradford, South)

  Sexton, James

  Broad, F. A.

  Hudson, J. H. (Huddersfield)

  Shepherd, Arthur Lewis

  Bromley, J.

  Hutchison, Sir Robert (Montrose)

  Shiels, Dr. Drummond

  Brown, Ernest (Leith)

  John, William (Rhondda, West)

  Shinwell, E.

  Buchanan, G.

  Johnston, Thomas (Dundee)

  Short, Alfred (Wednesbury)

  Charleton, H. C.

  Jones, Morgan (Caerphilly)

  Sitch, Charles H.

  Compton, Joseph

  Kelly, W. T.

  Snowden, Rt. Hon. Philip

  Connolly, M.

  Kennedy, T.

  Stamford, T. W.

  Cove, W. G.

  Kenworthy, Lt.-Com. Hon. Joseph M.

  Stephen, Campbell

  Crawfurd, H. E.

  Kirkwood, D.

  Stewart, J. (St. Rollox)

  Davies, Rhys John (Westhoughton)

  Lawrence, Susan

  Thomas, Rt. Hon. James H. (Derby)

  Day, Harry

  Lee, F.

  Tinker, John Joseph

  Dennison, B.

  Lindley, F. W.

  Tomlinson, R. P.

  Duckworth, John

  Lunn, William

  Wallhead, Richard C.

  Duncan, C.

  MacDonald, Rt. Hon. J. R.(Aberavon)

  Watson, W. M. (Dunfermline)

  Dunnico, H.

  Maxton, James

  Wellock, Wilfred

  Edge, Sir William

  Mitchell, Sir w. Lane (Streatham)

  Welsh, J. C.

  Garro-Jones, Captain G. M.

  Morris, R. H.

  Westwood, J.

  Gibbins, Joseph

  Morrison, R. C. (Tottenham, N.)

  Wilson, R. J. (Jarrow)

  Gillett, George M.

  Naylor, T. E.

  Windsor, Walter

  Gosling, Harry

  Owen, Major G.

  Young, Robert (Lancaster, Newton)

  Graham, D. M. (Lanark, Hamilton)

  Palin, John Henry

  Greenwood, A. (Nelson and Colne)

  Paling, W.

  TELLERS FOR THE NOES.—

  Grenfell, D. R. (Glamorgan)

  Pethick-Lawrence, F. W.

  Mr. Charles Edwards and Mr. Whiteley.

  Griffith, F. Kingsley

  Potts, John S.

  Groves, T.

  Richardson, R. (Houghton-le-Spring)

  Adjourned accordingly at Seven Minutes after Eleven o'clock.

  HOUSING (DIRECT LABOUR).
  HOUSING (DIRECT LABOUR).
  CASUAL WARDS.
  CASUAL WARDS.
  NAVAL AND MILITARY PENSIONS AND GRANTS.
  NAVAL AND MILITARY PENSIONS AND GRANTS.
  INDIA (EX-MAHARAJA OF NABHA).
  INDIA (EX-MAHARAJA OF NABHA).
SCOTLAND.
  BLAIR FARM, MUIR OF ORD.
  BLAIR FARM, MUIR OF ORD.
  AFFORESTATION (SHEEP-GRAZINGS).
  AFFORESTATION (SHEEP-GRAZINGS).
  LONDON UNDERGROUND RAILWAY (ACCOMMODATION).
  LONDON UNDERGROUND RAILWAY (ACCOMMODATION).
  FOOD PRICES.
  FOOD PRICES.
  ARCOS, LIMITED.
  ARCOS, LIMITED.
  WAGES (CHINA-CLAY INDUSTRY).
  WAGES (CHINA-CLAY INDUSTRY).
Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
LLANDUDNO URBAN DISTRICT COUNCIL BILL.
Read 2a.
SOUTH METROPOLITAN GAS BILL.
Read 2a.
BURY AND DISTRICT JOINT WATER BOARD BILL.
Bead 2a.

BRIDGWATER AND DISTRICT ELECTRICITY (EXTENSION, ETC.) ORDER, 1928.
THE FIRST COMMISSIONER OF WORKS (VISCOUNT PEEL): My Lords, I beg to make the Motion standing in my name on the Paper.
Moved, That the Special Order which was presented on the 8th of March last be approved.—(Viscount Peel.)
On Question, Motion agreed to.

BOROUGHBRIDGE AND DISTRICT ELECTRICITY ORDER, 1928.
VISCOUNT PEEL: My Lords, I beg to move that the Motion on the Paper be agreed to.
Moved, That the Special Order which was presented on the 13th of March last be approved.—(Viscount Peel.)
On Question, Motion agreed to.

IMPORTATION OF PLUMAGE (PRO HIBITION) ACT, 1921, AMEND MENT (No. 2) BILL. [H.L.]
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Danesfort.)
VISCOUNT PEEL: My Lords, on the Motion for the House to go into Committee
862
on this Bill I desire to make a statement to the House. Your Lordships will remember the circumstances under which this Bill was given a Second Reading in Your Lordships' House. In 1921 an Act was passed prohibiting the import into this country of certain classes of feathers. There was nothing laid down as to existing stocks; but I believe an Amendment was moved in another place to forbid the sale of these particular classes of feathers. That was resisted, and, therefore, the Legislature deliberately intended that the existing stocks of these prohibited feathers in this country should be allowed to be sold. This Bill, brought in seven years afterwards, forbids the selling of these particular classes of feathers; indeed, it rather severely puts the onus upon the shopkeeper, or whoever is exposing them for sale and selling them, of showing that he is innocent. He is presumed in fact to be guilty of selling prohibited plumage unless he can prove himself to be innocent; that is to say, that the feathers were imported before 1921.
There was some difference of opinion and some difference in statement of fact, I think, between the Government side and those who promoted the Bill. Certain facts were brought forward by my noble friend Lord Danesfort, as to the smuggling of feathers into this country, and statements were also made as to the selling in certain places of feathers that had been smuggled: in fact the discussion really turned upon whether these facts as to smuggling were true or not. It is quite clear that if there has been no smuggling during the last seven years it must follow that only existing stocks in this country are being sold, and if that is the case no one would wish, I presume, to go any further. My noble friend Lord Salisbury, the Leader of the House, said that there was a good deal of difference of opinion upon this point and that if we accepted the Second Reading that afternoon it must be on the express understanding that we could not allow the Bill to go forward until this extraordinary conflict of evidence had been resolved. I have some further information upon that subject to-day. The matter has been carefully looked into by the Board of Trade and also by the Customs, and I am anxious to place the results of that investigation at the earliest possible

863
moment before the House. I do not desire to wait until the Third Reading, because I hope that these facts may be present in the minds of your Lordships when you approach the Third Reading. You can then decide, with all the facts before you and the additional ones which I hope to state this afternoon, what attitude you should take on the Third Reading.
We can deal, I think, with certain figures that have been published in reply to a Question by Sir William Davison in another place. Those figures set forth the number of seizures of these prohibited feathers during the last few years—1925, 1926 and 1927. When I looked at these papers I was myself a little deceived. I said: "But there seems to be a considerable number of these seizures." Then it was explained to me that seizures did not mean smuggling, that all they meant was that these were all the arrests or seizures by the Customs of any feathers—single feathers or birds or skins or what not—that came through the Customs during those years. It does not at all mean that they were smuggled. On the contrary, I shall be able to show that the great bulk—in fact very nearly all—of these feathers was brought in whether for trade purposes or for individuals, and were not smuggled but were perfectly openly brought in and declared so that no one can suggest there is any desire or determination to evade the law. I hope your Lordships will consider this question in the light of the general situation. What is the motive for smuggling? The motive for smuggling, as a rule, is that the particular article—brandy or whatever it is—has to pay a heavy duty and if you get it in without paying a duty you can very often make profit out of it, but if, as I say in this case, not only is there no duty but there is no market, and if nobody wants to buy these things when they are brought in, surely it is not very likely that people are going to take the trouble of incurring the very heavy penalties from the Customs by trying to smuggle these articles into the country.
Your Lordships showed, if I may say so, considerable knowledge on the Second Heading. Unfortunately I was not myself able to be present then, but I have read the debate. Your Lordships showed considerable knowledge of women's fashions and many points arose
864
on that subject, but it was quite clear that, as the result of change of fashion or as the result of the prohibition or as the result of the emotion which had arisen in females' minds of possible cruelty by wearing these feathers, the business fell almost dead and nobody wore feathers. It is said that that is due to some transactions going on in Paris. I would not like to be dogmatic on the subject, but at any rate from that time there was no encouragement for anybody to run the risk of importing these feathers, because women's fashions had entirely changed and there was no necessity to bring the feathers in. I may add that that change has fallen very severely on those who had imported feathers before 1921, because they have been unable to dispose of their stocks, and it is for that reason, I think, that some of your Lordships who have examined these things and have seen feathers in the shops have assumed that they must have been imported since the year 1921. Let me deal, if I may, with some of these figures. I will give the figures for the years 1925, 1926 and 1927 separating private importation from trade importation. For the year 1925 there were 171 cases of private importation, 48 of trade and the total seizures, therefore, were 219. In 1926 the numbers of private importations were 142, trade 26, total 168. In 1927 the numbers were 173 and 17 and the total 190. Dealing with trade importations—and that is really the subject upon which we are engaged this evening—your Lordships will have observed that the numbers have fallen from 48 in 1925 to 17 last year.
LORD DANESFORT: I did not quite catch what are the figures which the noble Viscount is giving.
VISCOUNT PEEL: I am giving the total number of what are technically called seizures by the Customs during the years 1925, 1926 and 1927. As a matter of fact they are stated in answers and I have added them together and examined them. I am going to make this broad statement to your Lordships. You were, I think, very much impressed by certain cases brought forward by my noble friend Lord Danesfort. There were two cases especially. I think one was the grebe and the other the case of feathers being brought here in a portmanteau. Those were no doubt two bad cases of attempted smuggling during the last seven years and they were the only bad cases. I will

865
deal with them in a moment, but I want to state that, as regards the other imports, I am told by the Customs that practically the whole of the other imports and seizures were not smuggled at all, but were declared. Therefore there was no intention whatever of smuggling these articles in. I could give an account of each one but I do not want to detain your Lordships.
EARL RUSSELL: Declared by trade people in ignorance of the Act?
VISCOUNT PEEL: Declared by trade people and a great many of them sent to this country on commission by people in other countries who were not aware of the particular kinds of birds which were prohibited. That ignorance has prevailed very largely among individuals. There are numerous cases in which these feathers were sent by people to their friends, partly in ignorance of the law and partly thinking that the Board of Trade or the Customs had power to give them exemption or a licence in certain cases. But the general effect of the whole of the evidence given me by the Customs is this: they say there is no evidence except in these two cases of smuggling of any substance at all into this country. The great case is, I think, the grebe case and that was dealt with rather fully by my noble friend Lord Danesfort. That is very unlikely to occur again.
LORD DANESFORT: Why?
VISCOUNT PEEL: I am going to explain. It is not likely to occur again because it was imported by a body which no longer functions in this country. It was imported by a firm called Arcos. I think your Lordships are aware that that firm is no longer carrying on its transactions in this country and therefore I think we may fairly set aside its operations.
LORD BANBURY OF SOUTHAM: If a Labour Government comes in Arcos comes in, too.
VISCOUNT PEEL: I have two observations to make on that. One is that the Labour Party is not coming in, and the second is that if they do come in do not think that the first thing they will do is to bring back Arcos. That case occurred in 1924. The other case was in 1925. That was a case of the importation of feathers in a portmanteau with a false
866
bottom. That, no doubt, was a grievous and iniquitous offence, but it was discovered. The feathers never got to any shop in this country. The all-seeing Customs, the Argus-eyed Customs discovered the skins. They prosecuted and a very heavy penalty was paid by the gentleman who did it. That disposes of those cases. I have dwelt specially upon those two cases because, quite unconsciously no doubt, my noble friend had given the impression that they were only examples of a great number of importations and that they were typical. I show that they were not typical. They are specific examples of a bad thing that happened but they are not examples of something that happened on anything like a substantial scale. In the second case there were about 400 bundles of osprey feathers, the value of which was about £1,555. Therefore, I think your Lordships may assume, on the statement of the Customs and if you look at this Paper you will see, how few cases there are of any importance.
It is true to say that there is no attempt to smuggle these articles into this country. There was one case, for instance, of 576 millinery mounts which contained, I understand, very small portions of feathers. Your Lordships are no doubt familiar with millinery mounts. In that case a general order was sent out by a firm for millinery mounts. They did not specify any particular class and no doubt it is rather difficult for milliners in every country to remember what feathers are prohibited in this country. There was no concealment about it. The importers asked for examination to take place and it did take place. There was nothing criminal, no smuggling. Everything was perfectly open and above board. So much for the question of smuggling. I dare say that some of my noble friends who feel keenly on this subject may ask: "How do the Customs know there is no smuggling? Perhaps some of them escape." They certainly cannot escape in parcels, because every parcel is opened as it goes through the Customs. But here comes in my noble friend Lord Danesfort. He has watched these feminine fashions for years. He goes about the shops. He tells us so.
LORD DANESFORT: I certainly do not. I have much more competent persons to do that business for me.
VISCOUNT PEEL: Then I think my noble friend has deceived the House. May I read what he said in his speech? He said:—
"I have seen many of these feathers which have been bought in the last few days—some of them egret feathers, some feathers of birds of paradise, and other prohibited feathers, which have been bought openly in the London shops."
Therefore my noble friend says: "I have seen them."
LORD DANESFORT: Might I explain to my noble friend, who really, I must say, is under a most ingenuous but probably very sincere misapprehension of what I have done? What I have done is this: I have got competent persons whom I can trust to go to these shops and buy some of these prohibited feathers. They have come back and shown me these very feathers which they have bought. That is exactly what I said in my speech and that is precisely what is true.
VISCOUNT PEEL: Then I regret that my noble friend did not go himself to the shops.
LORD DANESFORT: Certainly not.
VISCOUNT PEEL: Then it is only second-hand information. He sends other persons. He delegates his duties to other persons. I should, however, like to ask my noble friend how does he know whether these feathers were brought in before 1921 or after 1921?
LORD DANESFORT: I will tell you at once: because the persons who bought them told me they had bought them and I believed them.
VISCOUNT PEEL: I was not asking when they bought them. My noble friend knows that it is perfectly legal to sell these feathers openly, if they were imported before 1921. The question asked him was how does he know or why does he assert that these feathers were brought in after 1921? That is what I want to know.
LORD BANBURY OF SOUTHAM: We cannot tell.
VISCOUNT PEEL: But that is the whole point, because it is perfectly legal to sell these feathers if they were imported before 1921. However, I do not want to be diverted by the personal operations of my noble friend from the point I was
868
going to make. My noble friend in the course of his activities gave to the Board of Trade the names of eleven important shops where he said this nefarious trade was being carried on; that is to say, the selling of smuggled feathers brought in after 1921.
LORD DANESFORT: My noble friend must not misrepresent me. I am sorry to interrupt, but what I said, or certainly what I intended to say, was that these articles which were in fact feathers of birds which were prohibited from importation under the Bill of 1921 were being sold. I do not say and I do not know when they were imported, but they were feathers prohibited by the Act of 1921.
VISCOUNT PEEL: My noble friend again misunderstands what I said. I did not say he said that in this House but that he gave to the Board of Trade the names of eleven places or shops where these feathers were sold. My statement is entirely correct. The most careful investigation has been made in all these cases. These are not cases selected by the Customs. They were places which my noble friend stated were places where these feathers were sold. The Customs have gone into the cases in the most careful manner and they assure me that they have gone through the books and examined them to find where they came from, and in not one single case has a single feather been brought into this country after 1921. They were all pre-1921 feathers. I take my noble friend on his own ground. I show him on his own ground that there is no evidence whatever of the selling of these prohibited feathers in shops to persons who may acquire them. I think that this really disposes of the point that he made. This error was also, I think, fallen into by His Grace the Archbishop of Canterbury who, speaking no doubt with considerable knowledge of these matters, told us that it was impossible that feathers could last for seven years and that if they were sold in good condition in the shops they must have been imported since 1921.
I have had a very careful investigation made into this question by persons well qualified to deal with it, as well qualified as is his Grace, and I am informed that the suggestion that feathers in saleable condition could not last for

869
seven years is really an absurdity. I have the evidence of Dr. Percy Lowe, of the Natural History Museum, and of Mr. Stuart Baker, a very well-known and eminent ornithologist, and they are both agreed that if plumage is properly taken care of it lasts almost indefinitely. There is no sign of deterioration in the plumage that has been in the Museum for many years. They say that, even where plumage is not kept under museum conditions, all that is necessary is to protect it against damp, moths and light. I think my noble friend told us of the case of the argus pheasant that had been kept for fifty years. I was given another interesting case in connection with the Crown jewels of the Russian Royal Family. There were some feathers attached to a particular sceptre which had been kept in perfect condition for about two hundred years. I do not want to go back two hundred years but I am ready to deal with ten years.
In order that your Lordships may have some opportunity of seeing the condition of feathers that have been kept for a long time, I have myself brought into this House a bird, an egret, that has been kept for forty years in the Museum. Here it is. If your Lordships care to look at it you will see that the feathers are really in perfect condition and, if it were the custom to wear feathers in hats, I am sure that many of the friends of your Lordships would be perfectly ready to use them. I place this bird on the Table. I cannot leave it on the Table because I have to return it to the Museum. That is an egret, in perfect condition after forty years. I could give any amount of evidence on the subject, but everybody who is familiar with the question of feathers and their preservation knows perfectly well that, if they are properly kept, they last indefinitely, and therefore there is no value or truth in the suggestion that, because these feathers have been prohibited for seven years, there are no stocks of legally imported feathers in this country. Indeed, the likelihood is in quite the other direction. I understand that these places that sell feathers have been in a very bad way. It has been graphically told me that dust is collecting on their ledgers and even on their telephones. That may be a great advantage as showing the effects of the Act of 1921, but it does not show
870
any particular degree of activity in the trade. So much for that aspect of the case.
As regards the powers of the Customs, they are very full indeed, because the penalties in the case of seizure and so on are extremely heavy. Further, if it is brought to the notice of the Customs that any of these prohibited feathers are being imported they have a right to go into these buildings and seize the feathers. Accordingly I do not think that any further powers of seizure are required. There are one or two other interesting points that I should like to mention. Lord Arnold, in an intervention in the debate, said that the prohibition would encourage ostrich farming. I want to say a word or two about ostrich farming. Unfortunately, that industry has fallen upon very evil days, partly, no doubt, because the change in fashion which operated with regard to most feathers has also operated in the case of ostrich feathers and they have fallen, as it were, into the same calamity. I understand that farmers in South Africa are letting their ostriches run wild and shooting them and there are at present large stocks or ostrich plumage in London which are held by South African farmers.
I am bound to place this point before your Lordships, because it has been very strongly represented to me by the High Commissioner of South Africa that these people have suffered very heavily and that a Bill like this, re-opening the whole subject, might very likely be the final blow to the ostrich trade. I am telling the noble Lord what a competent authority tells me. He may deny it and say that it is not true, but I should not be doing my duty if I did not say how strongly this matter has been pressed on my attention by the High Commissioner of South Africa. The two things seem to run together, and there is a great reaction on the plumage trade because of the prohibited birds. I will not deal further with that point, because I am only giving my information as shortly as I can to your Lordships, but when we come to the Third Reading it may be necessary to go into it in more detail.
The last point that I have to submit to your Lordships is this. If there is no evidence of smuggling, if, after all the investigations that have taken place into

871
the selling of these feathers, it is shown that those who sell them are perfectly innocent, if we consider the powers exercised by the Customs, is it really necessary to create this offence and say that anybody—not a body like the Customs, acting on the discovery in parcels and so on, but any common informer—can at any moment take before the magistrate perfectly reputable persons and put them to the task of proving their innocence with regard to the sale of these feathers? I submit to your Lordships that this is really hard dealing and a blow to a trade which is quite legitimate, because the State has decided that these people may sell their existing stocks. Naturally no reputable firm is going to put itself into the position of being brought before a court and having to prove its innocence merely because it is selling these feathers.
Real hardship, I think, would be inflicted on these people, and that fact, coupled with the case of the South African feathers, seems to suggest that it is not only unnecessary but really unjust for your Lordships, considering the whole circumstances of the case, to add this fresh and special penalty and create this offence. Those really are the facts as I have gathered them from the Board of Trade Returns. I was anxious to submit them to your Lordships at the first possible moment. I am not going to ask you to divide on this Motion, but having these facts in your minds and other facts being present to your Lordships—we want to be fair and to do justice and to prevent these feathers being imported—I thought you might possibly be in a better position to decide what your attitude would be and what the Government attitude would be on the Third Reading when we come to that stage.
LORD DANESFORT: My Lords, Lord Peel has made a most interesting Second Reading speech which might appropriately have been delivered on that occasion and which, with still greater propriety, might be delivered upon the Third Beading. From what he has just said I gather that he wants to make an impression upon your Lordships' minds before you come to the Third Reading.
VISCOUNT PEEL: I think that is hardly fair. I said frankly and fairly that I thought I ought to put the facts before
872
your Lordships at the first possible moment. What may be the effect upon your Lordships depends upon your own minds.
LORD DANESFORT: I do not wish to have a personal altercation with my noble friend, but I merely suggest that it would have been more regular to put the facts before the House on the Second Reading or to wait until the Third Reading, which would be the normal time. It is not a personal question between us—we have been excellent friends on other occasions—and if I have exhibited an undue degree of heat in endeavouring to correct my noble friend upon personal matters, I wish to apologise to him and to the House, because it is really not a personal question at all. I am not going to follow my noble friend's example and make a Second Reading or Third Reading speech in answer to him. I am not going to do that for two reasons: firstly, because it would be more convenient to make such a speech upon the Third Reading, and secondly, because I did not come to this House expecting any opposition to the Bill on the Committee stage, and therefore I did not bring with me the papers which deal with many of the matters which my noble friend has touched upon, not expecting those matters to be raised to-day.
There are, however, one or two things which he said that I think require immediate answer. May I remind your Lordships what is the nature of the Bill? It really is simply a corollary of the Act passed in this House and the other House in 1921, prohibiting the importation of the feathers of certain birds. This present Bill simply carries out the intention of that Act, which was to protect the plumage of certain birds, and says that when you find plumage of that prohibited character being sold here you should forbid the sale, giving, of course, the person concerned with the sale an opportunity of saying that the plumage had been brought, in before 1921. The whole object of this Bill is to make the Act of 1921 effective, by prohibiting not merely the importation but the sale of these feathers. Since the Bill was before your Lordships' House some few weeks ago a list has been given in another place, to which my noble friend very properly referred, of the prohibited plumage which had been brought into

873
this country, and which had been seized by the Customs during the last three years.
The heading of the list, which I do not think my noble friend read, is as follows:—
"The following is a list of birds, the plumage of which has been illegally imported and confiscated by the Customs authorities under the Importation of Plumage (Prohibition) Act, 1921,"
for the years in question. If you will look at that list you will see that it is a very formidable one. You will find it on columns 187 to 194 of the louse of Commons OFFICIAL REPORT for the 18th of this month. There you will find that the number of egret wings and millinery mounts is exceedingly large, numbering in some cases thousands.
VISCOUNT PEEL: Where does the noble Lord find that egret skins numbered thousands?
LORD DANESFORT: I did not say skins. They are single feathers, and the period in question is the second half of the year 1926. Birds of paradise are not numerous, but the number is substantial, right up to last year. Then kingfishers—"articles containing small pieces of feather"—are also substantial, and in the year ending December last the number of these prohibited kingfisher feathers imported was no less than 93. Then, if you look at pheasants' and peacocks' feathers, the number is very large. It is a formidable list, and naturally my noble friend was anxious to discount it as far as he could.
VISCOUNT PEEL: No, not at all.
LORD DANESFORT: Shall SI then say "explain it"? I wish to give a case which my noble friend cannot discount. There was the case in 1924 of the 136,000 skirts attempted to be smuggled into this country.
VISCOUNT PEEL: That is the Arcos case.
LORD DANESFORT: Yes, the Arcos case. They were captured and confiscated. My noble friend seems to think that because Arcos has been shut up no one will ever again attempt such an improper thing as Areas did, but if it was worth while for Arcos to try to smuggle in these skins in 1924, is it not exceedingly
874
likely, I ask, that some equally reckless body will try to do the same, if there is a sale for such articles?
VISCOUNT PEEL: There is not.
LORD DANESFORT: Let me ask this question. If there was not a sale for these articles in 1924, why should they bring them in? The same remark applies to all these illegally imported articles. No one would try to bring them in, knowing that they were liable to be confiscated, unless they knew that they were going, if successful, to make a profit out of it, and that there was a sale for such articles here. When my noble friend says that no one will ever again attempt such a thing as Arcos unsuccessfully attempted in 1924, I think he ignored really the legitimate inference to be drawn from that action. Then there was a very much worse case, which even my noble friend did not attempt to defend, of the importation of egrets.
VISCOUNT PEEL: The noble Lord must not say that. I defend nothing which is illegal. I admitted those two wrongful cases, but I said that other cases were declared.
LORD DANESFORT: He did not attempt to defend, because it was indefensible. The facts of that last case were these. The egret feathers were seized by the Customs House authorities in June or July, 1925. They were of the value of £1,555. They are the 335 hundles of feathers referred to in this list, and to which the note was that they "formed the subject of legal proceedings against the importer, who was fined £50 in London." Those were caught. Can my noble friend say that there were no similar cases where they were not caught? In this particular case they were put in the false bottom of some box, which came from Japan, professing to bring in something entirely different. Why were they brought in? Of course they were brought in—illegally, as we all know—because there was a sale for them, or the person who brought them in believed there was a sale for them. And surely my noble friend will not contend that there has been no case in which these goods were not discovered. There is no reason to think that they were discovered in every case. My noble friend gave a list of the seizures in 1925, 1926, and 1927. He did not give

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us the value of those seizures. It is perhaps not very important, but in the case of these egret feathers this one consignment was of the value of £1,555.
My noble friend's comment on this case was that it was not a typical case at all. I really do not know why he says that. It was a very remarkable case, but how many similar cases there were which were not discovered I really do not pretend to say. Then he says that if there is no smuggling and no sale there is probably no case for the Bill. But undoubtedly there is smuggling; in some cases the smugglers have been caught. I have no doubt that in a great many other eases they have not been discovered. I think your Lordships will be satisfied that there was a very large number of cases where attempts were made to bring these feathers into the country, and what I want to know is why, unless there was a sale for them in this country, any one should send them in. Then my noble friend says that, as regards the feathers which have been sold by firms of which I gave some names, they were in every case pre-1921 feathers. I have some important evidence which I will produce on the Third Reading—I think that the appropriate time—which will show that people are selling these feathers to-day, and stating at the time that they are feathers which have been smuggled in since 1921, the sale of which ought undoubtedly to be stopped. I really hesitate to discuss this exhibit which my noble friend produced of a bird which he says is forty years old. How does he know that? Has he watched this bird for forty years?
VISCOUNT PEEL: No, but I am informed by competent authorities of the Natural History Museum.
LORD DANESFORT: I am glad he has got that evidence, because he commented with some slight asperity upon my statement and upon the fact that I did not go into the shops myself and buy the feathers, that I contented myself with looking at the feathers after they had been bought. However, that is a relatively small matter. It is possible by great care to keep feathers a lifetime—it is possible to keep clothes a lifetime. But to tell me that none of these feathers which are being brought into
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this country and sold have been brought in since 1921 is really a draft on the credulity of your Lordships' House which I hope will not be accepted.
The last point is the question of the ostriches. The importation of ostrich feathers was expressly permitted by the Act of 1921. Ostrich feathers were taken out of the prohibition, and they are being brought into this country and sold, according to the fashion I have no doubt, without any difficulty whatever. My noble friend says he is informed by the High Commissioner for South Africa that the passage of this Bill—which has nothing to do with ostriches, but only with illegally imported plumage—would interfere with the sale of ostrich feathers in this country. I am bound to say, notwithstanding the great authority of the High Commissioner, that I find a great and almost insuperable difficulty in believing that. However, I leave it to your Lordships to make your own inferences. At any rate, what I say to-day is that my noble friend has endeavoured to put facts before your Lordships which would induce you on the Third Reading perhaps to reconsider your decision. I hope you will do nothing of the kind, and I am quite confident that when any further evidence which may be necessary is brought by the promoters of this Bill your Lordships will have no hesitation in coming to the same decision as you did on the last occasion.
EARL BUXTON: My Lords, I was unfortunately abroad when the Second Reading of this Bill took place, and therefore I had no opportunity of speaking upon it. I should have liked to do so, because during the last five years I have been Chairman of the Statutory Committee which was created under the Act in order to look into the whole question of the Schedule and the illegal importation of these birds' skins. I thought perhaps the best way of taking part in the debate would have been on this Motion to go into Committee. On further consideration, however, I understood that that is not a very common procedure in your Lordships' House, and therefore I thought I would speak on the Third Reading. But my noble friend Lord Peel has made what has been described as a Second Reading speech. I listened to him with great care, but I do not propose to discuss the points he has raised on

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the present occasion, as I think it would be more fitting to do it on the Third Reading.
I thought he made a very powerful statement against the Bill, but all the facts and figures which he gave are familiar to me, because the whole of them have been before the Committee of which I am Chairman, made out at the instigation and for the information of that Committee, and I feel sure that I am not treating him with any discourtesy if I reserve what I have to say in comment on his speech for the Third Reading. I think it will be more convenient for members of the House if I do so. The speech which he made was, I thought, a much more powerful argument against the Bill than that which was made on the Second Reading by his colleague sitting beside him At the same time, as far as I am concerned it has in no way converted me from the view I hold, and I will venture on the Third Reading to express my views more fully with regard to the Bill.
LORD BANBURY OF SOUTHAM: My Lords, I was not present on the occasion of the Second Reading, and therefore I listened with great interest, as I always do, to the speech of my noble friend Lord Peel. I understood him to raise four objections to the Bill. The first objection was that there was no market for these feathers, and therefore the Bill was unnecessary; the second objection was that there was no smuggling.
VISCOUNT PEEL: I admitted two cases.
LORD BANBURY OF SOUTHAM: Yes. No smuggling except in those two cases, which were exceptional, and one of which could not occur again unless the Labour Party came into power. The third objection was that feathers imported before 1921 ought to be sold and the fourth was as to the ostrich farms. With regard to no market, what is the object of allowing people to sell feathers which were imported before 1921 if there is no market? There is evidently a market or they could not sell the feathers which were imported before 1921. As to whether there is smuggling, I am not in a position to say very much about that, but I can understand that it is easy for women to bring in feathers in their muffs and in their hats, because they have very little hair now and there must be space between the head and the sort of hat that is worn
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nowadays. I do not see why they should not put feathers into their hats and I do not suppose that my noble friend's Custom House officials order women to take their hats off to see whether there are feathers in them or not. A man might bring feathers in under his shirt or anywhere. I should have thought it was perfectly easy to tiring in feathers by smuggling.
In regard to the sale of feathers imported before 1921, I have always held that retrospective legislation is bad. Therefore I feel very strongly that people who brought these feathers in before 1921 ought to be allowed to sell them, and I do not think there is any question about it. But as I read the Bill, it does not prevent it. The Bill provides that—
"it shall be a good defence to proceedings for an offence under this section to prove either—

"(i) That the plumage had not been imported since the Importation of Plumage (Prohibition) Act, 1921, came into operation, or

(ii) That all reasonable precautions had been taken by the person proceeded against to satisfy himself that the plumage had not been imported since the said Act of 1921 came into operation."

My noble friend did not use this argument, but it might be said that it is contrary to the principles of English law to put it upon a defendant to prove that the case against him is wrong; the case has to be proved by the plaintiff. But in this case there is an Act of Parliament which provides that you must not do certain things. One of those things is that you must not have imported feathers in your possession. Therefore, it is perfectly consistent with the principle of English law to say: "You have some feathers in your possession; you ought not to have had them in your possession unless they were imported before 1921, and you must prove that." Therefore I do not see that there is any harm done or that the people who imported these feathers before 1921 will suffer anything if this Bill is passed.
In regard to the ostrich feathers, according to my noble friend Lord Danes-fort, ostrich feathers are not included in the Bill. Therefore, instead of doing harm to the ostrich farmers the Bill will do good. If the plumage of other birds is not imported and women want feathers they will buy ostrich feathers, which are

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the only feathers they can get. Therefore, in those circumstances, unless anything very different arises on the Third Reading, I shall support the Third Reading of the Bill.
VISCOUNT NOVAR: My Lords, I rather agree with the noble Lord who has just spoken. We have to consider the sources of supply as well as the imports into the home market. There is no doubt that in the Pacific, which is the main source of supply, the killing of birds for their plumage has been carried to very great excess in the past. Not only birds but animals like the platypus, that very interesting duck-billed animal, have been put upon the black list and the plumage and skins of animals or birds killed before a certain date are still allowed to be sold until the stocks are disposed of. There is very little doubt in my mind that a good deal of killing still goes on despite legislation. The interesting point, I think, is to secure that the stocks already held are not increased by imports of more recently killed birds or animals. I doubt whether all the feathers that come into this country are imported in cases. They come in much smaller parcels in considerable quantities and they are not always seized by the Custom House.
VISCOUNT PEEL: All these parcels, I am advised, are opened.
VISCOUNT NOVAR: I have known of a great many brought into this country by many people-I do not say in large quantities, but undiscovered by the Custom House. I think it would be very desirable to come to some sort of understanding as to the approximate date at which these stocks will be exhausted. The supporters of the Bill have, perhaps, gone too, far in saying that feathers and plumage cannot be kept for a long time in perfect condition. They can be kept for a very long time and in perfect condition. I sympathise with what my noble friend has said about allowing, the stocks to be disposed of, but I hope that those who are responsible for legislation and the enforcement of it will keep a sharp eye against evasion, because I am sure that in this case there is a good deal of evasion at the sources of supply in the Pacific and, I fancy, some evasion here also.
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL of DONOUGHMORE in the Chair.]
Bill reported without amendment.

STRAITS SETTLEMENTS AND JOHORE TERRITORIAL WATERS (AGREEMENT) BILL. [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.
ARMY AND AIR FORCE (ANNUAL) BILL.
Read 3a (according to Order), and passed.

MINISTRY OF HEALTH PROVISIONAL ORDERS CONFIRMA TION (No. 5) BILL. [H.L.]
THE EARL OF PLYMOUTH: My Lords, I beg leave to introduce a Bill to confirm certain Provisional Orders of the Minister of Health relating to Clacton, Great Yarmouth, Keighley, Bingley and Shipley Joint Hospital District, Mex-borough, Port Talbot, and Slough; and to move that it be read a first time.
Moved, That the Bill be now read 1a.—(The Earl of Plymouth.)
On Question, Bill read 1a, and to be printed.

MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMA TION (SWINDON EXTENSION) BILL. [H.L.]
THE EARL OF PLYMOUTH: My Lords, I beg leave to introduce a Bill to confirm a Provisional Order of the Minister of Health relating to Swindon; and to move that it be read a first time.
Moved, That the Bill be now read 1a.—(The Earl of Plymouth.)
On Question, Bill read 1a, and to be printed.

MINISTRY OF HEALTH (HALIFAX AND WEST RIDING) PROVISIONAL ORDERS CONFIRMA TION BILL. [H.L.]
THE EARL OF PLYMOUTH: My Lords, I beg leave to introduce a Bill to confirm

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certain Provisional Orders of the Minister of Health relating to Halifax and the West Riding of Yorkshire; and to move that it be read a first time.
Moved, That the Bill he now read 1a.—(The Earl of Plymouth.)
On Question, Bill read 1a, and to be printed.

CANADA AND THE ANGLO EGYPTIAN NEGOTIATIONS.
LORD PARMOOR LORD PARMOOR rose to call attention to a statement made by the Prime Minister of Canada, in the Dominion House of Commons, on the 30th day of March, 1928, and to ask His Majesty's Government whether they can give any information as to the progress of negotiations with the Egyptian Government; and to move for Papers. The noble Lord said: My Lords, I do not think that the subject matter which I am bringing to your Lordships' attention, although of much importance, is in any sense of a controversial character and certainly is not of a Party controversial character. I beg to say that so far as the Party with which I am connected is concerned they are just as jealous of our national honour and national reputation as any other Party. That, I think, has been exceptionally shown—I will not say exceptionally but it has been specially shown in the Anglo-Egyptian question.
I want to say quite clearly at the outset, as I have to deal with a statement made on a former occasion in this House by the noble Marquess (the Marquess of Salisbury)—I am sure he will feel I say it with all sincerity—that I do not intend in any way to suggest, and never have suggested, that any statement he made was not in every sense perfectly accurate and straightforward, and in corroboration of that I want to call attention to what was said by the Prime Minister, Mr. Mackenzie King, in the Dominion House of Parliament in Canada. The passage which I should like to read I have taken out of the OFFICIAL REPORT which reports debates in the Dominion Parliament of Canada. Mr. Mackenzie King said:
"May I say, Mr. Speaker, that I accept unreservedly Lord Salisbury's statement to the House of Lords that the Government of Great Britain had not any intention
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of obliging the Dominions to become a party to the Treaty, or even of inviting them to do so."
I accept entirely what the noble Marquess said and what is said by the Prime Minister of Canada, but when this matter was before the House only a short time ago the noble Marquess seemed to think I had mad some "gloss," as he called it, upon what he said. I do not think there was any gloss. I looked very carefully afterwards to see whether there was. I certainly never intended it at the time.
I should like to read his actual words and your Lordships will then see what is the importance and relevance of the topic I wish to introduce. We were dealing with the Anglo-Egyptian Treaty and the noble Marquess said that there was DO question at any time of asking the Dominions to take part in being responsible for the results of the Treaty. Their concurrence in the general policy embodied in the Treaty was asked for, but there was a distinction between asking Dominion Governments for their concurrence in the general policy of a Treaty and asking them to be parties to it. With regard to the second matter, he said, it never entered the heads of the Government here. I accept that quite frankly without any question, but what is pointed out by the Prime Minister of Canada—and this is the importance of this question—is that, although no doubt the statement of the noble Marquess may be perfectly accurate, yet, on the other hand, he was perfectly justified in the view which he had taken—the different view which he had taken—that there was an invitation to the Canadian Dominion actually to become a party to the Anglo-Egyptian Treaty.
I must explain in a few words how this arises. I do not want to go back into the forms of Treaties which were examined and explained at the last Imperial Conference, although I think that the Prime Minister of Canada—and I believe the noble Marquess will agree with this—is perfectly right in saying that, having regard to the forms and principles there laid down, the inference which he drew was a perfectly accurate one, that the Dominion of Canada was being asked to become a party to the Anglo-Egyptian Treaty. He calls attention—and I think this is the most convenient way I can put

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it—to page 9 of the White Paper, which has been published in regard to the Treaty negotiations between this country and Egypt. He points out that under the head of "Counter-draft approved by His Majesty's Government, July 28, 1927," it is stated that this was forwarded to the Dominion Government. It is quite clear that if the form there adopted had been approved the Dominion Government would have become a party to the Egyptian Treaty. He further points out that it was because of the objection which the Canadian Government, through their Prime Minister, took, that the form was subsequently altered and the altered form was the form to which the noble Marquess called my attention the other day. It is to be found on page 36, where, in accordance with the principles laid down at the Imperial Conference, it is made quite clear that the only parties involved at a subsequent stage were Great Britain and Northern Ireland on one side and Egypt on the other. But that result was brought about by altering the form in which the Treaty was originally submitted to the Canadian Government, and it really emphasises the change in policy of His Majesty's Government between those two dates.
I would like to read a passage or two from what was said by Mr. Mackenzie King, the Prime Minister of Canada, in order to make quite clear what the position was. A certain Mr. Woodsworth asked a question of the Prime Minister in order to enable him to make an explanation very much in the same way as questions are asked in the House of Commons in this country. Mr. Mackenzie King said in reply:—
"My honourable friend has it exactly. May I say to him that the accuracy of what I have stated from the Canadian point of view is conclusively borne out by the White Paper which was laid on the Table of the House of Commons of Great Britain, this year, entitled 'Papers regarding negotiations for a Treaty of Alliance with Egypt,' a copy of which I hold in my hand."
Then he refers, as I have already done, to page 9. It is quite clear that page 9, as it stands, and the Treaty form, as it stands, would have meant a Treaty between all the Dominions and Great Britain on one side and Egypt on the other, and of course the Dominions would have included Canada. He goes on to say in regard to the first form:—
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"Under the interpretations set forth by the Inter-Imperial Relations Committee on Treaties—"
they are very detailed and of great importance—
"a Treaty so drafted"—
that is, drafted in the form in which this Anglo-Egyptian Treaty was submitted to the Canadian Government—
"without limitation, had it been signed by a plenipotentiary, would have bound Canada along with all the other Dominions. Being presented with the full text of the Treaty in this form, and being asked to give our concurrence, we interpreted that Canada was asked to be a party to the Treaty and therefore, in our reply, we were careful to state that we could not become a party to the Treaty because, for reasons given, we did not believe that this Parliament would approve of Canada being made a party thereto."
I have on former occasions asked that Papers might be laid showing what were the reasons given. I will not press that to-day, because it is not the particular point with which I am dealing. All I can say is that Mr. Mackenzie King's statement is anything but obscure. It is perfectly straightforward. What he originally stated in the Canadian Parliament is correct, that the Anglo-Egyptian Treaty was first submitted to the Canadian Government in a form which made Canada a party to that Treaty. Then he goes on to point out, what I have already pointed out, a change on a later page, which is the page to which the noble Marquess called my attention when the discussion was proceeding in this House on the last occasion. There the parties are limited. They are stated as His Majesty the King of Great Britain and so on, for Great Britain and Northern Ireland, and His Majesty the King of Egypt.
It is a most important principle that is involved here. I am one of those who care immensely for the preservation of good feeling and good comradeship between the Mother Country and her Dominions. The noble Marquess, Lord Salisbury, said the other day that I seemed to forget that it is a question of parents and children. I certainly did not forget it, but I feel that as between parents and grown-up children there is more need of care and right understanding than in almost any other relationship. At any rate, the fact stands (and I think there can be no contradiction)

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that the Treaty as first submitted would have made the Dominion of Canada a responsible party. The Treaty, as subsequently submitted to Egypt, made all the difference by eliminating Canada and the Dominions and limiting it to a negotiation which might eventuate in a Treaty as between Great Britain and Egypt.
Then he goes on to say:—
"Honourable members will notice that the Treaty as finally presented—"
that is the form I have just read, between Great Britain and Egypt—
"… is distinctly limited in the preamble, as should be the case when a Treaty applies to only one part of the Empire …"
That is a very important principle. It is perfectly well recognised that any Dominion or any part of the Empire is independent as to whether it takes part in a Treaty or not. I agree myself, and so do the Party to which I belong, with what was done at the last Imperial Conference when the Dominions were placed in the position of what is called independent sovereign commonwealths. There were certain restrictions with which I need not deal, but it was agreed on by all parties that forms of Treaty should be developed which would exclude from their operations any of the Dominions which did not wish to be bound by the proposals made.
Mr. Cahan, who I suppose is a member of the Canadian Parliament, said: "They made a very delicate suggestion," the delicate suggestion being the sending forward of a Treaty in a form which made them responsible. Mr. Mackenzie King said:—
"I agree with my honourable friend. I think it was a very delicate suggestion; and I submit that, as presented to us, the documents were not capable of any other interpretation in the light of the rules laid down at the Imperial Conference with respect to the negotiation, signature and ratification of Treaties. But I hope the explanation which I have made will remove any possibility of difference on that point as between the British Government and ourselves."
I do not fear that any serious friction will arise in this case upon a point of that sort, but it certainly is unfortunate that this misunderstanding, if I may so call it, had a foundation given for it in the Canadian Parliament by neglecting the forms of Treaty which were agreed upon at the time of the Imperial Conference
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and forwarding one which would have made the Dominion of Canada responsible.
I will not go back to what I said the other day as to why Canada did not want to become responsible. The Prime Minister said it showed the real peace spirit of Canada, because they had determined that they would not become party to a Treaty in which they were not directly concerned but which might entail military sanctions and military warfare. I would emphasize this somewhat for another reason. I notice that it is constantly suggested that, although we in Great Britain may desire peace, yet our Dominions are not prepared to go the length that we might desire to go in a peace direction. I venture to say that the exact opposite is the case. Canada has shown from the very start more than once, and particularly through M. Dandurand, her very able representative at Geneva, that she has long been prepared to sign what is called the Optional Clause of the Statute of the International Court. That is quite right.
I had rather hoped that Lord Cushendun would have been present to-day, because I read a letter from him stating that the Dominions stood in the way of adopting the principle of the signature of the Optional Clause. I submit that that is totally unjustified. What he referred to was that at the time of the Imperial Conference it was suggested that it might be premature. That was admirably answered by Viscount Cecil of Chelwood, who pointed out, as I have pointed out to your Lordships more than once, that openly and notoriously Canada at any rate—and there were other Dominions also—were desirous, and had often expressed their desire, to promote peace by signing the Optional Clause.
Now I want to say a few words upon the point in reference to which this discusion arose. I say at once that I neither ask for nor intend to embark upon any discussion which could possibly involve any difficulty or increase, any difficulty which stands in the way of the Government in carrying out what I would call the anxious negotiations between them and the Government of Egypt. I want to say that on this point the policy of the Labour Party has been made perfectly clear for a considerable time. The question was stated really in 1922 when

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independent sovereign power was given to Egypt, and at the same time certain reservations were made. Your Lordships may recollect a debate in this House in 1924 when the late Marquess Curzon of Kedleston classified under four heads the points for discussion—the Sudan, the protection of foreign interests, the defence of Egypt and the security of Imperial communications—in other words, the Suez Canal. I want to say how strong the support of the Labour Party has been in order not to throw any obstacle in the way of the Government but to increase their power to carry their negotiations to what I hope may be a decision fair to both sides.
So far as the question of the Sudan was concerned, in explaining at that date the policy of the Labour Party I found myself in an exceptional position of popularity. I stated that we were wholly of opinion that the obligations towards the Sudan must be preserved without change by Great Britain, and I recollect that the noble Marquess, the late Lord Curzon of Kedleston, said that my statement was entirely satisfactory, as was the additional statement that, if any change were suggested as regards either the Sudan or Egypt, the Labour Party would not sanction it until it had been sanctioned by Parliament, not merely by discussion but if necessary, by a Vote. On both those points the Conservative Party, who were in power at that time, expressed their satisfaction. I do not mention this as a personal matter, but I very strongly object to the suggestion that is heard from time to time that in some way or other the Labour Party are less zealous than the other Parties in this country for our national honour and reputation, and that in some way that I do not understand the honour and reputation of this country in questions of this sort can less safely be committed to them than to either the Conservative Party or the Liberal Party.
As regards the Egyptian question generally, Mr. Ramsay MacDonald has always adopted and stated one policy. His policy is this. There are certain unequivocal questions on which our country has taken up its stand, and on those questions he holds the view that they must be settled in some Treaty form before the general settlement of Egypt can be constitutionally and properly carried through. Of course the way of
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settlement differs in different views. I have always thought that the Foreign Minister of the Labour Party was a master craftsman in building up an atmosphere of peace and good will. I should like to read to your Lordships a passage that is quoted in the White Paper from a Despatch from Mr. Ramsay MacDonald to Lord Allenby when he was in authority in Egypt. He wrote:—
"No British Government in the light of that experience—"
that is, the experience of the European War—
"can divest itself wholly, even in favour of an Ally, of its interest in guarding such a vital link in British communications [the Suez Canal]. Such a security must be a feature of any agreement come to between our two Governments, and I see no reason why accommodation is impossible, given good will."
I hope that none of us see any reason why accommodation should not be possible, given good will. As I read the White Paper, as matters stand the accommodation has not been reached, but perhaps the noble Lord will be able to tell us—I will not ask him more than this—where matters stand now. Do they stand as they did when the White Paper was published?
I want him to note my remarks, because this charge is so constantly and unfairly made against the Labour Party. I have no desire to embarrass the Government in its duty, but I merely remind him that these statements have been made on behalf of the Labour Party and to suggest that on this matter we are all at one. Mr. Ramsay MacDonald then went on to say:—
"The effective co-operation of Great Britain and Egypt in protecting these communications might in my view have been ensured by the conclusion of a Treaty of close alliance."
That is the policy still.
"The presence of a British Force in Egypt provided for by such a Treaty freely entered into by both parties on an equal footing would in no way be incompatible with Egyptian independence, whilst it would be an indication of the specially close and intimate relations between the two countries and their determination to co-operate in a matter of vital concern to both."
Then he adds these words:—
"It is not the wish of His Majesty's Government—"

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he was then at the head of the Government—
"that this force should in any way interfere with the functions of the Egyptian Government or encroach upon Egyptian sovereignty, and I emphatically said so."
I think that in a matter of this kind it is extremely important that there should be no division of opinion in this country, so that negotiations of this kind may be brought to a satisfactory issue, and I must say that I regret that it sometimes seems to be suggested that the Labour Party has less regard for national matters than other Parties.
Let me say that we approach this matter from a national standpoint only, as indicated by Mr. Ramsay MacDonald in the statements that I have read. There is, of course, the difference that one Minister may succeed in promoting an atmosphere of good will and peace where another Minister has not the same success. I earnestly believe that, in the words used by Mr. MacDonald when he was Foreign Secretary, with good will an accommodation is not impossible, and that with good will we may have the great advantage of a friendly Egypt and a far greater guarantee than any other of the safety of our communications through the Suez Canal. I formally move, as we sometimes do on these occasions, for Papers, but of course I shall not press that Motion if the noble Marquess tells me that there are no further communications that he can safely lay upon the Table or put before the public at the present time.
VISCOUNT ELIBANK: My Lords, the Motion which the noble Lord has put on the Paper this afternoon has given me an opportunity of making a few remarks on a subject in which I have been particularly interested for a number of years, as a practical student of Empire politics. I also wish to take this opportunity because I have during the last two months paid a visit of several weeks to Egypt. I do not propose to deal with the first part of the noble Lord's Notice regarding the statement by the Prime Minister of Canada in the Dominion House of Commons. I propose to confine myself to the latter portion, in which the noble Lord asks for information as to the progress of negotiations with the Egyptian Government. Perhaps the noble Lord will not be surprised if I do not approach the subject from exactly the same angle
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as himself, because he in his missionary zeal—if I may put it in that way—for the cause of peace throughout the world, very often, I think, blinds himself to the realities of the case with which he is dealing. Therefore this afternoon, if my remarks follow along a somewhat different line of thought from that followed by the noble Lord, the House will understand why I am doing this.
It happened that during my visit to Egypt the crisis which has recently developed in the joint affairs of Egypt and this country came to a head, and consequently I found myself witnessing one of the critical political situations which arise in Egypt from time to time. To the surprise of many Egyptians, and certainly of many of the Europeans in Egypt, that agitation fizzled out very quickly, and this was owing largely to the restrained but efficient action of the Cairo Police, but also, and this is particularly interesting, very largely I think to the apathy of the Egyptian labouring classes, who are weary of the continued political upheavals, and desirous of carrying on without interruption their peaceful avocations. Attempts were made by school-boys and students to arouse public opinion, and ultimately the Wafd, the local Sinn Fein organisation, decided to call them off, as they were only disclosing the lukewarmness of the support. So the agitation died down. Then Sarwat Pasha resigned. There followed a couple of weeks of political difficulties, and comings and goings, and then Nahas Pasha, the President of the Wafd, became Prime Minister, and immediately he, as his first action, confirmed the decision of the Egyptian Parliament and rejected the Draft Treaty in unequivocal terms.
I now come to the real object of my intervention in this debate. During the past few weeks there have been various declarations by the Secretary of State for Foreign Affairs, which have been conveyed to the Egyptian Government through the medium of our High Commissioner in Cairo, Lord Lloyd, and one of the principal declarations which has been made was that we have reverted to the position outlined by the Declaration of February 28, 1922. I wish to give your Lordships' House just an extract from that statement, as it is very important. It said:—

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"Now that conversations with the Egyptian Government have failed to achieve their object, His Majesty's Government cannot permit the discharge of any of their responsibilities under the Declaration of February 28, 1922, to be endangered, whether by Egyptian legislation of the nature indicated above"—
that is certain legislation with regard to public control and order, being passed by the Egyptian Government at the present time—
"or by administrative action, and they reserve the right to take such steps as in their view the situation may demand."
That, I submit, is an unequivocal declaration of the situation taken up by His Majesty's Government only a few weeks ago.
It is important, in this regard, to refer to the Declaration itself, from which the noble Lord, Lord Parmoor, has already quoted. That Declaration said:—
"In view of this responsibility and of the vital importance to the British Empire of British interests in Egypt, the British Government had reserved by the said Declaration to its absolute discretion"
those four points which have already been quoted, namely:—

"(a) The security of the communications of the British Empire in Egypt;

(b) The defence of Egypt against all foreign aggression or interference, direct or indirect;

(c) The protection of foreign interests in Egypt and the protection of minorities; and

(d) The Sudan."

I should like to ask His Majesty's Government—I do not know whether the noble Marquess will be able to give a reply to my question this afternoon—whether the British Government have definitely gone back to 1922 or, on the other hand, whether the provisions of the Draft Treaty of 1927 are still open for negotiation with the Egyptian Government. In my judgment, and with all respect to His Majesty's Government, the reply to that question is of great importance, because there are two provisions in that Draft Treaty which in my opinion—and I think when I read them to your Lordships' House you will agree with me—conflict seriously with points referred to in the Declaration of 1922, and which were said at that time to be of vital importance to the British Empire.
I believe from what Lord Parmoor said a few minutes ago that he, too, believes that those points are of vital importance to the British Empire, and as he was
892
speaking, as he said he spoke, for the Labour Party, I assume that the Labour Party also believe that those points are of importance to the British Empire. I turn to that Draft Treaty, and I find that Article 7 of the Draft. Treaty says:—
"In order to facilitate and secure to his Britannic Majesty the protection of the lines of communication of the British Empire, and pending the conclusion at some future date of an agreement by which His Britannic Majesty entrusts His Majesty the King of Egypt with the task of ensuring this protection, His Majesty the King of Egypt authorises his Britannic Majesty to maintain upon Egyptian territory such armed forces as His Britannic Majesty's Government consider necessary for this purpose."
We find wedged in this particular part of the Article these words:—
"and pending the conclusion at some future date of an agreement by which His Britannic Majesty entrusts His Majesty the King of Egypt with the task of ensuring this protection."
Now, supposing that Draft Treaty had come into effect and had been ratified, this country would have committed itself, by virtue of those words, to entrust at some future date to the Egyptian Government the task of ensuring this protection.
I should like in that connection to quote from a Memorandum written by Sir Austen Chamberlain, the Secretary of State for Foreign Affairs, and appearing in this same White Book, dated July 13, 1927, only four or five months before he allowed this Draft Treaty to go out of the Foreign Office, and you will observe how that particular clause conflicts with the expression of opinion contained in the Memorandum. He says:—
"I had last year drawn his attention"—
that is, Sarwat Pasha's attention—
"to the reservations which we had attached to the grant of Egyptian independence and to the obligations no less than the rights which those reservations imposed upon us. The rights were vital to us. No British Government could afford to ignore them. My predecessor had asserted them as plainly as I could do. They were, in fact, so essential to the existence of the British Empire that every British Government in the future, as in the past, whatever its complexion, would be obliged to insist upon them. I was old enough to remember the circumstances of our intervention in Egypt in the early eighties. My father was a Minister at that time. I could recall the sincerity with which the Ministers of that day had declared that our occupation was only temporary—"

893
I ask you, my Lords, to mark those words that "our occupation was only temporary"—
"and that it would be withdrawn at the earliest possible moment. But circumstances had been too strong for us. The moment of withdrawal had never come, and the events of the intervening forty or fifty years had shown that neither of us could escape from the situation in which God had placed us or evade the mutual relations which that situation imposed upon us."
In spite of that very definite declaration by the Secretary of State for Foreign Affairs in July, 1927, we find in Article 7 the words I have just read out, which foreshadow the possible assumption by the Egyptian Government of this office of protection. I submit that this should never have been inserted in that Article, and that, as the negotiations are in a state of suspension, that Article, certainly from that point of view and from a further point of view which I propose to mention directly, should be reconsidered in any future negotiations that may take place, or in any negotiations that may be taking place.
I come now to the second part of that Article, which reads:—
"After a period of ten years from the coming into force of the present Treaty, the high contracting parties will reconsider, in the light of their experience of the operation of the provisions of the present Treaty, the question of the localities in which the said forces should be stationed."
And then it goes on:—
"Should no agreement be reached on this point, the question may be submitted to the Council of the League of Nations. Should the decision of the League of Nations be adverse to the claims of the Egyptian Government, the question can, at their request and under the same conditions, be reinvestigated at intervals of five years from the date of the League's decision."
In anything I am about to say on this quotation I hope your Lordships will acquit me of any intention to attack or in any way disparage the League of Nations or its activities, for, on the contrary, I have a great regard for the League of Nations and a great respect for the work it has done in smoothing the differences between nations of an independent character, and especially the task it has so admirably performed in assisting to restore Central Europe.
But I have always contended that the League of Nations has no function in arranging or adjusting the domestic concerns of individual nations. The destiny
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of Egypt has been entrusted to us for nearly fifty years. It has been entrusted to us by other nations, and I deprecate strongly that the League of Nations should have any say in the matter of how we carry out those responsibilities and maintain law and order in Egypt, or of how we look after the interests of the various nationals or after the capital which has been invested in that country by Europeans. At the end of that Article it says:
"Should the decision of the League of Nations be adverse to the claims of the Egyptian Government, the question can, at their request and under the same conditions, he reinvestigated at intervals of five years from the date of the League's decision."
I should like to ask what would happen supposing the question were remitted to the League of Nations and the decision were adverse, not to the Egyptian Government, but to the British Government. The British Government would find itself perhaps in a very awkward position. It might find itself compelled by the conditions which existed at the time in Egypt to come into conflict with the League of Nations, and having to tell the League of Nations that, in spite of this Article, they could not abide by the decision of the League of Nations.
I suggest that this clause is fraught with the greatest danger to the British Empire, and possibly with the greatest danger to Great Britain itself. I sincerely hope that the Government will take what I have said into, consideration, because I am perfectly certain that if this matter were debated in the House of Commons and it wits known in the country what that clause contained it would arouse the greatest feeling and the greatest opposition. If this Treaty is ever signed in this form and with the provision in it I shall feel myself compelled to vote against it if it comes before your Lordships' House. I can assure your Lordships that there is a very strong feeling in Egypt and throughout the East amongst British people that the policy of the Governments of the last seven years since the War has been most vacillating; that they are continually finding themselves let down, and that they do not receive the support which is their due and which was theirs in the past. I assure your Lordships that the various races living in and occupying those territories in the East do not regard us

895
with the same degree of respect as they were wont to do before the War, because our policy has been one of concessions. That is understood in the West but is regarded in the East as a form of weakness. Justice and firmness have been the bases of our success and of our popularity in the past. I hope that the Government will look seriously into the whole situation as it exists in the East and that they will stand firm in China, in Egypt and wherever our interests are at stake.
THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY): My Lords, I do not complain in the least of the noble and learned Lord for having taken this opportunity of raising these questions. They are of very great importance and I only regret that owing to circumstances with which the noble and learned Lord is acquainted I must not detain your Lordships at any great length on the present occasion. In regard to Canada we have this advantage which we did not possess on the last occasion—that by reason of the lapse of time we are now in possession of the full report of what was said by Mr. Mackenzie King, the Prime Minister of Canada, in the debate to which the noble and learned Lord has made reference. I have read the report of that speech with the greatest care, and may I say at once that His Majesty's Government have no reason to complain in the least of anything which the right hon. gentleman, Mr. Mackenzie King, said on that occasion. On the contrary, I should like to bear testimony to the great courtesy and consideration with which he discharged the very responsible task which was thrown upon him. I have the honour of Mr. Mackenzie King's acquaintance, and I am not surprised to read that he entered into this subject with a full regard to the responsibility under which he stands and with the circumspection which the subject demands.
The noble and learned Lord has pointed out that the gravamen of Mr. Mackenzie King's speech was the slight change of form which took place in the Draft which was originally submitted to the Canadian Government and the form in which the Treaty was ultimately signed.
LORD PARMOOR: The noble Marquess means ultimately submitted to Egypt?
THE MARQUESS OF SALISBURY: Ultimately submitted to Egypt. I am obliged to the noble and learned Lord. Unfortunately, it was not signed; it was ultimately submitted to the Egyptian Government. I had not, when I spoke, the two forms in mind in addressing your Lordships' House, and perhaps I was to blame in that particular. I frankly admit that I had not those two forms in my mind and, undoubtedly, Mr. Mackenzie King was fully entitled to call attention to the distinction. There was, therefore, perhaps, a misunderstanding in the matter. But it is quite clear now, and let there be no doubt about it, that in the form in which the Treaty was ultimately submitted to the Egyptian Government there was no obligation thrown upon the Dominion of Canada, which was, in accordance with the decision of the Imperial Conference relating to Treaties of this description, inferentially excepted from the Treaty by the words that His Majesty only acted for Great Britain and Northern Ireland and not for the Dominions beyond the seas. That is absolutely so.
On the question as to Papers, I am afraid there are no Papers at the present moment which can be added to the White Paper which has already been laid upon the Table of your Lordships' House. On a future occasion I might be able to expand the Papers a little further; but that is the answer which I must give so far as the discussion this evening is concerned.
LORD PARMOOR: May I interrupt the noble Marquess for a moment? Does that apply to communications not only between us and Egypt but between us and Canada?
THE MARQUESS OF SALISBURY: Yes. So far as I know there are no Papers to be laid between us and Canada. I have nothing to add to what I said on that point the last time I had the honour of addressing your Lordships upon the subject. Turning to the question of Egypt, the noble and learned Lord was at pains to prove that in matters of foreign policy the Labour Party might be relied upon to take a patriotic attitude. I do not deny that for a moment. Why should I? The Labour Party consists of Englishmen and Scotsmen, and

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we expect, of course, that all Englishmen and Scotsmen will be patriotic. Though, perhaps, one cannot say it is always the case, yet in the vast majority of cases it is so, and I fully believe and I am very grateful for the fact that in matters of foreign policy the Labour Party intend to be guided by patriotic considerations.
With regard to the position in Egypt, any one who has followed this matter knows that my right hon. friend the Secretary of State for Foreign Affairs made a statement in another place in answer to a question on April 4. I have nothing really to add to that answer. There are no negotiations going on. Since the Treaty was rejected by the Egyptian Government there are no negotiations. The situation is as it was. My noble friend who has just sat down asks exactly what that situation is. The Treaty was a great effort on our part to come to an arrangement with Egypt. It has been rejected and the status quo ante immediately arises. We go back to the situation before the Treaty was negotiated—that is to say, we go back to the situation which the noble and learned Lord recited and which my noble friend recited, the situation which was embodied in the celebrated statement, including the four reserved points, of which both noble Lords have reminded your Lordships. The Treaty being rejected the status quo ante arises and that is the situation at this moment.
If my noble friend will forgive me—I make no complaint whatever of his speech—I will not discuss in detail the provisions of the Draft Treaty because it has been rejected. There would be no useful purpose in going into the details. If, hereafter, the subject were resumed between the two Governments, the result of last year's negotiations having been rejected, it does not in any way commit His Majesty's Government if and when fresh negotiations are undertaken. I am sure my noble friend fully realises the importance of that position, and that being so I am sure he will forgive me for not going into the matters of detail to which he very legitimately referred. My noble friend spoke in some terms of general criticism of the policy of His Majesty's Government throughout the East.
VISCOUNT ELIBANK: May I say it was a general criticism of the policy of all Governments since 1918–19, not any particular criticism levelled at His Majesty's present Government.
THE MARQUESS OF SALISBURY: I am very much obliged for that comparatively friendly assurance of my noble friend. I agree with him that anything in the nature of vacillation in policy, especially in foreign policy and most of all in foreign policy in the East, is to be deprecated. I earnestly hope it may be avoided, but there is no doubt that in administering the policy of this country in foreign affairs since the War the greatest weight must be attributed to the effect of the War. It is absurd to pretend that we are in exactly the same position as we were before the War. No man of common sense would pretend it. We must pursue the very heavy task which is before us as well as we can with that dignity and that strength of purpose which has always characterised British policy. We must avoid vacillation, but, above all, we must pursue, if we can, the paths of peace. It is with a policy of that kind we shall hope to succeed, whether it be in Egypt or elsewhere.
LORD PARMOOR: My Lords, I should like to thank the noble Marquess very much for the answer he has given. I purposely abstained from going into the details of the negotiations, acting in consonance with what I may call the patriotic view. I have always understood when negotiations are going on or a delicate position has arisen that we must abstain as much as possible from going at that moment into the details of the question being discussed. I will not say more in answer to the noble Lord (Viscount Elibank). He knows that my views differ from his toto calo. I do not regard the pursuit of justice as vacillation. I regard it as a proof of strength and a desire to do what is right. I again thank the noble Marquess for his answer. I do not press for Papers.
Motion, by leave, withdrawn.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The Royal Assent was given to the following Bills:—

Army and Air Force (Annual),

Bromborough Dock,

Mersey Tunnel,

Barnet District Gas and Water.

House adjourned during pleasure.
House resumed.
House adjourned at twenty minutes before seven o'clock.

Preamble
The Earl of Winchilsea and Nottingham—Sat first in Parliament after the death of his father.
SOUTH SUBURBAN GAS (CONSOLIDATION) BILL.
Message from the Commons that they have come to the following Resolution, namely: That it is expedient that the Bill be referred to the Joint Committee of both Houses of Parliament to be appointed for the consideration of the Dover Gas Bill [H.L.] and to desire their Lordships concurrence thereto: The said Message to be taken into consideration on Tuesday next.
GOLDSMID ESTATE.
Petition for a Bill, together with a copy of the proposed Bill annexed thereto: Read, and referred to two Judges of the High Court of Justice in England.
BLACKPOOL EXTENSION BILL. [H.L.]
Report from the Committee of Selection, That the Lord Lamington be proposed to the House as a member of the Select Committee on the said Bill in the place of the Lord Fairlie (E. Glasgow): Read, and agreed to.
LLANDUDNO URBAN DISTRICT COUNCIL BILL.
  SOUTH METROPOLITAN GAS BILL.
  Committed for Tuesday next.
  BURY AND DISTRICT JOINT WATER BOARD BILL.
  Committed: The Committee to be proposed by the Committee of Selection.

  BRIDPORT AND DISTRICT ELECTRICITY ORDER, 1928.
  Special Order in respect of the Borough of Bridport and parts of the rural districts of Bridport and Beaminster in the County of Dorset:
  Laid before the House (pursuant to Act) and referred to the Special Orders Committee.

  WEST GLOUCESTERSHIRE ELECTRICITY (EXTENSION) ORDER, 1928.
  Special Order in respect of part of the rural district of Lydney, in the County of Gloucester, and the urban district of Usk, the rural district of Monmouth and parts of the rural districts of Chepstow and Pontypool, in the County of Monmouth:
  Laid before the House (pursuant to Act) and referred to the Special Orders Committee.

  LIQUOR (DISINTERESTED OWNER-SHIP AND MANAGEMENT) BILL. [H.L.]
  To be read 2a on Wednesday, June 13 next.
  MINISTRY OF HEALTH PROVISIONAL ORDERS CONFIRMATION (No. 5) BILL. [H.L.]
  Referred to the Examiners.
  MINISTRY OF HEALTH PROVISIONAL ORDER CONFIRMATION (SWINDON EXTENSION) BILL. [H.L.]
  Referred to the Examiners.
  MINISTRY OF HEALTH (HALIFAX AND WEST RIDING PROVISIONAL ORDERS) CONFIRMATION BILL. [H.L.]
  Referred to the Examiners.