Sitting of 6 March 1931

Preamble
The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.
NEW WRIT.
For the Borough of Westminster (St. George's Division) in the room of the Right Honourable Sir Laming Worthington-Evans, Baronet, G.B.E., deceased.—[Sir Bolton Eyres Monsell.]
ORDERS OF THE DAY.

  PROFIT-SHARING BILL.
  Order for Second Reading read.
  Mr. ALLEN: I beg to move, "That the Bill be now read a Second time."
  Just a month ago, during a private Members' debate, the hon. Member for Bridgeton (Mr. Maxton) remarked that he had not heard of any proposal to put into any safeguarding scheme powers which would protect the wages of the workers. This Bill goes further than the hon. Member envisaged, and is a rather more practical measure than the Living Wage Bill which he introduced. That Bill received a Second Reading, and in so far as this Bill may be regarded as a step forward rather than as a leap forward, and in so far as it is one more limited in its scope and more immediately practicable, I hope it may have the support of Members of all parties, and receive its Second Reading without a division. It has been put to me that the premises on which this Bill is based are rather optimistic, since very few industries are operating under safeguarding conditions and the continuance of those conditions is at present in doubt. I have also been told that the present is not the time to concern one's self with the future distribution of hypothetical profits, since in most industries profits are at the present moment a steadily declining quantity. I make no apology for my optimism, for I believe that before we are very much older safeguarding conditions will have been applied to the majority of manufacturing industries in this country, and with the arrival of that happy state of affairs, the distribution of the profits of safeguarded industries will become a matter of general public interest.
  The fundamental principle on which the present proposals are based is one which, I trust, few members will dispute. The principle is that where the State is asked to intervene in the interests of a particular industry, and where the community is required, to a certain extent, to sacrifice its right of buying in a free and unrestricted market, the State, as representing the community, has the right to impose conditions as to
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  the distribution of any benefits which may accrue in the industry to which special safeguarding conditions have been applied. That principle, I submit, is a matter of social equity, and I will not enlarge on it further. I would like, also, to submit an important economic principle on which the ideas embodied in this Bill are also based, and that is that the wage earner is and must remain the only substantial market for the goods which he is engaged in producing. Therefore, if the productive power of the British industrial machine is expanded, as it undoubtedly will be under an adequate system of Safeguarding, it is vital to secure conditions under which the wage earners will have the power to consume increased quantities of the goods which they will be turning out. In other words, as production increases the power to consume must be increased. This increase on the part of the consumer can be attained by methods which are by no means contradictory—by reducing costs and by increasing wages.
  There is nothing heretical about this theory from a purely capitalistic stand point. Mr. Henry Ford, who is probably the most significant figure in 20th century capitalism, has had the power on his own account to put this theory into practice, and if those who are responsible for the management of the capitalist system in this country and America had had the good sense to follow his lead much of our present problem of world unemployment might have been avoided. If the power of the wage-earning millions to consume had been increased in ratio to the power of the machine to produce, we should not have been confronted with the present ghastly dilemma of congested stocks, idle labour and a poverty line of consumption. The principle of this Bill is that where the State intervenes to safeguard the interests of production in any specific industry it attempts also to safeguard the conditions of consumption by ensuring that part, at least, of the surplus of goods produced in that industry is released in the form of a profits distribution to the workers. By this means an increased power of consumption will be automatically released to absorb the surplus which the profits themselves represent.
  I do not pretend that this Bill touches beyond the fringes of a very great prob-

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  lem. Hon. Members opposite may be expected to maintain that the Bill does not go far enough. They may reject the whole principle of expanding consumption through wage increases as a solution which is not fundamental to the economic problem. On the other hand, there may be hon. Members on this side of the House who will object to the interference with private ownership and control of production which is implicit in every Clause of the Bill. I propose, briefly, to examine the Clauses of the Bill, but before doing so I would submit that the paramount duty of Members in the present crisis is to arrive at immediate, if temporary, solutions of the problems before us. We have to admit that there are in this country at the present day two completely divergent interpretations of the economic problem. The country is divided on the subject into camps of almost equal strength. While neither side is in a position to impose their suggestions on the sections of the community who fail to agree with them, we have, as sensible human beings, to hammer out solutions which may not be permanent, but which represent a compromise of two antithetical interpretations of the economic problem. It is in this belief, and with some degree of confidence, that I turn to the Clauses of the Bill, and if all the Clauses are not acceptable in all sections of the House I hope, at least, the general principles of the Bill will find some degree of approval.
  Clause 1 is, I think, comparatively straightforward and does not require elaboration at the moment. Sub-section (2) of this Clause provides that the Board of Trade shall have the power to establish a profit-sharing scheme for any company which fails to submit an approved scheme on its own account. Clause 2 is the most important clause in the Bill. It will, no doubt, be criticised from different aspects on both sides of the House. There are two important provisos with regard to it. First, the wages paid to employés in safeguarded companies where the profit-sharing scheme is operative shall not be less than those commonly paid in the district for similar work under like conditions of employment. The object which I desire to attain here is to ensure that any profits distributable under a profit-sharing scheme shall be additional to the
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  current wage rate, and not merely a deferred part of it. In all safeguarded industries to which this Bill applies it will be necessary to take a minimum flat rate of wages based at least on the rate payable before the safeguarding duties are introduced. The other important point, and, I must admit, a most difficult one, is the provision of a basic dividend, which I have suggested should be not less than 8 per cent. and not more than 15 per cent. As hon. Members will see, the later Clauses in the Bill provide for full consideration being taken of the different conditions operating in each industry and in each individual company engaged in the industry to which this Bill will apply.
  One of the principal difficulties with regard to this Clause will be immediately obvious. There may be, in any industry, competing firms some of which are under capitalised and others which are over capitalised. It would obviously be grossly unfair that the owners of businesses which are under capitalised should under this Bill be penalised. It is also obviously undesirable that any legislation should be introduced which should have the effect of putting a premium on over-capitalisation. Clause 4, it will be seen, provides for full consideration being given to the interests of all parties concerned. Sub-section (2) of that Clause provides for an appeal to an Industrial Court and Sub-section (3) of the same Clause provides for subsequent amendment. It will therefore be seen that should this legislation operate unfairly in respect of either the capital or the wage interests concerned there is full provision for an appeal and amendment. With regard to the question of companies which are either over-capitalised or under-capitalised, I think it would probably prove necessary, in the event of failure by the parties concerned to agree, for the Board to have powers to order an assessment of the actual real capital value of the company concerned. Such an arrangement would be definitely in the interests of owners of companies which were substantially under-capitalised.
  Clause 3 provides for the distribution of the fund in the proportion of one-half to the owners of the capital employed in the specific business and one-half to be distributed among the employés of the company. This division is

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  essentially an arbitrary one, but the principle which seemed to me desirable was that, while provision should be made for additional profits to go to the capital concerned as the due reward for continued successful enterprise, at the same time the effect of the introduction of Safeguarding Duties should be reckoned as one of the causative effects of any increased prosperity, and that in these circumstances the capital concerned would not be entitled to the entire fruits of the subsequent development resulting from a system of Safeguarding. The actual monetary advantages which will accrue to workers under paragraph (b) of Clause 3 will of course vary according to the specific businesses and industries. The workers in industries in which the proportion of labour costs to total costs is relatively low will benefit in a greater degree than workers in industries where there is a large amount of labour employed, and I feel therefore that, in industries where the labour employed is relatively small, it would be possible to allow the maximum dividend envisaged in Clause 2, and in industries where there is a large amount of labour employed the minimum basis dividend might be taken.
  Clause 1 has assumed the preparation of an agreed scheme and its submission to the Board of Trade. In Sub-section (1) of Clause 4 it is provided that, after the scheme has been properly advertised, any interested party may make representations to the Board. The Board may hear any persons whom it may consider entitled to make specific representations and may then approve the scheme with or without amendment. The Board will then make an order giving effect to the scheme so approved. Sub-section (2) of Clause 4, as I have already mentioned, provides for an appeal to the Industrial Court in the event of grievances arising, or of it being found that the scheme is not operating fairly to one party concerned. Clause 6 provides for the withdrawal of any company or firm to which this Bill applies if the advantages of Safeguarding Duties are withdrawn from the industry in which the specific company or firm is concerned.
  In conclusion, I feel that the objections to this Bill which may be put forward on the grounds of interference with private enterprise and indi-
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  vidual independence in industry are not morally valid. The whole theory of Safeguarding involves a. fundamental and drastic interference with industry on the part of the State. It is a. complete departure from the laissez faire principles of economic organisation. What is sauce for the goose is sauce for the gander. If the State is required to intervene in the interests of production it is also entitled to intervene in the interest of consumption.
  A further advantage as a result of this Bill would be a tendency to stabilise interest returns in important categories of industry, with consequent elimination of stock market fluctuations. A prosperous period in any particular industry would result in a stimulation of the purchasing power of the workers engaged in that industry, instead of a mere stimulation of stock exchange values. One of the troubles of the last few years has been that the profits of industry have been dispersed in the violent fluctuations of the stock market. This Bill is designed to protect the interests of the managers and owners of industrial plant, and of the workers who handle that plant. The interest of industrialists is to find an ever-expanding market for their goods, based upon an ever-expanding capacity to consume on the part of their workers. The employer and the worker have a common interest to sustain each other. They are not concerned with the speculator whose only function is to bet upon the results of their joint efforts.
  Viscount CRANBORNE: I beg to second the Motion.
  In this House we are often faced with very long and difficult Bills which are almost unintelligible, and it is sometimes very difficult to express an opinion upon a Bill of that kind. The Measure we are now considering is a short, simple, and straightforward Bill, and my hon. Friend has already explained its provisions so clearly and so fully that I think it will be unnecessary for me to deal at length with them. I propose to devote the remarks I have to make to the principle underlying the Bill and the object which we are seeking to attain. I will try to clear up some misapprehensions to which, I think, the Bill may give rise.

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  The object of this Measure is to make some contribution to the cause of industrial peace. That is an object which I am sure will appeal to all members on every side of the House. There is, after all, nothing which has done so much deeply to intensify bitterness as the feeling of distrust which undoubtedly exists between certain sections of those engaged in industry in. this country. It would be futile for us to deny that it exists, because I think we have all seen signs of it at different times during the last few years, and it is perfectly clear that, so long as it does, exist, we can never have real prosperity in this country.
  We in this House spend a good deal of our time in discussing the relative merits of various economic systems. Some of us think that this country can only flourish under a system of private enterprise; others think that our future is bound up with Socialism; some people laud the virtues of Protection, and others those of Free Trade; but there is one thing that is perfectly certain, and that is that none of these systems can succeed unless all those who are engaged in industry are co-operating in amity and harmony for a single end, the prosperity of the individual worker. It is, therefore, of the utmost importance that we should eliminate any causes of industrial unrest which exist, and I do not think it will be disputed anywhere in this House that one of the chief of these causes is the feeling which undoubtedly exists in certain sections of the community that labour is being exploited by capital, that the workman has to be content with a pittance, and that all the fruits of his labour go into the pockets of the capitalist. I do not say that I should subscribe to that doctrine; in fact, I do not, for reasons which I hope to show later on. At the same time I recognise, as I think we all do, that that feeling does exist and is a cause of unrest and a breeding ground of civil strife, and that, if we can eliminate it, so much the better will it be for all of us.
  We, therefore, who are concerned in the introduction of this Bill, propose, as my hon. Friend has said, that all profits in certain industries—the safeguarded industries—above a certain low limit, which will vary according to the circumstances of different industries, shall be
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  divided equally between capital and labour. I quite recognise that that proposal may need a good deal of explanation, especially the part dealing with the basic dividend which is to be earmarked for capital. I quite recognise that hon. Gentlemen opposite may argue that it is all very well for those who are proposing this Bill to talk about removing a grievance and giving a fair share to labour, but that we are still leaving a very handsome advantage to capital. They may ask, "Why have this low limit at all? Why have any basic dividend? Why try to delude us by saying that you are going to give us fair treatment, when as a matter of fact labour will not get a penny until at least eight per cent. has gone into the pockets of capital?" And they may say that we cannot expect them to consider this question seriously unless we start capital and labour on all fours and divide all dividends equally. That is an argument which, superficially, has a certain amount of force, but it rests on the assumption that at the present time labour is getting no share in profits at all. That is an assumption which I, personally, would not admit for a moment; it seems to me to be utterly fallacious and based on an entirely out-of-date conception of the structure of industry.
  It is perfectly true that 100 years ago, or even 30 years ago, capital would generally have been defined as wealth devoted to production. The theory of industry was that the capitalist purchased labour just as he purchased raw materials and machinery, and that, when he had paid for the raw materials, machinery and labour, the profit remaining all went into his pocket; and it is quite obvious that under a theory of that kind labour could not expect to have any share in profits. What the workman had to sell, namely, labour, was bought and paid for in wages, and there, as far as he was concerned, his interest ended. I should have thought that that would now be considered a very out-of-date conception, since more and more people are now beginning to think that such a definition of capital is, as I have said. much too narrow and out-of-date, and that there ought to be included in the definition of capital all means by which wealth is created. In that sense, of course, the workman is a capitalist just

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  as much as his employer, because he lends to the business his knowledge of his craft and the strength of his muscles, and the return on his manual capital, if I may coin such a phrase—the dividend which he receives—is wages.
  If that definition be accepted, the assumption that labour has no share in profits really cannot be defended. Indeed, the return on manual capital, the wages bill, in a given business, is, of course, very much larger in bulk than the return on money capital. Let me take a very simple instance. Hon. Members opposite will correct me if I am not accurate, but I think I am fully accurate in saying that under the Coal Mines Act, 1924, the return on manual capital was fixed at 87 per cent. of the profits, as compared with 13 per cent. in the case of the money capital. That is the return in bulk. That is not the only advantage which manual capital claims, and claims successfully, over money capital. Its dividends are a first charge on industry. They are paid before the dividends on money capital are considered at all, and even before money is put to reserve against a rainy day; and, when the rainy day comes, the contrast is even more striking, because the money capitalist may receive nothing year after year on what he has invested, whereas, so long as the industry works, even at a loss, the manual capitalist receives his dividend. It may, of course, be reduced, but in the vast majority of cases it cannot go below a fixed minimum.
  Hon. Gentlemen opposite may think I am trying to argue that the lot of the manual capitalist is a, much happier one than that of the money capitalist. That, however, is obviously not true, and it would be ridiculous for me to try to argue that it is. We all know a number of money capitalists who are rich, and a certain number who are very rich; whereas practically all manual capitalists—I think one may say all—are poor men. We all know the shifts and hardships, the difficulties and tragedies, which are inseparable from poverty, and which the working classes of this country have to endure—the difficulties and tragedies of which hon. Members opposite sometimes speak in moving terms from their own experience, and of which we on this side are not so insensible as they sometimes think.
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  What is the clue to this apparent paradox? I think it is a very simple one. If I may use a rather homely metaphor, the earnings of capital, money and manual, may be compared to a great cake, and, while it is perfectly true that manual capital in bulk receives a very large proportion of that cake, it has to be divided into so many portions that each manual capitalist receives only a very small slice. At the same time, the fact remains, and nothing can alter it, that the manual capitalists do receive, in bulk, a very large proportion of the cake, that is to say, of the gross profits of industry; and not only is that the case, but they have a first call on those profits. Therefore, I contend, and I think that hon. Members opposite will consider it a fair contention, that money capital must be assured of at least a proportion of what remains before another Share-out begins of the surplus profits. That is the whole argument in favour of this basic dividend, and I think it is quite a, fair one.
  In conclusion, I should like to say one word with regard to another objection which may be raised to this scheme. The question may be asked, "Why is the scheme only to apply to certain industries—the safeguarded industries? If you are agreed that profit-sharing is such an excellent principle, why not extend it to all industries alike—why make this differentiation?" Hon. Members may be acquainted with a phrase which has been used in this House recently, "the inevitability of gradualness." That is the main reason. It is obvious that, if you are introducing a new principle, you cannot try it on the whole of industry at one fell swoop; you must try it out first on certain industries. There may be employers who will say that their resources will not be equal to it, and, therefore, it has been thought right by the promoters of this Bill to confine the operation of the Bill to those industries which we have reason to suppose are best able to bear it. We know that industries which are receiving protection are, to the extent of that protection, more prosperous, and we think that, as they are being helped by the State, they might very legitimately be asked to make some gesture in return. If there are any employers in these industries who are still very strongly averse to this scheme, I would remind them that the proposals

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  of the scheme provide the most complete reply to a common and cogent argument of hon. Gentlemen opposite against Protection. Whenever the issue of Protection is raised in this House, hon. Gentlemen opposite always reply, in defence of their opposition to it, that it will be protection, not for the workman, but for the employer, and that any additional profits that come out of the industry will go into the pockets of the employers. If they accept this Bill, that cannot happen. If we believe that Protection is going to bring prosperity to the employers, the workers will share in that prosperity. It is not only an argument for the employers. It is argument also for those who represent the employees. I think their contention is a perfectly genuine one. I believe they think Protection is merely an employers' dodge to increase profits. If they really believe that, why do they not take advantage of these proposals to safeguard themselves against it? They are going to have Protection. There is no doubt about that. They had much better take these measures to safeguard themselves against what they conceive to be the danger of Protection.
  I do not pretend to think the Bill is an ideal one. We shall hear other Members later on. They will see many holes in it. If it passes Second Reading, I think it will require drastic alteration in Committee according to the wisdom and experience of various parts of the House, and I shall be quite ready to accept such alterations as seem to the House to be necessary. At the same time, I claim that it is a step in the right direction and is a real contribution towards the cause of industrial peace, and I appeal to the House, which is so generous to new ideas, to give it a Second Reading.
  Mr. THOMAS SNOWDEN: I desire to support the principle enunciated by the hon. Member who introduced the Bill. I do not want to discuss this question with any particular reference to the fiscal question, in regard to Safeguarding or even to Free Trade. I want to discuss it from the point of view of experience, having regard to the fact that one has tried it in a somewhat humble way with a certain measure of success. I am not
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  at all unmindful of the fact that I am in conflict with a good many of my friends on this side of the House, because they regard it as one more attempt to bolster up the present capitalist system which might possibly interfere with the trade union movement in certain respects. I would urge that it is possible to have a profit-sharing system in industry for the very good reason that it would contribute very substantially towards the workers manifesting a far deeper and more sustained interest in industry.
  I am as much in favour as ever I was of the nationalisation and socialisation of industry, and I am not prepared to whittle it down one iota. It is because I have had some experience in this particular matter that I think it is far more likely to contribute in the direction of the workers being able to understand the real administrative responsibility of business. We are not likely to make a huge success of our Socialism or Capitalism unless and until the workers themselves know far more than they do at present of the administrative responsibility of industry. It is a matter of regret that up to 30 years ago the employers denied the right of the workers to participate in industry. Up to the present time, with very few exceptions, men and women have come in to their work from Monday to Saturday noon, and have been mere cogs in the machine. It is proved conclusively, as far as my own experience goes, that, if you can once get the workers interested in the financial side of it, they are far more likely to respond upon certain lines which will be very helpful indeed.
  The hon. Member who introduced the Bill made it clear—and I am glad he did—that we must, in the first place, give full recognition to the fact that there is a trade union movement. They have by every method of reason the right to negotiate on behalf of the workers. Some of us are not only paying the standard rate of wages but slightly over, and it pays to do it. It is a commercial proposition, and a paying proposition, too. Having admitted that the trade unions have the right to negotiate and that we are paying the standard rate of wages, I cannot see that there should be any reasonable objection on the part of trade unionists to the principle of this

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  proposal, because it is proved beyond doubt that, once you can get the workers definitely and directly and constructively interested, they respond in such a way that eventually they are fitted for far greater, responsibilities than even the employers dreamed of. That is a consideration which has been overlooked.
  Some people might say it is a mercenary inducement, but, after all, we are all in business to make a profit, and it is quite possible to make it mutual up to a point. Surely, after you have paid the trade union rate and possibly slightly over, if, by some constructive scheme, you can bring the workers in an industry in a material and administrative sense to certain responsible posts, they are far more likely to develop an interest than they would be in coming to the factories, workshops or mines from Monday to Saturday noon, simply having the humdrum life which they have experienced previously. For that reason, I hope my friends on this side will not look with too much suspicion upon the principle enunciated by the mover of the Bill.
  Unfortunately, there are not always profits to distribute. My own humble experience has been of such a character that there have been extreme difficulties. It will be said that in times of prosperity it is easy to get new workers interested, but, if you have them interested on that side, it is proved again conclusively that they are far more able to understand adversity, having participated in it, than they were previously. I do not think that it will be disputed that they are far more sympathetic on certain lines even when times of adversity overtake us than they were before. That I repeat from practical experience, is not altogether satisfactory on one side, but, having been mutual previously, it is far better understood when such like times overtake them.
  There is a point in regard to which I do not agree with the hon. Member who introduced the Bill. Although it may seem to be a detail, I think that the question of the 8 per cent., and not more than 15 per cent. as a maximum, ought to be left to the decision of the industry. The percentage may have to be specified in the Act if the Bill becomes an Act, but industries vary so much in their character that it is a very difficult question for us to decide. There is another point which
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  is very important and which ought to be mentioned at this juncture. The workers in partnership are a far greater asset to an industry than ornaments who are introduced into industry with the object of attracting capital. In the past, if anyone has been floating a company or issuing a prospectus, they have put at the head of the prospectus that "My Lord So-and-so" and "Sir So-and-so" are going to be directors. Having regard to the experience of the immediate past, we can dispense with that sort of thing. The community at large are not going to be bluffed in the future as they have been in the past. We shall discover—in fact, some of us have discovered it already—that the workers are a far greater asset to industry than the ornaments to whom I have referred.
  A great deal depends upon what we can find in our hearts to do. One of the tragedies of the past has been that employers up to 20 or 30 years ago could not find it in their hearts to allow their workpeople to participate in the results of industry. That was deplorable, and is to-day, in great measure, still deplorable. It is very easy indeed in regard to companies which have monopolies to organise the industry in such a way as will more or less guarantee a certain margin, but it is going to be difficult where there is competition. I have in mind the industry with which I happen to be associated—the textile industry. During the past four or five years that industry has gone through tremendous difficulties. People are apt to sneer and to laugh and say: "It is all very well talking about profit-sharing in times of prosperity, but, when these bad times come upon us as they have in the textile industry in recent years, it is very difficult."
  The hon. Member referred to one of the contributing features, a very important contributing feature, which detracts in a large measure from schemes such as I have just indicated, namely, the violent fluctuations which take place in certain phases of industry. In the industry to which I have just referred more people have been made bankrupt during the last few years arising from the violent fluctuations which have taken place and the low price of materials than from any other cause. Something will have to be done, and I respectfully suggest to the representative of the Board of Trade

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  that this is a phase of industry which will have to receive far more consideration and attention than has been the case previously in order to enable us to have some degree of stability to carry out the main principle enunciated by the Mover of the Bill.
  Tremendous difficulties are admitted, but have we to leave things as they are simply because there are difficulties and disappointments? I do not think that we ought to do so. It is possible, and I am very glad to be able to say so from experience and conviction, for the trade union movement, if they so desire to be represented on behalf of the workers, and the employers, to submit a definite constructive scheme of a nature which will make us all real partners in industry. We have paid a terrible price, far too great a price, up to the present time for the difficulties, disparities, and misunderstandings which have arisen substantially because of the jealousies and suspicions of employer and employed alike.
  Whatever may be said in criticism of this Bill, I am certain that something of a very definite nature will have to be done not only to make the workers of this country feel, by a mere impulse, that they are partners in industry but also to enable them to realise that they are partners in a very real and very definite sense. It is without prejudice, as I said at the very outset, with regard to some of the points raised by the hon. Member, that I have no hesitation whatever, in spite of the fact that I may come into deep conflict with many of my immediate good friends, in saying that I am so convinced of the efficacy and the rightness of this proposal, that at all costs and all hazards I am prepared to support the principle of the Bill, and I hope that the Bill will meet with a measure of success.
  Mr. HANNON: I beg to move, to leave out the word "now," and, at the end of the Question, to add the words "upon this day six months."
  With the speeches of my hon. Friend who moved the Second Reading, and the speech of the Noble Lord who seconded it, we are in very large agreement in every part of the House. The speech which we have just heard from the hon.
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  Member for Accrington (Mr. T. Snowden) was a most helpful and constructive contribution to put forward in this House on the final adjustment of some of our difficulties. It was a helpful and an unsparingly sincere examination of some of the most disturbing factors in our industrial situation to-day. The Measure before the House is not such as to make any substantial progress at all towards the solution of our industrial difficulties. The hon. Gentleman who moved the Second Reading with that bubbling of youth who loves to forage into all kinds of obscure economic cavities, gave a, whole series of beautiful illustrations which if they could be applied to the practical side of industrial life would instantly raise us to a very high level in the economic world. But beautifully constructed phrases are not going to help us to make our industrial life better.
  The Noble Lord who seconded the Motion seemed to imply that those of us who advocate Safeguarding in this House regard it as a procedure by which one section of industry secured some definite advantage over another. It is nothing of the kind. Those of us who advocate the protection of industry in this House ask for nothing more than that competitive industry in this country should be placed upon a level of equality with its rivals in every other part of the world. When you produce a Measure limiting the application of profit-sharing to those industries which have been struggling for their lives in the past and which, because of that struggle, have been, to some extent, unable to compete with their rivals abroad, it is certainly not what one would call a broadminded view of the essentials of legislation.
  The story of profit-sharing in this country is not an attractive one. Profit-sharing in industry in this country began as far back as 1842 and it went through a whole series of ups and downs which have continued up to the present time. I had an opportunity many years ago, when I was engaged in the agricultural movement, of coming into close contact with the labour and co-partnership movement in England and Scotland. That movement had been fathered by a very illustrious body of reformers in this country during the middle and the latter

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  part of the 19th century, men like Vansittart Neale, Robert Owen and George Jacob Holyoake, some on the Christian side and some on the Rationalist side, all aiming earnestly to bring about a better understanding in the industrial life of this country on the line of co-partnership, or profit-sharing.
  I will tell the House what have been the results of those efforts. During these years there have been 577 schemes introduced by 570 firms, and of these no fewer than 280 were complete failures. Of the 297 which are still in operation—of course one excepts certain schemes where big organisation offers exceptional opportunities for profit—sharing the whole project of bringing the worker into closer association either with the profit-making side of the industry or with the capital side of the industry, by the giving of shares, has made no substantial progress. It is fair to say that in regard to the introduction of profit-sharing into industry, the trade unions of this country have been either hostile or indifferent towards the profit-sharing movement during the whole of its history. Organised labour, through their trade unions, regard that medium as a process by which all sorts of settlements with capital could be adopted, and they look with grave suspicion upon what they regard as a new-fangled and fantastic scheme in order to associate the worker more closely with the industry in which he is employed.
  I agree entirely with the hon. Member for Accrington that if we could so organise industry that the worker from day to day would get a more substantial share in the industry, it would be far better for the whole of our national life in this country. This Bill not only limits the application of profit sharing in industry to those which have received the advantage of Protection, but it proposes to place those industries under a department of the State. The co-partnership Bill introduced in this House in 1922 and 1925 contemplated the creation of a co-partnership commission to regulate and deal with profit sharing and co-partnership in industry. The hon. Member who moved the Second Reading of the Bill wishes the scheme to be put directly under the Board of Trade. The Bill provides that the Board of Trade is to have wide powers in regard to these safeguarded industries. I
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  can hardly conceive anything more hopeless in relation to industrial success in this country than the putting of any branch of enterprise under the control of the Government.
  I do not mean this as any reflection upon the Parliamentary Secretary to the Board of Trade. We should be delighted to have him, with his great business capacity, at the head of some private enterprise in this country, but that he should sit in Whitehall and tell British business men how they are to apportion their profits is a thing to which I have a profound objection, and I hope that I shall never see the hon. Member in any industry in that capacity. I admit that the Board of Trade has rendered immense service to trade, but I do not want to see it concerned in industrial organisation in the way suggested by this Bill. Let us assume that an industry is to come under the provisions of this Bill. First of all, it has to prepare a scheme. That scheme is submitted to the Board of Trade. The Board of Trade approves the scheme and it is brought into operation. The whole of the obligation which is placed upon the safeguarded industry to produce its scheme is based on the assumption that it is going to make a profit. The hon. Member for Accrington did not say this quite clearly, but I know that at the back of his mind he had the experience which has been obtained in a number of industries in this country where efforts have been made to introduce profit sharing. So long as profits were made, everything in the garden was lovely, but as soon as a bad season came, as in the textile industry, immediately the schemes collapsed. How can we expect any sensible person engaged in industry in this country to undertake with any hope of success the management of enterprise with an obligation of that kind upon it?
  12 n.
  Let me tell the House of one case in Bristol with which I am familiar. A very enterprising and promising employer made arrangements with his workpeople to establish a scheme of profit sharing. At that time the industry was comparatively successful and there were profits to be divided. For two, three or four years substantial profits were made and the scheme worked with considerable satisfaction to everyone concerned. Then

  755
  there came a serious slump in trade, there were no profits to divide and he found that great numbers of his workpeople, particularly his clerical staff, in anticipation of getting a share of the profits, had made commitments which they could not meet when the slump came. This inflicted considerable hardship upon these poor people. Any hon. Member of this House who would like to see profit-sharing applied to industry with practical results, and a well-devised scheme brought into play, must recognise that it must be applied to industry as a whole. You cannot divide industry into compartments, apply this Bill to an industry which is fighting for its life, perhaps with some assistance from the State, against highly organised continental rivals, who are pouring goods into the home market of this country, and expect schemes to be carried out regardless of the difficulties imposed upon the industry.
  There has been considerable experience of profit-sharing schemes in protected countries. In eight of the United States, schemes were introduced 30 or 40 years ago on a considerable scale. Protagonists of industrial co-partnership arose in the States and did everything in their power, for the same reason that this Bill has been introduced, to bring capital and labour into closer association. Practically every one of those schemes has failed. I see from the last report of the National Conference Board of New York that only four per cent. of the schemes introduced have remained in operation up to the present date, and in some of them the situation is by no means satisfactory.
  MR. SKELTON: May I ask the hon. Member what is the period over which those schemes were started?
  MR. HANNON: Some 30 years ago, some 25 years ago, and others down to eight, nine and ten years ago. I will be very glad to give the hon. Member the actual reports so that he can see for himself. With industry in its present state, it seems much more important to introduce really effective management into industry, to give it adequate protection against foreign competition, and then to afford every reasonable facility for giving the worker a fair share in the enterprise itself. Fantastic proposals, especially in these days when industry
  756
  finds itself in such amazing difficulties, are not in any degree helping the country to solve its great problems. I can say truthfully that for the last 20 years of my life I have been continually associated with projects which aimed at the introduction of permanent peace in industry. There is not a single movement to establish a closer rapprochement between labour and capital with which I have not been associated. Consequently, I hope no one will charge me with not being willing to give complete support to the underlying purpose of this Bill. There is, however, a tendency to introduce too many feeble and fantastic proposals in the way of legislation. In the present Session we have had a series of Bills, every one of which contemplated some kind of reform, but of which none was of any particular advantage to the community. This House ought to be concentrating its attention upon much more serious measures, affecting the welfare of the masses of the people who are unemployed.
  This Bill is unnecessary, and does not make any progress whatever towards the solution of our economic difficulties. It places industry, so far as it is affected by the Bill, under the control of a Government Department. Safeguarding does not impose a disability of any sort or kind upon the consumer where Safeguarding is in operation. One would imagine, from the speeches of the Mover and the Seconder, that industries which are safeguarded exploit the consumer. Those of us who know what is actually taking place in the industries which are safeguarded—the Noble Lord shakes his head—
  Viscount CRANBORNE: I think the hon. Member has misunderstood what I said. I did not say that safeguarded industries exploited the consumer. All I said was that industries were so much more prosperous by the amount of Protection they had received, and that is true.
  Mr. HANNON: I apologise to the Noble Lord. At any rate, my hon. Friend below the Gangway did distinctly specify his view in that direction. I say that there is no tittle of evidence that the consumer has been exploited in the smallest degree in industries where safeguarding measures have been introduced.

  757
  On the contrary, the very effect of the safeguarding procedure has been—
  Mr. ALLEN: I think the hon. Member misunderstood me if he thought I expressed the opinion that Safeguarding was going to exploit the consumer. My point was that, by stimulating wages, one protected consumption, and increased consumption.
  Mr. HANNON: Of course, I accept at once the hon. Member's explanation. He concluded in such beautiful terms, that no doubt I did not appreciate entirely the full significance of what he said. If profit-sharing is to be introduced, it must apply to industry as a whole.
  Brigadier-General Sir HENRY CROFT: I beg to second the Amendment.
  We listened with great pleasure to the very interesting speech of the hon. Member who has just sat down. One feature of this debate is that we have got away from intense party disputes in order to consider an interesting proposal. I desire to assure the Mover and Seconder that I appreciate the motives which inspired them. When I was at the age of the Noble Lord, I was a very keen supporter of profit-sharing. It is a subject which appeals immensely, and I think there are numerous cases where profit-sharing could be applied. When I went into the matter with very great care many years ago, I soon discovered that there were very few industries where you might apply the principle successfully. I discovered that, in the great industries employing possibly up to 10,000 workers, when the end of the financial year had arrived and a reasonable dividend had been paid, if there was anything left over for profit-sharing it was so small that, divided among this very large number of workers, they did not say "Thank you" for the idea. That, I am afraid, is true. Profit-sharing may be very successfully adopted in an industry where you turn out a. large number of articles per head per worker. For instance, it might be possible in the manufacturing of hats, where girls are employed, if they can make a very much larger number of hats owing to the stimulus provided by the idea of profit-sharing.
  I am in no way opposed to profit-sharing. I hope it will be tried, as I
  758
  have endeavoured to try it and as other hon. Members have no doubt attempted to try it, and I hope it will be successful wherever it is tried. But, while we may all approve the idea of experimenting in the direction of profit-sharing, when it comes to laying down as the Law of the land that every industry included in the operation of the Safeguarding of Industries Act shall be compelled to go into profit-sharing, then I think we are neglecting the realities of the case. I can speak quite impartially on this subject as, although I am engaged in industries, I am not engaged in any safeguarded industry. Nor am I engaged in any industry which conceivably would be safeguarded. Therefore I can speak dispassionately. But it is a remarkable fact that any one should have singled out in this Bill the very few safeguarded industries of this country. I am glad to have the tribute, which has come from both sides of the House, as to the likelihood of increased prosperity in industries which are safeguarded. We are grateful for that tribute. At the same time I want to ask the House, regarding those industries which are at present safeguarded, why were they safeguarded? Because after the most exhaustive inquiry—
  Mr. T. SNOWDEN: The hon. and gallant Gentleman is suggesting that I said that Safeguarding is all right. I said nothing of the kind.
  Sir H. CROFT: I thought the hon. Member said that he was supporting this Bill, and I know his justice is so great—
  Mr. SNOWDEN: I said that I was supporting the principle of profit-sharing, without prejudice to Safeguarding or Free Trade. If the hon. and gallant Member had been here at the beginning of my speech he would have heard me say that.
  Sir H. CROFT: I do not want in any way to distort what the hon. Member said, but I gathered that he was supporting the Bill. Now that he is not going to vote for the Bill I will not pursue the matter further. Let me remind the hon. gentleman who introduced the Bill, and the noble Lord who supported him, that the safeguarded industries—there are very few of them—were safeguarded only because they were in extreme difficulties. Everyone knows that they were industries which were suffering most of all from

  759
  foreign competition. Yet they are singled out in this Bill for this exceptional legislation, as if they had not been harried sufficiently by the Chancellor of the Exchequer during the last two years with doubts and uncertainties. Even now all these safeguarded industries are under sentence of death from the Chancellor of the Exchequer, if the right hon. Gentleman can have his way. As a matter of fact most of the industries are at the present time fighting for their existence. They are having a terrible time, even in anticipation of what may come. They dare not push ahead with production, and imports are flowing in very large quantities into this country. Therefore it is rather a bad joke to produce this Bill and to single them out as if they were prosperous, when everyone knows that they are really having an extraordinarily bad time.
  Above all I object to compulsion in this matter. The Bill would have only one result, and that would be to drive industries out of the country. To take a recent case of protection given to an industry, the motor tyre industry, as lately as 1927. What was the result? I think I am right in saying that five great foreign business concerns brought their plant into this country and are now manufacturing here and giving employment to something like 15,000 workers. Would one of them have come to this country if it had been aware that legislation was proposed which would limit their profits after they were established here? There is one company to which I will refer. I do not know whether it is intended to come under this Bill. I refer to the famous American India Tyre Company. They came here after the Duties were imposed and they are now extraordinarily successful. I read in the "Times" the other day a remarkable report referring to the company. The company had done extremely well though they have been running only three years. Their profits have increased by something like 100 per cent. The profits naturally would be very small at the inception of the factory, but they are making very large profits now. Why did that company come here? In order to make large profits. They had a goodwill in this country, and they came here in order to get inside the tariff. I ask any business man, is it likely that a foreign firm would
  760
  come into this country if they were told that their profits are to be limited?
  Captain GUNSTON: Is it not likely that a foreign firm would come if there was more likelihood of peace in industry, without strikes and lock-outs?
  Sir H. CROFT: That is perfectly obvious, but I do not think these industries came here because this Bill was contemplated. The came here in order to be inside our tariffs and in order to get the British market. That is what influenced them. It is also contrary to Conservative doctrine that we should interfere with industry in this way. I shall be very sorry to see any form of compulsion introduced, unless there are absolute abuses which are outstanding and clear to the people of this country. Moreover, I am one who believes that high wages are most desirable. I am not one of those who hold what I might call the Manchester School idea, that industry can he put on its feet again by reducing wages. I believe that if we can maintain our wage levels we increase the purchasing power of the country and therefore the consumption power of the people as a whole. But if we deliberately legislate for the limitation of profits the result must be a tendency towards lower wages. That would be very unfortunate.
  I think there is no employer in the country who does not wish to see his men paid the highest wage that reasonably can be paid in return for the goodwill and the skill which go to the making of a successful business. If we give our industries security we are achieving that. I think I am right in saying that in the Morris and Austin works there is the highest wage level of any industry in the country. That is a remarkable tribute to the success of these industries, and I cannot see, therefore, why it is wise to introduce legislation of this character when we see a rising wage level in those industries which have received protection. Piece work is adopted very largely in these industries, and when a man by piece work can earn £6, £7 and £8 a week he is getting the advantage of profits to which the noble Lord referred. [HON. MEMBERS: "Where are these jobs?"]. If hon. Members will come to the Morris-Cowley works with me this evening I can introduce them to a large number of workers who realise the value of this scheme of payment.

  761
  I want to come to the broad principle which this Bill backs, the question of limiting profits. I can understand that hon. Gentlemen opposite, who have not thought always of the matter from both angles, should favour the idea that profits should be limited, but I cannot understand anyone on these benches, who has had every advantage of education, failing to realise that what this country wants above everything else at the present time is the success of industry. I say, deliberately, and I would say it in the poorest quarters in this country, that the greatest godsend to this country is that industries should be successful and should pay high profits. There is an amazing idea held by a large number of people in this country that, as a rule, big profits are made. That is wrong. I took the trouble yesterday to examine the cases of 20 sound industrial concerns—not speculative ventures—and I found that the average profits for the last five years came to 5 per cent. This year I think it will be found that that average is about 4 per cent. I ask the supporters of the Bill, are they wise in doing anything to limit profits in industry at the present moment? Going into industry is a risk because fashions change; to-day we may all want Belfast linen but tomorrow there may be some new process and Lancashire may introduce something better.
  Mr. ALLEN: As the hon. and gallant Gentleman has asked me a question, may I point out that under Clause 3 of the Bill the profits are not limited, but it is provided that the employés are to get 50 per cent. of the balance remaining after a dividend of 8 per cent. has been paid.
  Sir. H. CROFT: After the industry has paid 8 per cent. dividend, the profits are halved. I think that is a correct description of the proposal. What is the position of those who invest money in industry? If the hon. Member for West Belfast (Mr. Allen) had money to invest and could see an absolutely safe return of 6 per cent. from Government investments in various parts of the world, is he likely to risk his money in industry for a possible return of 8 per cent. or over.
  Mr. MARLEY: What would happen to those safe securities if everybody wanted
  762
  to put their money into them? What would the price rise to in that case?
  Sir H. CROFT: I think the hon. Member will find that there is ample margin for him to invest his money in Government securities all over the world. I lay down this proposition: Taking industry as a whole in this country during the last 10 years and, allowing for passing of dividends and liquidations owing to changes of fashion and so on, industry is not yielding more than five per cent. That is the trouble. If you do anything to prevent the chance of big profits, people are not going to risk their money in industrial concerns.
  Mr. MARLEY: What are they going to put their money in?
  Sir H. CROFT: I have already told the hon. Gentleman. I am sorry he does not understand. The individual investor, rather than risk his fortune, if he does not see a chance of good profits from industrial concerns, will invest his money in Government stocks, or other stocks of that kind, somewhere in the world, knowing that he is going to have a certain return from them. In this country we are all very modest when we talk about money affairs, and business, and I think that attitude has its disadvantages. In the United States people talk freely about their business successes or failures. It is because of the British character I think that there is so much misunderstanding between capital and labour in this country. I wish to give three instances—they are not safeguarded industries but the same thing may occur in connection with any safeguarded industry within the scope of this Bill—to show the folly of such a proposition as this.
  I was intimately connected with one industry which seemed to have the prospect of making a wonderful profit and a very large amount of money was expended upon it—I am speaking of comparatively small people—£70,000 being spent on advertising. At the end of five years, owing to a great collapse in the United States of certain agents, that company had to come to an end, and the whole of the money originally invested was lost. A few of the survivors put in a little fresh capital and kept the thing going. They put in that money on top of what they had already lost, and to-day

  763
  that company is paying a dividend of 10 per cent. and may be paying a dividend of 15 per cent. in another year. I can give hon. Gentlemen opposite full details of this matter if they care to have them, and I think the more we discuss these matters, the more we shall realise the common difficulties of capital and labour. I put it to the noble Lord the Member for Southern Dorset (Viscount Cranborne), or the hon. Member for West Belfast: Do they think that an industry such as that ought to come under a Bill of this sort?
  Mr. ALLEN: It is really impossible to answer questions dealing with hypothetical cases.
  Sir H. CROFT: I put a second case to the House, and I may say I am only dealing with facts of which I know. For 15 years I have been connected with a pioneer venture which, during all that period, has shown no profit. This year I believe 12 per cent, will be paid. Is such an industry to come under this Bill and, if so, is there to be no compensation for the loss of interest on capital, for all those previous years? I give a third case of an undertaking in which for years no profits were made. The wages were not lowered and the loss was borne entirely by those connected with the industry. Now 9 per cent. is being made. Is such a company as that to pay part of its increased profits in the way proposed, without any consideration for the years during which it was carried on at a loss?
  Viscount CRANBORNE: I am quite prepared to answer that question.
  Mr. GORDON MACDONALD: On a point of Order. Is this in order?
  Mr. SPEAKER: I was about to suggest to the hon. and gallant Baronet that he should discontinue this oral examination.
  Sir H. CROFT: I have put three cases which, I think, should convince all fair-minded men of the injustice of this scheme if applied to concerns of the kind I have indicated. I am all for profit-sharing, but it would be grossly unfair if an industry has suffered losses for many years, to compel it to yield 50 per cent. of its profits over 8 per cent. on the very first occasion when it was able
  764
  to make a, large return. Furthermore, this Bill would penalise the successful management of business. An industry which did not succeed in making a certain profit would not come under the scheme, but if an industry is successful, part of its success is to be taken from it. I submit that the effects of this Measure cannot have been thought out by the promoters. I appreciate the spirit in which it has been moved. I know that the promoters are actuated by the idea of producing goodwill in industry. By all means let us attempt profit-sharing in every single industry where we can do so. I think there is no finer conception that that the workers in industry should share in the benefits of industry, and get the reward of their skill and energy. But if you endeavour to compel all industries to come into a scheme of this kind, it will have a painful effect on many industries in this country and it will certainly prevent foreign capital from being invested here. An hon. Gentleman mentioned the safeguarding of prices and protecting the consumer, but this Bill has nothing to do with the consumer or the price. As my hon. Friend has pointed out, the result to the consumers of this country since we have made these experiments has been that the consumers in practically every case have gained.
  I want to say a final word to the promoters of the Bill and to beg of them to consider whether you should not aim at increasing the profits of industry in this country, because if you increase the profits, you are helping to give security to the workers, and you are helping—it must be so—to see that the standard of wages is maintained and, if possible, as I would like to see, increased. Instead of bringing in legislation of this description, which would penalise certain industries, I ask my hon. Friends to do everything in their power to see that at least 2,000 more millionaires are created in this country. If you can achieve that, you will have got over financial difficulties, and you will be able to wipe off a proportion of the National Debt as they pass through life and, as the Chancellor of the Exchequer takes 50 per cent. of all that they possess at death, you will find that that will be the speediest way to restore your industries. I would go to any working class audience in the country, and I believe I could

  765
  convince them that it is not by depreciating profits and making industry unsuccessful that this country will progress, but that it is by giving the freest opportunity for success and seeing that success is rewarded that you will see this country turn the corner and get back to prosperity.
  Mr. G. MACDONALD: I rise to support the Amendment, but not because of either of the speeches of those who have moved it. If I had to judge from the speeches which have been delivered, I should certainly support the Bill. I felt that both the Mover and Seconder of the Motion for the Second Reading put their case in a good way, but they failed to convince me. I agree with the Mover when he emphasized the importance of the wage-earner as a potential market. It is a truth oftentimes emphasized that the wages of the workers ultimately determine market values, and in so far as this Bill would increase the wages of the wage-earner, I should gladly support it, but I fail to see in what way it would do so.
  The Seconder of the Motion for the Second Reading used as an illustration an industry with which I am well acquainted, and said that the mining industry has something of this kind. What we have in the mining industry is not profit-sharing but proceed-sharing, which is a vastly different thing. As the Noble Lord knows, the industry is regulated from the beginning by the 87 per cent. and the 13 per cent. to which he referred. Those figures govern wages all the time and govern profits all the time, and prosperity simply means that we continue getting 87 per cent. of that prosperity, and we get 87 per cent. of the adversity. it is true that we have a Minimum Wage Act, which safeguards a minimum wage for the miners, but as regards the sharing side of it, it is not profit-sharing but proceed-sharing.
  With regard to the Bill itself, I find that its limitation to safeguarded industries is unjustifiable. If profit-sharing is a good thing for the workers and the employers of this country, it must be applied to every industry. I have not a word to say in favour of Safeguarding, and if I thought the Bill would help to keep Safeguarding, I should be strongly opposed to it for that reason, but I do not think it is fair to
  766
  pick out safeguarded industries and to say that profit-sharing shall be compulsory for them.
  In Clause 2 we, on this side, especially trade union Members, are strongly opposed to the words relative to wages. We are simply told that the wages of employés should be
  "at rates not less than those commonly paid in the district for similar work."
  Instead of those words there must be inserted words safeguarding trade union rates of wages. If the words of the Clause mean that, we accept them, but we stand for trade union rates of wages being maintained under any profit-sharing scheme. Take the mining industry. We know that the rates of wages are fixed by the employers with an eye on profits, and that wages are fixed at such a figure as will enable the employers to make profits, and if they find that that rate of wages does not enable them to make profits, they go for a reduction of wages. When you say you will allow 8 per cent. at least of profits, we know that before you can get any profits at all you have to fix your wages at so low a figure as to get profits. I do not suggest that hon. Members opposite want low wages—I do not think they do—but we know that there is a relationship between profits and wages, and it is no use suggesting that you shall fix wages at a certain figure and that if, on that figure, you find later on that 9 or 10 per cent. profits have been made, you will share those profits over 8 per cent. with the workers.
  To those of us who are in the trade union movement, that is not the right way in which to handle the wages question. We say that the workers are entitled to a living wage, to as big a wage as the industry can pay. So long as private enterprise exists and men must invest their money and their lives in industry, we say that the investors of money and labour are entitled to a reasonable return on their investments, but we say also that if you are going to fix a figure for profits before the profit-sharing takes place, we know that the wages have been determined so as to enable that figure to be secured. When you come to share profits and suggest 50 per cent. for employers and 50 per cent. for workers of the profits over 8 per cent. that proportion is entirely

  767
  wrong. In the mining industry we get 87 per cent. and the employers get 13 per cent., which is a reasonable ratio, and we say that that ratio should operate all through the sharing of profits, not 50–50. We think everybody ought to have their share, but, to take the example of the cake, which has been used, when the 87 per cent. of the cake is shared among the workmen, each workman gets a very little piece of the cake, but when the 13 per cent. of the cake is shared among the employers, each employer gets a much bigger piece of the cake than each workman gets.
  Sir GEORGE HAMILTON: No.
  Mr. MACDONALD: He does, because the number of those who have invested their money is less than the number of those who have invested their labour.
  Sir G. HAMILTON: It is not so at all.
  Mr. MACDONALD: I know that in the mining industry 87 per cent. goes to the workmen and that the piece of cake that each gets is very small, whereas of the 13 per cent. that goes to the employers the piece that each gets is very substantial, as compared with the piece that each worker gets. This kind of thing does not make for peace in industry. I do not doubt at all the motives of the promoters of the Bill. I think they want peace in industry, and so do I. It is essential, both for the worker and the employer. We want peace in industry, not by fancy schemes of industry, but by the workers in industry being treated as they ought to be treated, not only in the financial share of industry, but in the control and running of industry. We contend that schemes on those lines will bring peace far more than schemes on the lines of this Bill, and, therefore, I oppose its Second Reading.
  Sir NAIRNE STEWART SANDEMAN: The noble Lord who seconded this Bill said that it was short, simple and straightforward. He might have added the word "sweet". I oppose the Bill for a good many reasons, which I will give later. The idea of the proposer and seconder is quite definitely to get peace in industry. I think that a plan which is brought forward on compulsory lines is never going to bring that peace in in-
  768
  dustry which we all desire, and I think I shall be able to give perfectly good reasons why the Bill should be rejected; first of all, because it is compulsory, and, secondly, because there is not a single Clause in the Bill really workable. Of all the industries which have adopted profit-sharing—and I am all for profit-sharing where possible, that is, where there is a definite monopoly—more than 50 per cent, have turned out failures, for one reason or another, and the ones which, so far as I can find out, have been successes, have been schemes like gas schemes, where there was a monopoly. If it had been a question of sliding wages according to profits, I should have said there was some sense in it, but to go through a Bill like this, Clause after Clause, and know how unmanageable it is, makes one feel rather tired.
  I have had a good deal of experience in this sort of thing. I remember trying for months to work a profit-sharing scheme and finding that it was absolutely impossible to get any scheme which was fair all round. We generally found that if things were going well in that trade the wages went up, and that was actually the share of the profits the workers got; it was a share which came to them pretty quickly, and they had not any chance of the losses and missing of profits. I read in Command Paper 554 that where schemes had been successful it was entirely through the management and personality of those who were running the schemes. This scheme is to be compulsory. If you cannot make up a scheme yourself, the Board of Trade is to make it up for you. What does the Board of Trade know about all these various businesses and their intricacies? Is every industry to make up a scheme, or is the Board of Trade to make up a scheme, not only for every industry but for every firm in the country? I do not think so.
  I will mention one of the difficulties I see in this profit-sharing scheme. Take two mills side by side. They are dealing in cotton, or jute, or some very speculative raw material, the price of which varies, perhaps, 25 or 30 per cent., and even more, in the year. One firm buys its raw material cheaply, and the other very badly indeed. What will be the consequence? At the end of the year, one firm makes a very big profit, and the other a big loss. Is this going to lead to peace in industry? The workers of one

  769
  firm get a big bonus at the end of a year, and the firm which bought the raw material badly—not any fault of the workers—may have put themselves in a position that the profit-sharing would not come in for three or four years, because they would surely have to make up the loss before they could make profits in the future.
  To come to the question of good selling, I do not think that the employés in a firm are responsible for the good or the bad selling, and in a scheme like this they would certainly gain or suffer by good or bad selling. At the end of the year, if one firm had done very well, they would be quite pleased that things should go on in the way they had been going, but if they had gone badly, very naturally the employers might say, "We want to put on a director to look after the financial side of the firm as well." I, personally, do not believe that this is going to help in good management. This Bill is to apply only to safeguarded trades. What about the exporter whose trade is safeguarded? Is he to have this scheme, or is he not? I take it that he is. I do not think that that is a very sound thing. It might quite possibly be that in a works one-half of the work was under Safeguarding and the other was not.
  Then, what about the merchant who employs four or six clerks, and, perhaps, half a dozen travellers, and who speculates, very probably, in the goods he is selling, and perhaps makes a very big profit. Are his clerks and his travellers to participate in this scheme or not? Or does it not apply to a firm like that? Evidently my hon. Friend is not very sure about his scheme. I, personally, am certain that increased wages are the best way of getting at any profit-sharing. Take the cotton trade. Suppose they put up a scheme and safeguarded the cotton trade immediately. How long would it be before the workers got a penny out of that scheme? Whereas, as things are, if the cotton trade got busy to-morrow, very naturally and rightly they would at once put in for a rise of wages, which, as I said before, is their share of the profits.
  Clause 1 is, of course, the usual old thing of going to the Board of Trade and getting them to set up a scheme for you if you cannot do it yourself, which means employing more men, more bureaucracy,
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  more fiddling about. The work they would have to do in arranging schemes for all sorts of trades in this country would be almost unthinkable. Clause 2 deals with a profit-sharing fund. There is the curious phrase "reasonably necessary." What is "reasonably necessary for depreciation and reserve"? I have always considered that the whole trade and industry of this country was made up by people in the last generation being very thrifty and carrying forward all they could to reserve, and the more they carried to reserve the better. With a little bit more carried to reserve, I am certain that the country would not have been in the mess it is now, because people would have money with which to bring their works up-to-date and weather the storm. This scheme would simply mean that the employers and the employed would want to take every single penny they possibly could out of the scheme. The employer and employé would say, "Let us get out of this scheme all that we can; do not let us leave decent reserves." Who is going to say what the reserves ought to be? This Bill would do away with initiative, and would have a tendency to bring in bad feeling between the workers and the employers. With reference to Clause 3, paragraph (b), I can imagine a nice row at the works when they come to pay out these dividends. There is to be equal division for unequal earnings; a man with £4 a week will at the end of the year draw exactly the same as any apprentice, which is absolute nonsense.
  Clauses 4 and 5 are simply questions of more accounting and more work for the Board of Trade, and, when the whole scheme is finished, the balance-sheet has to be stuck up in the works in a prominent place. That, again, would be a mistake. Far too many notices are stuck up in works already, and, if a balance-sheet were put up, it would at once go across to the firm's competitors, who could, if they were clever, tell in the case of a private company in which department the profit was being made. That would be most unfair, and also unfair to the people who were in receipt of benefit under this scheme. A compulsory scheme would not be workable. It would give more trouble and worry and unrest than anything else I can think of. Why cannot it be left to the em-

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  ployers and employés to get together and arrange, where it is possible, a profit-sharing scheme? I am not against profit-sharing where it is possible, but I am certain that it is far better to leave it to the good will of the employer and employé.
  Mr. MANDER: I have been greatly shocked at the disunion which we have seen to-day among Members above the Gangway. As I belong to a party which is comparatively united, I hope that the time will come when they will settle their differences, although I hope that it will not be too soon. I was astonished to listen to the speeches made just now by the two high priests of Protection. They are the people, above everybody else, who have been going about the country in the last few years, and by speeches, propaganda, the letters to the Press have been lauding Protection as being the one and only solution of all our difficulties, and pointing out the tremendous advantages that any safeguarded industry would receive. Yet we are told to-day that they are simply on the same level as industries under the system of Free Trade, which they so despise, and that it must not be assumed that protected industries are going to he any more prosperous than those not so affected. It is extraordinarily inconsistent with everything that they have been trumpeting about the country for the last 10 years.
  1.0 p.m.
  The hon. and gallant Member for Bournemouth (Sir H. Croft) asked three questions. He gave three examples where he was shortly to receive profits, and where he had not been getting them for some years. If the hon. and gallant Member goes in for a lock-up investment, knowing that for probably 15 years he will not get any return, I see no reason why that should not come under this Bill and be shared by the employés in the industries concerned. The answer to his three questions is that they ought to come under the provisions of this Bill. I do not want to become involved in the fiscal controversy. I rise to give general support to the Bill. I do not commit myself to all its provisions by any means, but it represents a step forward in the new idea of partnership in industry, which is absolutely vital to the restoration of prosperity in the commercial life of this
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  country. I agree for once in a way with my hon. Friend the Member for Moseley (Mr. Hannon), that it would be unfair to single out one particular group of industries—the safeguarded ones—and apply this to them. If profit-sharing is a good principle, as I think it is, it ought to be applied to every industry. This Bill may have very far-reaching effects, according to the view that we take of the economic future of this country. If the views of hon. Members above the Gangway are right, and if we are to have a universal system of Protection in this country, this Bill will be of enormous importance, and will apply practically to every industry in the country, including agriculture, if that is protected. If, on the other hand, the views of those who sit on these benches are correct, this Bill will have very little effect, because it will probably not apply in due course to any industry at all.
  Exception has been taken to the principle of compulsion. I agree that if we can get schemes of this kind, whether profit-sharing or any other of the new industrial ideas that are coming forward, on voluntary lines, they are far more effective; but, if we are to wait until all the employers have been persuaded of the wisdom of doing this kind of thing, we shall have to wait for many generations. Figures have been given that probably not more than one per cent. of the employed population come under any kind of profit-sharing scheme. In these circumstances, we ought to do what has been the universal practice in this country, and let private enterprise experiment and test out what are the best methods of developing; then, when we have practice which has been proved sound and successful, we can apply the law and make it, so far as we can, the common rule. It has been done in the case of friendly societies, and there is a strong case for doing it here. In any case, the mere fact that there is compulsion in the Bill ought to be sufficient in most cases to give a stimulus to employers to bring forward a scheme without any State pressure. It is valuable to have a reserve power of this kind, but probably it would have to be used in a very small number of cases.
  I believe that the correct method of payment of labour in this country should be threefold. You should, first, have a

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  basic wage settled through negotiations by trade unions or through trade boards, which would be sufficient to enable a man to keep himself and his family in decency and comfort, with a reasonable allowance for luxuries and things of that kind. Secondly, you should reward a man according to his own personal efforts. Thirdly, you should give a man a share in the general prosperity of the firm or industry in which he is employed. The general success of industry is due not solely to the board or to the management, but to a considerable extent to the good will of the men who are employed in it. We very often hear about the value to a firm of its goodwill. That is a firm's
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  goodwill in relation to its customers, but there is another equally valuable item of goodwill that does not very often figure in balance-sheets. That is the good will that exists between the management of the firm and its employés, and that can be considerably extended by a Measure such as this. I am not at all sure that the method of profit-sharing adopted under this Bill is the right one.
  Notice taken that 40 members were not present; House counted, and 40 members not being present—
  The House was adjourned at Six Minutes after One o'Clock until Monday next, 9th March.

  EDUCATION (EVENING CLASSES).
  EDUCATION (EVENING CLASSES).
  STATE PENSIONS.
  STATE PENSIONS.
  ROYAL NAVY (DOCKYARDS, EMPLOYMENT).
  ROYAL NAVY (DOCKYARDS, EMPLOYMENT).
  RUBBER INDUSTRY.
  RUBBER INDUSTRY.
  POOR LAW RELIEF, PLAYMOUTH.
  POOR LAW RELIEF, PLAYMOUTH.