Sitting of 24 May 1933

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

PRIVATE BUSINESS.
Lyme Regis District Water Bill [Lords],
As amended, considered; to be read the Third time.
Leeds Corporation Tramways Provisional Order Bill,
Read the Third time, and passed.
Ministry of Health Provisional Order (Stourbridge) Bill,
Nottinghamshire and Derbyshire Traction Company (Trolley Vehicles) Provisional Order Bill,
Read a Second time, and committed.

ORAL ANSWERS TO QUESTIONS.

  TREATY OF VERSAILLES (SULTAN MKWAWA'S SKULL).
  Major MILNERasked the Secretary of State for Foreign Affairs whether Article 246 of the Versailles Treaty, providing for the handing over by Germany to this country of the skull of the Sultan Mkwawa, has been complied with; and whether he can inform the House of the present whereabouts of the relic and the intentions of the Government as to its ultimate resting place?
  The LORD PRESIDENT of the COUNCIL (Mr. Baldwin): No, Sir. In spite of repeated investigations on the part of the German Government, the present whereabouts of this relic has not been traced. The last part of the question, therefore, does not arise.
  Major MILNER: Will the right hon. Gentleman not take further steps in the matter?
  Mr. BALDWIN: I do not think any further steps would be likely to be any more successful.
  Mr. CHARLES WILLIAMS: Will not the right hon. Gentleman set up a Royal Commission to deal with this question, composed of the right hon. Member for Epping (Mr. Churchill) and the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), who are largely responsible in this matter?

  GERMANY.

    REFUGEES (PASSPORTS).
    Major MILNERasked the Secretary of State for Foreign Affairs whether, in view of the stateless position of refugees from Germany, he will bring the matter before the League of Nations with a view to the grant to them of international passports through the Nansen Office?
    Mr. BALDWIN: The hon. and gallant Member is, I think, under a misapprehension; the refugees from Germany to whom, I understand, this question refers, are German nationals who possess German national passports, and are therefore not technically Stateless persons, with whom the Nansen Office might be called upon to deal.
    Mr. LANSBURY: Will the Foreign Office consider the case of those German nationals who have fled the country without passports, who, if they return, will be in danger of death, and who are therefore in effect Stateless persons? Does the right hon. Gentleman not see that it is a misapprehension under which the authorities are labouring in thinking that the people with whom we are concerned possess passports?
    Mr. BALDWIN: I will bring my right hon. Friend's observations to the notice of the Foreign Office.
    Major Milner: Does the right hon. Gentleman not appreciate that the initiative should be taken by someone, and, that being so, cannot the British Government take that initiative?
    Mr. JANNER: Will my right hon. Friend also take into consideration the position of those, particularly Jewish people, in Germany whose passports have been taken from them in many cities?

    5½ PER CENT. INTERNATIONAL LOAN.
    Sir CHARLES CAYZERasked the Chancellor of the Exchequer whether any portion of the proceeds of the German ½ per cent. international loan of 1930, issued in London, was ultimately received in cash into the British Exchequer; and, if so, will he state the amount so received?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): In accordance with the Treasury Minute dated the 20th June, 1930 (Command Paper 3617), the share of the United Kingdom in the proceeds of the issue of the German Government international 5½ per cent. loan, 1930, which amounted to £9,057,247 14s. 11d., was paid to the National Debt Commissioners and applied by them to the cancellation of long term debt.
    Sir ARTHUR MICHAEL SAMUEL: In view of the money having been received by the Treasury, are the Government doing anything to protect those British subjects who subscribed this loan?
    Mr. HORE-BELISHA: A question of that sort would necessitate my being given notice.
    Sir A. M. SAMUEL: Is not the hon. Gentleman aware that those who borrowed the money, namely, the German Government, have defaulted upon their contractual obligation with respect to it?
    Mr. HORE-BELISHA: If my hon. Friend will put any question of that kind on the Paper, I will give him a considered reply.

    WORLD ECONOMIC CONFERENCE (RUSSIAN DELEGATION).
    Mr. ANSTRUTHER-GRAYasked the Secretary of State for Foreign Affairs whether representatives of the Union of Socialist Soviet Republics have accepted the invitation to attend the World Economic Conference; and, if so, can he give their names?
    Mr. BALDWIN: The Soviet Government have accepted the invitation to attend the Monetary and Economic Conference. The delegation will consist of the following members: Monsieur
    1082
    Litvinoff, Commissar for Foreign Affairs, leader of the delegation; Monsieur Nejlaouk, Vice President of the Gosplan; Monsieur Ozerski, Vice Commissar for Foreign Trade; and Monsieur Maisky, the Soviet Ambassador in London.
    Mr. BERNAYSasked the Prime Minister whether negotiations are in progress for a currency truce during the period of the Economic Conference?
    Mr. BALDWIN: I think it would be inconvenient to make statements as to any general questions which may from time to time come under informal discussion between Governments in anticipation of the Conference which is about to meet. I may add that I deprecate the use of the term "currency truce" which seems to be open to misrepresentation.

  TRADE AND COMMERCE.

    MILK PRODUCTS.
    Brigadier-General CLIFTON BROWNasked the Secretary of State for the Colonies whether, in order to diminish the glut on the home market and to increase inter-Imperial trade, he will make arrangements with the Colonies to import their processed milk products from the Dominions instead of the foreign-manufactured milk products which they now import?
    The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): I would refer my hon. and gallant Friend to the answer which I gave yesterday to a similar question by the hon. and gallant Member for the Isle of Wight (Captain P. Macdonald) of which I am sending him a copy.
    Brigadier-General BROWN: I read that. If the right hon. Gentleman gets no help from the Colonies with regard to the glut of dairy products on the English market, what steps do the Government propose to take to fulfil their promises to raise the price to the home producer?
    Sir P. CUNLIFFE-LISTER: My hon. and gallant Friend is entirely wrong in saying that no steps have been taken. There was very close consultation at Ottawa about the whole of these products, and a very large new preference was

    1083
    given in all the Colonies for which it was asked. That step was taken six months ago.
    Brigadier-General BROWN: Is my right hon. Friend aware that the Ottawa Agreements, instead of raising prices, have lowered them both to Dominion and home producers?
    Sir P. CUNLIFFE-LISTER: My hon. and gallant Friend is asking about the Colonial markets, which have nothing whatever to do with the Dominion markets. What the Dominions asked for was that in the Colonial markets a certain preference at a certain rate should be given. Those preferences have been given by every Colony that was invited to do so.

    TIMBER IMPORTS (LABOUR CONDITIONS, FINLAND).
    Mr. DOBBIEasked the President of the Board of Trade if he is aware that quantities of manufactured timber imported from Finland are made by prison labour; and if he will take that fact into consideration when negotiating a trade agreement with the representatives of Finland?
    Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department): I am not aware that any goods imported into this country from Finland are made by prison labour. In any case, goods proved to the satisfaction of the Customs to have been made by prison labour can be excluded from this country under existing legislation.
    Mr. DOBBIE: Will the hon. and gallant Gentleman be good enough to cause inquiry to be made into those conditions of labour, with a view to safeguarding British workmen?
    Lieut.-Colonel COLVILLE: I will certainly watch that point, but I have already made such inquiries, and I have no information that would lead me to believe that there are any goods of this category coming in.
    Mr. KIRKWOOD: If the hon. and gallant Gentleman finds, in the course of his inquiries, that this timber is cut up by prison labour, will he use his influence with the President of the Board of Trade to have that timber disallowed from coming into this country?
    Lieut-Colonel COLVILLE: That is a hypothetical question.

    IMPORTS AND EXPORTS (RESTRICTIONS AND PROHIBITIONS).
    Mr. HERBERT WILLIAMSasked the President of the Board of Trade whether it is the intention of His Majesty's Government in the United Kingdom to withdraw on 30th June next from the international convention for the abolition of import and export restrictions and prohibitions?
    Lieut.-Colonel COLVILLE: This question is still under consideration.
    Mr. WILLIAMS: Will the hon. and gallant Gentleman bear in mind that it will be much easier to run the policy of quantitative restriction if we are not compelled to impose restrictions on our own production as we are now?

    EMPIRE COTTON GROWING CORPORATION.
    Mr. HAMILTON KERRasked the President of the Board of Trade whether he will make a further statement to the House regarding the income and expenditure of the Empire Cotton Growing Corporation, and the average annual income and expenditure of the corporation for that period?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): The particulars which I gave to the House on 19th May regarding the income and expenditure of the Empire Cotton Growing Corporation represented income and expenditure for a period of two calendar years, 1931 and 1932. During this period the corporation's average annual income from all sources amounted to about £73,000, of which some £63,000 came from investments, while the average annual expenditure was about £76,000.

    RUSSIA.
    Mr. T. WILLIAMSasked the President of the Board of Trade what representations he has received from employers' organisations regarding the effect of the Russian embargo on our export trades; and the nature of his reply?
    Dr. BURGIN: No representations have been received from employers' organisations as to the effect of the prohibition of Russian imports on the export trades. The second part of the question does not therefore arise.
    Mr. WILLIAMSasked the Secretary to the Overseas Trade Department the value of exports from this country to Russia for the month of April, 1932, and the figures for April, 1933?
    Lieut-Colonel COLVILLE: The exports to the Soviet Union of United Kingdom produce and manufactures in April, 1932, were valued at £1,197,483, and re-exports of imported merchandise at £15,366. The corresponding figures for April, 1933, are not yet available.

    INDIA (TARIFF BOAED RECOMMENDATIONS).
    Mr. CHORLT0Nasked the Secretary of State for India if, in view of its importance to those in this country employed in the (manufacture of goods destined for India, he will publish the recommendations of the Indian Tariff Board at an early date?
    The SECRETARY of STATE for INDIA (Sir Samuel Hoare): I cannot at present add anything to the reply given on the 13th March to the hon. Member for Westhoughton (Mr. R. Davies).

    SUGAR INDUSTRY (TOBAGO).
    Mr. JOHNasked the Secretary of State for the Colonies why, Since a subsidy of £145,000 was granted to the sugar industry in Trinidad in 1930, a similar subsidy has not been granted to the sugar industry of Tobago, where similar conditions prevail and the same request has been made; and what are the reasons for this difference in treatment?
    Sir P. CUNLIFFE-LISTER: Trinidad and Tobago Ordinance No. 15 of 1930, under which assistance by way of loans was granted to the sugar industry, applied to the Colony as a whole. The object of this Ordinance was to enable owners of sugar plantations to secure advances at the rate of £2 per ton on all sugar exported during 1930 and in this way enable them to carry on their industry during the following year, and I am not aware of any differentiation against owners in Tobago who complied with the conditions prescribed by the Ordinance.

    KENYA (TREATMENT OF NATIVES).
    Colonel WEDGWOODasked the Secretary of State for the Colonies
    1086
    whether he has considered the memorandum, of which a copy was sent to him from the Kikuyu Central Association, complaining of the native registration Ordinance, the domestic servants Ordinance, the squatters Ordinance, the native liquor Ordinance, and the arrest of natives in petty cases; and whether he will have these matters compared with the law and practice in other African Crown Colonies with a view to seeing whether some amelioration of the position of Kenya natives is now practicable?
    Sir P. CUNLIFFE-LISTER: From the right hon. and gallant Gentleman's description of the subjects dealt with, it would appear that the memorandum has not yet reached me. As regards the Native Registration Ordinance, correspondence has been proceeding with the Governor, and I hope to receive definite recommendations shortly. With regard to the latter part of the question, I would point out that conditions and circumstances differ in the different Territories, but comparisons may possibly be useful in considering what action can properly be taken in Kenya.
    Colonel WEDGWOOD: Will my right hon. Friend consider in particular Tanganyika in connection with Kenya, with a view to seeing that there is similar treatment of native questions?
    Sir P. CUNLIFFE-LISTER: It may be wise to compare, but it would be unwise to give any undertaking that the same system should be followed in each country. The best administrators, who have experience of Tanganyika and elsewhere, find that the same rules do not conveniently apply in all places.
    Colonel WEDGWOOD: Does the right hon. Gentleman agree that occasional inquiries into this issue in adjacent or neighbouring Colonies would be wise, in order that the experience of one Colony could be utilised by another?
    Sir P. CUNLIFFE-LISTER: Indeed, that is the real object of referring matters of this kind to the Colonial Office, where we are able to pool the collective experience of all the different Colonies and advise one Colony in the light of the experience in another Colony.

    TRAFFIC COMMISSIONERS (INCOME AND EXPENDITURE).
    Lord SCONEasked the Minister of Transport (1) the total income from fees, etc., paid by operators in each of the years 1931–32 and 1932–33 in the Scotland (Northern), Scotland (Southern), and Newcastle traffic areas, and for the whole of Great Britain, respectively;
    (2) the total expenditure incurred, in each of the years 1931–32 and 1932–33, by the Traffic Commissioners in the Newcastle area, the Scotland (Northern) and Scotland (Southern) areas, and the whole of Great Britain, respectively?
    The MINISTER of TRANSPORT (Mr. Oliver Stanley): As the answers to the Noble Lord's two questions contain a number of figures, I will, with his permission, circulate the information in the OFFICIAL REPOET.
    Following are the answers:
    The total income from fees, etc., under the Road Traffic Act, 1930, paid by operators in the financial years 1931–32 and 1932–33 in the Scotland (Northern), Scotland (Southern) and the Northern (Newcastle) Traffic Areas and in the whole of Great Britain was:

    —

    1931–32.

    1932–33.

    £

    £

    Scotland (Northern) Area

    9,151

    8,342

    Scotland (Southern) Area

    21,300

    21,628

    Northern Area (Newcastle)

    17,980

    17,305

    Total for Great Britain

    215,210

    223,447

    It is not possible to identify the whole of the expenditure in respect of the Traffic Commissioners' organisations in the three areas as certain items of expenditure e.g. postage, printing and stationery and superannuation charges are not allocated between the areas, nor is anything included in these figures for expenses incurred in the Ministry of Transport itself in connection with the administration of Part IV of the Act of 1930.
    The identifiable expenditure in respect of the Traffic Commissioners organisations in the three areas and the total expenditure in the whole of Great Britain were as follow:
    1088

    —

    1931–32.

    1932–33.

    £

    £

    Scotland (Northern) Area

    11,169

    9,675

    Scotland (Southern) Area

    12,550

    12,187

    Northern Area (Newcastle)

    15,301

    13,707

    Total for Great Britain

    199,190

    198,847

    SERPENTINE, HYDE PARK (BATHING SEASON).
    Mr. DAVID GRENFELLasked the (First Commissioner of Works when it is proposed to open the bathing season at the Serpentine; and, in view of the fine weather, will he expedite the opening?
    Sir GEORGE PENNY (Comptroller of the Household): I will reply on behalf of the First Commissioner of Works. As announced in the Press this morning, arrangements have been made to open the bathing season at the Serpentine to-morrow.
    Mr. GRENFELL: Will the hon. Gentleman consider a suitable ceremony of opening, with the First Commissioner of Works and the Leader of the Opposition present in person?
    Sir G. PENNY: If there are any strong expressions of opinion about it in the House, I would not be averse to taking the first dive myself.

    GOVERNMENT DEPARTMENTS (MINISTRY OF PENSIONS).
    Mr. SMEDLEY CROOKEasked the Minister of Pensions the number of those employed in the Special Grants Committee Department; and what proportion of these are ex-service men?
    The MINISTER of PENSIONS (Major Tryon): There are 30 men and seven women on the staff allocated to the Special Grants Committee. The seven women are employed on duties connected with widows and children which are particularly appropriate to them. Of the 30 men, 25 are ex-service.
    Mr. CROOKE: Is it a fact that certain head officers in this Department are not ex-service men; and, further, does not my right hon. and gallant Friend agree

    1089
    that these positions should be held by ex-service men, who would be more sympathetic in dealing with the unfortunate claimants?
    Major TRYON: No, I am not prepared to admit that an ex-service man would be more sympathetic than the rest of the community, who owe so much to the ex-service men.

    NAVAL AND MILITARY PENSIONS AND GRANTS.
    Mr. SMEDLEY CROOKEasked the Minister of Pensions the number of surgical boots supplied to pensioners for each of the following years: 1929, 1930, 1931, and 1932?
    Major TRYON: The number of surgical boots supplied fluctuates from year to year with the number of pensioners to be supplied, their varying surgical condition and, of course, with the proportion due for renewal under Ministry regulations. The numbers supplied in the years referred to were:

    In 1929

    …

    …

    …

    16,600

    In 1930

    …

    …

    …

    17,100

    In 1931

    …

    …

    …

    15,300

    In 1932

    …

    …

    …

    12,600

    Mr. CROOKEasked the Minister of Pensions the total number of applications for renewal of surgical boots that have been received from pensioners during the past 18 months; the total number of surgical boots supplied; and the number of cases where it was decided that suitable adaptation of ordinary boots would meet the needs of the case?
    Major TRYON: I have no record of the total number of applications for the renewal of surgical boots. The number of surgical boots supplied during the 18 months ending 31st March last was 19,459. During the last 12 months of this period (for which alone records have been kept) the number of cases in which ordinary boots were on medical advice adapted to pensioners' requirements was 622.

  COAL INDUSTRY.

    CLOSED MINES.
    Mr. TOM SMITHasked the Secretary for Mines how many mines were closed and not reopened from 1st January,
    1090
    1927, to the end of December, 1930, and the number of wage-earners affected?
    The SECRETARY for MINES (Mr. Ernest Brown): During the period 1st January, 1927, to 31st December, 1930, 1,279 pits in Great Britain, employing 113,000 wage-earners, were closed and not reopened. Of these, 649 were small pits employing 10 men each or less and in the aggregate only 2,837 men.
    Mr. SMITH: Can the hon. Gentleman say whether any of the colliery owners concerned blamed the quota system, which was in operation in some districts on a voluntary basis, for the closing of these pits?
    Mr. BROWN: No, Sir.

    PIT TIMBER (PRICE).
    Mr. T. WILLIAMSasked the Secretary for Mines whether there has been any change in the price of pit timber Since the Russian embargo was made effective; and, if so, what were the changes?
    Mr. E. BROWN: I understand that there has been a slight tendency towards a rise in the price of pitwood for season's shipment to east coast ports, but I believe that little business is being done at the moment, and I cannot give any figures.
    Mr. WILLIAMS: If there is a tendency to a fairly large increase in the price of pit timber, will the hon. Gentleman make representations to the President of the Board of Trade to relieve the embargo?
    Mr. BROWN: The hon. Gentleman can be assured that I shall watch it closely.
    Mr. PIKE: Is the hon. Gentleman aware that there has been no change in the price of pit timber from Russia Since the embargo?

    RAILWAY AND CANAL COMMISSION.
    Lieut.-Colonel Sir VIVIAN HENDERSONasked the Prime Minister when legislation will be introduced to give effect to the recommendation of the Select Committee on Estimates last year that the functions of the Railway and Canal Commission should be redistributed?
    Mr. BALDWIN: The necessary Bill has been prepared, but I regret that, having regard to the pressure of Parliamentary business, I can hold out no hope of time being available for legislation on this subject during the present session.
    Sir V. HENDERSON: Is the right hon. Gentleman aware that something between £7,000 and £8,000 a year is being spent on salaries for this commission, which is practically doing no work?

    PRESIDENT ROOSEVELT'S MESSAGE.
    Mr. LEVYasked the Prime Minister if the Dominions are being consulted on the proposals of President Roosevelt in his world message; and, if so, whether he can make a statement on the reply of the British Empire?
    Mr. BALDWIN: His Majesty's Government in the United Kingdom have been in communication with His Majesty's Governments in the Dominions, with reference to President Roosevelt's message. A reply to that message on behalf of His Majesty's Government in the United Kingdom was sent yesterday and has been published. I understand that separate replies have already been sent by some of His Majesty's Governments in the Dominions.
    Mr. LEVY: Will my right hon. Friend be able to make a further statement with regard to the negotiations which are going on?

    SUEZ CANAL.
    Mr. WHYTEasked the Prime Minister if he is prepared to give his consideration to the suggestion that part of the share holding of the British Government in Suez Canal shares should be distributed among the principal Dominions in order to obtain for the Empire more effective representation on the board of the company?
    Mr. BALDWIN: There are at present three official British directors on the board of the Suez Canal Company and also seven unofficial British directors representing British shipping and commercial interests. I have considered the suggestion referred to in the question, but, as at present advised, I do not think it would be practicable to adopt it.
    Mr. ROBINSON: Is the right hon. Gentleman aware that a reduction in the dues of the Suez Canal would be of great assistance to the Lancashire cotton industry in meeting Japanese competition in India?
    Mr. H. WILLIAMS: How much would we have to increase our taxation if the dues were reduced?

    CENTRAL ELECTRICITY BOARD.
    Sir GIFFORD FOX [for Major EDMONDSON)asked the Minister of Transport whether he has considered the resolution sent to him by the Oxfordshire County Council in reference to certain actions on the part of the Central Electricty Board; and whether he will take such steps as may be necessary to ensure co-operation and consultation in the future between the board and local authorities in whose areas operations by the board are contemplated?
    Mr. STANLEY: I have considered the Resolution referred to as well as a previous request from the county council that I should use my influence with the board to induce them to meet the requirements of the council with regard to certain town planning proposals which were fiNaily settled only after the board's line was arranged. The board have agreed at, I understand, some inconvenience and expense, to alter the site of two towers which, I hope, will be regarded as a reasonable arrangement. With regard to the second part of the question, I am informed by the board that it is their practice to co-operate with local authorities so far as possible.

    AGRICULTURE (IMPORTED POTATOES).
    Major CARVERasked the Minister of Agriculture the average price obtained for potatoes imported into this country this year and last year?
    Mr. BLINDELL (Lord of the Treasury): I have been asked to reply. Owing to the small volume of the imports this season my right hon. Friend has no quotations in respect of old potatoes from the Continent for comparison with those ruling last year. First quality Irish at Liverpool, however,

    1093
    averaged about 63s. per ton during the first four months of this year as compared with about 200s. per ton in the corresponding period of 1932. In May of this year first quality new potatoes from the Canary Islands and Spain have averaged about 19s. 3d. per cwt. as compared with 20s. 6d. per cwt. in the corresponding month of last year.
    Mr. T. WILLIAMS: Do we understand the hon. Gentleman to say that the imports of last year's growth of potatoes are very small?
    Mr. BLINDELL: That is so.

    METROPOLITAN POLICE FORCE (VOLUNTARY FUNDS).
    Mr. JAMES DUNCAN(by Private Notice) asked the Secretary of State for the Home Department whether it is proposed to wind up the Metropolitan Police Force Provident Fund and the Criminal Investigation Department Testimonial Fund, and whether he can state if any uniform and Criminal Investigation Department officers have tendered their resignation as a consequence of any proposal to wind up these funds?
    The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): I am glad to have this opportunity of correcting a most mischievous and misleading statement to this effect which appeared in the Press this morning. There is not a word of truth in the statement that it is proposed by the Commissioner of Police to wind up these funds. These funds are voluntary funds, and all that has happened is that the Commissioner of Police has been approached informally with a view to seeing whether he can help to secure an improvement in the existing arrangements. As regards the second part of the question, the Commissioner of Police informs me that there has been no increase in the normal number of resignations and that no man retiring has ascribed his retirement to any proposal in connection with these funds.
    Mr. CAMPBELL: Can the right hon. Gentleman inform the House in which paper that appeared?
    Sir J. GILMOUR: It has appeared to my knowledge in the "Daily Herald."

BUSINESS OF THE HOUSE.
Mr. LANSBURY: May I ask the Lord President of the Council to tell us how far he proposes to go with business tonight if his Motion relating to business is carried?
Mr. BALDWIN: The Eleven o'Clock Rule is being suspended to make sure of obtaining the Committee stage of the two Financial Resolutions which are on the Paper. So far as the progress of the Finance Bill is concerned, what we hope to do is to obtain Clauses 1 to 6 and the Committee stage of the two Financial Resolutions in such time as will allow the Report stage of the co-operative societies Resolution to be started about 9 o'clock. The Report stage of the Money Resolution relating to the Metropolitan Police and the Education (Necessity of Schools) Bill will also be taken to-night. I think there is no controversy about those.
Mr. LANSBURY: As to the Metropolitan Police Money Resolution, I think the Patronage Secretary will remember that I told him last night we should like a little time for it, and we can hardly get through the co-operative Resolution much before half-past 11, if we get to it by 9 o'clock. I should like to ask him at least to postpone the Report stage of the Police Money Resolution till another night.
Mr. BALDWIN: I am quite willing to consider the point, provided, of course, that we get satisfactory progress and that we can complete the rest of the business not too late.
Mr. LANSBURYWe do not want to be too late.
Motion made, and Question put,
"That the Proceedings in Committee on Finance [Savings Banks Annuities] and on Finance [Post Office Fund] be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[Mr. Baldwin.]
The House divided, Ayes, 216; Noes, 5.

Division No. 190.]

AYES.

[3.13 p.m.

Acland, Rt. Hon. Sir Francis Dyke

Grimston, R. V.

Pearson, William G.

Acland-Troyte, Lieut-Colonel

Guest, Capt. Rt. Hon. F. E.

Peat, Charles U.

Agnew, Lieut.-Com. P. G.

Gunston, Captain D, W.

Peto.Sir Basil E. (Devon. Barnstaple)

Allen, Sir J. Sandeman (Liverp'l, W.)

Hales, Harold K.

Peto, Geoffrey K. (W'verh'pt'n, Blist'n)

Allen, William (Stoke-on-Trent)

Hamilton, Sir R. W.(Orkney & Zetl'njd)

Pickford, Hon. Mary Ada

Anetruther-Gray, W. J.

Hanbury, Cecil

Pike, Cecil F.

Bailey, Eric Alfred George

Harris, Sir Percy

PowNail, Sir Assheton

Baillie, Sir Adrian W. M.

Hartington, Marquess of

Raikes, Henry V. A. M.

Baldwin, Rt. Hon. Stanley

Hartland, George A.

Ramsay, Alexander (W. Bromwich)

Balniel, Lord

Harvey, George (Lambeth, Kenningt'n)

Ramsay, Capt. A. H. M. (Midlothian)

Barton, Capt. Basil Kersey

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

Rea, Walter Russell

Beauchamp, Sir Brograve Campbell

Haslam, Henry (Horncastle)

Reid, James S. C. (Stirling)

Beaumont, M. w. (Back*., Aylesbury)

Haslam, Sir John (Bolton)

Reid, William Allan (Derby)

Beaumont, Hon. R.E.B. (Portsm'th.C.)

Heilgers, Captain F. F. A.

Renwick, Major Gustav A.

Bernays, Robert

Henderson, Sir Vivian L. (Chelmsford)

Roberts, Aled (Wrexham)

Blindell, Jamee

Hepworth, Joseph

Robinson, John Roland

Boulton, W. W.

Herbert, Capt S. (Abbey Division)

Ropner, Colonel L.

Bower, Lieut.-Com. Robert Tatton

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

Rosbotham, Sir Samuel

Braithwaite, Maj. A. N. (Yorke, E. R.)

Hore-Belisha, Leslie

Ross, Ronald D.

Briscoe, Capt. Richard George

Hornby, Frank

Ross Taylor, Walter (Woodbridge)

Brocklebank, C. E. R.

Horobin, Ian M.

Russell, Albert (Kirkcaldy)

Brown, Ernest (Leith)

Horsbrugh, Florence

Russell, Alexander West (Tynemouth)

Brown, Brig.-Gen.H.C.(Berks.Nswb'y)

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

Russell, R. J. (Eddisbury)

Browne, Captain A. C.

Hudson, Robert Spear (Southport)

Rutherford, John (Edmonton)

Buchan-Hepburn, P. G. T.

Hume, Sir George Hopwood

Salt, Edward W.

Burnett, John George

Hunter, Dr. Joseph (Dumfries)

Samuel, Sir Arthur Michael (F'nham)

Cadogan, Hon. Edward

Hard, Sir Percy

Samuel, Rt. Hon. Sir H. (Darwen)

Calne, G. R. Hall-

Hurst, Sir Gerald B.

Sandeman, Sir A. N. Stewart

Campbell, Edward Taswell (Bromley)

Hutchison, W. D. (Essex, Romford)

Sanderson, Sir Frank Barnard

Caporn, Arthur Cecil

Jackson, J. C. (Haywood & Radcllfle)

Savery, Samuel Servington

Carver, Major William H.

Janner, Barnett

Scone, Lord

Cautley, Sir Henry S.

Jesson, Major Thomas E.

Shaw, Helen B. (Lanark, Bothweit)

Cayzer, Sir Charles (Chester, City)

Joel, Dudley J. Barnato

Shepperson, Sir Ernest W.

Cazalet, Thelma (Islington, E.)

Johnstone, Harcourt (S. Shields)

Shuts, Colonel J. J.

Cazalet, Capt. V. A. (Chippenham)

Jones, Henry Haydn (Merioneth)

Simmonds, Oliver Edwin

Chamberlain, Rt. Hon. N.(Edgbaston)

Jones, Lewis (Swansea, West)

Slater, John

Chapman, Col.R. (Houghton-le-Spring)

Ker, J. Campbell

Smith. Sir Jonah W. (Barrow-in-F.)

Choriton, Alan Ernest Leofric

Kerr, Hamilton W.

Smith, Louis W. (Sheffield, Hallam)

Christle, James Archibald

Kimball, Lawrence

Soper, Richard

Clarry, Reginald George

Law, Sir Alfred

Sotheron-Estcourt, Captain T. E.

Cochrane, Commander Hon. A. O.

Law, Richard K. (Hull, S.W.)

Spencer, Captain Richard A.

Colville, Lieut.-Colonel J.

Lees-Jones, John

Spender-Clay, Rt. Hon. Herbert H.

Conant, R. J. E.

Leighton, Major B. E. P.

Stanley, Lord (Lancaster, Fylde)

Cook, Thomas A.

Levy, Thomas

Stanley, Hon. O. F. G. (Westmorland)

Cooke, Douglas

Lewis, Oswald

Stevenson, James

Crooke, J. Smedley

Liddall, Walter S.

Stewart, J. H. (Fife, E.)

Crookshank, Capt. H. C. (Gainsb'ro)

Lloyd, Geoffrey

Stones, James

Davison, Sir William Henry

Loder, Captain J. de Vere

Storey, Samuel

Denman, Hon. R. D.

Lovat-Fraser, James Alexander

Strauss, Edward A.

Denville, Alfred

Lumley, Captain Lawrence R.

Strickland, Captain W. F.

Despencer-Robertson, Major J. A. F.

Mabane, William

Sueter, Rear-Admiral Murray F.

Dickie, John p.

MacAndrew, Capt. J. O. (Ayr)

Summersby, Charles H.

Duckworth, George A. V.

McEwen, Captain J. H. F.

Tate, Mavis Constance

Dugdale, Captain Thomas Lionel

McLean, Major Sir Alan

Thomas, Rt. Hon. J- H. (Derby)

Duncan, James A. L, (Kensington, N.)

Magnay, Thomas

Tryon, Rt, Hon. George Clement

Ellis, Sir R. Geoffrey

Makins, Brigadier-General Ernest

Wallace, Captain D. E. (Hornsey)

Elmley, Viscount

Manningham-Buller, Lt.-Col. Sir M.

Warrender, Sir Victor A. G.

Emmott, Charles E. G. C.

Margesson, Capt. Rt. Hon. H. D. R.

Watt, Captain George Steven H.

Erskine, Lord (Weston-super-Mare)

Marsden, Commander Arthur

Wayland, Sir William A.

Everard, W. Lindsay

Martin, Thomas B.

Wells, Sydney Richard

Falis, Sir Bertram G.

Mayhew, Lieut.-Colonel John

White, Henry Graham

Fielden, Edward Brocklehurst

Mills, Sir Frederick (Leyton, E.)

Whyte, Jardine Bell

Foot, Dingle (Dundee)

Mitchell, Harold P.(Br'tl'd & Chisw'k)

Williams, Charles (Devon, Torquay)

Foot, Isaac (Cornwall. Bodmin)

Mitchell, Sir W. Lane (Streatham)

Williams, Herbert G. (Croydon, S.)

Fox, Sir Gilford

Molson, A. Hugh Elsdale

windsor-Clive, Lieut.-Colonel George

Fuller, Captain A. G.

Monsell, Rl. Hon. Sir B. Eyres

Winterton, Rt. Hon. Earl

Gauit, Lieut.-Col. A. Hamilton

Morris, John Patrick (Salford, N.)

Wolmer, Rt. Hon. Viscount

Glimour, Lt.-Col. Rt. Hon. Sir John

Nail-Cain, Hon. Ronald

Womersley, Walter Jamee

Goff, Sir Park

Nation, Brigadier-General J. J. H.

Wood, Sir Murdoch McKenzie (Banff)

Goldie, Noel B.

North, Edward T.

Goodman, Colonel Albert W.

Nunn, William

TELLERS FOR THE AYES.—

Grattan.Doyle, Sir Nicholas

Palmer, Francis Noel

Sir Frederick Thomson and Sir

Griffith, F. Kingsley (Middlestaro'.W.)

Patrick, Colin M.

George Penny.

NOES.

Maxton, James

Parkinson, John Allen

TELLERS FOR THE NOES.—

Milner, Major James

Tinker, John Joseph

Mr. McGovern and Mr. Buchanan.

Owen, Major Goronwy

PUBLIC MEETING ACT (1908) AMENDMENT.
Sir GERALD HURST: I beg to move,
"That leave be given to bring in a Bill to amend the Public Meeting Act, 1908, by extending its operation to meetings held during an election for local government office."
I hope that the House will agree that this will be a useful little Measure. The Public Meeting Act, 1908, makes it an illegal practice, and provides appropriate penalties for the organising and promoting of disorder at public meetings for Parliamentary elections. It was thought at that time to be a remote possibility that people would take the trouble to organise the same sort of thing at municipal elections, and therefore that Act does not extend to municipal elections. The only object of the Bill which I am asking leave to introduce is to place municipal elections on exactly the same footing for this purpose as Parliamentary elections. A similar Bill was introduced in 1928, when it was well received in all quarters of the House, but no progress was made with it. The principle of free speech as applied to municipal elections is exactly as sacred as in Parliamentary elections, and if hooligans disturb public meetings at municipal elections they are invading exactly the same rights as they invade in the case of Parliamentary elections. Hon. Members will know how useful this Measure will be. We all know which party is responsible for breaking up meetings, the party to which we do not happen to belong. Disorder is something of which no party can approve. If a candidate wants to tell people what he stands for, and if the audience agrees with him, they will want to hear his wisdom. If they do not agree with him, they may want to listen to him nevertheless, in order to see to what lengths human effrontery can go.
We therefore have a common interest in supporting this Measure. There is nothing in it which will interfere in any way with the ancient and attractive art of heckling. It will still be permissible for Socialist hecklers to ask such questions as What price equality of sacrifice?" and "Who stole the children's milk?" Earnest-minded young Liberals can still ask what were the views of Cob-den on this matter in 1842. Nothing in
1098
this Bill will interfere with such heckling, or with the mild and dignified tumult which we all associate with well-conducted elections or with Liberal conferences, when the question is mooted as to whether the right hon. Gentleman the Member for Darwen (Sir H. Samuel) should or should not cross the Floor of the House. That sort of tumult will still take place. If a heckler has been fortunate enough to extract from a candidate an express pledge that he will give a plain answer to a plain question, yes, or no, the heckler will still be able to ask the candidate the old question: "Have you left off beating your wife?" All the old foibles and delights of election time will still remain. This Bill is only intended to suppress, so far as municipal elections go, the organised violence which prevents free speech and free hEarlng at election meetings. All of us like a little frolic at election times, but we do not want pandemonium. The House will remember the words of Tennyson, when he spoke of England as:
"…the land that freemen till,
That sober-suited Freedom chose;
The land, where, girt with friends or foes,
A man may speak the thing he will."
The Bill is put forward to enable candidates at municipal elections to have a chance to deliver their message to a waiting world, and to enable their audiences, poor devils, to listen to what they have to say.
Question put, and agreed to.
Bill ordered to be brought in by Sir Gerald Hurst, Lieut.-Colonel Ainsworth, Lieut.-Commander Astbury, Colonel Broadbent, Mr. Choriton, Mr. Essenhigh, Captain Fuller, Mr. Goldie, Mr. Magnay, Sir Alan McLean, Mr. Potter, and Mr. Savery.

PUBLIC MEETING ACT (1908) AMENDMENT BILL,
"to amend the Public Meeting Act, 1908, by extending its operation to meetings held during an election for local government office," presented accordingly, and read the First time; to be read a Second time upon Friday, 16th June, and to be printed. [Bill 111.]

MESSAGE FROM THE LORDS.
That they have agreed to—
City of London (Various Powers) Bill, with Amendments.

ORDERS OF THE DAY.

  FINANCE BILL.
  Considered in Committee.
  [Sir DENNIS HEEBEET in the Chair.]

  FINANCE BILL.

    CLAUSE 1.—(Seduced duties and drawbacks on certain descriptions of beer.)
    3.29 p.m.
    Mr. NAIL-CAIN: I beg to move, in page 2, line 28, at the end, to insert the words:
    "(5) Where the aggregate amount of the excise duty charged under this section on the several constituents of beer which has been prepared by a process of mixing by a brewer for sale exceeds the amount of the excise duty which would have been chargeable under this section on the mixture the Commissioners may, subject to such conditions as they may prescribe, remit or repay the excess.
    "The conditions prescribed under this sub-section may, notwithstanding anything in any enactment, include conditions as to the method of computing the last-mentioned amount and the method of ascertaining any matter by reference to which that amount is to be computed."
    This Amendment is a technical one arising out of the change in the method of assessing the Beer Duty laid down in the Budget, and I hope that the Chancellor of the Exchequer will see his way to accept it. It can fairly be described as one of the adjustments which are so frequently found to be necessary when new machinery is put into motion. Some brewery companies prepare the beer which they offer to their customers by special methods, for example by brewing two different beers and mixing them. Owing to the operation of the new scale of Beer Duty, some breweries which adopt special methods of catering for their customers' tastes are liable, as the scale stands, to pay more duty than the scale contemplates for beer of the original gravity which their customers actually get. I am sure that the Chancellor never intended that the new duty should have this effect, and my Amendment is designed to rectify the position by enabling the duty in these cases to be charged according to the original gravity of the beverage after it has undergone the kind of preparation that I have described.
    Captain HEILGERS: I beg to second the Amendment.
    3.31 p.m.
    The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): I have examined the Amendment of my hon. Friend, and I must admit at once to the Committee that the practice which he has described was unknown to the Customs when the original Clause was framed. We were not familiar with the various methods of brewing, and, when our attention was called to this particular method, it was at once seen that the Clause as it was drawn would place an additional burden upon brewers who were following this sort of practice, as compared with other brewers. That was not what we intended, and, as we framed our estimates of revenue, not upon this practice, but upon the original gravity of the beef as it was supplied to the customer, we shall not lose any revenue by accepting my hon. Friend's Amendment;. In the circumstances, therefore, I have pleasure in accepting the Amendment.
    Amendment agreed to.
    Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
    3.33 p.m.
    Sir FRANCIS ACLAND: Whatever may be said about the party to which I belong, it has never been said of them that they were anxious to sea a penny off the pint of beer, and, therefore, I begin what I have to say with a delightful sense of freedom. I should like to take as a text for my remarks a sentence from the leading article of this month's Bulletin of the Fellowship of Freedom and Reform, which, as the Committee knows, is one of the aliases of the drink trade. They said this:
    "As Mr. Chamberlain said again and again with transparent earnestness, his one reason for reducing the Beer Duty was not to enrich the brewers or to propitiate beer drinkers, but simply to prevent the steady decline of a great revenue."
    I have no quarrel with that; it in no way misrepresents the Chancellor's Budget speech; that was the impression that he gave. He took the line of the righteous Chancellor of the Exchequer, primarily concerned with revenue, and only secondarily concerned with any social or moral questions; and I think that, without saying so in so many words,

    1105
    he gave us the impression that he was seeking, by this change, an optimum figure of taxation which would bring him in as much revenue as possible. That, I think, was what the ordinary man in the street has gathered—that we must put the tax lower in order to get more revenue. Indeed, that was made quite definite by the Financial Secretary to the Treasury in his excellent speech winding up the Debate on the Second Reading of the Finance Bill—a speech which, I learn from the "Western Morning News," enormously impressed the Cabinet. I wonder where they got that from. The Financial Secretary put the point quite clearly. He said:
    "The literal solemn reason for the reduction of duty was that the unemployed and all salaried officials might continue to receive their pay."
    It seems to me to be putting it rather high to say that the unemployed and all our salaried officials depend on the figure of the Beer Duty, but it makes it quite clear that the idea is that by putting the duty lower more revenue will be obtained. I hold that that argument, on the figures actually given in the Budget speech, is completely untenable. In his Budget statement, the Chancellor of the Exchequer named the amount that he would lose if he kept the Beer Duty as it then was. He said that, whereas it had brought in £74,000,000, if he left it where it was it would probably bring in only £68,000,000; that is to say, there would be a fall of £6,000,000. But, by the reduction of the tax by 1d. a pint, the estimated fall is increased from £6,000,000 to £14,000,000, an increased fall of revenue of £8,000,000. It does not look as though there was much search for an optimum figure there, and it does not seem to hold out any special hope of the unemployed and the civil servants continuing to get what they receive.
    The only argument which can be sustained to the effect that this decrease of duty is going to increase the revenue is on the idea that the change will not show itself in one year, that the habits of the people change slowly, and that it will take people some years to learn that beer is 1d. a pint cheaper and to adapt their habits to this new dispensation, so that, although we are demonstrably going to lose an extra £8,000,000 this year by the change, we may make it up, and even more, perhaps, in time. I cannot accept
    1106
    that at all. Social habits do change, and sometimes change slowly. People who -some years ago, when having a house built for themselves, saw to providing a nursery, now prefer to put their money into a garage; they prefer a baby Austin to the real baby, very often. Similarly, you may get a development of the bridge habit, or the cocktail habit, or something of that kind, gradually growing over several years. But, surely, when 1d. a pint is taken off beer, people who are going to resume the fine old patriotic habit of beer drinking, on which the unemployed and the civil servants depend so much, will do it pretty well at once if they are going to do it at all. Nobody takes three or four years to decide whether he prefers to spend a spare shilling on beer or on the cinema.
    My point is, and I think that the House, whatever 1ts views may be on the main question, is bound to agree, that, if we are going to lose an extra £8,000,000 by this alteration in the present year, we shall, other things Being equal, continue to lose it next year and the year after. Of course, if there is an all-round increase of purchasing power, more will be spent on beer, but that is another matter. I do not believe that the change has been made in order to reach an optimum figure of taxation; I believe that one of the parties in one of those historic alliances between a trade and a party has got restive and "cut up rusty," and that the National Government has yielded to the pressure.
    The Chancellor of the Exchequer cannot, on his own figures, be seeking to prevent, as the organ which I have quoted says, a steady decline in a great revenue; he is deliberately planning a decline of revenue, which, of course, has to be met in this Budget and in subsequent Budgets by extra taxes elsewhere if the Budget is to be made to balance. Is it justifiable to give a considerable relief to one class of taxpayers without giving any consideration at all to the cuts in expenditure which were made at the time of the financial crisis? I am not going to quote assurances and pledges, because that only tends to bring the House into disrepute, but we all know what was said at the time the cuts were made. Thousands said it all over the country on the authority of the Government. I said it as chairman of the

    1107
    Devon Education Committee when I had to put through the cuts in teachers' salaries. One said, on the authority of leading Ministers, that, when it became possible to relieve taxation in any important particular, those who were now cut would have, at any rate, prior consideration—not a pledge of restitution or anything of that kind but, at any rate, prior consideration. That applied to the police, to the teachers, and to the unemployed, particularly to the cuts in the children's allowances which a lot of us felt were really rather hard. How does the Chancellor deal with that? He does not. He has not, I think, ever referred to the definite expectation held out at the time the cuts were made. He does not even say he acknowledges the commitments implied that the children's allowances shall be reconsidered as soon as possible. [Interruption.] There was a cut in the general rate of unemployment pay for adults and children. [HON. MEMBERS: "Not for children!"] If I am wrong, I withdraw that point, but the general allowance for the family was reduced.
    The argument that it is really more important nowadays that the nation should drink more and stronger beer than that things of this kind should be reconsidered if they press very hardly on a great many people might have been difficult to sustain, though I doubt if any argument would have been impossible to representatives of the Government considering some of the points that they have been able to argue in the House lately. What I object to is that all these anticipations of early revision of cuts were deliberately ignored or forgotten. I have no doubt that to some of the Government supporters this decrease in the taxation of beer is very good popularity and so on. It gives them an excellent slogan. I can imagine at the end of their speeches: "We have suppressed the Sinking Fund in order to increase the drinking fund." "We have decreased the cost of living by 1d. a pint." All that will sound very well, but, in the long run, there are more important things than being able to please that section of our people. One of them, I think, is to keep faith, and certainly those who suffered the cuts at the time of the crisis feel that faith has not been
    1108
    kept with them when, without any consideration being given to the matter, as soon as any considerable relief can be given at all it is given to people who form another class on the whole to themselves. I do not think it is sufficient to say that the cost of living has gone down Since the cuts were made, though, of course, that is so. If trade improves, it may go up again. The sort of thing that they want to know is where they stand with regard to these expectations that were held out to them that as soon as circumstances improved their case should be reconsidered.
    I say deliberately, looking at the matter from a broad social standpoint, a time of very great hardship for the masses of the people is not the time to reduce the Beer Duty. More beer means less bread and fewer boots.
    Captain ARTHUR EVANS: Rot!
    Sir F. ACLAND: That is rather un-parliamentary, if not rude. I think I know the conditions in the industrial areas through the work that I have tried to do in connection with allotments for the unemployed quite as well as some of those who interrupt me, and I say deliberately that more spent on beer generally means less spent on food, clothing, coal, and things of that kind. That is a serious thing, because for every shilling spent on beer, owing to the high taxation upon it, a very small proportion goes in wages, and of every shilling spent on boots, bread or coal a very large proportion goes in wages. It is a perfectly arguable and a good point that at a time like this we should try to keep our expenditure in the trades where expenditure gives the greatest amount of employment. It is wrong at a time like this to try deliberately to divert expenditure from things which maintain the stamina, the physique and the health of the people to something which, to put it mildly, has not that effect. It is said that the Roman Empire fell because the later Emperors adopted a policy of bread and circuses. There was some method in their madness. It was bread that they gave and not wine. It is rather a remarkable thing that the consumption of bread has very considerably gone down in the last few years. I know, as chairman of an education committee, that hundreds of thousands of children are underfed already in bread and other

    1109
    necessities. This change will certainly make that worse. I intend, therefore, to vote against the Clause, however many or however few vote with me.
    3.48 p.m.
    Viscount WOLMER: The right hon. Gentleman's logic is difficult to follow. He has told the Committee that the more spent on beer the less money there will be to spend on bread and on boots. But the effect of this Clause is to make beer cheaper and, therefore, a person who is accustomed and desires to drink a certain number of pints of beer in a week will, as the result of the Clause, be saved a corresponding number of pennies which, according to the right hon. Gentleman's logic, he will be able to spend on boots and bread.
    Sir F. ACLAND: The Chancellor of the Exchequer made it clear that he hoped that this would lead to more beer being consumed.
    Viscount WOLMER: I do, too, but I was merely pointing out that the logic of the right hon. Gentleman's argument led to a conclusion exactly opposite to that which he wished to draw. But the argument that we have just heard is the type of argument that we have heard from the Liberal party for the last 20 years and more, although during the interval the taxation of beer has increased to 12 times what it was before the War. The argument that I should like to address for his consideration is that any attempt to drive this or any country into a higher state of morality or temperance by putting penal taxation on beer or any other drink is bound to end in disaster and is in itself most unjust and, indeed, in my opinion immoral. You will not and cannot achieve sobriety by this means. The taxation of beer, as it was left by Lord Snowden's Budget and as it will be left after this Bill has been passed, amounts to an attempt to bring about prohibition by high taxation. I should have thought that the failure of prohibtion in America ought to have warned all temperance reformers of the futility of trying to bring about sobriety by legislation. It is true that there is a great deal more sobriety in this country than there was 20 or even 50 years ago, but I do not think that the higher taxation is the root cause of it. You will find greater sobriety in all ranks of life and
    1110
    among all conditions of persons. It used to be a common expression to say that someone was "as drunk as a lord." That expression is not, I am glad to think, commonly used nowadays.
    Mrs McGOVERN: It is "as drunk as an M.P." now.
    Viscount WOLMER: Yes, perhaps it is another instance of how prerogatives have passed from one House to the other. At any rate, it goes to show that sobriety has nothing to do with the length of one's purse. I submit to my hon. Friends of the Liberal party that it is fundamentally wrong and unjust to put such a terrific burden upon the section of the community who are not teetotallers. Man is not naturally a teetotaller. You will find that alcohol has been drunk by the human race throughout all ages, and it is fair and right to say that beer is part of the food of ordinary mankind. Beer is the wine of England. It is utterly unjust to select a certain section of the community and put this terrific taxation upon the non-teetotallers and upon the smokers. By far and away the greater portion of the contribution which the wage-earning class make to the national Exchequer comes from the beer drinkers and the smokers.
    Justice demands that the Beer Duty should be brought down considerably lower than the Chancellor of the Exchequer has been able to bring it down in the Budget, and taxation ought to be reapportioned more fairly so that all sections of the community, whatever their individual habits, may make their fair contribution to the national Exchequer according to the means of their purse. Not only would that remove injustice, but it would also tend towards removing what has always seemed to me to be a very legitimate cause of social discontent. Take those large sections of the wage earners like the railway men, and the civil servants, postal employés, for instance, whose wages depend by agreement on the cost of living. During the last few years their wages have been steadily falling according to the official table of the cost of living, but in the official table the cost of beer and tobacco is not taken into account at all. Whereas the incomes of total abstainers may have fallen in proportion to the cost of living, the man who throughout his life has been

    1111
    accustomed to drink so many glasses of beer a week has had his wages reduced, although the price of beer has actually been raised. That is a real attack upon the standard of life, and if I were a wage earner in that position I should feel that I was being very unjustly treated and that it was, unfair as between me and the rest of the community.
    While thanking the Chancellor of the Exchequer for this concession, I venture to say that justice has not yet been done to the beer drinkers of the country. They should bear their fair share of taxation, but ever Since the War they have been asked and compelled to bear a great deal more than their fair share of taxation. One result has been that you have had the beer drinkers and the brewers organised as a political force perhaps in a way in which they have never before been organised. There has been much legitimate resentment caused by the unholy alliance between the Exchequer and the teetotallers which has brought about this high taxation. Therefore, I hope that the Chancellor of the Exchequer in future years, when he has more money to spare, will be able to address his attention to the question of whether the beer drinkers cannot have a further remission in taxation, and whether a greater part of the burden of national taxation ought not to be put upon those who do not smoke and who do not drink beer. In regard to the point made by the right hon. Gentleman the Member for North Cornwall (Sir F. Acland) about the teachers' and the other cuts, I should have thought that it was possibly a little outside the scope of this Clause and more suited to a Second Reading Debate, but I would remind him that even teachers and policemen and the unemployed will, as a result of this Clause, get their beer cheaper.
    3.57 p.m.
    Mr. ISAAC FOOT: The noble Lord the Member for Aldershot (Viscount Wolmer) has taken us away from the essential point in this Debate. We are not concerned with the question of whether there ought to be high and penal taxation upon beer, nor are we in this House responsible for what was done in September, 1931, by the then National Government. I remember that the action which was then taken was taken in the
    1112
    midst of high scenes of enthusiasm, and that when the late Chancellor of the Exchequer, who was then Mr. Snowden, introduced his proposals, including this tax, Members upon the several benches, with some exceptions on the other side, rose and cheered the impositions which were made. So that all that has been said by the Noble Lord about the danger of high and penal taxation is undoubtedly beside the mark in to-day's Debate. That imposition was made in a time of national crisis and desperate need. It was the contribution which one section of the community was called upon to make. That was not very long ago. The issue to-day is not what has been done by the Liberal party for the last 20 years, or the immaculate fecord of the party to which the noble Lord belongs. The whole question is whether, when the impositions which were made at a time of national need, come to be reduced, beer drinkers have the first claim to the exclusion of the other suffering parts of the community. That is the whole issue, and it is upon that issue I should like to say a few words.
    Brigadier-General Sir HENRY CROFT: Surely, the issue is that the tax has completely failed and that the revenue was not forthcoming, and that if the tax had been pursued under the present law, the revenue would have declined more and more each year.
    Mr. FOOT: The hon. and gallant Gentleman will be able to put that point as he did last year, when, very shortly after joining in the cheers of September, 1931, he voted with the others to bring down the National Government because they were not prepared to take off that part of the burden within a few months of the imposition.
    Sir H. CROFT: That is not so. I did not vote.
    Mr. FOOT: I beg the hon. and gallant Gentleman's pardon. I apologise at once to the hon. and gallant Gentleman. I know that at that time he was extremely interested in the Amendment, as he would at once admit, and there were, I think, 31 Members pledged to support the National Government who went into the Lobby in the early part of the last year because of their resentment against this tax. I have no wish to include the hon.

    1113
    and gallant Member, although I know that he was very active in the matter at that time. Before the general issue is discussed, I want to put a question to the Chancellor of the Exchequer, or to whoever may be answering on this matter.
    The CHAIRMAN: I would call the hon. Member's attention to the fact that we are now talking on the Clause.
    Mr. FOOT: On the general Clause. Taking the general Clause, I want to see its effect. I heard the Chancellor of the Exchequer, when he introduced his Budget, use these words:
    "It is very difficult to predict with any confidence what the cost of these changes in the Beer Duty will he…I am advised that I cannot expect any great increase in consumption to follow immediately on this change, although it is very possible that the decline may be arrested. I put the loss at £14,000,000."—[OFFICIAL REPORT, 25th April, 1933; col. 57, Vol. 277.]
    On the same day that that statement was made by the right hon. Gentleman, there was published the Financial Statement in the name of the Financial Secretary to the Treasury, and some figures were given in relation to the Beer Duty upon page 23 of that Statement, according to which the Budget estimate for 1932–33 was £80,000,000. The receipts in respect of the Beer Duty were approximately £73,725,000. The estimated receipts in respect of the duty for 1933–34 were £54,000,000. According to those figures, therefore, there was a difference of £19,725,000. The figure given by the right hon. Gentleman as his estimate of loss was £14,000,000. Between the £14,000,000 and the £19,725,000 there is a difference of £5,725,000, and I would like some explanation of the difference between those two figures. Is the right hon. Gentleman expecting that there will be an increase in the consumption of beer which will make up the difference between the £14,000,000, which he gave in his Budget Statement as the approximate figure, and the £19,725,000 which was given as the figure in the Financial Statement? According to present calculations, the difference would represent an increase in consumption equal to 2,290,000 barrels, so far as I have been able to calculate. That increase is one upon which, perhaps, we can be advised by those who are able to give the Treasury information.
    1114
    Regarding the whole issue as to why this relief should be given to this one industry, I want briefly to make my protest against what has been done. I think that this is a cynical betrayal of those interests upon which the National Government relied at the time they made their first appeal. I think that this concession is now being made, not for purely economic reasons, but because of very heavy pressure brought to bear particularly in recent months. We saw something of that pressure last year. Within a few months of the imposition, at a time when all parts of the community were asked to take their share of an unconscionable burden, that protest was raised in this House, although at that time there was very great need throughout the country, and the desperate position was being felt by everyone in the community. Lord Snowden, it will be remembered, made his appeal in the House at that time, and quoted the lines of Swinburne. I wonder what would have been the result if, after quoting the words of Swinburne, and talking to us about Shakespeare, Milton, Wordsworth and the rest, it had been said from those benches, "We are asking you to take these heavy burdens upon yourselves. We are asking the poorest of the community to accept cuts that will go right into their day-to-day life, making very much heavier their burden, but, as soon as we are able to give some relief, we propose that that relief shall be given to beer, that it shall be given to the one industry in all the country that has suffered least in the midst of this national distress." If that had been the appeal made from those benches at that time, I do not think the National Government, when they went to the country in the next few weeks, would have had the response they did have.
    It is the betrayal of those interests against which I make my protest. During the Debate upon this Bill, it is evident from the Amendments now on the Paper, a great many concessions will be asked for—concessions for the poorest people going to places of entertainment, concessions for this class and for that class. Every one of those claims, probably, will now have to be denied, not because there is a continuance of the national stringency which makes any relief impossible, but because all the relief has practically gone in one direction, and the other dogs will

    1115
    be treated like the dog of Mother Hubbard. They will get as much as Mother Hubbard's dog when they come round for their bone. They will be denied their bone, not because there is no bone, but because the biggest dog has gone off with the whole joint, and that has been given, not because he is the hungriest dog, but because he has the fiercest snarl and the sharpest teeth.
    4.6 p.m.
    Mr. ANEURIN BEVAN: After listening to many discussions in this House about the Beer Duty, I find it very difficult to become indignant about beer. I cannot sympathise with those people who look upon beer as such a dreadful sin that it is quite impossible to speak dispassionately on the subject. At the same time, I cannot look with patience upon those who regard drinking beer as such an excessively pleasant pastime that they defend it with as much religious zeal as some people attack it. It seems to me that we ought to look upon this discussion from the point of view of social justice and political equity, and not from the point of view of the sacrosanctity of the glass of beer. The Noble Lord, who has just left, used a most remarkable argument in asking us to believe that the reason why it is sought to reduce the price of beer is that, in consequence of the high price of beer, the brewing industry is now declining, and a considerable revenue is being lost to the State. I would like to ask Conservative Members kindly to tell the Committee where they stand in the matter. In the course of the last few years every Minister of the Crown has been engaged in the task of raising the prices of commodities. We have been told by the Prime Minister and by the Minister of Agriculture that this nation, and even the world at the moment, are suffering from the fact that prices are too low, and that if it be only possible to raise the prices of goods, prosperity will return.
    Sir JOSEPH LAMB: It is a question of primary products—not secondary.
    Mr. BEVAN: We have heard the arguments about primary products over and over again. Everyone knows that if the prices of primary products are raised, the cost of production in various industries
    1116
    will necessarily be raised, and that cost ultimately will be transferred to the cost of the retail products and the byproducts. I would like Conservative Members to be consistent. In one direction their policy has succeeded. It has succeeded in raising the price of beer, and one would have thought, therefore, that if their economics were sound, prosperity ought to come to the brewing industry. Tariffs are being put on, artificial shortages are being conspired for, the Minister of Agriculture is deliberately engaged in a policy of restricting agricultural production to raise prices, and I should have thought that they would be delighted that at last the price of beer was being raised and that they had succeeded in one part of their policy. Now we are told that the price of beer must be reduced in order to increase the consumption of beer. Does not the same logic apply to every other product? Is it not true that if you reduce the price of beer, of bread and of fruit, there will be an additional consumption of those products? Is it not, therefore, reasonable to ask that the Government should be engaged in a policy of general cheapness?
    If that were their policy, I would agree with them in attempting to reduce the price of beer in order that men who want to have more of it may be able to obtain more. But, at the same time that those people are engaged in reducing the price of beer, they are conspiring to increase the price of bread, which must result in a decreased consumption of bread, and ultimately in a decreased consumption of beer. Therefore, I would submit that if anybody is a real defender of the workman's right to drink beer, it is the party seeking to bring about such a general cheapness of commodities as will leave more purchasing power in his hands to buy more beer. It is all cant for the Conservative party to say that they are engaged in any other task this evening than a conspiracy to put more profits into the pockets of the brewers. They are not engaged at all in the task of enabling the workman to drink more beer. That is simply political camouflage. They are seeking to put more profits into the pockets of the brewing industry which, I am told, makes generous contributions to the headquarters of the Conservative party.
    Lieut.-Commander BOWER: Will the hon. Gentleman tell us what possible interest the Majority of our party have in the brewers? So far as I understand, the vast Majority of our party have no interest in the brewers at all, but in the interests of tens of thousands of working men in our constituencies.
    Mr. BEVAN: I was about to come to that aspect of the argument. I was pointing out that if the Conservative party had a genuine interest in the working classes, and desired to make their lives more comfortable and to extend their amenities, they would be engaged in a policy of general cheapness, instead of which, they are engaged in a conspiracy of creating artificial shortages and making many primary products consumed by them dearer, and therefore adding to the burdens of the poor. The hon. and gallant Member has no right to sentimentalise about the working class. What he is sentimentalising about is the brewer, and not the working man at all.
    Lieut.-Coltimander BOWER: Will the hon. Member say that in the working men's clubs in his constituency?
    Mr. BEVAN: I have no doubt at all that if the League of Freedom and Re-form, or whatever it may call itself, attaches sufficient importance to what I say in the House, it will see to it that the clubs in my constituency will know what I am saying. If the working man wants more beer, make him more prosperous and he will have more money to buy more beer. The Conservative party have raised the price of an article which we are told by medical science ought to be consumed in much larger quantities by working-class people. They raised the price of tomatoes. Hon. Members may say that that is a subject for merriment. Why is it a subject for merriment? They are engaged in this House in raising the price of milk, tomatoes, potatoes, bread and of every article of working-class diet, and then they have the humbug to come to the House of Commons and say, "On behalf or the working-class, we are trying to reduce the price of the pint of beer." It is too bad that we should have to listen to this sort of thing. The Conservative party have regarded themselves as the traditional upholders of the working man's pint of beer. In my constituency a very large percentage of the population
    1118
    like a glass of beer. I desire that my constituents should be able to enjoy the pleasure of that amenity without detriment to other amenities which they desire to enjoy, but what you are attempting to do is to secure for the brewing industry a favoured position, because at the same time that you are attempting to reduce the price of beer you are attempting to increase the price of primary products.
    Hon. Members must be consistent in their politics. I do not mind them subscribing to the point of view which is held by many reputable economists, that you ought to raise the price of goods, because by doing so you will be able to accomplish all sorts of desirable things. That is a conceivable line of argument, but it is not conceivable in logic that you should come forward at another stage and say that cheapness is what you want, cheapness of the product of one particular industry which, if it does not contribute to the individual expenses of members of the Conservative party, does subscribe very generously to Conservative propaganda throughout Great Britain. I do not accuse individual members of the Conservative party, but I do suggest that I am well within my rights in saying that a traditional supporter of the Conservative party in Great Britain has been the brewing interest, and that when hon. Members come forward in the House of Commons and generously give £14,000,000 away to the brewing industry, if it is not personal nepotism it is political nepotism, because you are paying for past favours received.
    The Noble Lord said that as a consequence of the raising of the price of beer there has been acute social discontent, that the masses are stirred up because of this iniquitous burden which has been put upon them in past Budgets. I have received numerous postcards from my own constituency urging me to support the reduction in the Beer Duty. It is remarkable that those postcards are all written in the same language and the same words. I do not object to that form of pressure, because I am not susceptible to it. Perhaps other hon. Members resent it because they feel that they may succumb to such pressure. To argue that individual members of my constituency are up in arms about the high price of beer when standard communications

    1119
    are sent out from every public house asking as many working men as possible to sign, is bunkum. I will go to any working man's club with any hon. Member of this House, and argue this proposition, that if the Chancellor of the Exchequer in the circumstances facing Great Britain to-day has £14,000,000 to dispose of, the working men in that club will say that that. sum of £14,000,000 should have been given to the children and the wives of unemployed men before it was given to the beer industry. I will go to any working man's club in Great Britain and put that proposition.
    I say to the Government that they are insulting decent Britishers when they say that they would prefer to starve unemployed men and their dependents in order that they may have cheaper beer. I make hon. Members that challenge, and I put it fairly. The proposition is this: The Chancellor of the Exchequer says: "I have £14,000,000 to dispose of. To whom shall I give it? Shall I give the £14,000,000 to the men from whom you have taken £32,000,000?"Conservative Members come here and weep crocodile tears over the working man's glass of beer, and yet they are taking £10,000,000 a year more from the working people than they contracted to take, and they suggest that they are supporting the working man by the proposition to cheapen beer. The Chancellor of the Exchequer has £14,000,000 to dispose of. To whom shall it be given? He is giving it to the beer interest. Have I put the proposition fairly? [HON. MEMBERS: "No!"] Will hon. Members tell me where the unfairness is? They will say they desire to maintain the source of taxation in this way.
    If the brewing industry declines as a consequence of decreased consumption, what happens to the purchasing power that the brewing industry enjoys? Is it lost? Has it vanished into thin air? It is the same sort of argument that we heard about the co-operative tax. If the co-operative society abolishes the distributing industry, what happens to the profits formerly earned by the private trader? Are they lost? No. It means an adjustment of the system of taxation. The same taxable resources are available in the community. We heard the argument the other day that it is an ex-
    1120
    cellent thing, that it means a prosperous society to have as many Super-tax payers as possible, in order to milk them. It was argued that if you had more Super-tax payers you would have a more prosperous community, because you could get more money. If you distributed the receipts of the Super-tax payer over the community you would have democratised the income, and all you need to do to adjust it is to democratise the taxation, and you have got your money back. [Interruption.] I am coming to the point. Hon. Members will say that my argument is in favour of increasing the taxation on low incomes.
    Captain CROOKSHANK: May I ask whether on this Amendment it is open to us to debate the whole question of the theory of taxation? There are a good many forms of reply, which I am afraid would be out of order.
    The CHAIRMAN: The hon. Member is travelling rather wide from the question of beer.
    Mr. BEVAN: I was attempting to answer the arguments addressed to the House by the Noble Lord, and I maintain that I have not gone one single inch outside the speech that he addressed to the Committee. We are, I understand, debating the Clause in its entirety, and surely I am entitled to put the points that I have made. What is affecting Great Britain is not the decline in the brewing industry, thereby contracting the resources of taxation, so that you can remedy it by democratising taxation, but what has happened is the failure on the part of industry to produce the same sum of wealth. This has no reference to the brewing industry. It is an illustration of the failure on the part of people who defend the existing social order to make the taxable wealth of the community. You may democratise taxation if you will, provided that you democratise the production of wealth.
    The CHAIRMAN: The hon. Member says that this has nothing to do with beer. It is beer we are discussing, and I must ask him not to go into the general question of the democratisation of taxation.
    Mr. BEVAN: I was about to leave the point, but I was compelled to safeguard myself against the charge that I was asking the Committee to increase the

    1121
    taxation upon low incomes, because I had already argued that if the brewing industry had ceased to be as prosperous as it was formerly, if everything remained equal the same sum of wealth would be available in the community. If hon. Members are Sincere in their desire that working class people should have made available to them the same amenities that are enjoyed by the rich, they should seek to bring about greater equality in the distribution of income. They should seek to make working class people more prosperous, but they are engaged politically and industrially in lowering the standards of life of the working class as a whole. They are making it more difficult to buy food, clothing, and housing. It is not Sincere politics, whilst you are doing that, to argue that you are defending the working man by seeking to make his pint of beer cheaper.
    If the argument was presented to decent working-class citizens up and down the country in the terms in which it should be presented, they would say to the Conservative party and the British House of Commons that a decent nation should dispose of its income as would a decent father of a household. It would provide for the weakest members of the family first. It would see to it that all the members of the family had food, boots and clothing before some members of the family had luxuries. The Conservative party have gone a very long way from the patriachial attitude adopted towards the citizens of this country that was characteristic of the early years of the Conservative party. They have simply become defenders of vested interests, and exploiters of the passions of the community. [HON. MEMBERS: "No!"] You do exploit the passions of the community in regard to the beer industry more than anything else. You exploit their passions far more successfully than we do. You have been cleverer in that respect than we are. You did it at the last election, and you would probably do it again next time. Ite is a monstrous injustice that, with all the poverty that exists in Great Britain at the present time, with all the mainutrition of children that exists to-day, the House of Commons should be cynically throwing away £14,000,000 to the brewing industry.
    4.30 p.m.
    Sir H. CROFT: The hon. Member for Ebbw Vale (Mr. Bevan), in his speech which rambled over many subjects, started by informing the House that it was wrong for anyone to speak about raising the price of beer. I should not be at liberty to discuss the question of raising prices with the hon. Member, but probably he will remember the words used by a member of the Socialist party, that the first duty of the Socialist party when it was returned to power would be to raise wholesale prices all round. I will leave the matter there.
    Mr. BEVAN: Will the hon. and gallant Member give the name of the member?
    Sir H. CROFT: Mr. Lees-Smith, who I understand is the economic instructor of the Socialist party.
    Mr. BEVAN: Will the hon. and gallant Member mind producing the document from which he quotes?
    Sir H. CROFT: I shall be pleased to do so, but I thought everybody knew it, especially those Members of the Socialist party who are his pupils. From the speeches we have heard this afternoon one would imagine that a great boon is being given to the British working-man, and to a special industry. The fact is that in September, 1931, Mr. Snowden, then Chancellor of the Exchequer, looked around to see where he could raise revenue. Everyone wanted to assist him at that time. Instinctively every Member in the House, on whatever side he sat, desired to support the then Chancellor of the Exchequer in every part of his Budget. I said on that occasion that I would support and vote for the increased tax on beer because we ought not to interfere with any part of the general Budget conception, but I warned the Chancellor of the Exchequer on that occasion that the very instrument he was using would defeat his object. Mr. Snowden hoped that by increasing the duty he would raise an extra £10,000,000; but he did not get more than £2,000,000. The sole effect was that a grave additional burden was inflicted on the people of this country who consume beer with-out achieving the results which everyone desired to see. Only a few months later anyone who was examining this matter could see that the revenue was going to fail, and it would have been wise to reconsider the question. If the then

    1123
    Chancellor of the Exchequer had thought it wise to introduce a special Finance Bill in the autumn the national Exchequer would have been better off, but—
    Mr. ISAAC FOOT: There were 35 Members of the National Government who were prepared to bring the Government down upon this one issue, in spite of the appeal made by the Chancellor of the Exchequer.
    Sir H. CROFT: I understand also that 33 gentlemen sitting opposite again and again on the question of tariffs were prepared to bring the Government down. I suggest that stones should not be thrown quite so quickly against my 35 friends, whoever they were on that occasion. The broad fact is that from the point of view of the consumer there is a violation of the principle of equality of sacrifice, when one particular section of the working-classes find that their taxation has increased by 1,200 per cent. Since 1914. That is a staggering rise. Revenue has always been obtained from this source, but there came, of course, a time when taxation killed the goose which lays the golden eggs—no more eggs came into the basket. The British working man is not an excessive drinker. It is difficult for any magistrate to say that after a glass or two of beer a man is ripe for crime. No one will advance that proposition. It is not from such men that you get crime.
    The British working-man who consumes two pints of beer a day throughout the year, not an excessive amount, one in the middle of the day and a pint of beer at night, if he is buying the ordinary cheap beer pays in taxation alone £7 11s. per annum, apart from the actual cost of the article. Surely that is beyond the bounds of reason, and hon. Members will realise that taxation has reached a height which is no longer fair. If you consider equality of sacrifice, then the working-man, the agricultural labourer, the steel worker, the blast furnace worker, any of these men are not being asked to make an equal sacrifice when the tax on their beer is raised to such a percentage. The right hon. Member for North Cornwall (Sir F. Acland) said that the industry provides little employment compared with others.
    1124
    He is wrong. It is one of the greatest employing industries in the country.
    Sir F. ACLAND: I said in proportion to the amount spent.
    Sir H. CROFT: The right hon. Gentleman omitted to tell the Committee that of the amount spent an enormous proportion is taxation.
    Sir F. ACLAND: I said so.
    Sir H. CROFT: If you allow for that, and for all the ramifications of the industry, the large number of other industries which provide the raw materials for the brewing industry, you will find that it is a large employment giving industry. As a result of the present taxation many thousands of persons have lost their employment. This is not a gift of £14,000,000 to the brewing industry. It is merely a return to the position in which it was before the Budget of 1931, and, undoubtedly, the country would have lost that amount of money in two or three years time if the present level of taxation had continued. The number of people who will not now lose their employment will more than compensate the State for any financial loss. If my right hon. Friend the Chancellor of the Exchequer had not taken this step the effect of the present taxation would have been most disastrous upon all the barley-growing areas of the country. Men who have been facing the gravest difficulties would undoubtedly have been involved in bankruptcy and ruin, whilst thousands of acres of land would have gone back into prairie land. Most people who do not want to be vindictive will congratulate the Chancellor of the Exchequer on doing something to stop the rot in all these various industries which are dependent on the brewing industry.
    4.39 p.m.
    Captain ARCHIBALD RAMSAY: I could not help but admire the agility of the hon. Member for Bodmin (Mr. Isaac Foot) in the way in which he gave no one a chance of taking up his arguments, not that they were unanswerable, but because the points he was trying to make were not quite clear. The only one that I was able to grasp was that he places beer and its price to-day in the same category as primary products. It is the glut in primary products to-day that has

    1125
    caused the drop in prices and, therefore, the essential difference between beer and primary products is that there is no question of the production of beer being excessive. The brewing industry is suffering from taxation which is out of all proportion to that borne by any other commodity.
    I desire to associate myself with the remarks made by the right hon. Member for Aldershot (Viscount Wolmer), when he pointed out that this particular industry has been singled out for taxation, and my object in rising is to say that an even stronger anomaly exists in Scotland and bears hardly on particular producers and on particular classes of consumers. I do not think this point is likely to be raised again, and therefore I take this opportunity of begging the Chancellor of the Exchequer, if this reduction in taxation does result in a more satisfactory revenue, if it does result in a more satisfactory demand for barley and primary products, to consider the case of a similar industry North of the Tweed, which has suffered far more severely than beer—namely, whisky. I hope that in any future reduction of taxation which he may have in mind he will not leave this Scottish industry out of his reckoning.
    4.43 p.m.
    Captain A. EVANS: During the course of the eloquent speech the hon. Member for Ebbw Vale (Mr. A. Bevan) invited a Member of this House to debate with him the question as to whether the Chancellor of the Exchequer was wise or not in devoting a surplus of £14,000,000 to a reduction of the Beer Duty in this country, and I think it is fitting that a Member from the Principality, representing the opposite party, should take up that challenge. I shall be happy to discuss with the hon. Member any arrangements which might suit our mutual convenience. I rise to apologise to the right hon. Member for North Cornwall (Sir F. Acland) for interjecting "rot" during the course of his able address. I am afraid that I was so astonished at the arguments he introduced that I committed the unpardonable sin of thinking aloud. On various grounds the right hon. Member invited the Committee to reject this Clause, thereby putting the price of beer back to
    1126
    the figure at which it stood before the Budget was introduced.
    His first argument was to suggest that the modern tendency of society was to finance baby Austins instead of real babies, and he blamed that to the low price of beer. How he arrived at that rather remarkable deduction I cannot understand. He did say that if any Chancellor of the Exchequer at this particular time and in this particular financial year had such a large surplus at his disposal he would have been better advised to devote that sum of money to restoring the cuts in pay in certain ranks of the Civil Service, or to other causes which in his judgment he considered better than a reduction in the price of beer.
    My point is that the Chancellor of the Exchequer is not singling out any particular class when he makes a reduction in the price of beer. Let us start with the unemployed. Is it suggested that the unemployed will be deprived entirely of the benefits which will be enjoyed by other classes of the community through a reduction in this taxation? Not for one moment would I suggest that the unemployed men have large funds at their disposal to spend on beer drinking, because I know full well that the means at the disposal of the unemployed are small enough. Nevertheless if it is possible for any member of the unemployed to enjoy a pint or two of beer per week the last person on earth, I should think, to say that the unemployed man has no right to enjoy that facility for cheaper beer would be my right hon. Friend the Chancellor.
    That is the real question which the Committee has to consider to-day. We are not being invited to consider whether any special class has an additional right to consideration above any other class. The only question in the mind of the Chancellor of the Exchequer and certainly in the minds of the Majority of Members, is what is the best way to raise the necessary revenue with the least inconvenience and unfairness to the Majority of people. We have to realise, whether we like it or not, that this sum of money has to be raised. We should not exercise our minds or allow our imagination to run away with us in selecting ways and means for a reduction of taxation. We should with better pur-

    1127
    pose address our minds to the problem how it is possible to raise the necessary sum of money without undue unfairness to any section of the community. The real problem we have to consider is the decrease in revenue; whether it comes from Super-tax or Income Tax or from the taxation of beer, that is the problem to which the Chancellor of the Exchequer has to address himself.
    I do not think it is disputed by anyone that owing solely to the excessive taxation of beer the revenue has not come up to the expectations of Lord Snowden. Therefore I hope the Committee will allow this Clause to pass. I persoNaily feel that it would be most unwise for the Committee now, having regard to the many unemployed and the very severe conditions which obtain in our industrial cities, to try to throttle any avenues of enjoyment which the Majority of the working classes are permitted to share to-day. I have no sympathy with the point of view which raises beer to prohibitive prices, which says that you must not go to cinemas on Sundays and that you shall not enjoy dog racing under proper facilities and arrangements. It behoves the Government of the day to do everything in its power to afford reasonable facilities, enjoyment and amenities for the vast Majority of our people.
    4.51 p.m.
    Mr. CHAMBERLAIN: I think it is fairly clear that the right hon. and hon. Members who have spoken against this Clause made their speeches merely as a protest against a proposal which they dislike. All the same, I always endeavour to try to answer arguments which are addressed to the Committee, whether they are addressed with any hope of convincing the Committee or not. But I must admit that in this instance I have found it difficult to appreciate exactly the ground on which the right hon. Gentleman who opened the Debate wished to take his stand. He began by challenging the suggestion that the effect of the change in the duty would be to arrest the decline in revenue. He stated that there were changes going on in the social habits of the people which could not be withstood or diverted by alterations in taxation, and he therefore expressed complete scepticism as to the calculation I have made. But his second argument was that the
    1128
    effect of the proposal would be to divert to beer money which would be spent otherwise on clothes, boots and bread. If this money is not diverted in accordance with the second argument, obviously the right hon. Gentleman's first argument falls to the ground. I am not one of those who, like the right hon. Gentleman, think that it is desirable to try to dictate to the working man through the medium of taxation exactly how he shall order his life. I think that the working man, to-day at any rate, can safely be trusted not to abuse whatever income he has, and that the idea that he does not know what is good for him, but that the right hon. Gentleman can tell him better how much he shall spend on bread or clothes or beer, is one which is not in accordance with the feelings of the mass of the people to-day.
    Another argument that the right hon. Gentleman used was that this proposal was inconsistent with pledges which he alleged had been given by Members of the Government, that they would, whenever taxation decreased, give priority to those who had been the subject of cuts. The right hon. Gentleman did not bring up any quotations; he did not tell us the letter of the pledges on which he relied. I do not myself remember that any pledges were given of priority in regard to the various cuts. But certainly the proposal in the first Clause of this Bill is one which is entirely unaffected by any pledges of that kind, because it is not based upon a proposal to relieve the burden which falls on a particular section of the community; it is based, as I have over and over again stated, 'solely upon considerations of revenue. It may be that you cannot alter a tax and that you cannot affect the revenue one way or other without to some extent altering the burdens on people who would otherwise be subject to the particular tax. But that has not been the motive, and therefore the question as to whether money should be devoted to the restoration of this or that particular cut or to the relief of this or that particular tax, does not arise here at all.
    The hon. Member for Bodmin (Mr. Isaac Foot) sought to accuse me of some inconsistency or inaccuracy in my figures. I can easily explain to his satisfaction what was the difference between the figures which he gave and those which I

    1129
    gave in my Budget speech. The figures which he compared were the estimated yield of the tax as altered by this Clause this year with the actual receipts from the tax last year. The difference between those two is £19,725,000. But the figure that I quoted in my Budget speech, and which has been quoted Since, is the difference between the estimated yield of the Beer Duty if it were left as it was, and what its yield would be if it were altered as proposed in this Clause. The estimated yield of the duty if it were left as it was I stated to be £68,000,000. I stated that the estimated yield of the tax as amended would be £54,000,000, and the difference is £14,000,000 as the expected loss by reason of this change.
    Let me once again remind the Committee what the position is with regard to the effect upon the revenue of the repeated increases of taxation which have taken place. What has been the increase in the taxation? In November, 1914, the Beer Duty was £1 3s. per standard barrel. In September, 1931, it had grown to £6 14s. per standard barrel, less a rebate of 20s. per bulk gallon. That is a gigantic increase. What has happened to the consumption? I shall not go back as far as 1914. In 1929–30 the consumption was 20,700,000 standard barrels; in 1930–31 it was 19.6 millions; in 1931–32 it was 16.9 millions; and in 1932–33 it was 13.8 millions. In the Becond half of 1931–32, that is after this vast increase had taken place, there was a fall of no less than 18 per cent. in the consumption as compared with the first half; and if we take last year there was a fall of no less than 25 per cent. as compared with the first half before the extra duty was imposed. With regard to revenue the figures are: 1929–30, £77,200,000; in 1930–31, £75,700,000; and last year £73,700,000.
    I have never maintained that the drop in the revenue was solely attributable to the increase in taxation. Some of it must be ascribed to a change in the habits of the mass of the people. But there can be no shadow of doubt that this crushing taxation which has been imposed upon this particular article has accentuated very severely indeed the drop in consumption which was taking place before. A prudent man has to look not merely to what is happening in a particular year under consideration, but has
    1130
    to take a rather longer view and consider what is going to be the probable effect upon the revenue as a whole of this continual drop in this very large source of revenue. It really was not fair to my successors that I should leave matters as they were. I might very justly be reproached by future Houses of Commons with having whittled away and diminished one of the principal sources of revenue to such an extent that further taxes had to be put on in other directions. For that reason, and that reason alone, I have advocated a reduction of the duty, and while I cannot expect that there is going to be a very considerable increase in the consumption of beer, I am confident that this will do something at any rate to arrest the decline, and will to that extent safeguard the revenue of the future.
    5.0 p.m.
    Mr. MORGAN JONES: I should be very unhappy if this discussion closed without a further expression of opinion from this side concerning the merits of this proposal. I wish, at the outset, to make quite clear that there are Members on this side who would, perhaps, take a different view on this subject from mine, and, in speaking as I propose to do on this subject, I am speaking for myself and possibly for some of my hon. Friends as well, but not generally for those with whom I am associated. It seems to me that the Chancellor of the Exchequer has not quite faced the objections which are felt to this proposal. The right hon. Gentleman's first point, which was not unfamiliar to those who have listened to previous beer discussions in the House of Commons, was that he had no right to dictate to people how they should live their lives. Is not the right hon. Gentleman a little late in discovering that principle? As a Member of this Government last year he with his colleagues imposed a cut upon the allowances to the unemployed, thereby dictating in some degree how the unemployed should live their lives. That decision had the effect of dictating the conditions under which the unemployed were to live and the area within which they could undertake expenditure either on their own behalf or on behalf of their families.
    Then, we are told by the right hon. Gentleman that his- first interest is revenue. Naturally that would be the

    1131
    point of view of a Chancellor of the Exchequer in connection with the Finance Bill and one can understand it. But the question which the Chancellor has to answer is whether, in looking for revenue, this method is the best and the most desirable from a financial point of view and from a social point of view. A Finance Bill certainly has its revenue implications but it has its social implications as well, and the right hon. Gentleman must face the objections to this proposal which some of my hon. Friends have advanced. To what do we take the strongest objection in connection with this proposal? I think I may claim in this respect to express the view of everyone in this part of the Committee, regardless of their opinions on the temperance question as such. Our strongest objection is this: Eighteen months ago we were told that the nation was in a great financial crisis and everyone was called upon to share in a common sacrifice. [HON. MEMBERS: "A fair sacrifice."] A common sacrifice—I shall discuss its fairness afterwards. A sacrifice was imposed upon certain sections of the community and, as the question has been raised, may I say that it has yet to be proved that the sacrifice imposed on the unemployed was fair as compared with the sacrifices of other sections of the community. That sacrifice was made, willingly or unwillingly, and the question now arises: Has such a change come over the situation as to justify a remission of taxation to the tune of £14,000,000 for somebody? The answer of the Chancellor is that there has been an amelioration of the position to such a degree that he has £14,000,000 that he can sacrifice.
    Mr. CHAMBERLAIN: I said exactly the opposite.
    Mr. JONES: Surely I am entitled to argue that the right hon. Gentleman is now doing without £14,000,000 and he would not do without it unless he could afford to do without it. Am I right or wrong?
    Mr. CHAMBERLAIN: I have no objection to the hon. Gentleman giving his own interpretation but he must not say that I said the exact opposite of what I did say.
    Mr. J ONE'S: If I have seemed to put words into the right hon. Gentleman's mouth, I beg his pardon. I have no desire to do so; I am giving my own interpretation. My view is that the right hon. Gentleman is making a remission to the extent of £14,000,000, and I gather from that fact that he is of opinion that he can do without this £14,000,000 in some way or other. The question then arises, Since there is a change in the situation who has the first claim to benefit? Ordinarily, even in times of prosperity there might be very big differences of opinion as to the right of the beer trade to consideration, but here we have an extraordinary situation. Millions of our people are being called upon to make grievous sacrifices and yet we are told that, as compared with the claim to relief of people so grievously situated as the unemployed are to-day, the beer trade has a prior claim. The hon. Member for Ebbw Vale (Mr. A. Bevan) offered a challenge explicitly to hon. Members to debate this question with him in any part of the country. If such a debate were to take place, you could fill the hall if you liked with unemployed people or with heavy drinkers or with both, and my hon. Friend the Member for Ebbw Vale would be found to be well within the truth in his statement that the vote of any working-class meeting would be in favour of the unemployed and their dependants having the first claim. The hon. and gallant Member for South Cardiff (Captain A. Evans), I gather accepts the challenge and I promise him that I shall be there to see his case torn to pieces. The hon. and gallant Member claims, I dare say honestly, to express the views of South Cardiff. I know Cardiff as well as he does—perhaps better—and I say to him that in expressing the view which he expressed this afternoon he has no more right to speak in the name of South Cardiff than the Chancellor of the Exchequer himself if he made that statement on their behalf.
    Hon. Members who are supporting this Clause speak as though there were some merit in the argument that the decline in the consumption of beer is due merely to overtaxation. We ought to be perfectly frank with ourselves and face this fact. There is a tremendous change in the social outlook on the question of beer-drinking. I do not deny that the heavy taxation im-

    1133
    posed last year assisted in some degree the decline in consumption but a comparison of the figures of beer consumption in pre-War days with those in postwar days reveals an enormous drop in beer consumption generally. This striking fact indicates a change in the attitude of the people towards the habit of beer drinking. What I object to about this proposal is that not merely does the Chancellor propose to reduce the price so as to stimulate consumption, which is a bad thing socially, but he is also increasing the strength of the beer. He is adding to the potency of a drink which is already responsible for a great deal of social distress. The right hon. Gentleman frankly says that he hopes to stimulate the consumption of beer and thus reverse a tendency which every social reformer in recent years has been glad to welcome. I ask the Committee not to forget that last year's consumption of drink in this country represented a figure round about £230,000,000. That, look at it as you like, is a colossal and a challenging figure.
    Sir H. CROFT: But is it not a fact that that vast figure is nearly all tax?
    Mr. JONES: It is the money spent by the people upon drink. Whether the larger proportion of it is returned in taxation is another point which I am not arguing now. The simple proposition is that it is a terrible thing, in days of social and financial distress, that the nation should be spending £230,000,000 upon drink. We are not entitled to take any comfort to ourselves from the fact that it gives a certain amount of employment. It does, but there is no comparison between the effect upon employment of £1,000,000 spent on the production and manufacture of beer and £1,000,000 spent say in the iron and steel trade or in the textile trade. This proposal is socially bad and, I think, financially unjustified, but the main objection to it is that in times like these it is bad and wrong for the Chancellor of the Exchequer to stimulate a trade of this sort.
    Captain A. EVANS: On a point of Order. May I ask, Sir Dennis, whether an hon. Member is entitled to challenge the right of another hon. Member to express a view on behalf of his constituents? In view of the fact that the hon. Member for Caerphilly (Mr. M. Jones) knows my
    1134
    constituency perhaps as well as I do, having done me the honour to speak there frequently, may I say that if I had not the right to speak on behalf of my constituency, I would not have been elected by it to this Chamber on three occasions.
    Mr. JONES: Perhaps you will allow me to say, Sir Dennis, that I would not dream of challenging the hon. and gallant Member's right to speak for his constituency. All I intended to convey was that I challenged the proposition that in speaking as he spoke this afternoon he correctly interpreted the mind of his constituency.
    Captain EVANS: That is quite different from what the hon. Member said in the first instance.
    5.14 p.m.
    Mr. GORDON MACDONALD: I rise to speak in favour of the Clause standing part of the Bill and I should not have done so had not two of my colleagues spoken with great eloquence against that proposition. I happen to be a lifelong total abstainer, and I have done all I could on behalf of total abstainance, but I do not think that the question at issue this afternoon is whether taxation is the best means to secure a lower consumption of beer. My hon. Friends who are, I know, very anxious to see the whole of Great Britain filled with total abstainers, sometimes think that the Chancellor of the Exchequer is helping to increase the consumption of beer by this proposal. It may be the Chancellor's intention to do so. The tax on beer has brought about a much lower consumption, and consequently less revenue, and he is compelled to take steps to prevent a further reduction of revenue. I shall never support the taxation of beer as a means of lowering its consumption. I do not think it is sound or the best way to deal with the beer question. Prohibition by means of taxation is wrong in regard to any article, including beer.
    I shall be told by my hon. Friends, "You are afraid of the clubs in your division." If there is any hon. Member of this House who need not be afraid of his clubs, I can claim to be that Member. If the clubs in my division know where I stand on this question of beer, and they do, I need not worry about them. I can afford to say to my clubs, "I think this is a good proposal," if

    1135
    I do think so, or "I think it is a bad proposal," if I think it is bad. I am convinced that the beer drinkers, many of whom are among my friends, are making too large a contribution to the revenue of this country. Why should a poor unemployed miner, a personal friend of mine, because he happens to like a glass of beer, be asked to pay revenue in excess of what I pay? I do not think beer drinking is a good thing, and that is why I abstain from it. I think the Chancellor of the Exchequer has pursued on this occasion a very wise policy.
    If I were asked personally, if I would prefer to see the £14,000,000 involved in this proposal handed over to the wives and children of the unemployed rather than used to reduce the taxation on beer, I should say, "Yes," but that is not the question before us. The right hon.
    Gentleman has given us no choice of that sort, and if we rejected this Clause, it does not mean that the £14,000,000 thus saved would go to the unemployed. As a total abstainer and as one who is very anxious to see the consumption of beer lessened, I still think this proposal is a wise one, and I shall vote for it. Two of my colleagues, the only two who have spoken from these benches, have given the impression that this party is against this proposal, and that is why I have risen. I thought that if I gave a silent vote, I might be misunderstood. I know that by speaking one can be misunderstood, but I prefer to be misunderstood by uttering my sentiments to being misunderstood by sitting quietly in my seat.
    Question put, "That the Clause, as amended, stand part of the Bill."
    The Committee divided: Ayes, 326; Noes, 20.

    Division No. 191.]

    AYES.

    [5.20 p.m.

    Acland-Troyte, Lieut-Colonel

    Cape, Thomas

    Emrys-Evans, P. V.

    Adams, Samuel Vyvyan T. (Leeds, W.)

    Caporn, Arthur Cecil

    Erskine, Lord (Weston-super-Mare)

    Agnew, Lieut.-Com. P. G.

    Carver, Major William H.

    Erskine-Boist, Capt. C. C. (Blackpool)

    Albery, Irving James

    Castlereagh, viscount

    Essenhigh, Reginald Clare

    Allen, Sir J. Sandeman (Liverp'l, W.)

    Cayzer, Sir Charles (Chester, City)

    Evans, Capt. Arthur (Cardiff, S.)

    Allen, William (Stoke-on-Trent)

    Cayzer, Ma). Sir H. R (Prtsmth., S.)

    Falle, Sir Bertram G.

    Anstruther-Gray, w. J.

    Cazalet, Thelma (Islington, E.)

    Fermoy, Lord

    Astbury, Lieut.-Com. Frederick Wolfe

    Cazalet, Capt. V. A. (Chippenham)

    Fieldan, Edward Brockiehurst

    Astor, Ma). Hn. John J. (Kent, Dover)

    Cecil, Rt. Hon. Lord Hugh

    Forestier-Walker, Sir Leolin

    Atholl, Duchess of

    Chamberlain, Rt. Hon. N. (Edgbaston)

    Fox, Sir Gifford

    Bailey, Eric Alfred George

    Chapman, Col. R.(Houghton-le-Spring)

    Fraser, Captain Ian

    Baillie, Sir Adrian W. M.

    Charlton, Alan Ernest Leofric

    Fremantie, Sir Francis

    Baldwin, Rt. Hon. Stanley

    Christie, James Archibald

    Fuller, Captain A. G.

    Balniel, Lord

    Clarke, Frank

    Galbraith, James Francis Wallace

    Banfield, John William

    Clarry, Reginald George

    Gault, Lieut.-Col. A. Hamilton

    Barclay-Harvey, C. M.

    Clayton, Dr. George C.

    Gillett, Sir George Masterman

    Barrie, Sir Charles Coupar

    Cobb, Sir Cyril

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

    Barton, Capt. Basil Kelsey

    Cochrane, Commander Hon. A. D.

    Glossop, C. W. H.

    Batey, Joseph

    Cocks, Frederick Seymour

    Gluckstein, Louis Halle

    Beaumont, Hon. R.E.B. (Portsm'th.C.)

    Conant, R. J. E.

    Goff, Sir Park

    Beit, Sir Alfred L.

    Cook, Thomas A.

    Goldie, Noel B.

    Benn, Sir Arthur Shirley

    Cooke, Douglas

    Goodman, Colonel Albert W.

    Bennett, Capt. Sir Ernest Nathaniel

    Copeland, Ida

    Grattan-Doyle, Sir Nicholas

    Betterton, Rt. Hon. Sir Henry B.

    Courtauid, Major John Sewell

    Greaves-Lord, Sir Walter

    Bird, Ernest Roy (Yorks., Skipton)

    Croft, Brigadier-General Sir H.

    Griffith, F. Kingsley (Middlesbro', W.)

    Blaker, Sir Reginald

    Crooke, J. Smedley

    Grimston, R. V.

    Blindell, James

    Crossley, A. C.

    Groves, Thomas E.

    Boothby, Robert John Graham

    Culverwell, Cyril Tom

    Grundy, Thomas W.

    Bossom, A. C.

    Daggar, George

    Guest, Capt. Rt. Hon. F. E.

    Boulton, W. W.

    Davies, David L. (Pontypridd)

    Guinness, Thomas L. E. B.

    Bower, Lieut.-Com. Robert Tatton

    Davison, Sir William Henry

    Gunston, Captain D. W.

    Bowyer, Capt. Sir George E. W.

    Dawson, Sir Philip

    Hales, Harold K.

    Bracken, Brendan

    Denman, Hon. R. D.

    Hail, Capt. W. O' Arcy (Brecon)

    Braithwaite, J. G. (Hillsborough)

    Denville, Alfred

    Hamilton, Sir George (Ilford)

    Brass, Captain Sir William

    Despencer-Robertson, Major J. A. F.

    Hammersley, Samuel S.

    Briscoe, Capt. Richard George

    Dickie, John P.

    Hanley, Dennis A.

    Broadbent, Colonel John

    Donner, P. W.

    Harris, Sir Percy

    Broekiebank, C. E. R.

    Doran, Edward

    Hartland, George A.

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

    Drewe, Cedric

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

    Brown, Ernest (Leith)

    Duckworth, George A. V.

    Haslam, Henry (Horncastie)

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

    Dugdale, Captain Thomas Lionel

    Haslam, Sir John (Bolton)

    Buchan-Hepburn, P. G. T.

    Duggan, Hubert John

    Heilgers, Captain F. F. A.

    Burgin, Dr. Edward Leslie

    Duncan, James A. L. (Kensington,N.)

    Henderson, Sir Vivian L. (Chelmsf'd)

    Burnett, John George

    Dunglass, Lord

    Heneage, Lieut.-Colonel Arthur P.

    Burton, Colonel Henry Walter

    Edwards, Charles

    Hepworth, Joseph

    Cadogan, Hon, Edward

    Ellis, Sir R. Geoffrey

    Herbert, Capt. S. (Abbey Division)

    Campbell, Edward Taswell (Bromley)

    Elmley, Viscount

    Hills, Major Rt. Hon. John Waller

    Campbell, Vice-Admiral G. (Burnley)

    Emmott, Charles E. G. C.

    Hirst, George Henry

    Hope, Sydney (Chester, Staiybridge)

    Mayhew, Lieut.-Colonel John

    Sandeman, Sir A. N. Stewart

    Hore-Belisha, Leslie

    Meller, Richard James

    Sanderson, Sir Frank Barnard

    Hornby, Frank

    Mills, Sir Frederick (Leyton, E.)

    Savory, Samuel Servington

    Home, Rt. Hon. Sir Robert S

    Mills, Major J. D. (New Forest)

    Scone, Lord

    Horobin, Ian M.

    Milne, Charles

    Shaw, Helen B. (Lanark, Bothwell)

    Horsbrugh, Florence

    Mitchell, Harold P. (Br'tf'd & Chlaw'k)

    Shaw, Captain William T. (Forfar)

    Howard, Tom Forrest

    Mitchell, Sir W. Lane (Streatham)

    Shepperson, Sir Ernest W.

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

    Molson, A. Hugh Elsdale

    Simmonds, Oliver Edwin

    Hudson, Robert Spear (Souihport)

    Monsell, Rt. Hon. Sir B. Eyres

    Slater, John

    Hume, Sir George Hopwood

    Moreing, Adrian C.

    Smiles, Lieut.-Col. Sir Walter D.

    Hunter, Dr. Joseph (Dumfries)

    Morris, John Patrick (Salford, N.)

    Smith, Louis W. (Sheffield, Hailam)

    Hunter, Capt. M. J. (Brigg)

    Morris-Jones, Dr. J. H. (Denbigh)

    Smith, Tom (Normanton)

    Hard, Sir Percy

    Moss, Captain H. J.

    Somervell, Donald Bradley

    Hurst, Sir Gerald B.

    Munro, Patrick

    Soper, Richard

    Hutchison, W. D. (Essex, Romt'd)

    Nail-Cain, Hon. Ronald

    Sotheron-Estcourt, Captain T. E.

    Jackson, Sir Henry (Wandsworth, C.)

    Nation, Brigadier-General J. J. H.

    Southby, Commander Archibald R. J

    Jackson, J. C. (Heywood & Radcliffe)

    Nicholson, Godfrey (Morpeth)

    Spencer, Captain Richard A.

    Jesson, Major Thomas E.

    Nicholson, Rt. Hn. W. G. (Petersf'ld)

    Spens, William Patrick

    Joel, Dudley J. Barnato

    North, Edward T.

    Stanley, Lord (Lancaster, Fylde)

    John, William

    Nunn, William

    Stanley, Hon, O. F. G. (Westmorland)

    Jones, Lewis (Swansea, West)

    Palmer, Francis Noel

    Stevenson, James

    Ker, J. Campbell

    Parkinson, John Allen

    Stones, James

    Kimball, Lawrence

    Patrick, Colin M.

    Storey, Samuel

    Knight, Holford

    Peake, Captain Osbert

    Strauss, Edward A.

    Knox, Sir Alfred

    Pearson, William G.

    Strickland, Captain W. F.

    Lamb, Sir Joseph Quinton

    Peat, Charles U.

    Sueter, Rear-Admiral Murray F.

    Lambert, Rt. Hon. George

    Peters, Dr. Sidney John

    Sugden, Sir Wilfrid Hart

    Law, Sir Alfred

    Peto,Sir Basil E. (Devon, Barnstaple)

    Sutcliffe, Harold

    Lawson, John James

    Peto, Geoffrey K. (W'verh'pt'n.Bliston)

    Tate, Mavis Constance

    Lees-Jones, John

    Pike, Cecil F.

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

    Leighton, Major B. E. P.

    Potter, John

    Thomson, Sir Frederick Charles

    Levy, Thomas

    Poweil, Lieut.-Col. Evelyn G. H.

    Thorne, William James

    Liddall, Walter S.

    PowNail, Sir Assheton

    Tinker, John Joseph

    Lindsay, Noel Ker

    Price, Gabriel

    Titchfield, Major the Marquess of

    Lister, Rt. Hon. Sir Philip Cunlifle-

    Procter, Major Henry Adam

    Todd, Capt. A. J. K. (B'wick-on-T.)

    Liewellin, Major John J.

    Pybus, Percy John

    Todd, A. L. S. (Kingswinford)

    Lloyd, Geoffrey

    Raikes, Henry V. A. M.

    Tryon, Rt. Hon, George Clement

    Loeker-Lampson, Rt. Hn. G.(Wd.Gr'n)

    Ramsay, Alexander (W. Bromwich)

    Wallace, Captain D. E. (Hornsey)

    Lockwood, John C. (Hackney, CJ

    Ramsay, Capt. A. H. M. (Midlothian)

    Wallace, John (DunferMilne)

    Loder, Captain J. de Vers

    Ramsden, Sir Eugene

    Ward, Lt.-Col. Sir A. L. (Hull)

    Logan, David Gilbert

    Ratcliffe, Arthur

    Ward, Sarah Adelaide (Cannock)

    Lovat-Fraser, James Alexander

    Rawson, Sir Cooper

    Warrender, Sir Victor A. G.

    Lumley, Captain Lawrence R.

    Reed, Arthur C. (Exeter)

    Watt, Captain George Steven H.

    Lunn, William

    Reid, James S. C. (Stirling)

    Wayland, Sir William'A.

    MacAndrew, Lieut. Col. C. G.(Partick)

    Reid, William Allan (Derby)

    Wells, Sydney Richard

    MacAndrew, Capt. J. O. (Ayr)

    Rentoul, sir Gervals S.

    Whyte, Jardine Bell

    McConnell, Sir Joseph

    Renwick, Major Gustav A.

    Williams, Charles (Devon, Torquay)

    McCorquodale, M. S.

    Roberts, Aled (Wrexham)

    Williams, Herbert G. (Croydon, S.)

    macacdonald, Gordon (Ince)

    Roberts, Sir Samuel (Ecclesall)

    Williams, Thomas (York, Don Valley)

    Macdonald, Capt. P. D. (1. of W.)

    Windsor-Clive, Lieut.-Colonel Goorge

    McEwen, Captain J. H. F.

    Robinson, John Roland

    Winterton, Rt. Hon. Earl

    McKie, John Hamilton

    Ropner, Colonel L.

    Wise, Alfred R.

    Maclay, Hon. Joseph Paton

    Rosbotham, Sir Samuel

    Withers, Sir John James

    McLean, Major Sir Alan

    Ross Taylor, Walter (Woodbridge)

    Wolmer, Rt. Hon. viscount

    McLean, Dr. W. H. (Tradeston)

    Range, Norah Cecil

    Womersley, Walter James

    Macauisten, Frederick Alexander

    Russell, Albert (Kirkcaldy)

    Wood, Rt. Hon. Sir H. Kingsley

    Makins, Brigadier-General Ernest

    Russell, Alexander west (Tynemouth)

    Wragg, Herbert

    Manningham-Buller, Lt.-Col. Sir M.

    Rutherford, John (Edmonton)

    Young, Rt. Hon. Sir Hilton (S'V'noaka)

    Margesson, Capt. Rt. Hon. H. D. R.

    Rutherford, Sir John Hugo (Liverp'l)

    Marsden, Commander Arthur

    Salmon, Sir Isidore

    TELLERS FOR THE AYES.—

    Martin, Thomas B.

    Salt, Edward W.

    Sir George Penny and Major George

    Mason, David M. (Edinburgh, E.)

    Samuel, Sir Arthur Michael (F'nham)

    Davits.

    NOES.

    Attlee, Clement Richard

    Jones, Henry Haydn (Merioneth)

    Salter, Dr. Alfred

    Sevan, Aneurin (Ebbw Vale)

    Jones, Morgan (Caerphilly)

    Williams, David (Swansea, East)

    Buchanan, George

    Kirkwood, David

    Williams, Dr. John H. (Llanelly)

    Cowan, D. M.

    McGovern, John

    Wood, Sir Murdoch McKenzie (Banff)

    Davies, Rhys John (Weithoughton)

    Mallalieu, Edward Lancelot

    George, Major G. Lloyd (Pembroke)

    Maxton, James

    TELLERS FOR THE NOES.—

    George, Megan A. Lloyd (Anglesea)

    Owen, Major Goronwy

    Sir Francis Acland and Mr. Isaac

    Jenkins, Sir William

    Rathbone, Eleanor

    Foot.

    Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

    CLAUSE 4.—(Increased duty on matches.)
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    5.30 p.m.
    Sir PERCY HARRIS: I have an Amendment on the Paper to move to leave out this Clause.
    The CHAIRMAN: The hon. Baronet must realise that that is not an Amendment. I have put the Question, "That the Clause stand part of the Bill."
    Sir P. HARRIS: I make no apology for calling attention to the change of this duty from a mere Excise revenues-producing duty to one of a protectionist class. In 1928 there was a great amount of discussion about it, and it almost brought the Government down. It put the then Financial Secretary in a difficult position, and the First Lord of the Admiralty, who was then Chief Whip, had to come down to ask for mercy, so great was the feeling about the matter. In these days, however, when duties are put on and taken off so easily and when the House almost without discussion brings in various articles to be taxed or protected, the House of Commons is becoming indifferent. Matches stand out in a peculiar position. A tax was first put on matches before the War and was later withdrawn. In the War it was re-introduced by Mr. Bonar Law in search of revenue in order to save the financial position. In 1927, 20 per cent. was added and in 1928, in order to protect the revenue, mechanical lighters were taxed for the first time. A great Conservative Chancellor of the Exchequer, the right hon. Member for Epping (Mr. Churchill), made it clear that it was an Excise Duty imposed merely for revenue and that was the justification for it.
    Under the new regime and under our policy of Protection, the Chancellor of the Exchequer has thought fit to impose two different rates, one a purely Excise Duty on the home-produced article, and the other a higher rate of Customs Duty on the imported article. He justified it by saying:
    "Since the introduction of the Import Duties Act, however, some of the raw materials of match makers have become subject to duty."
    That is a rather novel principle to justify a new duty from a protectionist Chancellor of the Exchequer. I have always been led to understand that the foreigner pays the duty, and we have had constant discussions in the House and questions suggesting that a duty on timber and other raw materials has not increased the cost. The Chancellor went on to say:
    "The manufacturers have no access to the Advisory Committee under the Import Duties Act, because the Match Duty 1s a Revenue Duty."—[OMBTOIAL REPORT, 25th April, 1925; col. 50, Vol. 277.]
    That is the excuse for the absence of any inquiry. We are not in this case given the advantage of a report or memoran-
    1140
    dum or any justification for this action. The Chancellor merely comes to the House and says: "I have decided of my own free will to make this difference in the rate." The Chancellor's justification for imposing this duty without referring the matter to the Advisory Committee is rather lame, because in the next paragraph of his Budget speech he refers to the Silk and the Artificial Silk Duties from the Protectionist point of view to this very Committee. If we are to have a tax and Parliament has set up this Committee of three to decide what articles should be protected, there is no reason for exempting matches any more than silk, for what is good enough for silk should be good enough for matches. If the Government really desire to have this article protected in the interests of the producer, they should follow the proper machinery which they have created, and let the matter be referred to the Advisory Committee.
    The CHAIRMAN: I have been listening very carefully to the hon. Baronet for some time, and I have found difficulty in seeing that the speech that he is making is at all in order on the Question, "That the Clause stand part of the Bill." It merely effects an alteration in the rates of Customs Duties already existing.
    Sir P. HARRIS: The present Customs duties are on the same rate as the Excise duties and are not protective. The duty has been deliberately made protective, as was explained by the Chancellor of the Exchequer in his Budget speech. The duty has not been altered for revenue purposes, but in order to give protection to the English match manufacturer. There would be no point in the difference if it were not protective, because the Chancellor seems to think that the revenue will be the same. The only purpose of this Clause, as explained by the Chancellor, is to give protection to the match industry. I therefore suggest that I am justified in arguing that, that being the purpose of the Clause, the ordinary machinery under the Import Duties Act should be followed.
    The English match industry has not called out for protection. My right hon. and gallant Friend the Member for Ripon (Major Hills) is an expert, and a far greater authority than I am on this question In the discussion in 1928 he stated that the match industry had never asked

    1141
    for protection. I am not surprised, because the English match industry is a healthy, virile, strong, well-organised and most efficient industry, and is able to stand on its own legs. If you want a good match, buy a British match; I always do. If, however, you are poor, you ought to be allowed to get the cheaper substitute. It may be inferior, but it is more within the reach of the poorer members of the community. The additional duty may be small, but it will put an extra tax on a necessity of every working woman. It is unfortunate that in order to give an unasked for protection to a strong and healthy British industry, this new rate of duty should be imposed with hardly a word of explanation from the Government. I shall await the explanation of the Financial Secretary with considerable interest.
    5.40 p.m.
    Major HILLS: I have no objection to the way in which the hon. Baronet has put his case, but I think that I can reassure him. He made his case on the ground that this was a protective duty. I think that I can convInce him that it is really a compensating duty. I said in 1928 that the match industry did not want protection, but two new factors have arisen Since then to alter the situation. The first new factor is the Import Duties Act. Under that Act an anomalous position arose with regard to the tax on matches, because the raw materials which must be used by the match maker are not produced here and have to be imported, and they are taxed. The wood with which matches are made is aspen wood, which is largely grown round the Baltic, from which the chief imports come. This and the other raw materials in match-making are taxed, and yet the foreign match, made abroad of the same wood and of the same chemicals, comes in free of extra duty. The Import Duties Act does not apply to articles subject to a Customs duty. So the British manufacturer has to pay duties on the necessary articles of his production but finds his foreign competitors free of those duties, and therefore able to compete with him on unfair terms.
    The second new factor is that the Russians are sending matches here at a price that cannot pay for the cost of the material. I do not think that
    1142
    the extra 5d. per 144 boxes of 50 matches can be regarded as a protective duty. It only really compensates for the anomaly that I have mentioned. My hon. Friend twitted us with supporting the doctrine that the foreigner pays the duty. If you give the foreigner an easy way of evading the duty by admitting his finished articles duty free, of course he does not pay the duty. For these reasons I hope that the Committee will pass the Clause. I think that I can say that the match manufacturers have no wish for a substantially higher duty. All that they wish to see is the very moderate increase that the Government have given, and for that I hope I have shown the Committee that there is ample justification.
    5.45 p.m.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): The hon. Member for South-West Bethnal Green (Sir P. Harris) was anxious to know whether anybody was going to reply to his speech. If he really wishes me to reply, I will do so with the greatest pleasure, although he can hardly expect me to enter into the general discussion which he sought to raise on the merits of Free Trade and Protection.
    Sir P. HARRIS: I only sought an explanation on this point.
    Mr. HORE-BELISHA: My hon. Friend raises that particular issue on every possible occasion. I will confine myself to the comparatively narrow point of why we are raising the Customs duty on matches and leaving the Excise duty where it now stands. We do that for two reasons, with which my hon. Friend is well acquainted, because he quoted them. We desire to see more matches manufactured in this country, and we think this additional inducement will secure that object. We desire also to remove an injustice which is now complained of, namely, that the manufacturer of matches has to pay a tax upon his raw materials—his chemicals and his wood. My right hon. and gallant Friend the Member for Ripon (Major Hills) has explained that this particular kind of wood—and what he said applies to certain of these chemicals—is not obtainable in this country. Therefore, it would be patently unjust that the match

    1143
    manufacturer should have to pay duty upon his raw materials without receiving the benefit which we now- give him by way of compensation. Those are the reasons for the course we have taken. The subject is not one which could be referred to the Import Duties Advisory Committee. This is a Budgetary duty and the Import Duties Advisory Committee is specifically precluded from considering Budgetary duties. We shall obtain an additional £100,000 by the course we now propose. We are not prepared, as my hon. Friend would desire, to abandon the whole Match Duty, which provides us with something like £4,000,000 a year, especially in these hard times, and we think the general effect of this Clause upon employment will be thoroughly good.

    CLAUSE 5.—(Increased duties on mechanical lighters.)
    5.47 p.m.
    Mr. MARTIN: I beg to move, in page 5, line 3, at the end, to add the words:
    "except in so far as they relate to parts of mechanical lighters, being wheels for striking a flint."
    I am moving this Amendment in the absence of the hon. and learned Member for Central Nottingham (Mr. O'Connor), in whose name it stands on the Paper. It raises a very simple point, to which I hope the Financial Secretary will give his consideration. Anomalies have arisen in connection with mechanical lighters. Parts of mechanical lighters have come into this country free and have gone to manufacturers to be assembled into lighters, which were then taxed. The present Budget taxes the separate parts of those lighters which come into this country. The position would have been a simple one for the manufacturers if it were not for one of the essential small parts of the lighter, which is the wheel. They cannot find a sufficient supply of wheels in this country to meet their demands. This Amendment is proposed, therefore, with the object of enabling manufacturers to import these wheels free in order to assemble them, with the other parts, into lighters, and I very much hope that the Financial Secretary will see his way to accept it.
    5.49 p.m.
    Major HILLS: I do not know why the English manufacturers cannot get wheels in this country. I should have thought they could have been made as well in this country as abroad. In its broader aspect, however, this is a revenue question. This is largely a duty imposed for revenue purposes, with the object of obtaining revenue from articles which are a substitute for matches. I know of no evidence to show that British industry cannot make the wheels which are used in these lighters, and I say with respect to the Mover of the Amendment that a much stronger case ought to have been made out in support of it. The House agreed on the Report stage of the Financial Resolution to keep the protective duty on the lighter, and that being the case we must include the parts of the lighter. Unless a very strong case can be made out for this Amendment, I hope that the Financial Secretary will resist it and that the Committee will reject it.
    5.51 p.m.
    Mr. LOGAN: The hon. Member who moved this Amendment is labouring under a mistake when he says that there is any part of one of these mechanical lighters which cannot be made in this country. During the War supplies from Germany were no longer available, but Birmingham rose to the occasion, and made not one or two of these lighters but made millions of parts for lighters. As far as gramophones and various other machines and these lighters are concerned, we can get anything made in Birmingham, the only point being that they have to pay adequate wages to the men who make them.
    5.52 p.m.
    Sir P. HARRIS: When the last Clause was under discussion I felt compelled to raise the question of the Treasury imposing a protective duty without the ordinary procedure of an inquiry under the Safeguarding Act or by the Import Duties Advisory Committee. The Financial Secretary to the Treasury did not deign to answer those points. He felt that he was under a grievance. He talked about my adherence to Free Trade and ancient principles. I was not raising that question at all, but the practical problem of our departure from the great principle underlying the Import Duties

    1145
    legislation through the Chancellor of the Exchequer proposing ft protective duty of his own volition.
    Mr. HORE-BELISHA: I am trying to be courteous to my hon. Friend, but, when I was giving an answer upon that specific point, my hon. Friend was conversing with the hon. Member sitting next to him, and therefore did not hear the answer.
    Sir P. HARRIS: The hon. Gentleman is not being courteous. He is following his usual habit of trying to be clever and scoring. I was not talking; I was listening to every word; I was hanging on to his valuable words as if they were so many diamonds, but I did not get any inspiration, and he did not answer my point. Here is a practical illustration of the effect of imposing a protective duty without having an inquiry. The hon. Member who moved the Resolution, and who has some practical knowledge, points out that the industry is going to be handicapped, because cogwheels, as component parts of mechanical lighters, are to be taxed. I happen to know that there-is a large export trade in mechanical lighters manufactured in England, and owing to the tax on the raw materials, as a result of this clumsy attempt to impose a duty without advice, without inquiry, and without giving the trade a chance to put their case before the impartial body provided under the Import Duties legislation, we now find that the industry is going to be handicapped and exports will be interfered with. It is the duty of the Financial Secretary to the Treasury to explain every new tax to this Committee. This new tax has never been explained. There have been no figures, no facts, no details, no inquiry, no report; they have not even taken the trouble to go before the impartial tribunal. I know it is a very hot day, and I willingly commiserate with the hon. Gentleman on his heavy task of defending the Finance Bill, but I hope he will meet the case of the hon. Member properly with full facts and figures.
    5.55 p.m.
    Mr. HERBERT WILLIAMS: I hope that this Amendment will not be accepted. The hon. Member who moved it was suffering under the disability of looking after somebody else's Amendment, and was not able to give us as much information as the hon. and learned Member for Central Nottingham (Mr.
    1146
    O'Connor) would probably have been able to do. I happen to have in my con-. stituency a factory which manufactures mechanical lighters, and I have not heard any complaint from them of any difficulty in getting these wheels. It may be that some English firm of manufacturers have been buying their wheels from abroad and have not taken the trouble to find out whether they could get English wheels, and so they want these wheels to be exempted from duty. It is perfectly obvious that we can make them here, and, if we can, why should they want to import them? The hon. Member for South-west Bethnal Green (Sir P. Harris), who more or less supports the Government, as distinct from the hon. Member for Bethnal Green who does not, wants to know why this question was not referred to the Import Duties Advisory Committee. I ask him to read the Import Duties Act.
    The CHAIRMAN: I have ruled out of order any discussion in detail of whether these matters should be referred to the Advisory Committee or not. We are dealing with a perfectly definite Amendment to leave out specific articles which it was proposed to include in this duty, and the discussion must be confined to that point.
    Mr. WILLIAMS: I was only seeking to reply to a specific argument from the hon. Member for South-West Bethnal Green (Sir P. Harris) which was permitted. I was only pointing out that he had no right to raise that point, because the Chancellor of the Exchequer had no power to refer the matter to the Import Duties Advisory Committee.
    5.57 p.m.
    Mr. MARTIN: I have been told on one hand that I have great knowledge on this subject, and I have been told by the last speaker on the other hand that as I am moving the Amendment for an hon. colleague I am probably speaking under a disability. As a matter of fact, I think that perhaps the latter explanation is nearer the case than the former. Such hon. Members as the hon. Member for South Croydon (Mr. H. Williams) who have these factories in their constituencies may forget that these lighters are very cheap articles, and that it is most essential that very cheap parts should go to their manufacture. If we are to put first-rate British stuff into a

    1147
    very cheap article it may mean that in the end these lighters will not he assembled here at all, and therefore I propose to the Financial Secretary that, unless it can be proved that British manufacturers can supply a really cheap wheel, which is an essential part of the lighter, he may find it more to the Treasury's advantage to give consideration to this Amendment.
    5.58 p.m.
    Mr. HORE-BELISHA: The Committee are aware, I hope, of the exact position under this Clause. Before the Budget the Customs Duty and the Excise Duty on manufactured lighters was 6d. in each case. We have now made the Customs Duty 1s. 6d. and the Excise Duty 1s. When the Customs Duty and the Excise Duty were the same there was a right to import parts of mechanical lighters free into licensed manufacturers' premises and the revenue lost nothing, because it obtained 6d. if the mechanical lighter came in from abroad through the Customs, and it obtained exactly the same revenue by Excise if the parts were assembled here. Now, however, we are proposing a difference between the rate of Customs Duty and the rate of Excise Duty—the Customs Duty will be 1s. 6d. and the Excise Duty 1s.—and therefore the concession of importing parts free can no longer obtain. Otherwise, it would pay manufacturers in this country to import the parts free, to assemble them here, and thus to escape with a lower duty than the Customs Duty. I hope I have made that point quite plain to the Committee.
    In moving his Amendment my hon. Friend asks whether the wheels used for striking the flints cannot be imported free although other parts are taxed. The purpose that my right hon. Friend had in view was to encourage the making of lighters in this country. It is hoped that the course that he has taken will have that effect. The hon. Gentleman suggests, by his Amendment, that that course cannot have such an effect, because there are not sufficient wheels made in this country, and consequently that until British manufacturers have adjusted themselves to the new position, instead of more lighters being made here fewer lighters will be made.
    1148
    We have made inquiries into the position, and we understand that nearly half the lighters manufactured in this country during the last financial year contained imported wheels, the reason being that wheels are not at present produced in this country upon a sufficient scale to supply requirements. The Committee will appreciate at once that the possibilities of encouraging the increased manufacture of lighters would be checked if our manufacturers had to pay a duty of 1s. 6d. on every wheel for the reason that sufficient wheels were not being made in this country. We hope very much that the duty will have the desired effect, and that the wheels will be made in this country. I gave some time to hon. Members who desired to state a case before I rose to reply, because it is only fair that the case should be made. The hon. Member for South Croydon (Mr. H. Williams) informed the Committee that wheels are made here and that he knew of cases where they were made. I do not in the least dispute that, but I hope that they will be made here in ever-increasing quantities. That they are not made here in sufficient quantities is, unfortunately, the fact. As we desire to encourage the making of lighters without let or hindrance, I hope that the Committee will agree that it will be proper to accept the Amendment of my hon. Friend.
    Amendment agreed to.

    CLAUSE 6.—(Amendments as to duty on hydrocarbon oils.)
    6.3 p.m.
    The CHAIRMAN: Before I call the first Amendment on this Clause, I would like to propose an arrangement which, I think, would be for the convenience of the Committee in discussing the large number of Amendments which are suggested to this Clause. Those Amendments fall naturally into several different groups, but unfortunately we cannot take them in the order of those groups, Amendments in one group first and then Amendments in the other groups next, because the Amendments in each group come in different places in the text of the Bill. I venture to suggest to the Committee that perhaps we might take the first Amendment that comes, in its order,

    1149
    and then discuss, on that, all the Amendments having a somewhat similar object. Hon. Members whose names are attached to other Amendments of a similar kind will make their speeches in the general discussion on the Amendment that has been called, on the understanding that their Amendments will not be selected later on unless it be agreed that they shall be moved formally without discussion in order that we may take a decision upon them. Let me tell the Committee what I suggest should be done. We should start with the first Amendment at the top of page 982 in the name of the hon. Member for West Bromwich (Mr. A. Ramsay) which proposes, in page 6, line 4, at the beginning, to insert the words:
    "Save in the case of such fuel oils as may have a viscosity of seventy-live seconds and over."
    I am not an expert in these technical terms, and I am told that that Amendment has reference to the particular use to which the oil can be put. That applies to most of the Amendments on page 983 of the Order Paper. It would apply to most of those on page 982, except that they are out of order. Hon. Members will understand that the Amendments which have regard to different special purposes for which the oil is used, whether it is in the shipping and coasting trades, manufacturing and industrial purposes, jute textiles or the manufacture of asphalt or asphalt products, all fall into one group. My suggestion, therefore, is that on the first Amendment called, all the different uses of oil in respect of which it is claimed that there should be special privilege, should be discussed, and such Amendments as are in order can be called in due course for the purpose of a Division only, and not for the purpose of discussion. The Committee might like to know from the Chancellor of the Exchequer or from the Financial Secretary to the Treasury whether they think that that would be the most convenient way of conducting the discussion.
    6.7 p.m.
    Sir BASIL PETO: Before the Chancellor of the Exchequer speaks, may I say one word on this point of Order? I quite agree to a discussion on the uses to which the oil should be put in general cases, but there is such a special case for the exemption of the oil for use as
    1150
    fuel for the coastwise and shipping trades that it stands entirely by itself. It is possible that the Chancellor of the Exchequer may be inclined in that case to make a concession which would not be applicable in other cases. The arguments for those two trades are entirely different from the general argument, and I ask you whether in conducting the discussion you could not call one of the Amendments, of which there are several on the Paper dealing with the consumption of oil by vessels engaged in those trades. There is one in my name which stands at another point. I ask that one of these Amendments, whichever one you think most proper, and raising a specific point, may be called, in order that we may have a discussion.
    The CHAIRMAN: May I, in regard to that, go a little further? The hon. Baronet the Member for Barnstaple (Sir B. Peto) has raised this question, but I would have raised it later. The particular group into which falls the Amendment that I shall call first is the group dealing with use, to which I have already referred. Secondly, there is the group with regard to deferment of the date of the duty. Then there is another group in regard to shipping. I think that group would include the question of coastal traffic. There is at least one Amendment which I have marked as in order relating to ships and dealing with the coastwise traffic, and I suggest that the hon. Baronet's Amendment would come under the group of Amendments relating to ships to be discussed later on.
    Sir B. PETO: Do I understand that we are to have one Amendiment called to raise the question of coastal shipping, and to have a decision on that point?
    The CHAIRMAN: Yes. My intention is to see I that all these questions are adequately discussed, and further, where the discussion covers a group of different industries or something of that kind, there should be a Division, where necessary, on every definitely separate Amendment. My difficulty is that if each Amendment is discussed there will be such an immense amount of overlapping that the Committee will find it a little difficult to follow the discussion.
    Mr. CHAMBERLAIN: I think that the suggestion that you have made will very much facilitate our discussion. The Gov-

    1151
    ernment are anxious to have a discussion in such a form as will enable all the points to be discussed that hon. Members desire to raise. The grouping of them in the way that you suggest will enable us to have a general discussion which will cover a number of Amendments, and then it will be possible to divide on any one that hon. Members desire.
    Colonel WEDGWOOD: It would considerably facilitate discussion if the right hon. Gentleman had made up his mind on these questions, and could take the earliest possible opportunity of saying what the Government have decided. Otherwise, the discussion may be interminable. The best way of facilitating the passage of business would be to know what the Government have decided.
    Sir STAFFORD CRIPPS: I am sure that it will be very good to have the Amendments grouped in any convenient manner. You, Sir Dennis, did not say anything about such Amendments as the last one on page 982 in the name of the hon. Member for Aberavon (Mr. Cove)— in page 5, line 10, to leave out the words "seven pence," and to insert instead thereof the words "seven pence halfpenny"—as falling in any of the groups which you mention.
    The CHAIRMAN: I am sorry, but in dealing with the question of shipping I forgot to mention that group. The next group would be the one dealing with the rate of duty.
    Sir S. CRIPPS: There is another point as to an Amendment on page 984. Is that considered to come into the same class as the one to which I have referred on page 982? It is dealing with a different point, and I am not quite certain which class it will fall into. It proposes, in page 5, line 10, at the end, to insert the words:
    "provided that this section shall not apply to oils for use as fuel in any plant installed and in use prior to the twenty-fifth day of April, nineteen hundred and thirty-three."
    The CHAIRMAN: I have that Amendment marked as one of those which fall into the group "use," and therefore to be discussed with the first Amendment that I shall now call.
    Mr. NEIL MACLEAN: Are we taking discussion on only three Amendments?
    The CHAIRMAN: On four groups. Now that we have got so far, may I say exactly what Amendments I suggest should be discussed? I propose to call that which stands at the top of page 982 in the name of the hon. Member for West Bromwich (Mr. A. Ramsay), to which I have already referred. The Amendment in the name of the hon. Member for Govan (Mr. N. Maclean)—in page 5, line 4, to leave out the words "six o'clock in the evening of"—is out of order. The next one in the name of the same hon. Member—in page 5, line 5, to leave out the word "April" and to insert instead thereof the word "November"—comes into the next group, and therefore would not be discussed now. The Amendment in the name of the hon. Lady the Member for Wallsend (Miss Ward)—in page 5, line 8, after the word "consumption," to insert the words "subject to the provisions of this Act" is introductory, and therefore with it must be discussed another Amendment in her name much later on the Paper. The rest of the Amendments on page 982, with the exception of the last two, are out of order. One in the name of the hon. Member for Broxstowe (Mr. Cocks) —in page 5, line 9, after the word "shall," to insert the words "except where the oils are not for use as fuel"— will be discussed now. The; one in the name of the hon. Member for Aberavon (Mr. Cove)—in page 5, line 10, to leave out the words "seven pence" and to insert instead thereof the words "seven pence halfpenny"—will come later, in another discussion. The first Amendment on page 983 in the name of the hon. Member for South Bradford (Mr. Holds-worth)—in page 5, line 10, to leave out the words "seven pence" and to insert instead thereof the words:
    "such sum as would be equivalent to a tax of 10 per cent. on the landed value of such oils"
    would be discussed later in a group relating to weight of tax. The second in the name of the hon. Baronet the Member for North Cornwall (Sir F. Acland) —in page 5, line 10, after the word "pence," to insert the word"halfpenny"—would be covered by a previous Amendment. The next five would be discussed on the present Amendment—in page 5, line 10, at the end, to insert the words:

    1153
    "other than oil used for h4at production for industrial urposes."—[Mr. Holds-worth."]
    "other than oil used for power production."—[Sir R. Hamilton.]
    "(except in respect of oils having a viscosity of seventy-five seconds and over)."— [Mr. A. Ramsay.]
    "but where any oil other than light oil is used as a fuel in any hospital equipped prior to the twenty-fifth day of April, nineteen hundred and thirty-three, with apparatus especially designed for the use of such oil, the rate of rebate shall continue to be eight pence per gallon."—[Captain Fraser.]
    "other than oil used in the jute industry."—[Mr. Dingle Foot.]
    The next Amendment, in the name of the hon. Member for East Birkenhead (Mr. White)—in page 5, line 10, at the end, to insert the words:
    "other than oil used as a fuel by a vessel proceeding from any port or place in the United Kingdom"
    will come under a group "ships" and therefore will not be discussed now. The others on page 883, in the name of the hon. Member for Cardigan (Mr. O. Evans)—in line 10, at the end, to insert the words:
    "other than oil used in the metallurgical processes set forth in the Ninth Schedule"
    and in the name of the hon. Member for East Birkenhead, in page 5, line 10, at to end, to insert the words:
    "except for consumption by vessels belonging to or chartered by a harbour authority and used solely for the purposes of, the harbour. The expressions 'harbour authority' and 'harbour' shall have the meanings, respectively, assigned to them by the Merchant Shipping Act, 1894,"
    will be discussed now. So we get to the second Amendment on page 984 in the name of the hon. and learned Member for East Bristol (Sir S. Cripps)—in page 5, line 10, at the end, to insert the words:
    "Provided that this section shall not apply to oils for use as fuel in any plant installed and in use prior to the twenty-fifth day of April, nineteen hundred and thirty-three."
    I hope that that is fairly clear. I am calling the first Amendment, and, later, the other Amendments in the same group will be moved formally, without a discussion.
    Mr. CHAMBERLAIN: Are there not a number of other Amendments on page 984 which would come in?
    The CHAIRMAN: I think there are, but I am really trying to reduce them to two. Most of those on page 984 relate to use, but they refer to Excise and not to Customs, so I will take that as a special sub-group in its due course.
    Sir B. PETO: Would it be convenient to indicate which Amendment will raise the question of coastwise shipping?
    The CHAIRMAN: I do not think it would be convenient to go into that, because it would come under the later heading of ships. At any rate, it would not come in this group; it would definitely come in a later group.
    Colonel WEDGWOOD: May I ask whether the Chancellor of the Exchequer will make a statement on this first Amendment?
    Mr. CHAMBERLAIN: The right hon. and gallant Gentleman is asking me to pronounce judgment before I have heard the case.
    Colonel WEDGWOOD: The right hon. Gentleman must have made up his mind, and I want to know what attitude he is taking on this first Amendment.
    6.17 p.m.
    Mr. ALEXANDER RAMSAY: I beg to move, in page 5, line 4, at the beginning, to insert the words:
    "Save in the case of such fuel oils as may have a viscosity of seventy-five seconds and over."
    With regard to this tax on fuel oil, my task, Sir Dennis, is much simpler than yours. I do not know how necessary it is, but it may be for the convenience of the Committee if I attempt to define a little more definitely what this Amendment means. As hon. Members probably know, oils are differentiated according to their specific gravity—their weight or density—or their viscosity, as the case may be. In the case of a light oil, the viscosity may be, say, 20 seconds, and in the case of a very heavy oil it may be as high as 400 seconds. The figure of 75 seconds embodied in this Amendment differentiates the class of light oils from the class of heavy oils, and it is a well recognised point of differentiation in the trade. Those engaged in the fuel oil industry know, of course, exactly what is meant by a viscosity of 75 seconds; and the British Engineering Standards Association, who define standard oils,

    1155
    know exactly what is meant by this figure, but by way of parenthesis may I say that, if the Chancellor of the Exchequer felt inclined to accept this standard of measurement, I have no doubt that, from the legalistic point of view, he would desire to pursue it a little further, and describe it as 75 seconds as measured by Redwood's No. 1 viscometer—which is the technical method of measurement—at a temperature of 100° Fahrenheit. For the broad purposes of this discussion, however, the Committee will, I think, accept the generic description of "75 seconds" as differentiating between light and heavy oils.
    I would like briefly to point out to the Committee what the effect of this differentiation would be. If the Chancellor of the Exchequer were to accept the Amendment as it appears on the Paper, the effect would be that the lighter oils, such as kerosene, various classes of lighter lubricating oils, and the light oil used in the high-speed Diesel oil engine, would all be subject to the tax, but the heavier oils used for fuel purposes in a manufacturing establishment—for instance, for the heating of tube furnaces, or for boiler purposes—would be exempt from the scope of the tax. The Amendment, therefore, would draw a line exempting from the tax the manufacturing interests, and, incidentally, the users of heavy Diesel oil engines, and leaving within the scope of the tax the users of lighter fuels such as those I have mentioned. I know that a great deal of interest is being taken in this question, and I do not propose to abuse the indulgence of the Committee by speaking too long about it. That means that I do not propose to generalise except to mention that, as hon. Members are aware, a very considerable propaganda has recently been carried on by the coal industry against the remission of this tax on fuel oil. I do not think that the coal trade has in the House of Commons a more ardent supporter than I am myself, and I have on many occasions and in many seasons endeavoured to advance the interests of that industry; but in my view the coal industry has no right at this juncture to come to the Chancellor of the Exchequer and to the House of Commons and ask them, by means of discriminating and penal legislation, to do for the coal trade what the coal trade has not been
    1156
    able to do, by its own initiative and research, for itself.
    The truth is that fuel oil has very special and well denned uses, just as coal has, and I am certain that, the Chancellor would be doing a very great disservice to manufacturing industry, and also to the whole progress of scientific development in this country, if, merely for the sake of supporting one industry, he were to exercise repression on. the proper and scientific development of other industries. I want to test this Amendment, if the Committee will bear with me, by referring to the effect that it would have on certain specific industries. Surely all hon. Members, when we are proposing to put on a tax or to remit a tax, will want to know what effect the proposal is going to have on the manufacturing life of the country, which, after all, is the foundation of our whole economic structure. Clause 6 of the Bill, in its last paragraph, exempts from the ambit of the tax asphalt and substances of that kind which are solid or semi-solid at a certain temperature. I know what a solid substance is, but I am not so sure that I know what a semi-solid substance is. The Chancellor of the Exchequer is providing that asphalt substances coming into this country shall come in tax-free, but he appears to have forgotten that we not only import asphalt substances, but we manufacture them; and, in the manufacture of asphalt substances from our native products, we have to use large quantities of oil as a fluxing material. A number of factories engaged in this home manufacture from home materials, and using this imported oil merely as a part of an incidental process, will have to pay not less than £12,000 a year extra on their imported fluxing material. The effect of that will be simply this, that the Chancellor of the Exchequer will get his £12,000, which, at the best, or the worst, according to the point of view, will go on to the cost of the home-produced article, while the foreigner who is sending asphalt into this country will get a present on his imported material to the extent of that amount of money each year.
    We produce also in this country bituminous substances for road dressing. They are produced from oil—from the very roughest, crudest and cheapest oil, the technical name of which, I believe,

    1157
    Is "Top Crude," costing about £2 a ton. That oil is distilled, and, as a result of the distillation, you get the bitumen which is sold for road surfacing. I am not in a position to say whether that will escape as a semi-solid product; it seems to me that it may; but, if it does not, what is going to happen? Here again is a native industry, employing English labour, and, on the raw material of that industry, it will have to pay a tax of over 50 per cent. I am certain that the Chancellor of the Exchequer cannot have visualised the position from that point of view when he conceived the tax, and I have every confidence that he will now take steps to ensure that the matter is put right.
    When we come to the more intimate bread-and-butter industries of our manufacturing areas, what do we find? I do not propose to go through the whole range, but only to mention one or two. Take the bolt and nut trade. I can speak from a very long personal experience, because, as a boy, I started using an oil furnace myself 30 years ago. That industry, and ancillary industries, have been using this heavy, crude oil as a part of the primary basis of their manufacturing operations for 30 years, tax-free, and now the Chancellor of the Exchequer is proposing to put on to this fuel, which has been proved for many years to be essential to these industries, a tax equal to about 33 per cent. of the fuel costs. It is very difficult to go into the Midlands or the West of Scotland, where these standard, staple industries are carried on, and explain to British manufacturers why, after 30 years' operation, they are now having to pay a tax which is going to raise appreciably the cost of their product. In the black bolt and nut trade, which is only a sectionised industry, this tax, on a 60 per cent. basis of production, is going to cost £25,000 a year; it is going to put 1.38 per cent. on to their selling prices, at a time when their export trade has dropped, in six years, from £950,000 to £230,000. Here is a staple British industry of long standing, which has been fighting for its life Since the end of the War, hanging on by the skin of its teeth, and is now having 1.38 per cent. gratuitously added to the cost of its final product. I venture to suggest that the Chancellor of the Exchequer will have good grounds for ameliorating that condition.
    1158
    I do not want to argue unnecessarily from the particular to the general, because it is always dangerous to do so, but I would like to give to my right hon. Friend two very simple cases of hardship under these proposals. After all, the great structure of British industry is built up by units, and, unless these units can be safeguarded and kept sound and healthy, something will go wrong with the structure itself. I have here the case of a small man, away out in the country—not a wealthy manufacturer with great Capttal resources behind him, but a man in a comparatively small way, making bricks. He gets in a certain amount of money, and invests £1,250 in an oil engine and an oil installation. Now he sees this tax coming along, and, working in a small way with a very small margin of profit, if any, he 1s going to find his fuel bill increased by £3 a week. I have another case in which a man recently started making enamel for ironware, a trade which was until comparatively recently in the hands of the United States of America—imported stuff. This man is prepared to take a risk on his skill and enterprise and initiative, and he puts down £4,500 worth of new plant, with oil as its basis. He finds that under this Budget his fuel bill is going to cost him £10 a week more than he contemplated a month ago.
    I should like to take my right hon. Friend to another industry of considerably greater importance, that is, the glass industry. That is another active industry which, Since the War, has gone through seas of adversity. How it ha3 managed to hang on I cannot tell, but it has survived. Under this Government it has had the protection of a 20 per cent. tariff, and it is prospering. It has discovered new lines of manufacture. It has improved its efficiency and got new foreign markets because it has been up-to-date. It has been able to do that because the central characteristic of the new era of production in the glass trade has been oil. A turnover of £3,000,000 per annum has been produced by means of oil fuel. That turnover will have placed on it by means of this tax an additional burden of £100,000 a year for fuel. It means nearly 5 per cent. on their annual profit. It is going not only to militate against the effect of the protection they have had, but it is going seriously to pre-

    1159
    judice them when they come to try to sell their goods in the export market.
    One can go round the world among the manufacturing trades and the same story is told. There is one particular industry that does not get protection. It is still having to buy its raw material from' Belgium and Germany. It is still having to pay on that raw material 33⅓ per cent. for the benefit of the steel producers, and for my right hon. Friend. On top of this imposition, which they have resented tremendously and which has made many enemies for the Government in the Black Country, they are now having to pay 33⅓ per cent. extra for their fuel. They are quite seriously asking themselves, employers and workpeople alike, why they should be penalised in such an extraordinary degree.
    There are two other new branches of industry which deserve the good will of the Government, and not a tax. They are the makers of Diesel oil engines and the makers of fuel-burning apparatus. It is only recently that the Diesel oil engine came into the country and now engineers, by looking ahead and taking a chance, have adapted it to their own purposes and have made good. The Diesel engine is a thing that is coming. It has a well-defined place in our engineering life, and you cannot put it back. Exactly the same considerations apply to the makers of oil-burning apparatus, at one time a German and an American trade and now an English trade, and we are beating them at their own game. We find that, having gone ahead, having shown enterprise which is a credit to British craftsmanship and design, their reward is that their enterprise is to be taxed by 27 per cent. of their fuel cost.
    This tax, as applied to manufacture and power, is a retrograde tax, an ill-conceived tax, one that is entirely out of keeping with the sentiments and needs of the times in which we are living, and one that ought to be dropped altogether. I am not going to be content even if we hear that the tax is to be applied only in a modified form. We are creating a new precedent. We are upsetting standards which have obtained for 30 or 40 years. Although the Chancellor has put on only a certain unit of taxation to-day, how do we know that next year, or two or four years hence, that unit is not going to be radically altered, to the
    1160
    disadvantage of industry? It is that uncertainty, that not knowing what your fuel is going to cost you next year or the year after, which will militate against the extension of what would be a great advantage to all our producers, namely, power and heat, with fuel as the basis, on a scientific footing. I would beg the Chancellor to consider whether this Amendment does not give him the way out. After all, he has got another £500,000 from the co-operative societies, Let him open his heart. By doing so he would persuade manufacturers that this Government, which came into power with so much good will and so much authority, is not, in relation to manufacture, a mere tax gatherer, but that it has at heart the interests of our manufacturers, upon whom in our economic structure depends a great deal of the well-being of the people of the country.
    6.38 p.m.
    Mr. KIRKWOOD: I have the greatest pleasure in supporting the Amendment, not only on behalf of the engineers of Britain, but of the working class generally. If this tax is allowed to go through, it will hit one of the best developments that we have had in our time as far as engines are concerned. There are two ships in Scotland, the construction of which has been held up as the result of this threatened tax, one at Ardrossan, the other at Leith. It is going to put back the hands of time as far as the building of marine engines is concerned. That is a very serious matter for engineers. We are right up against it. We have been doing everything we possibly could to get work for our men. The Government, stopped us getting work in Russia and here is another action of theirs stopping work. This is not helping the country. It is doing the very opposite. It is throwing more people out of employment. The firm of Beardmore has been experimenting with Diesel engines on a small scale for a couple of years. They have now produced a Diesel engine small enough to be applicable for propelling omnibuses on our public highways. This means work for thousands of engineers. It will cheapen and revolutionise transport. It is one of the greatest things that have yet been effected. After all these years of experiments this firm has just got the engine into working order. They have

    1161
    proved to the entire satisfaction of the Glasgow Corporation that it can do the job satisfactorily.
    Mr. H. WILLIAMS: On a point of Order. Shall we be entitled to argue the case of the Diesel engine on an Amendment which will still leave1 the fuel of the Diesel engine taxed? I know it is a very technical point, but the Amendment does not, in fact, exempt the Diesel engine oil from duty. It does not seem proper that we should argue something which will not arise.
    Colonel WEDGWOOD: Captain Bourne, did not your predecessor say origiNaily that we were to discuss all questions of use on the Amendment, and is it not, further, the fact that this particular viscosity includes the abatement on Diesel engine oil?
    The DEPUTY-CHAIRMAN (Captain Bourne): I understand that it is a de-bateable point whether, in fact, oils of this viscosity can or cannot be used in Diesel engines. I am not an expert, and I do not propose to express an opinion upon it. With regard to what the right hon. and gallant Gentleman the Member for Newcastle - under - Lyme (Colonel Wedgwood) has said, the understanding, as I heard the Chairman rule, was that we should take a general discussion on the Amendment on the use of oil.
    Mr. KIRKWOOD: I can assure the hon. Member that, if this Amendment is accepted, I shall be quite satisfied, and so will those who are interested in the Diesel engine. He is always posing as the greatest living authority in Great Britain, France and Ireland. His great anxiety is to be a member of the Government, but I can assure him that he is not going to be included.
    There is another way in which this affects us. The Diesel engine has been introduced into a great many factories. In my constituency we have been faced with a tremendous amount of unemployment owing to so little shipbuilding being done. We have been doing what we could to bring new industries into our constituencies. We have been successful in Clydebank in establishing a biscuit factory which gives employment to nearly 500 young men and girls. They have put down a Diesel engine, which has given great satisfaction. If this tax goes on,
    1162
    it will be quite impossible for this firm to compete with the other great firms, not only in Scotland but also in England, and it will throw those wham we have got in work back among the unemployed. I know for a fact that the Chancellor of the Exchequer has been inundated with letters from people who are able- to tell him how this matter is affecting our industry throughout the length and breadth of Britain. I leave the matter to his own good sense.
    6.45 p.m.
    Sir ROBERT HORNE: I understand that by your Ruling, Captain Bourne, we can embark upon a very general discussion of fuel oils, and I should like to extend some purely general considerations to the Committee before an opinion is arrived at upon this subject. It is obvious that if any import duty of this kind is put upon any commodity which is in use in industry, it will create hardship. Everybody would admit that at once. I imagine that we are not so far away from our discussions upon the various import duties which were imposed in this country under our new tariff system that we cannot remember now to recall vividly the great complaints made with regard to almost every duty put upon a particular commodity. These things must be so. It does not matter what is the commodity upon which you put a tax, somebody suffers and somebody complains. Always you are able to urge that somebody is to be put out of employment because of the harsher conditions under which the industry must then be carried on. We cannot come to definite conclusions simply upon such narrow considerations as these. We must, indeed, have regard to the general interests of the whole country. I sympathise deeply with the complaints made by many different industries using oil engines to-day. I realise their difficulties. I can see at once that in some industries, where the cost of oil is a large part of the charges upon production, it must work out in very harsh measure. On the other hand, I see some complaints which appear to be very much exaggerated, but I am not prepared in any way to resent such suggestions to-day. I admit the case of those who would rather not have a duty upon oil than have a duty.

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    There are one or two considerations which seem to be worth our attention. It is said, for example, that to put a tax upon oil, and in view of a reversion to the use of coal, is to take a reactionary and backward step. That is a view from which I entirely dissent. The future of mechanical propulsion does not lie at all with oil. If I read aright the scientific prognostications which are being made at the present time, coal is coming back to its own again, and, indeed, so far from oil being the propelling agent in the future, those who are looking farthest ahead tell me that propulsion will be done on gas, and that that will be before many years are over. I am also informed by those knowledgeable people to whom I appeal that not many years will have passed before everybody will carry a cylinder of gas on his motor car instead of having to fill up his motor tank with petrol. The future is with coal, and not with oil. Therefore there is no ground upon which it can be said that it is to force this country into reactionary methods, which other countries have long ago given up. I am told that to-day Germany, which has probably gone in for more scientific investigations into these matters than any other country in the world, is quite convInced that it is useless now to try to produce economically what they so long desired to do, namely, oil from coal by hydrogenation processes, and that in the future we really must look to gas as the cheapest method by which vehicles shall be propelled or engines driven.
    The difficulty in this country at the present time is that gas is too dear, but that difficulty arises very largely from the character of our legislation. We have imposed so many restrictions and limitations upon gas companies with regard to the means of distribution that they are not able to give large quantities of gas to the large consumers at a price at which they could readily supply gas. They are bound by the restrictions which compel them to supply gas to the largest consumer at the same rate per unit as to the person who takes almost none at all! When we have got rid of these difficulties, I have not the slightest doubt that we shall see a great advance in the country in the use of gas rather than of oil. It may well be that with regard to the people who use oil engines,
    1164
    there will be as great a complaint made that they are left in the lurch because of the advance of science. Already one company in the vicinity of Sheffield which has special powers with regard to the use of gas has set up the kind of grid which is already well known in Germany, and will be able to supply gas at a very economical price to anybody wo can use it for power purposes. Do not let us get misled by the idea that we are taking a reactionary step in doing anything which will restrict the use of oil.
    It is said in a great many instances that to turn from oil-using machinery to machinery which, for example, can be used with coke as fuel would be costly to the industry. I have no doubt that that is true in many cases, but it is not true in all cases. We must not exaggerate that difficulty. Many instances have already been given. There was a notable instance given in the "Times" the other day by a man who had put what he suggested into practice. He converted his oil-using machinery to coke-using purposes, and he found that in the first two years he had saved enough, because of the cheaper price of coke as compared with that of oil, to pay all the costs of his conversion. I believe that in some instances the costs of conversion are even cheaper than that. Therefore, we must not exaggerate that argument either.
    Mr. KIRKWOOD: I should like to ask the right hon. Member for Hillhead (Sir R. Home) if he is aware of the fact that Beardmores got a cruiser from the Government in order to experiment with gas and that it turned out to be a gigantic failure? And not only that, the Beardmore firm have spent fortunes in trying to develop the gas engine on the lines suggested and have scrapped the entire output.
    Sir R. HORNE: That may be an individual instance, but I do not think that my hon. Friend, if he really reads the modern literature upon the subject, will come to the conclusion that it is the general experience. The greatest possible advance has been made in gas. The last and the main consideration which I venture to put before the Committee this afternoon is as follows: The hon. Gentleman the Member for West Bromwich (Mr. A. Ramsay), who opened the discussion

    1165
    and made a very able, eloquent and interesting speech upon the subject, said that was was proposed now was without precedent. I really cannot entirely follow that point of view. It is certainly not without precedent in this House that we have been protecting some of our main industries. If this protection which is being suggested this afternoon, if it be regarded as a protective duty, is in favour of coal—
    Sir ISIDORE SALMON: Will the right hon. Gentleman inform the Committee what commodity we have protected to the extent of 40 per cent.?
    Sir R. HORNE: That, after all, is an argument upon the amount of duty and not upon the principle, which is the only question upon which I am now arguing. I would only remind my hon. Friend that if we put a duty of £l per ton on oil at the present time, it may be within his recollection that Germany defends its coal trade by a duty of £10 a ton. If we are making an innovation in this respect, we are certainly not exceeding what has been done by Germany. Suppose you were having boat-loads of coal delivered into this country, would not the claim of the coal trade for a duty be irresistible? What is this duty? It is a duty upon a commodity which is as much the competitor of coal as any cargo of coal which can be landed in this country. [HON. MEMBERS: "No !"] Undoubtedly. The argument which is put against it is that a duty upon oil would compel them to go back to coal. Undoubtedly it is the coal trade which suffers most severely from the imports of oil into this country. Of all the industries in this country coal is certainly second to agriculture in importance. Moreover, the coal of this country is the greatest, and, indeed, the only natural asset we possess. We cannot imagine anything which would do this country worse detriment than if coal became quite useless, or so expensive in comparison with other commodities that it could not be employed. It would ruin this country.
    If there is any trade in this country upon which we must depend, it is coal. Is there an industry which employs a larger number of people except agriculture? We know of the distress in the coal districts. I sympathise with the
    1166
    hon. Member for Dumbarton Burghs (Mr. Kirkwood) when he talks about 1,500 people being thrown out of employment if those oil engines were scrapped, but look at the vast number of people who are walking about idle in the coal districts to-day for lack of employment. If I were asked as to the necessity of finding employment in any industry, coal would be the first, and the iron, steel and shipbuilding industries would be the next. Surely, if there is anything that we should try to benefit to-day by such legislation as we can pass, the coal industry is at least one of the most deserving of the industries of our country.
    The importation of oil, undoubtedly, is doing the coal trade a very considerable injury. I find that 200,000 tons of oil are being' imported into this country at the present time for domestic heating purposes and for the heating of trade offices, and, surely, if we are really planning for the industries of our country, that is madness. We ought to be employing our native asset, giving work to our own people, for heating those places. They can be heated as efficiently by coal as by oil. We put no great hardship upon the oil industry which is heating those buildings in asking them to pay a penny a gallon simply to be allowed to come there. Not only is this 200,0000 tons a matter to be kept in view, but the position is still worse when we consider that the amount has risen by 55,000 tons in the course of a single year. There is one of the things which damages the coal industry. What have we been doing here during the last fortnight but struggling in trade agreements to get some outlet for our coal. For the sake of a million tons, which Germany is going to take from us in the course of the next few years, we have given away duties, and large numbers of industries are undoubtedly going to feel the difference. This is not a principle any different from that. While I agree that there are people who will be hurt, and while I sympathise with those whose difficulties are increased, I nevertheless feel that, looking to the broad general interest of this country at the present time, and its trade taken as a whole, this duty which the Chancellor of the Exchequer proposes is fully justified.
    7.1 p.m.
    Colonel WEDGWOOD: We have listened to the coal trade, and I presume we shall listen to the electricity power owner, and the gas owner. The coal-owner, I am bound to say, when speaking of "our" coal, would carry more conviction to me if it had been our coal and not his coal.
    Sir R. HORNE: I am not a coalowner. I never had a shilling in the coal trade in my life.
    HON. MEMBERS: Withdraw!
    Colonel WEDGWOOD: I withdraw. But I see he is a director of Samuel Hodge and Sons, Limited, pulverised fuel and fuel specialists. The suppliers of the fuel are telling us that their fuel is better than any other. We shall have in the course of this Debate everybody interested in supplying the market. I put it to the Committee, and the Chancellor of the Exchequer, that the people best able to judge are those who have to eat the pudding—not those who supply the ingredients. It is the manufacturers who are the best judges of what they want, and what they have to pay. Let me draw the attention of the Committee to this, that the principal consumer of fuel in this country is the Navy. Every one of the arguments the right hon. Gentleman has put before the Committee— convincing arguments—has been considered by every Board of Admiralty for years past. Every Board of Admiralty has been asked by colleagues in the Cabinet to "give coal a chance" and "go back to coal." In spite of that the Admiralty has stuck to oil, simply because they think it best for their purposes; because they think it is not fair to turn the British Navy into a C 3 navy. If that argument carries weight with the British Board of Admiralty, it must carry the same weight with the captains of industry in this country.
    Mr. SLATER: May I remind the right hon. and gallant Member that the Admiralty have recently given an order to a firm in this country for fuel oil produced from British coal?
    Colonel WEDGWOOD: If we are to go back to the use of coal, and if the Admiralty are going to do that, the price and the excellence of the result must be satisfactory. The right hon. Gentleman
    1168
    knows all about coal, and it may be that in years to come they may produce pulverised fuel, gas or oil from their coal as cheap as our present fuel and better. When that comes about, -I would say to the Chancellor of the Exchequer: "Now do this dire deed on imported oil." Until that day comes, let him join with me and sympathise with the manufacturers who are the best judges of what they want. I have a letter from a firm of manufacturers which is typical of hundreds I have received in recent days. This is from a firm of provision merchants in Bristol. After all, even provision merchants use oil very largely. This firm says:
    "We were aghast when we heard of the Chancellor's imposition of one penny per gallon on crude oil. We are of opinion that this tax will drive hundreds of manufacturers quite out of busmess. Many thousands of pounds of manufactures have been sold by us on a certain basis of cost. A tax such as that now imposed involves most horrible losses which cannot be recovered. The harm which this tax will do, in creating unemployment, will far offset any revenue obtainable."
    Allowing for a certain amount of exaggeration, manufacturers may have sold forward for a year. This tax unexpectedly falls upon them and upon people who are perfectly legitimately carrying on their business—particularly on those people who, desirous of making production as cheap as possible, use the best inventions, and get the best plant for competing in the markets of the world. I have to point out that I am not speaking on this matter from a selfish point of view. I had better explan that my largest holding in the firm of Josiah Wedgwood has been five £10 shares, and the largest amount I received from them is £7 10s. I have never spoken from the point of view of financial interest. What I put forward is in the public interest, and nothing but the public interest.
    I am terribly afraid that the Chancellor of the Exchequer—I know him so well— is putting off his answer. I know what that means. It means he is going to allow us to blow off steam, and state our trouble, and then say to us: "You can state your case to the Import Duties Advisory Committee." Whether in this House we are stating our case or not, we are stating public principles We cannot afford a Chancellor of the Exchequer with a parochial mind. This is not a question of any one industry; it is a question of

    1169
    the Chancellor of the Exchequer of England affecting all the industries of England—coal, fuel, electricity, power, oil, everything. On thi3 question it is not our duty, or right, to hand over the destinies of the manufacturers of this country to any statutory body, where a decision will be taken on the lines of the details of the case made out by a particular industry. Rather it should be decided on broad lines by this Committee. I think everybody in the Committee will agree that this is a question where broad lines come in. Even the right hon. Gentleman the Member for Hillhead (Sir R. Home) was rather staggered at the idea of a 40 per cent. duty.
    Sir R. HORNE: No, it does not stagger me, but I had not thought of it like that.
    Colonel WEDGWOOD: The broad issues are things such as that—whether a new tax of 40 per cent. should be imposed, without notice, to any industry. The weight of the tax is a thing we ought to discuss and make up our minds upon, and not leave it to any Import Duties Advisory Committee. Then comes the question of whether we should put a tax on raw material. The Committee must realise the enormous difference there is between taxing raw material and taxing the finished article. There are taxes on steel billets which are really raw material, taxes which are very much complained about. But I would call attention to this, that before this Government came in, and while the Tariff Reformers were still struggling in the wilderness, they drew up, under the expert guidance of one of the Members for Birmingham, a cast-iron scheme in which duties varied from nothing on haw material up to a considerable amount on the finished article. Duties were worked out in detail. The Government did not think of anything being done by anybody else and started out on a line of their own. There was a considered decision of all the skilled Tariff Reformers in this country, and they left out of the duties raw material.
    Mr. H. WILLIAMS: May I ask the right hon. and gallant Gentleman how he knows all this?
    Colonel WEDGWOOD: The right hon; Gentleman the Member for Sparkbrook (Mr. Amery) will correct me if I am
    1170
    wrong, and, even if I am wrong, it is very probable. The difference between taxing our raw material and the finished article is this, that if you have a tax on raw material you are adding to the cost of production in this country and making it impossible for the manufacturer in this country to compete with the manufacturer in another country where raw material is not taxed. It is a question of first principle. You levy your lower tax on the unfinished article in order that manufacturers in this country may still continue to compete in the neutral markets of the world. That is a strong argument for not imposing this particular form of protective tariff in order to benefit the coal industry.
    This is not only a very heavy tax—twice as heavy as the ordinary tariff of the country to-day—it is also a tax on raw material. The right hon. Gentleman will say it is not raw material; it is merely fuel. It is no use chopping logic whether it is fuel or raw material. The question is what will it mean in the cost of production; what does this taxation mean as an addition to the cost of production of the article? This is a new overhead charge added to the cost of production and, consequently, it is immaterial to the manufacturer whether that addition to the cost of production is on his steel, a raw material, or on his fuel. If you charge an extra £l,000 upon him he does not care whether it is for glass, borax or his fuel—it makes exactly the same difference. It is so much per cent. on the cost of production. If it adds to his cost of production the first thing he has to consider is: "Can I put up my price to meet the additional cost."
    Four main considerations have to be taken into account—(1) the rate of the tax, (2) that it is a tax on raw material, (3) that it adds to the cost of production and (4) can the manufacturer pass the tax on? Let us consider what happens in an ordinary case where the rates go up. Perhaps I had better, as I am speaking to the present Chancellor of the Exchequer, take the more exceptional case of when rates go down. The Chancellor of the Exchequer, when he occupied another position in the Government, took off three-fourths of the rates on factories and all the rates on machinery. That was held at the time by Members

    1171
    of this House, and particularly by those engaged in business, as being the best thing that could possibly happen for manufacturers here. What was the immediate result? Every manufacturer said: "This means so much off my cost of production. This means £500, £1,000 or £l,600 a year less in my costs of production. I can, therefore, afford to sell my goods abroad at lower prices, and if I have competitors in this country all our prices will come down accordingly." The benefit of that reduction in the cost of production was all passed on to the consumer, in so far as it was subject to a universal relief applying to everybody in the country.
    What about the present tax? Can the manufacturer pass on the tax by putting a higher price on the article? In some cases he can. In some cases the consumer will have to pay but, unfortunately, this tax is only on one special sort of fuel, and in so far as rival manufacturers are not taxed and selected manufacturers are taxed it means that you cannot pass the tax on. The manufacturers subject to the tax cannot get a higher price than he is getting at the present time, subject to the competition of other forms of fuel. This tax is a partial tax levied upon some but not upon all manufacturers. If it was levied on all fuels then, certainly, in the home market prices would go up, but because it is limited to one fuel no manufacturer using that fuel will be able to pass the tax on to the consumer or get a higher price for his goods. That is sound economics. There may be variations but on general principles we may take it that unless a tax is universal it cannot be passed on. So far as the foreign market is concerned, if you ask any manufacturer at the present time, who is fighting like a tiger for British trade abroad, to add to the cost of his goods in order to please the National Government, well, he would sooner have a Labour Government. Manufacturers in this country are not children. They are trying to get back British trade. They are doing it in regard to the Diesel oil engine, as the hon. Member for Dumbarton Burghs (Mr. Kirkwood) pointed out. Germany, who used to be ahead of us as regards the Diesel engine, now takes second place, because they pursued in Germany the same silly policy of
    1172
    putting a gigantic duty on fuel oil, in order to encourage something else.
    The proposed tax has another vice, and it is our duty to prevent that vice being grafted on to it. It means that the tax in the Majority of cases will rest entirely upon the businesses that use that particular fuel. It will fall entirely upon the ordinary shareholder, whereas preference and debenture shareholders will get off scot free. The rentier class will be untouched. The only people picked out for punishment are those on whose enterprise depends the whole future of British trade. You pick out a selected class of the trading community to tax, and you pick out the very man you ought to be encouraging if you really desire to restore British trade and industry.
    There are a whole series of general principles upon which this Committee ought to decide, but the right hon. Gentleman is going to say to us later: "You have stated your case, and you must now state it to somebody else—the Import Duties Advisory Committee." Who is going to state it? It will not be me. It will not be stated on general principles. It will be stated by each man asking for something for himself and trying to conceal from the others that he is going to get it. It is a wrong principle. I do not care whether it is the manufacturers or the coastwise traffic or the Diesel oil engine people, they all have the same case, that this tax is unfair in weight, that it is a tax on raw materials, that it is a tax which cannot be passed on, and that it falls solely on the enterprises that use this particular fuel. In spite of what the hon. Member for Bournemouth says, this is a tax which must penalise at least one line of experimental research and affect permanently the recovery of British industry and our ability to compete with every intelligent experimenting nation throughout the world. I beg the Chancellor of the Exchequer to treat this as a national question. We on this Committee are the experts on this question. No person who has not been in the House of Commons can possibly understand economics as we do here. I beg the right hon. Gentleman to show that Birmingham, which is so much interested in all these new lines of manufacture, can also supply some original ideas on matters of political economy.
    7.22 p.m.
    Miss HORSBRUGH: I intervene very briefly, because I have already stated the incidence of this tax on the oil used in jute manufacture, which is different from other oils in that it is not used as fuel and that it is not in competition with coal, gas or anything else. I refer to the oil used in the jute industry in the process called batching. I think I am right in saying that jute is about the coarsest fibre that we spin, and because of that fact a greater degree of oil is needed to treat the fibre before it can be manufactured. The jute industry is entirely dependent upon that particular oil, and an increased cost would be very hard on an industry which is struggling for life at the present time. The difficulty is that there is nothing else to substitute for the oil and that no application to the tariff board could help in any way, because the competitor is not a foreign country. Our competition comes from India, and therefore there is no import duty allowed on the jute goods imported from India. I will not keep the Committee further at this stage but will merely plead the case with the Chancellor of the Exchequer for this particular trade and for exemption for the oil used in the industry, because it is different from all other cases for which oil is used.
    7.24 p.m.
    Mr. GRAHAM WHITE: Having regard to some observations made in the Debate I should like to say that I am not a coal-owner, or a shipowner, or a maker of pottery, nor am I interested in any way in any trade that will be benefited or dis-advantaged by this particular tax. I should like my right hon. Friend to deal with the matter as a question of general principle. My right hon. and learned Friend the Member for Hillhead (Sir R. Home) reminded us that we were not so far removed from the discussion of the Import Duties Act and similar Measures that we have had to consider from time to time, but he had forgotten the arguments which were relevant to this discussion, how some people were disadvantaged and others hoped to gain, and the Government hoped that, on balance, the result would be good. The Chancellor of the Exchequer in first speaking on this Measure reminded us of that. He said that one of the reasons, and perhaps the Major reason, for introducing this tax was the fact that it was to remedy an anomaly
    1174
    and that this fuel had not been taxed before. There are accidents and accidents, and most of them are misfortunes, but when we have a fortunate accident which is of great advantage to a large number of struggling manufacturers, who are much concerned in trying to meet foreign competition, and when it is an accident which has enabled the most progressive people in the country to bring their methods and plant up to date, it is an accident that we might very well leave where it is rather than alter it merely for the sake of removing an anomaly or making our tariff system symmetrical.
    I do not think anyone will quarrel with what my right hon. Friend said with regard to the gas industry and its future development. In Germany and elsewhere a very great deal has been done scientifically in the development of the gas industry. The right hon. Gentleman said that we might in a short time be going about with cylinders of gas in our motor cars. His recollection of the War time is probably as clear as mine, and he will remember that we went about with balloons of gas on our cars. This is an important matter. Whatever may happen in regard to gas in the future that lies in the future, and we hope that it will do all the great things which science can develop and that it will be of the greatest service to our manufacturers. The vital thing to-day is that our manufacturers are trying to bring their plants up to date, and they ought to have the very best plant that is available, but the imposition of this particular tax will mean a very serious set-back to many of the most modern plants. The glass industry has been instanced by one hon. Member. In confirmation of what he said, I am told that in the glass industry in particular the incidence of this tax will just make the difference as to whether or not that industry will be able to hold the new foreign markets which it has obtained. That is a very serious consideration.
    The hon. Member for West Bromwich (Mr. A. Ramsay) dealt with many industries and pointed out how widespread the incidence of the tax would be. I cannot think that the Treasury or the Chancellor of the Exchequer had any idea when they launched this tax how wide its repercussions would be. Speaking on the Budget Resolutions, the Chancellor of the Exchequer said that he did not pretend to have great knowledge on this particular

    1175
    subject, but he hoped as the Debate proceeded views of hon. Members would be expressed. The hon. Member for West Bromwich might have increased his list. I am having letters from all over the country pointing out the serious effect this tax will have upon industry in general. The right hon. Member for Hillhead spoke on behalf of a great national industry which we all desire to help, but according to the information I have been able to collect the Majority of people who are using oil fuel will, in no circumstances, go back to coal; they cannot go back to coal. That is an important point which must be remembered. It is a liquid and for reasons of cleanliness and control of heat 90 per cent. of the present users of oil fuel cannot, in any circumstances, go back to coal, and whilst we have every sympathy with the coal industry and with the miners, and are prepared to support anything in reason which may help them, the arguments in regard to the use of coal have been considerably over-stressed this afternoon.
    Let me come to more general considerations in regard to the trend of British trade in relation to this tax. When you put on a tax it is impossible to see its repercussions, even at short range, still less at long range. The Diesel engine position in Germany has been referred to, and it is relevant to point out that 12 years ago when the manufacture of Diesel engines was being developed in Germany there was no tax on this fuel, and this and similar engines in Germany were coming into general use. The German manufacturers created a demand in their own market, were thus able to reduce their own charges, reduce the cost of their engines and command a considerable measure of overseas trade. They put a heavy tax upon fuel oil, and the result is that Germany has lost her supremacy in the manufacture, which is coming to this country. We ourselves now have a complete mastery of the export trade in this particular type of manufacture. It has been a feature of British industry during the last 25 years that we have been somewhat slower than other countries in adopting new industries. Take the Argentine as an example. When the people in Buenos Aires, in these modern times when new luxuries have been coming in, wished to have refrigerators
    1176
    put in their home they got them from Sweden; carpet sweepers they obtained from the United States of America, wireless sets from Amsterdam and gramophones from, America. Having a limited amount of money to spend and wishing to have these modern inventions they naturally had less to spend on the staple manufactures of this country, upon which we were still relying. Fortunately we are beginning to catch up and develop these new industries.
    The Chancellor of the Exchequer would not, I am sure, wish to impose a selective tariff; and it is inherent in the situation of industry that this tax must be selective. And it must select those industries which are most up-to-date, and which are making every effort to bring their plant up-to-date. May I remind the Committee that there are some countries which have not been so ill-advised as to tax this particular kind of raw material? The Scandinavian countries are practically free from a tax; Holland is free. In Belgium the tax is only light, and in France they have adopted a duty of 15 per cent. ad valorem. They are not so stupid as to handicap themselves by imposing a tax.
    Colonel WEDGWOOD: I think in France it is 5s. 9d. per ton.
    Mr. WHITE: It is very much less than the tax now proposed. I oppose this tax on general principles. It is contrary to the interests of industry. It is a selective tax. It is a tax upon progress, which is the most serious kind of taxation in these rapidly moving days. It will bring in some revenue I have no doubt, but I am convInced that it will bring in no revenue which can compensate for the injury it will do.
    7.38 p.m.
    Mr. ALAN TODD: I do not propose to detain the Committee for more than a few moments, but I should like to say that I agree with the hon. Member for Birkenhead (Mr. White) that this tax will hit the most progressive manufacturers. In my own constituency there is a glass industry, which it will affect to some extent; and if the Chancellor of the Exchequer were to come down to Birmingham at the present moment and visit Edgbaston he would know what that district thinks of the Government in connection with this tax and also in con-

    1177
    nection with the German Trade Agreement as well. This glass industry is a very old industry, and it has had a great deal of difficulty in keeping up-to-date, but it has done its best under very difficult circumstances. There is no doubt that this tax will, at the present moment, affect the conditions of this industry in a most serious way. Therefore I hope the Chancellor of the Exchequer will see his way to take it off. The right hon. Member for Hillhead (Sir B. Home) has dealt with the case of the gas industry and has said that the future of industry in this country depends largely on what happens to the gas industry. He also said that this tax will benefit the coal industry, but we have had no figures to show how the coal industry will benefit. The right hon. Gentleman, to whom we always listen with great attention, might have given us some figures showing how the coal industry and the gas industry will benefit; if we had had them it would be easier for those of us who are supporting the Amendment to agree with the proposal of the Government. The Amendment will not seriously interfere with the coal industry. I had a letter to-day from a coal federation in my own division, and the first reason they gave for supporting the tax was that it was put on because it was a pure accident, an anomaly, that this particular importation had escaped a duty altogether, because the Import Duties Advisory Committee were unable to deal with materials which are normally subject to duty. That may be so, but, on the other hand, on many occasions manufacturers have done well because they have taken the opportunities which have occurred. I hope the Chancellor of the Exchequer will reconsider this matter, and take the advice of many manufacturers, who must have come to him and told him that it was a tax which ought not to be imposed at the present moment. It will cripple new industries which are doing their best under difficult circumstances.
    7.42 p.m.
    Sir S. CRIPPS: I only propose to detain the Committee for a moment because the main argument which we want to advance will be put forward on a later Amendment to the Bill. I entirely agree with the right hon. Member for Hillhead (Sir B. Home) that we must look at this problem from a national point of view
    1178
    and not from the point of view of any particular industry. He has spoken of the future of coal, pulverised coal I presume he means, and gas as the new motive power. He reminded me of some of those gentlemen whom I meet in my professional capacity, the patentee who always comes forward with the latest device and assures one that within 24 hours the world will be converted to it. It is a long cry before there will be any substitute in the form of gas in this country for fuel oil. The process may have begun, but it will be a long cry before it gets all over the country. We are dealing here with the coming year, the financial and industrial effect of this tax in the coming year. As far as other substitutes for fuel oil are concerned, such as pulverised coal, that has been a potential substitute for many years, but for obvious reasons it has not been adopted instead of fuel oil. It is not suitable for many purposes for which fuel oil is used.
    The right hon. Gentleman seemed to think that the effect of this tax will be to make people immediately reconvert their furnaces from fuel oil burning furnaces to coal burning furnaces. That may be possible in a few isolated instances, but in many cases it is quite impossible, not only from the point of view of the cost, but from the point of view of the class of heating that is required. Indeed when one comes to such things as the Diesel engine it is completely out of the question. There can be no question of their going back to coal. If one deals with all the other uses of fuel oil for manufacturing purposes, and such uses as one sees mentioned in later Amendments, one realises that no home-produced article at the present time can compete with fuel oil. It is quite true that there is a quality of oil produced in this country which is similar to fuel oil, but it is not available in quantities to replace the imported oil. The result is that, although the tax might have some effect in preventing further people converting from coal to fuel oil, it cannot have any effect in the case of people who have already converted. That is the reason for the Amendment in the name of some of my hon. Friends, suggesting that so far as installations for fuel oil have been made up to the date of the intro-

    1179
    duction of the Budget, they should not be penalised.
    I hope the Chancellor of the Exchequer will tell us what object there is behind this tax. Is the policy to try to stop further conversion from coal to fuel oil in order to protect coal from any further encroachment by fuel oil? One can quite understand that as a bit of national policy, and if properly planned in association with many other things it might be a desirable thing to do to help to develop home resources. Or is the policy of the Government an attempt to get people to reconvert their furnaces back to coal? If that is the policy it really is a vain policy. In practice it would not be a possibility. If the right hon. Gentleman's policy is merely to stop further conversion, clearly he ought to give some consideration to people who have already converted and are now tied to fuel oil. In that event the only effect can be to penalise them in what must be considered to be a raw material, though whether technically it is a raw material or not does not matter.
    Especially in regard to the export trade one would have thought that the tax would be contrary to the interest of the country as a whole. So far as the amount of money to be obtained from this duty is concerned, the duty clearly cannot be a matter of any great importance compared with the industrial effect that it may have. I have no doubt that the Chancellor of the Exchequer is glad of every million that he can pick up, but I am also sure that if he felt that a large class of manufacturers were being penalised or affected in their costs and their competitive power abroad by reason of their having converted to fuel oil and being unable to reconvert, he would then reconsider the matter, anyway so far as the present installations are concerned. So far as such industries as the Diesel engine industry are concerned, that surely must be a matter to be taken most seriously into account. It is an industry which, in spite of the forecast of the right hon. Member for Billhead is going to play a very large part in the future. That being so, it must be a matter of prime importance as to whether we encourage the use of that engine in this country. Moreover, if in future we are to be able to produce fuel
    1180
    oil in this country, the more engines that will burn it the better.
    7.50 p.m.
    Mr. HOROBIN: I shall speak for only a few moments, especially as the right hon. Gentleman the Chancellor of the-Exchequer was good enough to listen at some length to arguments that were put to him when this matter was put before him by a deputation. I rise for one prime purpose, and that is to deal with certain arguments used by the right hon. Member for Hillhead (Sir R. Home)— arguments which may, quite unwittingly, have misled the Committee. The right hon. Gentleman made reference to the gas industry as a competitor of oil. I entirely concur with him in what he said as to the quite illogical and almost disastrous hindrances that Parliament has put on the proper development of the gas industry, hindrances which are causing gas fuel to be much more expensive than it need otherwise be. The fact remains that at the present time gas is three times as dear as oil. It is no use to say to struggling manufacturers that some day legislation will be altered, and some day they will be able to get gas as a competitive fuel. I take leave to doubt whether in the immediate future, even if legislation was amended, gas would become really competitive. However that may be, gas legislation is not being altered now.
    Sir R. HORNE: My point was that it had been suggested that anyone who stood up for this duty was a reactionary and taking a backward step. I pointed out that there was something much more forward than oil, which was the derivative of coal.
    Mr. HO ROBIN: Like all other interventions in the middle of an argument that is beside the point. The point is that you are putting a tax now upon oil, upon one competing fuel. It is quite useless to consider the effect of the tax in relation to circumstances which are not here, which may arise in the future or may not. Considerations of what may happen later are irrelevant. In actual fact the only real competitors to be considered are gas and oil. It is useless to consider this matter in relation to a possible effect on coal. There really is no direct competition between oil and coal. It would be as rational to consider

    1181
    the possibility of going back to charcoal burning in the smelting of iron. A great many of these processes never have used coal. They have grown up because the oil fuel has become available to manufacturers. The point I want strongly to make is that if this proposal would have the effect of cheapening gas there would be a very much stronger case for it. But it makes gas dearer. It will cost the gas industry between £200,000 and £300,000 a year.
    Mr. CLARRY: The gas industry recognises that an increased demand will ultimately recoup them.
    Mr. H0R0BIN: It is true that the gas industry welcomes these proposals. Who would not? It is going to cost them £200,000, but their main competitors something in the neighbourhood of £1,000,000. Of course the gas industry like it, and I do not blame them. It is going to put a very heavy burden on their principal competitors and a small burden on them. But from the point of view of the consumer of these fuels, and of the British manufacturer, the only true up-to-date fuels that he has before him are both to be made dearer. I hope that that point is clear in the minds of Members of the Committee, because it is vital. What we have to consider is not the competitive position of these two fuels, but the position of the British manufacturer when he is trying to put into use either of the two really up-to-date fuels at his disposal. This is protection run mad. There may be some argument for protection which says, "If we protect you you can become more efficient. Under the shadow of protection you will be able to launch out and put into operation more up-to-date methods"; but what can be said for the statement, "No, no, that is not the argument. What we say is that you will be able to sting the consumer to such an extent that we can compel you to go back to methods which were abandoned long ago because they were inefficient and uncleanly."
    This proposal is ill-conceived. You cannot force industry to turn from an up-to-date fuel to an out-of-date fuel. You can compel particularly the new trades to go from the country where fuel is made artificially dear to the country where fuel is naturally cheap. For these reasons I beg the Chancellor of the Exchequer to reconsider this duty, which I
    1182
    cannot believe that either a Free Trader or a Protectionist would really consider to be sound or worthy of consideration by a Parliament mainly elected to help the modernisation of British industry.
    7.58 p.m.
    Mr. MANDER: I quite agree with the statement of the right hon. Member for Hillhead (Sir E. Home), that we must take a national view of this matter. If the Chancellor of the Exchequer had gone to the trades of this country and had said that in the national interest he was going, after a certain passage of time, to put on a moderate duty, they would have received it in the right spirit and there would have been none of the very keen and bitter antagonism that there is in certain parts of the country to-day. I hope that the right hon. Gentleman will look at the matter from that point of view when he comes to reply, The right hon. Member for Hillhead referred to the effect on employment, and said that what weighed with him was the increase of the coal industry of this country. But it is no use putting more people to work in the coalfield if at the same time you are putting out of work as many or more people in the export trade of this country. That is what is likely to happen.
    I rise merely for the purpose of putting the point of view once again of the industries in the Black Country, which are very deeply concerned, regardless of party. Let me give one or two examples. One of the most important industries in the Black Country is the bolt and nut industry. There are 70 members in that trade association, and it is calculatel that the new impost will cost the trade £25,000 a year at the present rate of manufacture, while at the 1930 rate, to which they hope to get back, it would cost £40,000 a year. A statement was made by the chairman of that association to the effect that it would cost his-firm £20,000 to change back to coal burning. That is one of the cases where such a change would be possible. Another trade which is widely spread throughout the Black Country is the drop forgings industry. The association of that trade calculates that an addition of £25,000 a year to their expenses would be involved in this proposal. A good deal of that trade is export trade, and there is very keen competition. In the

    1183
    opinion of the manufacturers who know the situation best this taxation is going to make just the difference between holding those markets and losing them. They feel that it will involve seriously increased unemployment. The hon. Member for Kingswinford (Mr. Alan Todd) has referred to the glass industry and I need not go into that further.
    It is interesting to note that in certain factories the employes have been asked to express their views on changing back to coal where such a change is possible. They have unanimously expressed their concern and their hope that they will not be asked to return to conditions of that kind. There is the well-known difficulty of efficient furnace control if coal is used instead of oil, and there is an increase in the amount of ash and dust in the air supply which renders conditions for the workers unhealthier than they are where oil is used. There is no doubt that throughout these industries in the Black Country, Since the introduction of oil, there has been an improvement in health conditions which is greatly appreciated by the workers, and anything which would tend to a setback in that respect, would be resented on the human side in industry apart from its other effects. In many cases reconversion is not possible. Coal is not an effective alternative. The point has already been made that this taxation discriminates against the progressive manufacturers, the very type whom we want to encourage. One of the most progressive firms in the bolt and nut trade writes:
    "We were one of the first firms in the world to adopt oil for furnaces over 40 years ago. In busy times our consumption has exceeded 350,000 gallons a year. You will readily realise what the tax would mean to us. We changed over from coal for two special reasons, first, because oil was so much cheaper than coal, and secondly, because the furnaces are only one quarter the size of the coal furnaces, thereby saving much valuable works space."
    The Chancellor of the Exchequer said if it were found that, as a result of the tax, certain manufacturers were placed in a difficult position in regard to foreign -competition, they could go to the Import Duties Advisory Committee and ask for increased protection. I admit that in certain cases that argument might have a certain validity, but obviously it has
    1184
    no application to articles which come under the recent trade agreements. The hollow-ware industry, for instance, if placed in a worse position, cannot go to the Import Duties Advisory Committee because the protection which they have has been reduced to 20 per cent. from 25 per cent. at a time when they were expecting an increase to 33⅓ per cent., and it has been reduced for a period of years. There is no way out for trades of that kind. I hope the Chancellor of the Exchequer will be able to indicate in what direction their salvation lies. I asked the right hon. Gentleman, in view of the many difficulties which have now been brought to his attention, and which he admitted previously he had not been able to investigate properly owing to the necessity for secrecy, to consider some alleviation, perhaps in the direction of a postponement of the duty or an indication that it will not come into operation for a year or so, and then at a lower rate. Many of these manufacturers, if approached in that spirit, while deeply regretting any increased impost, will feel, from a patriotic point of view, less inclined to resent the situation. I appeal to the right hon. Gentleman to endeavour to meet their difficulty.
    8.7 p.m.
    Sir WILLIAM DAVISON: There are three classes whom I shall describe as public servants, who are anxious that the attention of the Committee should be drawn to the serious effect which this tax will have upon them. These are water companies, hospital administrators and owners of flats and hotels. What they complain of, like other users of these heavy oils, is the suddenness of the imposition and its partial effects. As chairman of the Water Companies' Association I would point out that this taxation will add to the expenditure of water companies many thousands of pounds a year which will ultimately have to be put upon the consumers of water. The company of which I am chairman recently installed Diesel engines manufactured in this country. This proposal means that our expenditure will go up from 65s. a ton to 85s. 5d. a ton, an increase of 30 per cent. A memorandum from another water company in another part of the country states:
    "The combined output of our stations recently became insufficient and the running of several stations was uneconomical…

    1185
    We have recently replaced our plant by modern diesel engines delivering a greater supply of water…of greater purity. This cost £146,000 and to change back is quite out of the question. The proposed fuel oil tax will also mean additional expenditure of between £300 and £400 a year."
    There is the further point that the Diesel engine has recently been developed in this country and is a most promising British industry. For a long time only German and American engines could be obtained. The East Surrey Water Company have recently put in British Diesel engines, which are., if anything, superior to engines of foreign make.
    With regard to hospitals, in the case of one hospital in my constituency, the cancer hospital, this tax will cost £900 a year. It may be said that this is not a very large sum, but it is a very serious thing to hospitals in these days, and I am told that in the case of St. George's Hospital the cost will be £2,000 a year. If my memory serves me right, the hospitals of the country consume something like 20,000 tons of heavy oil in the year, and therefore this taxation involves a serious additional imposition upon them. With regard to the third class I have mentioned, I have a great many letters from proprietors of hotels and flats in my constituency pointing out that oil is so much cleaner than coal, that it is practically a necessity nowadays. They have in many cases only recently used oil fuel for heating, and it will increase their expenses very considerably. One firm which owns three hotels state that their annual consumption of fuel oil is nearly 1,000 tons per annum.
    Here, again, the complaint is of the suddenness of this imposition. These people had no reason to suppose, when they put in oil-burning plant, which is not only cleaner and more economical but takes up less room, that this imposition would be placed upon them. Furthermore, they are placed at a disadvantage with some of their competitors by having to provide for this large additional fuel expenditure, and they suffer this disadvantage by the mere accident that this unforeseen tax now falls upon them and does not fall upon firms which are still using other forms of fuel, such as coal. I ask the Chancellor to bear in mind the position of these three classes—whom I have described as servants of the public
    1186
    because they all give service to the public in various ways—who are all seriously affected by this proposal
    8.14 p.m.
    Dr. O'DONOVAN: I would like to direct the attention of the Committee away from the oppressively commercial atmosphere in which this subject has necessarily been discussed hitherto, and to reinforce the claim of the hon. Member for South Kensington (Sir W. Davison) that the Chancellor should give special consideration to the hospitals in this time of difficulty. I have no doubt that this tax has been carefully measured by the experts of the Treasury, but I should be happier in my mind if I knew that the right hon. Gentleman had sought and obtained information from the Ministry of Health as to whether or not this tax will be a hindrance to the proper development of hospitals in England.
    Apart from the financial aspect, which is a matter for hospital managers, there is an aspect of this question which appeals to the medical profession. The fewer people there are employed about a hospital the greater the attention that can be given by the administrators to the work of the hospital. Where oil fuel is used the administrators are not bothered with the payment and management of and the responsibility for those who have to take in and store coal and stoke the furnaces. If that side can be cut away from hospital administration, the proper work will receive more attention from the committees and the administrators. It is obvious that the less smoke we have about the place, the less dust, the more will the modern hospital be a temple of healing and the less will it resemble a modern factory. Hospitals are so big that the problems of heating, lighting, disinfection, and washing almost make the hospital in its lay aspect a miniature factory. If oil fuel is developed more, then that factory aspect of hospital life will be diminished, to the very great satisfaction of the doctors. I have no adjectives at my disposal to apply to the Chancellor of the Exchequer. How he has maintained his composure under the many adjectives that have been thrust upon him during this Debate, I do not know. It is a lesson to us all in equanimity, but when the time comes for him to reply, I hope

    1187
    he will devote a few of his well-considered remarks to the medical aspect of oil fuel in hospital life.
    8.15 p.m.
    Mrs. WARD: I should like to support the Chancellor of the Exchequer on behalf of my constituency It seems to me, listening to this Debate, that the prosperity of the whole of British industry must definitely depend on the use of oil and, mark you, of foreign oil. We should indeed be retrograde if we considered that foreign oil was absolutely necessary to the efficiency and prosperity of British industry. There axe very few things that are being done by oil at present that could not equally well be done by gas, electricity, or pulverised coal. There are some things perhaps, but they are very few, that could not be done with some product of coal. The right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) referred to the pottery industry. It is an extraordinary thing that at the present time there is being used in that industry annually 834,000 tons of coal and coke-that is, apart from the consumption for power raising—and it is beyond question that the industry produced the finest porcelain long before oil was ever used at all.
    My hon. Friend the Member for Kings-winford (Mr. Alan Todd) talked of the awful effects of this tax upon the glass industry. That industry at the moment is using 595,000 tons of coal a year, as against 100,000 tons of oil. Furthermore, I am told that a combination of producer gas and town gas is used more extensively in the industry than oil. Those figures do not seem to bear out the hon. Member's argument. The right hon. and gallant Member for Newcastle-under-Lyme referred to the question of the Navy using oil or going back to coal, and he said he would welcome the day when the Navy used oil produced from coal, but surely what the Chancellor of the Exchequer is proposing is to encourage and to foster the production of oil from British coal. This tax will definitely give that assistance, and we in this House have to look upon this question from a national standpoint. We have to face the question whether we are willing to allow our national asset, one of our biggest primary industries, simply
    1188
    to fade out of the picture, and the answer to that question by every Member of Parliament, whether he represents an industrial area or whatever kind of constituency he represents, will be, "We certainly do not wish the coal industry to fade out of the picture."
    Members on all sides who are opposing the Chancellor's proposal have said, "I am willing to do anything I can for the coal industry," but when they have the opportunity of doing something really vital to assist our coal industry, they definitely oppose this effort. I welcome-the effort of the Chancellor of the Exchequer to assist this great industry that I represent. In my view there is no industry in the country, unless it be agriculture, that is more worthy of assistance. We have a great unemployment problem in the coal industry, and surely this proposal will vitally affect employment in that industry. We do not expect that all these concerns will revert to coal—that is not altogether the idea of these proposals—but we do contend that if the industries that are now using oil will use gas or electricity, it will indirectly assist the coal industry.
    We have spent millions of pounds on-a grid system in this country in order to bring cheap electricity from the North of England to the South. I am told that one of the reasons why we do not get cheap electricity is that we do not use enough, but surely, if we get something to encourage the use of electricity, it will enable it to be obtained more cheaply, and we have to remember that practically all the electricity in the country is generated by coal. I wish to support the efforts of the right hon. Gentleman the Chancellor of the Exchequer to assist the coal industry and to give employment to British miners, and I appeal to the Committee to take the broad view the big national view, and not to prevent something being done that will save the coal industry from extinction.
    8.21 p.m.
    Sir ROBERT HAMILTON: I must confess that I was rather surprised at the tendency shown by some hon. Members to regard this Debate as though it was a question of coal versus oil. I would rather look upon the problem as one of seeing that the country makes the best use of the best material at its disposal, and if anything is done in the way of

    1189
    taxation that interferes with the user of that material and handicaps our manufactures, I think it is a great misfortune. I rose only to refer to one aspect of the question, which so far has not been touched on, and that is the very large extent to which the oil engine is used in purely rural areas. The hon. Lady the Member for Cannock (Mrs. Ward), who has just sat down, referred to the difficulties of agriculture at the present time. I think it may perhaps astonish hon. Members to realise how very largely oil engines are used in purely rural districts, for all manner of purposes, on the farm, in saw mills, in quarries, and in all sorts of ways. From information which I have been able to obtain, I understand that 75 per cent. of the oil engines in existence are in rural areas, and that fact will enable hon. Members to understand to what extent oil is being used in purely rural industries.
    Mrs. WARD: Surely, where oil engines are used in rural districts, it is because they have not the chance of using electricity?
    Sir R. HAMILTON: Not necessarily so. The oil engine is used because it is found the most effective and the cheapest, and I may also remind the hon. Lady that there are many parts of the country, one of which I have the honour to represent, in which you cannot possibly use coal. We have to use oil for our purposes. Coal, electricity, and gas are not so easily available all over the country as some people imagine, and where the oil engine has been installed and has proved its usefuiness and its cheapness, surely nothing should be done to handicap the user of that oil. I am told that if this tax is imposed it will cost the users of these engines in rural areas something between £100,000 and £130,000 a year. You may say that that is not a very large amount, but if you were a user of an oil engine in a rural area, you would find that your expenses had been very considerably increased. If that engine were used for purely agricultural purposes, it would be a great pity at the present time if the expenses of the farmer were increased. I thought it desirable that the Chancellor of the Exchequer, who I have no doubt is by this time somewhat surprised at the information which he is receiving from all quarters of the Committee, should not
    1190
    be left without this small portion of information which I have been able to give him.
    8.26 p.m.
    Sir I. SALMON: I was a little surprised this evening to hear the right hon. Gentleman the Member for Hillhead (Sir R,. Horne) make a statement with regard to the necessity of protecting coal. Does not the Committee realise that what the Chancellor is asking us to do-is to put a tax of 40 per cent. on the cost of heavy oil but to protect coal to the extent of 60 per cent. It is important that the Committee should realise that those who are speaking strongly in favour of coal are asking to have coal protected to the extent of 60 per cent. I am entirely in favour of doing all that we can in a practical way to help the coal industry. On the other hand, we must have a sense of proportion. The hon. Member for Cannock (Mrs. Ward) said very lightly: "Let us generate heat by electricity." I am afraid she has very little experience of the cost to industry of raising heat for steam by electricity. This is a difficult problem for the Chancellor of the Exchequer, and we want to, consider whether he has in his mind the idea that he wants to protect the-coal industry or to balance his Budget. I feel that the method he is proposing will not help to balance the Budget, because there is a large proportion of the industries in this country that cannot possibly revert to coal whatever the tax on oil might be.
    Although we want to do the best we-can for industry, and although I am a great supporter of tariffs, I certainly think that it is overdoing tariffs to protect an industry to the extent of 60 per can. That is not fair to indusry. In flour mills, bakeries, hotels and hospitals, where they use oil fuel, it is largely done to prevent noise, dust and smoke. The real problem is: Is it fair and is there-any precedent for any industry to have such a penal tax of 40 per cent. put upon the cost of its material? We have had many Debates in the House about taxation, and we have always tried, in taxing for protection of industry, to take a reasonable view. To tax oil by £10s. 5d. a ton is the equivalent of 40 per cent. on the cost of oil,. and it protects coal by 60 per cent. That figure is easily checked, for-

    1191
    it requires one-and-a-half tons of coal to raise as much steam as is raised by a ton of oil because coal has not the same calorific value. The Chancellor of the Exchequer should give serious consideration to this problem, not from the point of view of its effect on one industry, but from the point of view of its effect on industry generally.
    This is a tax that will be rather difficult to transfer, even to the consumer, except in the case of the bakery industry. It is possible there because flour costs so much per sack and the effect of the extra cost of oil can be calculated. The effect will be that certain commodities will go up because there is an increased cost to-day of all sorts of materials; there is an increased cost not only of heavy fuel oil, but of transport. All these extra items will necessitate in certain industries increased prices. My experience of increased prices is a reduction of trade. If you reduce trade you automatically reduce staffs, and, instead of helping the country by putting more people in employment, you will do a great disservice by throwing a number out of work. I suggest that the Chancellor should consider this problem from its widest aspect and from the point of view of industry generally. I hope that he will see his way, if not to do away with the tax, at any rate, to put it at a more reasonable figure.
    8.33 p.m.
    Mr. BANFIELD: I want to add my plea to the many that are being made for some reconsideration of this tax. The bon. Member for Cannock (Mrs. Ward) pleaded that industry as a whole should go back to coal. I suggest that that is an absolute impossibility and an unreasonable thing to ask. It is impossible at this time of day to put the clock back. If repetition is the art of propaganda, I must repeat the plea which I have already made once or twice in the House. I want to draw the Chancellor's attention to the condition of the Black Country industry. The right hon. Gentleman knows the position in the Black Country of the nut and bolt industry and the tube industry. Here we have an industry which has used oil for many years. It is no recent thing in the Black Country, for some of the firms have used oil for 20 years or more. Even when coal was very cheap and when coal suitable for
    1192
    the purpose could be bought at 9s. a ton, manufacturers for certain purposes were using heavy oils. If this tax is to be imposed, I have not the slightest hesitation in saying, from the facts already in my possession and the interviews I have had with employers and workmen, that the only result will be that thousands of men will suffer still more in a part of the country which has been hit very hard indeed with unemployment. The export trade is the life-blood of the nut and bolt industry. They have had considerable difficulties in the last few years, and particularly in the last two years, in meeting foreign competition. They have had oil fuel plants for many years, and it will be impossible for them to change over, and this large burden will be the last straw upon the camel's back.
    The plea of the hon. Lady the Member for Cannock that we should all go back to coal is impossible so far as the Black County industries are concerned. We use steel and iron in our manufactures, and if our works are closed down, as many of them will be as the result of this tax, then the coal used in the production of the steel and iron which we use as raw materials in the Black Country will be no longer required. It has to be remembered, further, that many departments in those works use a considerable quantity of coal in addition to the oil used in other departments. If those works have to be closed down, that portion of the coal trade will "go west," and the position of the Cannock Chase miner, instead of being made better, will be made considerably worse. It would be a thousand pities if we put one section of the community against another section of the community. I believe there is room for both coal and oil, and I see no reason why modern developments cannot benefit our great coalfields as well as other industries.
    Another Black Country trade which is of considerable importance is the glass trade. I would point out to the Chancellor of the Exchequer, although I daresay it is within his knowledge, that for many years the glass trade suffered very severe foreign competition, especially in the cheaper kinds of glass. Bohemian glass and other foreign glass nearly monopolised the British market in the cheaper lines of glass. Of recent years our glass manufacturers have paid attention to the cheaper lines of glass. They

    1193
    have brought their works Up to date, they have introduced fuel oil, and the result has been that, in the main, they have captured that cheap glass market which for many years was outside their orbit altogether. If the Chancellor insists upon this tax he will simply play into the hands of their foreign competitors, and more and more of our people will be unemployed. If this tax is insisted upon, and our manufacturers are to keep their markets, that can only be done at the expense of the workpeople employed today.
    The one result which I am positive will follow any attempt on the part of our manufacturers to hold their own as well as they possibly can will be that they will reluctantly—and I admit it will be reluctantly—have to go to their workpeople and say to them: "We have had this tax of £10s. 5d. a ton put on our fuel oil, and we shall have to cut wages. We do not want to do it, but if we cannot cut wages to meet this tax we shall have to close altogether." The position of the Black Country workman to-day is bad enough in all conscience. I hear hon. Members talking from time to time about the distressed areas, about bad wages and the rest of it. In the constituency which I represent and in the adjoining constituencies wages are at a terribly low level. When one thinks of a man coming home after working six shifts with about 36s. or 38s. a week, and of young men of 21 to 22 years of age bringing home only somewhere about 15s. after a full week's work, one can realise what the poverty is in the Black Country. The unemployment figure is 33 to 40 per cent. in many of the areas. This tax, which touches nearly every kind of manufacture in the Black Country, will be a terrible burden indeed. I believe the last thing the Chancellor wants is to throw more people out of employment. I do not believe he wants to degrade the already low conditions of the workers.
    Another point is that in recent years new factories have been erected, with up-to-date plant, in an effort to meet competition, to create new industries and to find employment. The effect of this tax will be absolutely crushing upon them. Thousands and thousands of pounds have been expended in putting up these new factories with plant based, in the main,
    1194
    on oil fuel. Surely the Chancellor of the Exchequer cannot have any intention of making those people bankrupt. If he does what he gains on the swings he will lose on the roundabouts. He cannot get any Income Tax out of bankrupts. I would not argue in this way if I thought for a moment that the introduction of fuel oil would mean the ruin of the coal industry. I am positive that sooner or later the coal industry will hold its own, and will reap the reward of the research work which is being carried on, but it is quite obvious that to put an unreasonable tax upon fuel oil is no remedy for the state of affairs in the coal industry. I add my plea to the others which have been advanced that some further consideration should be given to this matter.
    8.44 p.m.
    Mr. CLARRY: I wish to support the Chancellor of the Exchequer in the imposition of this tax. I regard it as a belated tax; if it had been put on some years ago we should not have had the troubles with which we are confronted to-day. I Sincerely hope that he will not succumb to the pressure which is being put upon him, because I feel sure that the bulk of that pressure is due to a misapprehension and a misunderstanding of the situation. From many aspects the new proposal is ideal. There is a moderate measure of protection, the new tax has a moderate revenue-producing basis and a buy-British basis; we can go a stage further and say that it has a burn-British basis. In the few moments which I intend to occupy I shall deal with this question from the national point of view. A large number of speakers have made reference to the gas industry, and have asked a number of questions which I feel that I may be able to answer. One of the questions suggested that, the gas industry being a very large consumer of gas oil, gas would therefore be dearer. I would like to put this case. Oil is only used for enriching purposes; the bulk of the raw material used in gas production is 18,000,000 tons of coal, so that this extra penny is spread over a very wide area. A very small fraction of it passes into the cost of a thousand cubic feet of gas, The industry anticipates—we may assume that it knows its own business best— that the penny duty on oil will be the

    1195
    turning point for it to obtain an increase of business for British fuel.
    I can sustain that point by reading a letter. Letters have been read by most hon. Members, but mostly against the duty. This is a letter from the engineer and general manager of a local authority in Lancashire in regard to the gas department of that local authority, by no means the largest undertaking in the county. This is what he says, in reply to specific questions that were put to him.
    "I enclose herewith a statement showing:
    1. The new business it is considered to be possible of attaining during the next 12 months as a result of the imposition of the Fuel Oil Duty is, approximately, 82,000,000 cubic feet per annum.
    2. Conversions from oil to gas, which are at present in negotiation, and which it is probable will now be carried out earlier than was proposed, totalling 58,000,000 cubic feet per annum.
    3. Business definitely retained where consumers had been persuaded to reconsider the introduction of oil in place of gas, amounting to 10,000,000 cubic feet."
    That may appear to be a comparatively small amount to some hon. Members, but it is the cumulative effect throughout the country which has to be considered, and which actually means a considerable total. In that local area it may only mean 90,000,000 cubic feet per annum, but on the basis of 60 tons of coal per million cubic feet, multiplied by a large number of other gas undertakings throughout the country, the amount will be very substantial. The industry does not think that gas will increase in price, but that it is possible that it may even be reduced in price. It takes the long view, thinking and believing that this is an opportunity for British fuel to get in where it can. The penny duty will be a turning point in that business.
    I want to deal purely with the national point of view. I regret to have to say that the country has not been well served by the coal industry. That industry has not made, the best of itself. There has been a large amount of internal strife during the last 25 years by strikes, and the industry has been the subject of much legislation. Their attention has been diverted interNaily, rather than towards endeavouring to meet the situation from a national point of view. Until
    1196
    quite recently, there was no provision to give consumers adequate service, and no attempt was made to prove the efficiency of the fuel, or to approve of it. Certainly there was no national salesman for coal. This has obviously had the effect of allowing consumers to continue obsolete furnaces and equipment and wasteful consumption, to their extreme dissatisfaction. In cases which have come to my knowledge, processes have been in use for over 40 years, in their present state. I am glad to say that that is not the situation to-day. It is very materially altered, and the technique of coal consumption has vastly improved. Everything is being done, I am given to understand, to efface that rather bad past. What a happy hunting-ground for the oil industry, to step right into cases of that description, and especially to sell oil at dumped prices. The price is very low to-day. A few years ago it was even higher than it will be when the penny duty is put on. What safeguard is there that, at any moment, the oil kings may not decree that next day one penny or two pence may go on? There 1s no redress whatever.
    Mr. MARTIN: May I ask the hon. Member, in all fairness, why have those cases not also been a happy hunting-ground for the coal industry, if it can offer the advantage of cheaper fuel? The coal industry should have been able to get in as well as oil.
    Mr. CLARRY: The hon. Member will be interested to know that the coal industry is getting in, to a very material extent. Coal has displaced oil in a large number of cases. Price is a factor which comes in, but that has already been dealt with by a large number of speakers, so I will not stress it. There are hardships, as there are bound to be, in a matter like this. I do not think that we need stress them. When the consumers to whom I have referred turned over to oil, they did so more or less at their own risk, by taking what they considered was a cheaper fuel. At any moment the price might have been put up by the importers of oil. Last Autumn, petrol was put up three pence per gallon by the oil importing companies. From a certain date, 48 hours in advance, the price was to be three pence per gallon more. There was no outcry. There was nothing to be said about it, because there it was. No

    1197
    Members of Parliament were worried by letters and representations, and no Government was to be kicked as being the worst Government in the world -driving everybody to bankruptcy. The increase was just accepted. That was the position that we were driven into in this country. I am convInced that, if consumers of fuel will take the trouble to inquire, they can find adequate British fuel to replace oil. Among the British fuel resources, we have coal, graded or pulverised; coke, smokeless and with a higher content calorific value than oil, and gas, of which we have heard a great deal to-day, not only town gas but gas of every variety—I do not refer to the gas in this House. Gas offers all the advantages of oil to the consumer, with the additional advantage that it requires no storage. I say definitely that there is no process for which oil is used as a fuel which cannot be met conveniently and effectively by British gas. We have heard that electricity is on the switch. I do not wish to deal with that point.
    I would like to say something about oil from British coal. Hydrogenation is Hot a new invention. It was first thought of in 1912, but latterly it has been developed very much, and it is one of the epoch-making processes of our time. We are only in the infancy of hydrogenation. As hon. Members know, it has the effect of putting hydrogen into material. Nature would take, perhaps, 1,000,000 years to do it, but hydrogenation does it in the flash of a second. The penny duty will help hydrogenation of tar oil, which is a product of coal. It will help also in dealing with coal in its ordinary state. The present tendency is to deal with tar oil—the liquid side of it. I can quite understand that there would be an outcry among hon. Members, and in the country, if an eight penny tax were put upon a three penny raw material such as is the case to-day with petrol, of which there is only a small production in this country as a British commodity, namely benzol, which is making great strides, owing to the Protection. Here we have a penny suggested on a three penny fuel of which we have ample British resources available. I Sincerely hope that the Chancellor of the Exchequer will not succumb to pressure. In conclusion, I venture to forecast that, if it were possible to put on 1d. this year, another
    1198
    1d. next year, and still another 1d. in the following year, the Chancellor of the Exchequer would not get any more revenue when the 2d. or 3d. was on, because British consumers of fuel would be able to find a British resource for their purpose. I hope, therefore, that my right hon. Friend will be firm in the matter.
    8.56 p.m.
    Mr. CHAMBERLAIN: We have been discussing this group of Amendments for several hours, and, although I know that there are still some hon. Members who have not had an opportunity of making the observations that they had in mind, I cannot help thinking that the discussion has ranged over a sufficiently wide field to enable the Committee now to come to a decision. It is obvious that on this question, which does not follow the ordinary party lines in the House, opinion may be very widely and deeply divided, and there are probably some hon. Members, who take extremely strong views on either side of the question, who will not, I fancy be converted by any arguments that may be addressed to them by others. The right hon. and gallant Member for Newcastle - under - Lyme (Colonel Wedgwood) who claims to be omniscient, as he is also able to claim for himself a purity of motive which he cannot ascribe to other Members, prophesied that all we should have would be the repetition over and over again of the same arguments, and that, at the end of the discussion, I should only propose to refer the matter to the Import Duties Advisory Committee. He is wrong in both respects. There has been, I should say, practically no repetition during the afternoon; every hon. Member who has spoken has put before the Committee something different from the views that have been put forward by other speakers; and I have no intention of asking the Committee to agree to this matter being referred to the Import Duties Advisory Committee.
    It is true that the discussion has ranged very largely round the question of Protection, but, nevertheless, I would remind the Committee that this duty is essentially a revenue duty in the first instance, and any suggestion for reducing or abolishing it must take into account the fact that I should thereby lose an amount of revenue which, although, of course, it does not compare

    1199
    with the revenue to be derived from the source which we were discussing at an earlier stage, nevertheless, in these hard times, is not one with which I can afford to dispense. I would also mention a further point, because I am not sure that hon. Members have had it sufficiently in mind. Not only have I to consider a new source of revenue, but I must also consider the security of an existing source of revenue, and, in the present instance, the revenue from the petrol tax is certainly threatened, I will not say to any very serious extent at present, but it is threatened, by the competition of motors using other kinds of oil which hitherto have entirely escaped from any duty. One sees, from a discussion of this kind, how interests grow up around articles and commodities which are left out of a scheme of taxation which covers the greater part of our imports, and, in the interest of the future revenue from the petrol tax, I certainly could not agree to continue the exemption from any impost of a serious competitor of that fuel.
    It has been suggested that this tax was a tax upon progress, but I think that that argument was really disposed of by my right hon. Friend the Member for Hill head (Sir R. Horne), who speaks with considerable knowledge. I said a little while ago that there might be hon. Members who would not be convInced by arguments from the other side, but I think that a number of hon. Members must have felt that my right hon. Friend, speaking with general knowledge of the situation, pretty well disposed of the argument that progress lay solely in the adoption of oil fuel. Progress may lie in various directions. It may be in the direction of oil fuel to-day, it may be in the direction of gas to-morrow, it may be in a third direction in a year or two's time. I do not think, therefore, that that is really the ground on which we have to examine this tax.
    What, then, is the purpose of the tax? I have already said that its primary purpose is to provide me with an additional source of revenue, and to safeguard that revenue which I already enjoy; but I do not deny for a moment—indeed, I have stated on previous occasions—that we have in mind, in proposing this tax, definitely the protection of a British resource,
    1200
    the greatest natural resource that we have in this country the question, therefore, which I think the Committee have to consider is this: If the imposition of this tax does definitely assist the great British industry of coal and those industries which are associated with derivatives* of coal, we have to weigh up on the one hand the benefit that is conferred upon these important staple industries, and, on the other hand, the injury that may be done to other industries. I admit frankly that there is a great deal to be said on both sides; indeed, it cannot be otherwise. In particular, one can well understand why an industry which has recently been induced to instal oil-burning apparatus, in lieu of some other form of fuel which it has used in the past, in the hope of obtaining thereby either a saving of money or greater convenience or cleanliness, will naturally regard with considerable concern the imposition upon it of a burden which it had not contemplated at the time. But, unless one is prepared to weigh the pros and cons in a general way, that sort of consideration would prevent the putting of a tax on anything at all. Really it is impossible to put on a new tax anywhere without treading on somebody's corns; it must hurt some people. At the same time, I hope I may say, without offence to those who have been putting the case for particular industries, that it is natural that, when a new tax is first imposed, those industries which are affected injuriously by it should put the worst case they can. They take the maximum amount of injury that could be done and they are apt to assume that that, in fact, is the injury that they are going to suffer. They assume that the whole of the tax is going to be passed on to them and that they cannot alter to any other form of equipment which would enable them to avoid it or, if they have to do it, that, at any rate, it will cost them a very serious sum of money.
    Let us look at one or two considerations on the other side. First of all, I take the case of industries which are using oil. I am not dealing for the moment with hotels or offices. I am thinking of industries. Sometimes we are told that it is going to cripple them in their competition with the foreigner. Sometimes we are told that it is simply going to cripple them, because they will have to contribute to the Exchequer an amount of money which they cannot possibly

    1201
    afford. Suppose their competition is competition with the foreigner, we must not leave out of account that we have changed our fiscal system and that we have given to the great bulk of our industries an amount of protection which they have not had before and which may be set against this difficulty which they say they will now have to encounter because of the increased tax that they will have to pay on their oil. In the second place, one must remember that in the case of the principal competitors, at any rate, in some of the articles that have been mentioned to-day, in the case of Germany, the tax upon oil is 10 times as heavy as anything that we are proposing, here and that, even supposing the whole of the tax is added to the cost of the fuel, the fuel will be cheaper than it is to-day in Germany.
    So much for foreign competition. Then, as regards home competition, we are told that it is very difficult to pass this on to the consumer. Maybe it is. There has to be a certain amount of readjustment. I grant that, and it may be that some firms will find considerable difficulty, in the first instance, in making those readjustments. But do not let us forget that, in the first place, the difficulties that have been suggested are based on the assumption that the whole of the cost is going to be added to the present cost of fuel. The price of coal has remained comparatively steady for a number of years. The price of oil has fallen by 15s. a ton in the last five years. This is only 20s. a ton, so that there is at least a margin which may, perhaps, prove to be a source of some mitigation of the difficulties that have been anticipated. But, if the worst comes to the worst, supposing it were true that the additional burden upon an individual firm or industry were sufficiently great, I will not say to cripple it, because I cannot conceive that it can cripple an industry-—that is going too far—but to diminish its opportunities of expansion and possibly even, we will say, to contract its activities, even then I say you must remember that you have to set against that the increased employment which you expect to create in the industries of coal, gas and electricity and on the railway systems of the country by the imposition of the tax.
    One suggestion that has been made is that we should differentiate between the different kinds of oil, and that is the pur-
    1202
    pose of the Amendment that my hon. Friend moved. I do not think that, at any rate on this occasion, it is worth while to examine the particular principle which he suggested as a basis of distinction. I take the general suggestion that we should make a difference between the heavier and the lighter oils and that we should exempt the heavier oils from the operation of the duty. Someone else might possibly suggest that, if you did not exempt the heavy oils, at any rate you might give them a rather lower level of duty than the others. But that is going to leave some of the Diesel oil outside the full duty. That is going to some extent to leave the competitor of petrol outside of the duty. It will relieve the wrong kind of oil from my point of view; it will leave gas oil still bEarlng a penny, and it will still further increase the difficulties of the gas industry, while it will exempt the oils which are the principal competitors of the coal trade. The result of that would be that, while I should not conciliate all those who are now attacking the duty, I should find that I had destroyed the very benefit which is one of the principal reasons for imposing it. I have gone into this question of differentiation with some care to see whether that was an advisable and desirable method of varying the tax as I had origiNaily proposed it; but the conclusion that I have come to after looking into the thing all round is that I have been unable to see any way of differentiation and of having different levels of taxation which would really meet the views of those who object to the tax and would not at the same time destroy the benefits that I hope to obtain from it.
    This is a question of great importance in considering employment. The consumption of these fuel oils is about 2,000,000 tons a year. No one, of course, suggests that we can expect that the whole of that consumption of oil is going to be replaced by a corresponding consumption of coal, but, in order to show the order of the competition which coal is meeting from oil, I would call attention to the fact that the equivalent in coal is 3,000,000 tons, and I am informed that that would mean the employment of 12,000 miners. I am not suggesting that, if we put this tax on, we are going to get another 12,000 miners employed. I recognise that in many cases there will not be a shift-over from the present

    1203
    practice to coal. But we have not only to consider the situation as it is to-day. It is not a static situation. It is a situation in which there have been constant encroachments on the use of coal, and the coal people are finding that, year by year, there are more and more institutions, firms and bodies using oil in preference to coal which very likely, if they had just had to sit down and think what it would mean in taxation, would have gone more carefully into the difference between the two and, indeed, very likely have decided to put in some form of coal-using, coke-using or gas-using apparatus instead of the oil. My information is that, even Since the imposition of the tax, experience has shown that in quite a large number of cases where the installation of oil had been contemplated there has been a change-over and the person who was going to put in the oil has decided after all to adopt a system which would employ coke or gas. It is true that in some cases they are waiting to see what happens to the tax before they fiNaily make up their minds, but the evidence which has come to me has shown me that there is a good deal more likelihood, not only of persons choosing to take the coal-using apparatus instead of the oil-using apparatus in the future, but of actual conversion from using oil to-day to the other system than I had supposed possible.
    It appears that the conversion from the one system to the other is, in many cases, not a very costly affair. Instances have been given to me where that conversion has been effected. My right hon. Friend quoted a case, but there are other cases of which I have heard where the conversion has actually been paid for in the course of a very short time by the cheaper form of fuel. As I have said before, this is a big thing to this country. The consumption of coal in this country is something like 160,000,000 tons a year. A very large number of people earn their livelihood either by getting coal or by one of the trades which are directly dependent upon coal. As has been pointed out to us to-day by some of those objecting to this tax, the industries which are using oil to-day are using a great deal more coal, in one way or another, than they are using oil. Therefore, it is really in their interests that the coal industry should not be
    1204
    allowed to drift further and further into the background, which means, of course, that as it does so its costs continue to go up.
    It is my belief, after having heard what has been said this afternoon, that the case for the tax is a good one, that it is calculated, taking the broad national view, to help British industry, and that we have to take care to see that our British resources are not dissipated by the competition of foreign supplies, and the Committee would do well to accept the tax as I origiNaily proposed it. I hope that the Committee will now be prepared to come to a decision.
    9.18 p.m.
    Mr. DINGLE FOOT: I want to put a question to the right hon. Gentleman upon a point which was raised by an hon. Friend behind me and with which he has not dealt. It is the question of oil used in the jute industry for batching. None of the arguments which the right hon. Gentleman advanced, either on the last occasion on which the tax was debated or on this occasion, applied to this particular section of the tax. He says that these oils were only left out of the general system of duties by accident, that they are calculated to produce an appreciable amount of revenue, and that he has had strong representations from other industries, such as coal and gas, and that he has to hold the scales even between the two sides. I think that I am right in saying that none of those arguments apply to that part of the tax which will fall upon oil used in batching. Surely it is not the policy of the right hon. Gentleman to impose a tax upon the necessities of industry when those necessities cannot be obtained from any home source. The amount of revenue, some £8,000 or so, which will be obtained from those particular sources is negligible to the Exchequer, though it is very far from negligible to the industry concerned, and in this case, at any rate, there can be no question of competition with any British industry.
    On the last occasion when the matter was debated the right hon. Gentleman said that it was inaccurate to describe these oils as raw material. In this particular instance there can be no question that they are a raw material. I ask the right hon. Gentleman, as he did not deal with those oils in his speech,

    1205
    whether he cannot see his way, even if he has to proceed with this tax, to give some form of exemption or rebate in order to help an industry which has been suffering very much from the depression.
    Sir W. DAVISON: Can the right hon. Gentleman say whether any exemption will be given to hospitals?
    Mr. MACQUISTEN: I should like to ask about coastal shipping—the West Highland shipping.
    The DEPUTY-CHAIRMAN: I do not think the hon. and learned Member for Argyllshire (Mr. Macquisten) was here earlier in the evening when the Chairman ruled that the question of shipping would arise at a later stage. I think the Committee is ready to come to a decision.
    9.21.p.m.
    Mr. CHAMBERLAIN: I deliberately did not address myself to the individual cases which have been put up because I thought the Committee would really see that the general arguments which I used really applied to all the individual cases. We shall have a further opportunity of discussing those matters on the Report stage, more particularly the specific cases, such as the case put by the hon. Member for Dundee (Mr. Dingle Foot), and I hope that the Committee will now accept the general statement.
    9.22.p.m.
    Mr. MALLALIEU: I should not have risen at this stage of the Debate, after the Chancellor of the Exchequer has patiently sat through so many diverse speeches, listening many hours, had it not been for the inference which is to be drawn from the speech he has just made, that, whereas supporters of the tax are supporting it upon national grounds, all those who have ventured to object to it are doing so on particular grounds. I submit to the Committee that exactly the opposite is the case. Every single argument, except that which I can only describe, with great respect to the Chancellor of the Exchequer, as the paltry argument of the loss of petrol revenue, which he has not even substantiated, put forward by the Chancellor of the Exchequer and by hon. Members who have spoken in support of the tax to-day has been, in one form or another, for the support of a particular industry, namely, the coal industry or its derivatives. This tax is but one aspect of the Government's
    1206
    policy in support of coal. The coal industry is of considerable importance, but I want to ask the Chancellor of the Exchequer and those hon. Members who are supporting the tax, whether fuel is to be the servant of industry, or is industry to be the servant of fuel, and of a particular kind of fuel? Members in all parts of the House to-day have brought forward instances, and the accumulation of those instances should be sufficient to convInce the Chancellor of the Exchequer, were he not quite blind, in his proposal, to national considerations as distinct from coal considerations, that upon national grounds the tax is unsupportable, owing to the unemployment which it will cause being nothing like offset by the very small and doubtful increase in employment which may come to the coal industry and its derivative industries.
    The right hon. Member for Hillhead (Sir E. Horne) and the Chancellor of the Exchequer have both referred to Germany having an- exceedingly heavy tax upon oil now and not having had it previously. May I put this one point to the Chancellor of the Exchequer? Just after the War there was no tax in Germany upon the crude oil which the Chancellor of the Exchequer is now proposing to tax. At that time Germany held sway all over the world for the manufacture of crude oil engines. There were the Junker and Benz engines, and the M.A.N. engine developed for submarines during the War. Those engines were sent all over the world, and it was a tremendous industry for Germany. Germany put a heavy tax upon crude oil and made it almost prohibitive. To-day this country, which has had no tax up to now upon crude oil, leads the world in the manufacture of these engines. Is it nothing to the Chancellor of the Exchequer that, in these hard times, we in this country should have obtained the largest export trade, in the manufacture of these engines, very largely because there was freedom from tax for this oil in this country, with a consequent development of this industry here?My submission to the Committee is that no respectable argument has been put forward except arguments which are only valid with regard to coal. On national grounds, the Committee should refuse to tax this raw material of industry.
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 57; Noes, 239.

    Division No. 192.]

    AYES.

    [9.37 p.m.

    Acland, Rt. Hon. sir Francis Dyke

    Holdsworth, Herbert

    Owen, Major Goronwy

    Agnew, Lieut.-Com. P. G.

    Horobin, Ian M.

    Parkinson, John Alien

    Attlee, Clement Richard

    Hutchison, W. D. (Essex, Romford)

    Perkins, Walter R. D.

    Banfield, John William

    Jones, Henry Haydn (Merioneth)

    Rea, Walter Russell

    Bernays, Robert

    Jones, Morgan (Caerphilly)

    Salt, Edward W.

    Bevan, Aneurin (Ebbw Vale)

    Kirkwood, David

    Salter, Dr. Alfred

    Bower, Lieut.-Com. Robert Tatton

    Knox, Sir Alfred

    Sinclair. Maj. Rt. Hn. Sir A.(C'thness)

    Briant, Frank

    Lansbury, Rt. Hon. George

    Smith, Sir Jonah W. (Barrow-in-F.)

    Cripps, Sir Stafford

    Leckie, J. A.

    Smith, Louis W. (Sheffield, Hallam)

    Dobbie, William

    Leonard, William

    Strickland, Captain W. F.

    Edwards, Charles

    Lewis, Oswald

    Thorne, William James

    Evans, David Owen (Cardigan)

    Liddall, Walter s.

    Tinker, John Joseph

    Evans, Capt. Arthur (Cardiff, S.)

    Macdonald, Gordon (Ince)

    Wedgwood, Rt. Hon. Josiah

    Foot, Dingle (Dundee)

    McEntee, Valentine L.

    Williams, David (Swansea, East)

    George, Major G. Lloyd (Pembroke)

    McGovern, John

    Williams, Dr. John H (Llanelly)

    Griffith, F. Kingsley (Middlesbro', W.)

    Maclean, Nell (Glasgow, Govan)

    Wise, Alfred R.

    Groves, Thomas E.

    Mallalieu, Edward Lancelot

    Hamilton, Sir R. W.(Orkney & Zetl'nd)

    Mander, Geoffrey la M.

    TELLERS FOR THE AYES.—

    Harris, Sir Percy

    Mason, David M. (Edinburgh, E.)

    Mr. Alexander Ramsay and Mr.

    Hicks, Ernest George

    Maxton, James

    Alan Todd.

    NOES.

    Acland-Troyte, Lieut.-Colonel

    Cowan, D. M.

    Howitt, Dr. Alfred B.

    Ainsworth, Lieut.-Colonel Charles

    Craven-Ellis, William

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

    Allen, Sir J. Sandeman (Liverp't, W.)

    Crooke, J. Smedley

    Hume, Sir George Hopwood

    Allen, William (Stoke-on-Trent)

    Crookshank, Col. C. de Windt (Bootle)

    Hunter, Capt. M. J. (Brigg)

    Anstruther-Gray, W. J.

    Culverwell, Cyril Tom

    Hurd, Sir Percy

    Apsley, Lord

    Davies, Edward C. (Montgomery)

    Hurst, Sir Gerald B.

    Aske, Sir Robert William

    Denman, Hon. R. D,

    Jackson, J. C. (Heywood & Radcliffe)

    Astbury, Lieut.-Com. Frederick Wolfe

    Denville, Alfred

    Jennings, Roland

    Atholl, Duchess of

    Dickie, John P.

    Jesson, Major Thomas E.

    Baldwin, Rt. Hon. Stanley

    Drewe, Cedric

    Joel, Dudley J. Barnato

    Balnial, Lord

    Duckworth, George A. V.

    Jones, Sir G. W. H. (Stoke New'gton)

    Banks, Sir Reginald Mitchell

    Dugdale, Captain Thomas Lionel

    Jones, Lewis (Swansea, West)

    Barclay-Harvey, C. M.

    Duncan, James A. L. (Kensington, N.)

    Ker, J. Campbell

    Barton, Capt. Basil Kelsay

    Edmondson, Major A. J.

    Kimball, Lawrence

    Batey, Joseph

    Ellis, Sir R. Geoffrey

    Lamb, Sir Joseph Quinton

    Beauchamp, Sir Brograve Campbell

    Elliston, Captain George Sampson

    Lambert, Rt. Hon. George

    Beaumont, Hon. R.E.B. (Portsm'th.C.)

    Elmley, Viscount

    Law, Sir Alfred '

    Benn, Sir Arthur Shirley

    Emrys-Evans, P. V.

    Leighton, Major B. E. P.

    Bennett, Capt. Sir Ernest Nathaniel

    Entwistle, Cyril Fullard

    Levy, Thomas

    Bird, Sir Robert B.(Wolverh'pton W.)

    Erskine-Boist, Capt. C. C. (Blackpool)

    Lindsay, Noel Ker

    Blaker, Sir Reginald

    Essenhigh, Reginald Clare

    Locker-Lampson, Rt. Hn. G.(Wd.Gr'n)

    Blindell, James

    Evans, Capt. Arthur (Cardiff, S.)

    Lovat-Fraser, James Alexander

    Bossom, A. C.

    Falls, Sir Bertram G.

    Mabane, William

    Boulton, W. W.

    Fielden, Edward Brockiehurst

    MacAndrew. Lt.-Col. C. G. (Partick)

    Bowyer, Capt. Sir George E. W.

    Fraser, Captain Ian

    MacAndrew, Capt. J. O. (Ayr)

    Bracken, Brendan

    Fremantie, Sir Francis

    McCorquodale, M. S.

    Braithwaite, J. G. (Hillsborough)

    Galbraith, James Francis Wallace

    Macdonald, Sir Murdoch (Inverness)

    Briscoe, Capt. Richard George

    Gauit, Lieut.-Col. A. Hamilton

    McKie, John Hamilton

    Broadbent, Colonel John

    Gibson, Charles Granville

    McLean, Major Sir Alan

    Brockiebank, C. E. R.

    Gillett, Sir George Masterman

    McLean, Dr. W. H. (Tradestonl

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

    Glossop, C. W. H.

    Maitland, Adam

    Brown, Ernest (Leith)

    Gluckstein, Louis Halle

    Makins. Brigadier-General Ernest

    Brown, Brig.-Gen. H.c.(Berks.,Newb'y)

    Goodman, Colonel Albert W.

    Manningham-Buller, Lt.-Col. Sir M.

    Browne, Captain A. C.

    Grattan-Doyle, Sir Nicholas

    Margesson, Capt. Rt. Hon. H. D. R.

    Buchan-Hepburn, P. G. T.

    Grenfell, E. C. (City of London)

    Meller, Richard James

    Butt. Sir Alfred

    Grimston, R. V.

    Mills, Sir Frederick (Leyton, E.)

    Cadogan, Hon. Edward

    Guest, Capt. Rt. Hon. F. E.

    Mills, Major J. D. (New Forest)

    Campbell, Edward Taswell (Bromley)

    Guinness, Thomas L. E. B.

    Milne, Charles

    Campbell, Vice-Admiral G. (Burnley)

    Gunston, Captain D. W,

    Molson, A. Hugh Elsdale

    Caporn, Arthur Cecil

    Hacking, Rt. Hon. Douglas H.

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

    Carver, Major William H.

    Hales, Harold K.

    Morris, John Patrick (Salford, N.)

    Cautley, Sir Henry S.

    Hall, Capt. W. D'Arcy (Brecon)

    Morris-Jones, Dr. J. H. (Denbigh)

    Cayzer, Maj. Sir H. R. (Prtsmth., S.)

    Hammersley, Samuel S.

    Morrison, William Shepherd

    Cazalet, Thelma (Islington, E.)

    Hartland, George A.

    Moss, Captain H. J.

    Chamberlain, Rt. Hon. N. (Edgbaston)

    Haslam, Henry (Horncastie)

    Muirhead, Major A. J.

    Chapman. Col. R.(Houghton-le-Spring)

    Haslam, Sir John (Bolton)

    Munro, Patrick

    Clarry, Reginald Georgs

    Heilgers, Captain F. F. A.

    Nation, Brigadier-General J. J. H.

    Clayton Dr. George C.

    Heneage, Lieut.-Colonel Arthur P.

    Nicholson, Godfrey (Morpeth)

    Cochrane, Commander Hon. A. D.

    Hepworth, Joseph

    North, Edward T.

    Colfox, Major William Philip

    Herbert, Capt. S. (Abbey Division)

    Nunn, William

    Conant, R. J. E.

    Hope, Sydney (Chester, Stalybridge)

    O'Donovan, Dr. William James

    Cook, Thomas A.

    Hore-Belisha, Leslie

    O'Neill, Rt. Hon. Sir Hugh

    Cooke, Douglas

    Hornby, Frank

    Palmer, Francis Noel

    Copeland, Ida

    Horne, Rt. Hon. Sir Robert S.

    Patrick, Colin M.

    Courtauid, Major John Sewell

    Horsbrugh, Florence

    Peake, Captain Osbert

    Pearson, William G.

    Sassoon, Rt. Hon. Sir Philip A. G. O.

    Summersby, Charles H.

    Peto, Geoffrey K. (W'verh'pt'n, Blist'n)

    Savery, Samuel Servington

    Sutcliffe, Harold

    Pickford, Hon. Mary Ada

    Scone, Lord

    Tate, Mavis Constance

    Pike, Cecil F.

    Shakespeare, Geoffrey H.

    Thomson, Sir Frederick Charles

    PowNail, Sir Assheton

    Shaw, Helen B. (Lanark, Bothwell)

    Thorp, Linton Theodore

    Ramsay, Capt. A. H. M. (Midlothian)

    Shaw, Captain William T. (Forfar)

    Todd, Capt. A. J, K. (B'wick-on-T.)

    Ramsbotham, Herwaid

    Shepperson, Sir Ernest W.

    Turton, Robert Hugh

    Ramsden, Sir Eugene

    Shute, Colonel J. J.

    Ward, Lt.-Col. Sir A. L. (Hull)

    Ray, Sir William

    Slater, John

    Ward, Irene Mary Bewick (Wallsend)

    Reid, William Allan (Derby)

    Smiles, Lieut.-Col. Sir Walter O.

    Ward, Sarah Adelaide (Cannock)

    Remer, John R.

    Smith, R. W.(Ab'rd'n & Kinc'dine, C.)

    Warrender, Sir Victor A. G.

    Rentoul, Sir Gervals S.

    Smith-Carington, Neville W.

    Waterhouse, Captain Charles

    Renwick, Major Gustav A.

    Soper, Richard

    Wells, Sydney Richard

    Rhys, Hon. Charles Arthur U.

    Sotheron-Estcourt, Captain T. E.

    Whiteside, Borras Noel H.

    Roberts, Sir Samuel (Ecclesall)

    Southby, Commander Archibald R. J.

    Whyte, Jardine Bell

    Rosbotham, Sir Samuel

    Spender-Clay, Rt. Hon. Herbert H.

    Williams, Herbert G. (Croydon, S.)

    Ross Taylor, Walter (Woodbridge)

    Spens, William Patrick

    Windsor-Clive, Lieut.-Colonel Georss

    Runciman, Rt. Hon. Walter

    Stanley, Lord (Lancaster, Fylde)

    Winterton, Rt. Hon. Earl

    Runge, Norah Cecil

    Stanley, Hon. O. F. C. (Westmorland)

    Womersley, Walter James

    Russell, Albert (Kirkcaldy)

    Stevenson, James

    Wood, Rt. Hon. Sir H. Kingsley

    Russell, Alexander West (Tynemouth)

    Stewart, J. H. (Fife, E.)

    Worthington, Dr. John V.

    Russell, R. J. (Eddisbury)

    Stones, James

    Wragg, Herbert

    Rutherford, John (Edmonton)

    Strauss, Edward A.

    Rutherford, Sir John Hugo (Liverp'l)

    Stuart, Lord C. Crichton-

    TELLERS FOR THE NOES.—

    Samuel, Sir Arthur Michael (F'nham)

    Sueter, Rear-Admiral Murray F.

    Lord Erskine and Major George

    Sandeman, Sir A. N. Stewart

    Sugden, Sir Wilfrid Hart

    Davies.

    Question put, and agreed to.

    Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again, "put, and agreed to. —[Captain Margesson.]
    Committee report Progress; to sit-again To-morrow.

FINANCE [SAVINGS BANK ANNUITIES].
Considered in Committee, under Standing Order No. 71A.
[Captain BOUBNE in the Chair.]
Motion made, and Question proposed,
"That, for the purpose of any Act of the present Session relating to finance, it is expedient to provide that all savings bank annuities granted on or after the eleventh day of July, nineteen hundred and thirty-two, in accordance with the tables for calculating the amount of such annuities which were approved by the Treasury on that date shall be deemed to have been lawfully granted, and accordingly shall be charged on and issued out of the Consolidated Fund."-—({King's Recommendation signified.—[Mr. Hore-Belisha.])
Sir S. CRIPPS: Are we not to have any explanation of the Resolution?
9.36 p.m.
Mr. HORE-BELISHA: Certainly. The Resolution relates to a charge on the Consolidated Fund in respect of certain life annuities granted shortly after the War Loan conversion. As the Committee is probably aware, these annuities are sold in accordance with certain tables which set out the return that the purchaser will receive. At the time of the War Loan conversion the table in force showed the amounts payable on different
1210
prices of Consols up to a maximum of 7l½ per cent. It was not anticipated in the pre-conversion era that Consols would ever rise above that maximum. The Post Office Savings Bank are not entitled to pay these annuities until the tables have been laid before both Houses of Parliament and been gazetted for 30 days. It was impossible to fulfil that Statutory condition, and therefore we had to have recourse to paying these annuities out of the Civil Contingencies Fund. Annuities amounting to £909 quarterly were granted under the new tables. The Committee will appreciate that we could not give advance notice either to the House of Commons or to the public of the intention to convert the War Loan, and it was therefore necessary to take these extra legal powers which we now ask the Committee, with complete confidence, to authorise, because there was no alternative before us.
9.38 p.m.
Sir ARTHUR MICHAEL SAMUEL: I suppose the Resolution refers to Clause 36 of the Finance Bill. Apparently, as far as I can understand what the Resolution means, the annuities were approved on the 11th July, 1932, and the alteration was published in the Gazette on the 12th August, 1932. Then I come to a Treasury paper published a few days ago, dated the 30th March, 1933, from which it appears that these tables are based on rates which were fixed in 1872 and 1884. Now, we are asked to approve, in May, 1933, what was done in July and August, 1932. It looks to me suspiciously like retrospective legislation,

1211
caused by some oversight on the part of the Department, and we have to put right the oversight.
Mr. HORE-BELISHA: No.
Sir A. M. SAMUEL: Then what does it all mean? I notice that Clause 36 of the Finance Bill refers to "savings bank annuities," which is in the singular, but in the Resolution there is reference to "savings banks annuities," which is in the plural. I do not know whether it means the Post Office Savings Bank, and Trustee Savings Banks. In the White Paper, I find that it is stated specifically that the grant of deferred life annuities by the Post Office was discontinued in July, 1912, and the grant of insurances from the 1st January, 1929. To what, then, do these annuities refer? There is nothing in the Post Office White Paper on the point. Are we dealing with trustee savings banks? We ought to have the matter cleared up. We want to know whether this is retrospective legislation owing to something unforeseen or ovErieoked, or whether it refers only to the Post Office—if so, what business is the Post Office doing?—or whether if refers also to trustee savings banks.
9.41.p.m.
Sir S. CRIPPS: I did not understand the Financial Secretary when he said that. these annuities could not be issued legally at the time. By the 11th August these annuities could perfectly well have been issued legally. Why was it necessary between 11th July and 11th August, knowing that they could not legally be issued until 11th August, to issue annuities under the new table, and then come to the House nearly a year later and ask for the authority to issue them?
9.42.p.m.
Mr. HORE-BELISHA: I can answer that question at once. The tables for savings banks annuities do not have effect until they have lain on the Table for 30 days. They were laid on the 11th July, but before the 30 days had expired Consols rose above the maximum of 7l½ per cent. covered by the existing tables, and it was only at that stage that the law was exceeded, but during that period annuities amounting to £909 quarterly were granted under the new tables.
Sir S. CRIPPS: Why?
Mr. HORE-BELISHA: I agree that there was no statutory authority to grant these annuities, but obviously it is in the interest both of the annuitants and of the State that the annuitants should not be deprived of their annuities simply because, owing to a tecnicality, the tables did not cover Consols above 71.½ per cent. I hope that I have made it clear. I cannot in the least follow the complaint of my hon. Friend the Member for Farnham (Sir A. M. Samuel). He has unearthed some ancient Statutes, but the significance of what he said, I must genuinely confess, I was unable to appreciate. If I could have appreciated it, I would answer it. He asks what is the meaning of the "s" at the end of "bank." It so happens that in the copy of the Resolution which I have before me there is no "s," and, therefore, I take it if is the result probably of a clerical error and not of any Machiavellian intentions on the party of anyone. I assure the hon. Member that the result was a very great saving to the country.
9.45.p.m.
Major. HILLS: I am sorry, but I do not understand it yet. After the 11th July last certain annuities were granted illegally. Who was responsible; the Treasury or the Savings Bank I Someone has granted annuities which this House has never sanctioned. I listened carefully to the explanation of the Financial Secretary. I may be stupid, but I cannot understand it. Some one has gone beyond the law—either the Savings Bank or the Treasury; and I think the Committee should know who it was.
Sir S. CRIPPS: May I ask the Postmaster-General to tell us whether it is his personal responsibility or whether some deputy of his has done this?
The POSTMASTER-GENERAL (Sir Kingsley Wood): I should like to have the advice of the hon. and learned Member privately as to whether I am bound to incriminate myself.
9.46.p.m.
Sir A. M. SAMUEL: The intervention of the Postmaster-General does not really carry any weight. I know a little about Treasury business after all, but,

1213
apparently, the Financial Secretary has never seen the White Paper from which I have quoted, which is signed by himself, and issued on 30th March. In this White Paper it says specifically that the granting of deferred life annuities was discontinued in July, 1912, and the granting of insurance from the 1st January, 1929. Now he tells us that these annuities, or these contracts, which are to be deemed to have been lawfully granted, have something to do with the Postmaster-General, and the Postmaster-General gets up and talks about it. I should like to know what it all really means.
Mr. TOM SMITH: I should like to know why the Law Officers of the Crown are not present when a matter like this is being discussed?
Mr. HORE-BELISHA: The answer to the hon. Member for Farnhacn (Sir A. M. Samuel) is that he is reading a White Paper about deferred annuities, which were suspended at a certain date, which has nothing whatever to do with the matter.
Resolution to be reported To-morrow.

FINANCE [POST OFFICE FUND].
Considered in Committee under Standing Order No. 7lA.
[Captain BOURNE in the Chair.]
Motion made, and Question proposed:
"That, for the purpose of any Act of the present Session relating to finance, it is expedient—

(a) to authorise the payment from time to time out of the Consolidated Fund, into a fund to be established under the said Act by the name of the Post Office Fund, of sums to be calculated in the manner provided by the said Act; and

(b) to provide for the payment from time to time out of the fund so established into the Exchequer of sums to be calculated in manner provided by the said Act, and of sums which it is anticipated may become due from that fund to the Exchequer under the provisions of the said Act.—(King's Recommendation signified.) —[Mr. Hore-Belisha,.]

9.49 p.m.
Mr. HORE-BELISHA: This Resolution is to give effect to the recommendations of the Bridgeman Committee with regard to Post Office finance. The Com-
1214
mittee, of course, made other recommendations but we are concerned here only with finance; with the relations of the Post Office and the Exchequer. Hitherto credit has been taken in the Budget under the heading of Post Office Fund Receipts for the difference between the total cash revenue receipts of the Post Office and the cash expenditure of the Post Office. The Exchequer takes the whole of the surplus in any financial year and would be liable for any deficit. Any increase in Post Office expenditure or reduction in Post Office revenue reacts at once under the present system upon the Exchequer. There may be a conflict, I do not say that it is likely to arise, between the needs of the revenue and the desire of the present Postmaster-General to develop the service of which he has control. The recommendations of the Bridgeman Committee, under the heading with which we are dealing now, may be summarised in a sentence, which I will quote:
"So long as the existing financial arrangements continue so long will the tendency to regard the Post Office as a revenue producing instrument obscure and impede its primary function, which is the service of the public."
Accordingly the Committee recommended:
"A system under which the Post Office after making a certain agreed annual contribution to the Exchequer would be allowed to use its surpluses after making the necessary reserves for the benefit of the public the improvement of the services and the development of its business."
It is proposed for an experimental period of three years that the Exchequer share of the profits of the Post Office shall be restricted to £10,750,000, and any amount by which the profits exceed this figure in each year shall be paid to the Post Office out of the Consolidated Fund. The purpose of the Resolution is dual. In the first place, it provides for annual payments to be made out of the Consolidated Fund to the Post Office, and, on the other hand, it provides that the Post Office shall be in a position to guarantee that the Exchequer shall receive its fixed contribution of £10,750,000. What is the effect of this proposal upon the Exchequer? It will make a first payment next year to the Post Office Fund, which may be expected to be not far short of £1,000,000. That is the measure of the sacrifice which is being made by the Chan-

1215
cellor of the Exchequer at the beginning of this experimental period of three years. The present arrangements are tentative, for the period I have mentioned, but they do inaugurate for the Post Office a new era. In future the Postmaster-General will know exactly where he stands. He will know that above a certain figure he may use all his profits for the development of the Post Office. My right hon. Friend the Postmaster-General will be able to extend and develop in the manner that he desires. If anyone were calculated to take advantage of this new system my right hon. Friend is the man.
9.66 p.m.
Mr. ATTLEE: I am sure that the Postmaster-General is entitled to congratulation on seeing a Motion like this upon the Paper. We are not going to offer any opposition to the Motion, for we have certain Amendments to suggest on the Finance Bill, and I take it that there will be opportnity for a longer Debate then. As far as it goes we welcome this provision. The Postmaster-General has, at any rate, got the thin edge of the wedge into the Treasury, and I hope that he will be able to drive it a good deal further. I must say that this proposal does not go far enough. We have already had a quotation from the Bridgeman Committee. We are concerned this evening only with the financial recommendation of the Bridgeman Committee, and in my view that Committee's dealing with Post Office finance was the weak point of the report. Those who have read the report will recognise that there was not any very great examination of principle, and similarly in the suggestions which were brought forward as to fixing the amounts which shall go to the Post Office and those which shall go to the Treasury, there is no principle at all. There is merely a kind of ad hoc decision, based on what the Postmaster-General for the time being has managed to wring out of the Exchequer.
I congratulate the Postmaster-General very heartily. He is fortunate to be a Postmaster-General who has long worked in the same office as the Chancellor of the Exchequer, and no doubt he knew the right way to get round his right hon. Friend. But when one looks at what is being done here one finds that the Bridgeman Committee drew attention to
1216
a particular vice of the organisation of the Post Office, and that was its position as the mich cow of the Treasury. The Committee recommended a system of self-contained finance, but we do not get self-contained finance either in the Bridgeman Committee Report or in this Motion. The first thing is that the amount of the tribute to be paid to the Treasury is not fixed on any principle. It is fixed for only three years, and after three years a rapacious Chancellor of the Exchequer may raise the figure of that tribute. It is not based on any set of principles; it is merely based on a very rough averaging-out of the surpluses of the Post Office in the last three years, and, as the Bridgeman Committee state, these surpluses were mainly due to a drop in the cost of living.
Therefore the bird that the Postmaster-General thinks he has got in the hand may be in the bush, because we understand that the policy of the Government, to be carried into effect if possible at the World Conference, is to raise prices all round, and if they succeed in raising the prices of materials they raise the cost of living, so that bonuses go up and the Post Office surplus will disappear. Therefore, that million which was handed across by the Financial Secretary to the Treasury may not come to hand. I think the Postmaster-General would be wise to get a little on account. The trouble is that this absolute lack of principle in finance really vitiates and upsets the whole principle of having the Post Office run on certain definite business lines. There are three main points about Post Office finance. One is that it is the milch cow of the Exchequer. It has been cabin' d, cribn' d, confin' d by Treasury control in detailed administration. This system does not get rid of Treasury control. If you look at this Resolution and at the Finance Bill, you find that the Postmaster-General is still under the Treasury right the way through. Even with this Post Office fund, in which he is given a chance of expanding, he can expand only within the strait-waistcoat of the Treasury.
It is a very vital point which I cannot elaborate here. We all recognise that this is only one part of the Bridgeman Committee's report. The essential point of this financial control is that it affects the whole administration of the Post Office, and rigid Treasury control, even

1217
with some relaxation, is not the right way to run a great business. The second point is that the whole question of control by this House is not dealt with. The third point is that the question of internal administration of the Post Office is very largely affected by the financial arrangements and the extent of control, which to my mind leads to centralisation. I shall not speak at any length upon that point. While this may be accepted after a struggle of many years, as the first fruit, I do not think anyone can rest content with it. I want to see a real clean cut financially between the Post Office and the State. I want the State to be made into the debenture holder and not the ordinary shareholder and this House will be the trustee for the debenture holder.
10.5 p.m.
Viscount WOLMER: I welcome this Resolution and I also welcome the speech of the hon. Gentleman the Member for Limehouse (Mr. Attlee). I could not help thinking that that speech, though far more eloquent than any effort of mine, was the sort of speech which I used to make when I was on that side of the House and when the hon. Gentleman as Postmaster-General had to defend the position of Treasury control, and in doing so warded me off with his usual skill. Since he ceased to be Postmaster-General I admit that, speaking with greater liberty, he has taken a different position and has not deviated from that position. This Resolution is important because it recognises the principle for which the Bridgeman Committee contended, of Post Office autonomy in finance. It does not recognise it very far, but there is a recognition. It is, as the hon. Gentleman said, the thin end of the wedge, and I certainly shall be delighted to collaborate with him in driving in the wedge as far as possible. The net result in the Finance Bill of this year, as far as cash is concerned, is not, it is true, very great when we consider the vast sums involved in Post Office work.
The Bridgeman Committee admitted the principle that the Post Office should be run as a separate business and should be able to put its profits to reserve and develop its own resources. But then the Bridgeman Committee was faced with the practical difficulty that the present time was most inopportune for such a finan-
1218
cial departure. That is a fact which we must recognise. No Chancellor of the Exchequer at present, I do not care to what party he belongs, can afford to lose the huge revenue which his predecessors of recent years have been drawing from the Post Office. Therefore, while those of us who believe that the Post Office should be a self-contained unit, run as a business and not as a tax-collecting machine, welcome the endorsement of that principle by the Bridgeman Committee, we are forced to admit that it is not practical politics for the moment. I agree that we ought to be grateful to the Chancellor of the Exchequer for having, in these difficult times, followed out to the full as he has done this recommendation of the Bridgeman Committee by giving us this Post Office Fund. The Clause in the Finance Bill, which we shall discuss in detail later, as far as £ s. d. is concerned, carry out in full the recommendation of the Bridgeman Committee, and the net result is that the Postmaster-General will be left with something like £500,000 or £750,000 to play with at the end of the year.
That is a small sum compared with the vast sum which he hands over to the Exchequer. It is not a sum which will have any appreciable effect on telephone development or telegraph conversion or the mechanisation of the Post Office or the other heads under which great Capttal expenditure is necessary, but it will enable my right hon. Friend to confer a number of small benefits on the customers of the Post Office. A great deal can be done in that way with £100,000 or £50,000 and I believe that the result of these little benefits, which are familiar to anyone who has studied the Post Office question, will be to increase Post Office business, and will go towards swelling the profits of the fund in the future. While this is a very small portion of financial autonomy and while I agree with my hon. Friend opposite that the proposal takes away with one hand what it gives with the other, because Treasury control is maintained over the so-called Post Office Fund, yet there is asserted here for the first time the principle that the Post Office shall be able to retain everything it earns over and above a fixed charge to be paid to the Treasury. To that extent the Treasury is made a debenture holder. I think that is as much as we can expect in these difficult times.

1219
When times grow easier, I hope the Post Office Fund will be allowed to expand, and that the other principles to which the Bridgeman Committee gave lip service, will be carried out more fully than is at present possible.
10.10 p.m.
Lieut.-Colonel MOORE-BRABAZ0N: I congratulate the Financial Secretary on filing a petition of divorce to end what I have always regarded as the very unholy alliance between the Post Office and the Treasury. There is a lot to be said for private enterprise and there is something to be said sometimes for Socialism. We are apt to forget that our Army at one time was run by private enterprise, but even the most extreme Conservative would not defend such a system to-day and I think few of us would recommend a return to private enterprise in the case of the Post Office. But the present system has really nothing of great merit in it because, however well the Post Office is run, it is not allowed to take the profit which it makes for future development. That profit has to go to the Treasury. Some allusion has been made to the Postmaster-General expanding physically, and that, is indeed, distressing, but no one can accuse him of having been expansive. One of the most important things over which he has control is broadcasting but he only allowed us to say a few words on broadcasting on a Private Member's Motion. Having heard him so often in Opposition and so seldom Since he has been in office, I hope he will now tell us what he is going to do or what his dreams are with regard to the surplus which he is now to get. Are we to have better broadcasting, cheaper telegrams, better telephones or a penny postage? I hope he will hang upon this Resolution the opportunity of addressing us upon these questions which are so dear to the hearts of the whole community.
10.14 p.m.
Mr. DENMAN: If we were discussing the organisation of the Post Office I should follow previous speakers in welcoming the Resolution, but I would recall to the Committee the fact that we are discussing a Resolution which is the foundation of a Clause in the Finance Bill, and the important point to consider is the financial effect of the Resolution. I ask the Committee if they realise that
1220
this is a gift to the Post Office of £1,000,000 of our very hard-earned money as a prior charge. The Chancellor of the Exchequer has budgeted for a surplus of £1,200,000, and here is £1,000,000 of that surplus which he is giving away. It is true that it is not given away in the course of this financial year, but it is given away in the next financial year. That is to say, the right hon. Gentleman will come to us next year with a Budget in which his resources are diminished by £1,000,000, and that £1,000,000 is given to the Post Office before anybody else has anything given to them at all. I imagine that no one with a sense of the priority of social claims will feel that the Post Office has the first claim. I should have expected that the Opposition would feel that the children of the unemployed might have a prior claim, and I should have thought that Members in other parts of the House would think a reduction of taxation was a prior claim, but here the Chancellor of the Exchequer is giving £1,000,000 to the Post Office.
It is an extremely bad piece of finance, and the right hon. Gentleman may find it extremely awkward next year, because no one can say that our financial position is so clear that we can play about with £1,000,000 in this way. We may want it for far more vital purposes. Much as I agree that the scheme is sound, I think the time and method are ill-judged and that we ought to reserve our judgment until we are sure that we can afford this money. Then we could hand it over thankfully and cheerfully to the Post Office. Recollect that in this year we are not even providing for the Sinking Fund, and in these circumstances to hand away £1,000,000 of the surplus seems to be the one feature of unsound finance that this Budget has shown.
10.17 p.m.
Sir K. WOOD: I want to thank my hon. Friend the Member for Limehouse (Mr. Attlee), who preceded me in the position of Postmaster-General, and also the Noble Lord the Member for Aldershot (Viscount Wolmer), who was Assistant Postmaster-General, for the observations which they have made with regard to the conversations that I have had with my right hon. Friend the Chancellor of the Exchequer in this matter, and I would add that I have been greatly assisted by the efforts of the hon. Member for Lime-

1221
house and the Noble Lord in this matter for so long. I am very glad indeed to be able to express the opinion that the Chancellor of the Exchequer has treated the Post Office very fairly indeed, at any rate in making it possible that, as we hope, at the end of the next financial year some sum in the neighbourhood of £1,000,000 will be available purely for the improvement of the Post Office services. I think that is a great advance. I do not think I could have expected more, and I am very grateful indeed that I have had the opportunity in my term of office of bringing this about.
There is only one other observation that I want to make. I do not think my hon. Friend the Member for Limehouse need be alarmed that if the Government policy at the Economic Conference succeeds, it will have an adverse effect on the Post Office. In fact, if that policy succeeds, as we hope it will, nothing could be better from the Post Office point of view, because an improvement in the condition of the people of this country and of other countries would greatly advance the Post Office business. That is the short answer to the hon. Member. When we come to the Committee stage of these proposals, I shall be very happy to deal with the points that may be put forward.
I cannot accept what has been said to-night about Treasury control. Obviously, when you have ft Department such as the Post Office, there must be a measure of Treasury control, but I am glad to say to the Committee that when my Estimates come before the House, f they are asked for, I shall be glad to show that we, the Chancellor of the Exchequer and myself, have been able to take a considerable step forward and to make some new arrangement affecting the Post Office and the Treasury which I hope will be found satisfactory. To-night I content myself with thanking the Committee and trusting that the Post Office will be able to make good use of the money which we hope will soon be available.
Mr. DAVID MASON: What will the right hon. Gentleman do with this money?
10.20 p.m.
Major HILLS: I welcome what my right hon. Friend has said, but I do hope that he will go further. I hope that the Post Office is going to be run as a business under the Postmaster-General, and
1222
that the control of the Treasury will not be applied with strictness to it. Modern thought is moving on the line that a business of this sort ought to be run on quite different principles from other Departments of the State. I should like to congratulate the Noble Lord the right hon. Member for Aldershot (Viscount Wolmer), who, I believe, was part instigator of the Bridgeman Report, and who, at any rate, has fought very hard for the business management of the Post Office. I believe that under my right hon. Friend, after he has received the expansion which has been alluded to, the business will expand, and that in the end it will not only earn a large revenue for the Government, but will earn an even larger one, and that it will be a prosperous business and do its work for the public more efficiently and cheaply.
Resolution to be reported To-morrow.

WAYS AND MEANS.
REPORT [22ND MAY].
Resolution reported,

WAYS AND MEANS.

  INCOME TAX.—(Mutual profits and withdrawal of exemptions from certain societies.")
  "That—

  (a) in the application to any incorporated company or society, whether incorporated in the United Kingdom or elsewhere, of any provision or rule relating to profits or gains chargeable under Case I of Schedule D (which relates to trades), or under Rule 4 of the Rules applicable to Case III of Schedule D (which relates to the profits of certain cattle dealers and milk dealers), any reference to profits or gains shall include a reference to any profit or surplus arising from transactions of the company or society with its members which would be included in profits or gains for the purpose of that provision or rule if those transactions were transactions with non-members;

  (b) for the purpose of any such provision or rule the profit or surplus aforesaid shall he determined on the same principles as those on which profits or gains arising from transactions with non-members would be determined for that purpose;

  (c) the exemption from Income Tax under Schedules C and D conferred on certain societies by Sub-section (4) of Section thirty-nine of the Income Tax Act, 1918, shall cease;

  (d) there may be included in any Act of the present Session such provisions as

  1223
  to Income Tax in relation to any such incorporated company or society as aforesaid (being provisions which it is necessary or expedient to include for giving effect to or supplementing the foregoing provisions of this Resolution) as Parliament may determine."

  Mr. SPEAKER: I do not select the Amendment—in line 2, to leave out paragraphs (a) and (b) —standing in the name of the hon. Member for Bothwell (Mr. Leonard).
  Mr. LAWSON: I beg to move, in line 7, after the word "surplus," to insert the words:
  "(other than any moneys set aside for return to members as dividend or discount on their purchases)."
  Those who look closely at the Amendment will see that its purpose is to make quite sure that any moneys set aside to be returned to members as dividend or discount on their purchases shall not be counted as ordinary surplus. Those who are familiar with co-operative societies will know that it is the practice of some societies, instead of paying out certain moneys as dividend in a particular quarter, to earmark those moneys and set them aside to be paid in, say, the following quarter. It is a kind of assurance for dividend, with the object of equalising dividends from quarter to quarter. There is not any doubt that these moneys are definitely for the purpose of dividend, and there is no reason why the Chancellor of the Exchequer should not accept this Amendment. The Raeburn Committee stated on page 5 of their report, paragraph 9:
  "To our mind the point of time at which the 'divi' is determined and paid is no more than incidental to the particular mode of operation of the societies and does not affect the essential nature of the allowance."
  I could read further from that report to strengthen that point of view, but I think everyone who heard the Chancellor of the Exchequer's statement will agree that the one thing he did insist on time and time again was that the principle of excluding dividends from taxation was agreed upon. If there were any doubt upon that point the Prime Minister, in that apologia of his, made it crystal clear that he himself would not have agreed to the taxation of co-operative societies if dividends had not been excluded. I understand that the word of the Prime Minister still has great weight in the Cabinet. [HON. MEMBERS:
  1224
  "Oh!"]"Well; one of the things that he, in common with the Government, stood for very strongly in the election was the safeguarding of the savings of the people. A rapacious Labour Government was running away with the Post Office savings, and so the Prime Minister wanted to make quite sure that the people's savings were safeguarded. What the Prime Minister did make quite clear was that in no circumstances would he agree to this tax, if dividends were not safeguarded.
  I ask the Financial Secretary to the Treasury to give serious consideration to this proposal. I notice that to-night he has been fairly reasonable with some of his own people, and that the Chancellor of the Exchequer has manifested an unusual moderation for a Chancellor of the Exchequer. I trust that we are to have that serious consideration, and an acceptance of the principle which was laid down by the Chancellor and by the Prime Minister when he explained that famous speech. The Prime Minister certainly achieved a masterpiece in explaining that he meant what he did not say. He performed the most remarkable somersault that ever has been done by a Gentleman at that Box. I am looking to the time when he goes back to Durham, or anywhere else in the country, to explain that speech. If the Government do not accept this, they will take the last shred of pretence from the Prime Minister. In view of their proposals, and of their own attitude, I trust that the Government will accept the Amendment.
  10.33 p.m.
  Mr. LEONARD: I beg to support the Amendment. I regret that the time arrangements have not been acted up to, but that is no fault of mine. I will endeavour to make amends by keeping from repetition as much as I possibly can. I look upon the Resolution before me as one that outrages the spirit of mutuality which I, along with my colleagues, hold dear. The Amendment that has been moved is calculated to put that principle into the Resolution, and it is from that point of view that I speak. The object of the Resolution is that co-operative societies should be charged with Income Tax in respect of trading, irrespective of whether that trading is with members or with non-members. Not only is that

  1225
  principle being outraged, but the principles of equity are being placed on one side.
  The Resolution is based upon recommendations contained in the Raeburn Report. I do not want to speak about what has already been stated sufficiently, in regard to the personnel of the committee, but as to whether the Chancellor was entitled to accept the recommendations from the gentlemen who were members of that committee, and to deem them to be competent to deal with this matter. In order to do so, I wish respectfully to put before the representatives of the Government my opinion upon that point. The committee made the surprising statement that the application of the decisions of the courts in regard to mutuality, and their application to cooperative societies, was by no means free from doubt. If that is the opinion of these gentlemen, it is incumbent upon me to put forward certain other opinions, for which I claim equal recognition. I do not think I shall be guilty of repetition in referring again to the statement of the Board of Inland Revenue:
  "The surplus which arises in the mutual concern from transactions with members, though it is sometimes described as profit, is not a profit chargeable to Income Tax. The Board of Inland Revenue are aware that this fact has at times been challenged, but the question is one of law, and, as such, the Board are advised, in the light of decided cases, it admits of no reasonable doubt."
  I put that forward as equal in weight to any statement of the committee. I noticed that the Chancellor of the Exchequer stated earlier this evening that some Members of the House were not likely to be convInced by arguments from the other side, and I agree that that is so, but I now put forward the opinion of one who is outside trading and co-operative interests. I refer to an ex-Chairman of the Board of Inland Revenue, Sir E. Nott-Bower, who says:
  "Of course, what we have to consider is, assuming that the New York Life decision applies to co-operative societies, whether any change in the law is required. It would follow from that, would it not, that, if we want to change the present position of affairs, and make that surplus chargeable, it would be necessary, not merely to refuse the exemption, which at present stands in the Statute Book, of the co-operative societies as an entity under Schedules C and D; it would be necessary, if you want to charge that surplus, to invent some new definition of profit."
  1226
  On that point being put to the witness of the Board of Inland Revenue, his answer was:
  "I agree absolutely."
  Turning to legal opinion, Lord Macnaghten himself expressed this opinion:
  "I do not understand how persons contributing to a common fund in pursuance of a scheme for their mutual benefit, having no dealings or relationships with any outstanding body, can be said to have made a profit if they find they have over-charged themselves."
  That is a simple statement of the position in which members of the co-operative societies find themselves. My last reference is to an outstanding case in the House of Lords on the question of mutuality, and covering the New York Life Insurance Company. I want to state that here there was great Similarity between that company and the co-operative societies. In both cases trade is conducted, not only with members, but also with non-members, and in both cases members do not buy identical things. In both cases there is income from investment, and in both cases the dividend returned is a proportion of the whole body of surplus. Here is a case which has been decided, on the lines that we are suggesting here this evening, in favour of our opinion, and the representative of the Board of Trade summed up by saying:
  "I think the application of the principles of mutuality to co-operative societies admits of no reasonable doubt."
  The Committee state that they base their recommendations, which have been accepted by the Government, on two main points. In the first place, in paragraphs 20 and 22, they express themselves as unable to see any reasonable grounds for claiming exemption from taxation of co-operative trade with members by the nature of the source from which it arises. I can here quote two past chairmen of the Board of Inland Revenue who state that the proposal to tax the net receipts left in the hands of the society implies that profit depends, not on the origin of these receipts, but on the use to which they are put. This, in their opinion, is applied as regards any other class of receipts, and they cannot agree that it can be applied with regard to this particular class of receipts. It would single out a co-operative society

  1227
  for special taxation, and we humbly submit that this is what is being done at present and that a special class of the community is being singled out for special attention and taxation.
  On the second point that the Committee touch upon, the question of entity— that because of the numbers of persons involved an entity has been created— there is a reservation to the report of the Royal Commission on that point. That statement is that the mere fact that a number of individuals have formed themselves into a separate legal entity does not constitute the receipts of this legal entity a taxable product under any part of the British Income Tax law and they see no reason why it should be made to do so for co-operative societies. That is quite explicit. Lord Herschell in the New York case said:
  "I think the Attorney-General was correct in thinking it immaterial that the persons thus associated have been incorporated and that a legal entity had been created distinct from the members of which it was composed."
  Lord Justice Rowlatt's opinion on the matter is that, if people were to do the thing for themselves, there would be no profit, and the fact that they incorporate a legal entity to do it for them makes no difference. There is still no profit. These opinions, based upon analogous conditions and cases, are as important as those that gave guidance to the Government. The three individuals are, I presume, quite reasonable, intelligent people, but they do not equal the status of the references that I have given. The only other reference that has been made is that certain things that the right hon. Gentleman contemplated have Colncided with the opinion of Sir Josiah Stamp That is the only other name that I have heard from that side. Sir Josiah is deemed to be a statistician, and his own definition of statistician is a person who is brought in when your own figures can neither stand up nor lie for themselves. Sir Josiah Stamp was a civil servant at one time.
  Mr. SPEAKER: That is hardly relevant to the Amendment before the House, which deals with exempting sums set aside as dividends or discounts. That is the only question under discussion.
  Mr. LEONARD: I am suggesting that what is contained in the Amendment is
  1228
  reasonable and that the attitude of the Government in penalising this section of the community, as I claim they are doing, is unwarranted and should not proceeded with.
  10.45 p.m.
  Mr. HORE-BELISHA: I thank the hon. Gentleman the Member for Chester-le-Street (Mr. Lawson) for the mild and reasonable way in which he moved the Amendment. I understand the point which he was making. He wishes to ensure that the dividend commonly called "divi" shall not be assessable to tax. It will not be assessable to tax. The only point of substance in the Amendment would be to insert a provision which would ensure specifically that it would not be subject to tax. It is part of the common administration of the Income Tax that this "divi" will be treated as a trade discount. The report of the Raeburn Committee will be implemented by the Inland Revenue in letter and in spirit. If it were specifically laid down in the Resolution that the "divi" should not be subject to tax, then it would also be logically necessary by analogy to lay down by Statute that a trade discount allowed by an ordinary trader should not be subject to tax. These, I think the Committee will appreciate, are matters of administration, and the hon. Member for Chester-le-Street may have my solemn assurance that the "divi" will not be made liable to tax. He quoted paragraph 9 of the report which says that,
  "the point of time at which the 'divi' is determined and paid is no more than incidental to the particular mode of operation of the societies and does not affect the essential nature of the allowance."
  I quite agree. Smith makes his purchase. At the end of the year the society makes its discount. It decides what sum it will return by way of "divi," and that sum is allowed by the Inland Revenue as a trade expense. Income Tax is in practice assessed on the profit of the previous year, and therefore there is no danger whatever that the Inland Revenue will refrain from allowing any sum which is distributed as "divi." I hope that the solemn and uncompromising assurance on my part that the "divi" will in no circumstances be assessable to tax will satisfy the hon. Member.
  10.48 p.m.
  Sir S. CRIPPS: I am afraid that it does not satisfy us, and for this reason. One of the great arguments which has been going on for many years is as to whether this is a trade discount or not. It has always been urged by the traders that it is not properly comparable to a trade discount. We want to avoid that matter having to be litigated up to the House of Lords hereafter. The House have an opportunity now of making it perfectly certain. There can be 110 harm in putting in these words. It is not a question of dealing with general Income Tax matters. This is dealing with the imposition of a tax for the first time on a class of trade which hitherto has been untaxed, and as a condition of that a great many provisions are to be inserted in two Sections which take up three pages of the Order Paper. The co-operators are anxious that this matter should be settled beyond any possibility of doubt hereafter. It may be that the hon. Member will not always be at that Box to speak. He may have a successor, and his successor will not be bound by his assurance. It may be that the present administration of the Inland Revenue think that this is a proper matter to allow as a deduction. It may be that they will be advised by some future Law Officer or someone else that it is not a proper matter for deduction. Unless this matter is now signed, sealed and delivered, it will leave the door open for this discussion to continue, and it is that which we want particularly to avoid at all costs.
  There is no question about the intention of the hon. Gentleman. We do not doubt it for a moment. Anything he states at that Box we accept absolutely as naturally something to which he would stick. But a new Act is to be passed imposing taxation for the first time. The co-operators think that they are at least entitled to have it stated in this Measure, which is taxing them for the first time, that these dividends will not be taxed. I am sure the right hon. Gentleman will understand that the state of nervousness and anxiety, which has been created by this taxation, is something which must legitimately be taken into account by anybody who takes account of mass psychology and mass thought. A provision of this type will, at least, do some-
  1230
  thing to allay the fears of the co-operators, especially in view of the fact that private traders have made it perfectly clear that they are going to try to get the "divi's" taxed as the next step.
  If there is nothing in the Finance Act this year, and the co-operators have to rely upon the practice of the Inland Revenue Department, that practice may be changed to-morrow if the Inland Revenue Department think it right, proper or advisable, or are instigated to change their practice. If the Government refuse this Amendment, it will inevitably be thought by the people outside this House that the door is being left open to the taxation of "divi's" on a future occasion. They will think there can be no reason for not giving this protection and this assurance in a statutory form unless the Government have at the back of their minds the possibility on some future occasion of these "divi's" being taxed in addition to the taxation now proposed. I hope, therefore, the hon. Member, by accepting this Amendment, will undertake in statutory form to settle this matter of taxation of the "divi" and to put it on the Statute Book, so that nobody can take a case to the House of Lords or raise it in any other way as long as Parliament shall determine to keep the provision on the Statute Book.
  10.52 p.m.
  Mr. CHAMBERLAIN: The hon. and learned Gentleman has stated that doubts still exist in the minds of co-operators, not as to the intentions of the Government that now exist but as to the possibility that, in spite of those intentions, they should nevertheless be exposed to some decision in a court of law which might render the "divi" liable to tax. I think that his fears are groundless. The hon. and learned Gentleman does not throw any doubt on the intentions of the Government. I need hardly say that, whatever happens now, it could not possibly bind our successors. Nothing could prevent some future Government, if they chose, taking a different view from that taken by the present Government and introducing some legislation which would, in fact make the "divi" subject to tax. With regard to the particular Amendment before the House, its wording is not sufficiently accurate or precise to enable me to accept it, but, if the

  1231
  hon. Member will withdraw his Amendment now, I will certainly undertake to look into the question which he has raised before the Clause is actually debated. If it is found possible to put into the Clause some sort of assurance that will remove such doubts as may arise in the minds of co-operators, I shall certainly do so.
  10.55 p.m.
  Mr. LAWSON: In view of the statement of the right hon. Gentleman on this point, I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  10.55 p.m.
  Mr. MABANE: I beg to move, in line 17, at the end, to insert the words:
  "except in the case of those societies the rules of which include specific provisions to the effect—
  (1) that the interest on shares of members shall be limited to five per cent;
  (2) that in no circumstances may any premiums be required to be paid on shares taken up;
  (3) that in no circumstances may shares be redeemed at a value higher than that origiNaily subscribed."
  The purpose of the Amendment is to introduce an approach to this problem which is different from that which has been taken by the Government. It seems to me that the attitude the Government have taken towards the co-operative societies is this: "You have ceased to be mutual traders. You have ceased to trade mutually, therefore you must be taxed." I would rather the approach had been in this fashion: "We will not tax you, but we will ensure that you shall trade mutually." The object of the Amendment is to ensure that the trade of co-operative societies shall be of a mutual nature. The fundamental condition of mutual trading is perfectly plain. It depends upon the question, to whom do the profits belong? If the profits that accrue as a result of the trading belong to those who engage in the mtual trading in proportion to the trade they have done, that might reasonably be called mutual trading, but if the surplus that accrues belong to the members of the society not as traders but as shareholders, then I think it cannot be maintained that that is mutual trading. It is perfectly well known that the
  1232
  original object of co-operative societies was to provide for the people who were members of the societies, goods at cost price. If, for a matter of convenience, it was necessary to charge more than the cost price and at the end of a period to assess the surplus and distribute it, it was merely a matter of convenience, and there was no doubt that the surplus belonged to the people who had traded, in proportion to their trading. I do not think that can be disputed without undermining the whole principle of mutuality. There is considerable misapprehension on this point.
  I have been at some pains to examine the rules of co-operative societies in order to discover to whom in law the surplus belongs. Does it belong to the members as shareholders or to the members as traders, and I find that in the rules of almost all the co-operative societies that I have been able to examine, there is no sort of doubt that the surplus belongs to the members as shareholders. That fact carries with it very serious consequences. Let me illustrate it in a simple fashion. Let us suppose that three people decide to form a co-operative society. Two of them become shareholders to the extent of £200, and the third becomes a shareholder to the extent of only E1. Let us suppose that the shareholders to the extent of £200 did practically no trading with the society, while the shareholder to the extent of £l traded to the extent of several thousands of pounds. Let us suppose that there was a surplus of £200 at the end of the year. It is perfectly plain that if the trading was mutual, that surplus would belong to the member who had done the trading, but according to the rules of the co-operative societies as they stand in most cases, and certainly according to the rules which might be adopted, it would be possible for the two members who owned shares to the extent of £200 to determine that they would not distribute the surplus as "divi," but by means of interest to themselves on their shares, at 50 per cent., so that they would get £100 each, and the other poor man, who had done all the trading, would get only 10s. That; definitely undermines the principle of mutuality. It may be contended that that does not happen in practice, and that that is not the case in most retail societies, but the point is, that it might be so. There is a

  1233
  belief among members that the interest of co-operative societies is limited. Let me read a rule of the Huddersfield Cooperative Society:
  "Profits of all business carried on shall be applied as follows;
  In payment of interest not exceeding six per cent. on all shares held."
  And at the end it says:
  "The above rate of interest may be reduced or increased by a resolution of a quarterly or special general meeting of members."
  It is obvious that there is no limitation; that the members of the society, as shareholders, have the right to distribute any surplus by way of interest on their shares. The matter of the ownership of the profits is one of great significance. The object of the Amendment is to destroy any possibility of the surplus belonging to the shareholders. It provides that exemption from the tax shall cease except in the case of societies whose rules include the provision that the interest on the share of members shall be limited to 5 per cent., and that in no circumstances shall any premiums be required to be paid on shares taken up. Some hon. Members may be under the impression that cooperative societies cannot establish a premium on their shares. Of course they can. They may take powers to determine at the end of any year a price for its shares in excess of their par value. The third provision in the Amendment is that in no circumstances may shares be redeemed at a value higher than that origiNaily subscribed. It may be contended that co-operative societies never make provision which would allow shares to be redeemed at a value higher than that origiNaily subscribed, but they may do so. I suggest that the real test is what might happen on a winding up. Suppose a co-operative society acquires assets and that those assets in time become double the value of the shares subscribed. Suppose, further, that this cooperative society is wound up. There is no question that these assets would be distributed to the shareholders, who would receive double the amount which they origiNaily subscribed. If that is the case it cannot be contended that it is mutual trading. That surplus undoubtedly belongs to the members of the society in proportion to the trade they have done, and the Amendment would make that perfectly clear.
  1234
  I am prepared to alter the Amendment to make it definite that the surplus shall belong to the members as traders in proportion to the trade that they do. I am also prepared to extend the Amendment to make it clear that cooperative societies shall on no account trade with non-members, but what I am most concerned about is the principle that co-operative societies shall engage in mutual trading. If instead of approaching the problem in the way it has been approached by the Government it was approached in the way I suggest, not tax co-operative societies but insist that they shall trade mutually, you would be doing a more logical, reasonable, and fair thing; and co-operative societies could not object to the conditions. You would not offend them.
  We are told that this is done for the sake of the retail distributor. My business is largely connected with retail distribution, and I say that the present proposals are certainly no benefit to the retail trader. The proposal that I make would be of benefit to the retail trader. As a retail trader I should say, if I had to choose a competitor, that I should choose the cooperative society, because I think they are the least efficient, the easiest to beat. But the present proposal, as I see it, is only likely to have the effect of causing societies to distribute more in dividend or to lower prices, whereas my Amendment, by insisting that they trade mutually, would confine them to their proper sphere of business, and would be quite fair to them, and would get the Government out of a difficult position, for it is generally agreed that it is unfortunate that the Government has put its hand into this hornet's nest. I am prepared to admit that the great Majority of Members will vote against the Amendment, but we all know perfectly well that the House would have been much happier if this proposal had not been adopted by the Government.
  I ask the Chancellor of the Exchequer to hold out some hope that an Amendment of this nature, made watertight so that the co-operative societies are confined absolutely to mutual trading, will be accepted. It would solve the whole trouble and put the societies in their proper place; and it would, I am sure, remove all the difficulties of those who

  1235
  complain of the competition of the societies.
  11.7 p.m.
  Mr. McCORQUODALE: I beg to second the Amendment.
  Taxation of co-operative societies seems to me to fall under two heads. The Chancellor of the Exchequer in his opening speech mentioned the offer which he had made to the co-operative societies as to taxation falling upon all their income from investments. With that I am in complete agreement and I would have supported it. But when we came to the taxation of the surplus or profit which remains to the society after the dividend has been paid, we came to more ticklish and more dangerous ground. My hon. Friend who moved the Amendment raised a new and most interesting point. There is no doubt that at the present time, according to the rules of a great number of co-operative societies, the law of mutuality is not fully carried out. The whole profit made from trading before the dividend is paid is subject, not to the members' decision trading as members, but to the members' decision trading as shareholders.
  There are two distinct capacities: A member as member with a say in proportion to the amount of trade that he gives to his society, and the member as shareholder, with "one man, one vote," or else according to the amount of share Capttal that he has in his society. I do not think the wording of the Amendment is sufficiently exact and I would like to see some alteration in it, but the point of the Amendment is well worth con-sieration, namely, that we should tighten up the test of mutuality. The Financial Secretary said there must be a limit to mutuality in the case of these trading societies. He proposes to limit it in the manner suggested by the Government proposal. I would say that the Government should define it, rather than limit it; that they should insist on strict mutuality and, where mutuality exists, refrain from taxing it, while subjecting these societies to taxation on investments and in so far as it does not exist.
  11.11 p.m.
  Mr. BUCHANAN: I oppose the Amendment. It seemed to me that the Mover became involved in certain contradictions.
  1236
  He began by saying that his Amendment would not affect the co-operative societies as badly as the Chancellor's proposal and he wound up by saying that it was a much more efficient way of attacking the co-operative societies than the Chancellor's method. [HON. MEMBERS: "No!"] He said that his proposal was a better way of approaching the subject, a better way of tackling the question and therefore a more efficient way of attacking the co-operative societies.
  Mr. MABANE: I said, quite objectively, that as far as the retail traders were concerned, my method would be more likely to satisfy them than the method proposed by the Chancellor. That is merely an opinion.
  Mr. BUCHANAN: That is all I am taking it as. The hon. Member's whole speech is an opinion. It does not become more than his opinion unless his proposal is carried into effect, and his opinion is that his Amendment would satisfy the enemies of the co-operative movement more than the Chancellor's proposal—because the enemies of the cooperative movement are the private traders. If that does not mean attacking the co-operative movement I do not know what it means. The hon. Member based his argument on certain presumptions. He took the hypothetical case of a cooperative society of three members, two of whom had large share holdings, while one merely acted as purchaser. The two decided to divide the surplus between themselves and give nothing to the third, and the hon. Member says that would be unfair. But everybody knows what would happen in such a case. The society would "go bust," because it would lose its purchaser. The thing is so silly and stupid that there is no reply to be given to it. If the purchaser was left out he would leave the society and the society would be ended.
  Mr. MABANE: He would lose his money.
  Mr. BUCHANAN: But the hon. Member's point was that he had really no money in it and that the other fellows had the money in it.
  Mr. MABANE: He would have lost his dividends.
  Mr. BUCHANAN: And they would lose their business which would be a more

  1237
  serious matter. If co-operative societies followed the practice of limited companies and if members voted according to the cash value of their shares, there might be some point in the Amendment. In a co-operative society that is not the case. Each society member votes as a member. He may have the full voting capacity of £200; he may only have a voting capacity of a few shillings, but his membership rights of voting as to how the surplus is to be divided are the same absolutely.
  Mr. MABANE: We want to establish this fact, that the surplus belongs to the members as traders, in proportion to their trading, and that they shall be able to dispose of that surplus, and in disposing of it their voting power shall be in accordance with the trade that they have done, and not in accordance with the mere money that they have invested.
  Mr. BUCHANAN: They vote as members, not as shareholders with a certain amount, and a member with a shilling may trade as much as or more than a member with £200, but his voting rights are the same. Take the proposal that each member shall vote according to the trade he has done. That means that you are to have in future at a co-operative society meeting a miniature form of Labour party conference, with card voting, and that each member must be supplied at each annual, or six-monthly or three-monthly meeting, when the dividend is made up, with a card. One card will say, "You have bought £10 worth of goods: here is a card for you to vote with"; another will say, "You have bought £20 worth; here is your voting card"; and a third member will get a card for £30 worth of trading. As one who knows co-operative societies fairly intimately and who has been a member of a co-operative society for the biggest portion of his life, may I say that that is an awful proposal? It means the handing out of cards to one another, and anybody who knows anything about card votes at meetings knows what they involve. Imagine doing it in the society of which I am a member, with 22,000 members, and handing each member a card. Your meeting would cease to be anything like a business meeting, and the cards would be handed out, and there would be wholesale abuse in every part of the country.
  1238
  Then the hon. Member says a society might finish and might have a surplus due to certain advantageous circumstances. His experience of the Cooperative Movement must be different from mine. I have been a member now of three societies, and in one case, far from there being a surplus, there was so much more for me to pay, because they "went bust." But take the hon. Member's imaginary case of a society with a surplus. How has that reserve surplus been built up? The hon. Member says, "Give it to the members according to how they have traded in the last six months." Take my own case. My mother is, I think, the oldest living member of the Kinning Park Co-operative Society, in Glasgow. At one time she was almost the biggest purchaser, because she had a big family, but today, with nobody at home, she is a small purchaser. But she has built it up, and the hon. Member comes along and says, "Having built that up, she is only to have a say with regard to the last six months."
  Mr. MABANE: I mean all the time, continuously.
  Mr. BUCHANAN: So that they would have to search back. My mother has been a member for 50 years, I should say, and they have to search back for 50 years and try to average it out, and hand her a card accordingly. That is what it means.
  Mr. MABANE: It means for a year.
  Mr. BUCHANAN: It is to be for a year then, so that the person who has been a member for 40 years and a big purchaser for 38, but who has become a small purchaser, is to be given a card according to her small purchases, and all the other years are to be disregarded. Some societies went in for an insurance system according to the purchases of the members, and they went back over three years for new members, and for old members, in order to make it equitable and fair, and they had to increase the period to five or seven years. They knew that members' purchases may have altered over a period of years. What society today is paying more than 5 per cent.? What society dealing with retail members is not now engaged in reducing the percentage to a lower average? To-day the average purchaser of the Co-operative Society is not a large shareholder. He

  1239
  is a small shareholder, but a large purchaser, and every Co-operative Society is faced with the problem that the small shareholder—but large purchaser—is compelling the societies to spend less in interest and more in dividing out the surplus among its ordinary rank and file members.
  I see nothing in the proposal to commend itself to people who understand the co-operative movement. It is said that we are dealing with non-members, but the amount of that trade is infinitesimal, and it is so small as to make the cost of collection not worth the trouble.
  Mr. PIKE: Does the hon. Member say that £9,000,000 is a small total?
  Mr. BUCHANAN: In the total turnover of the movement in the country, retail and wholesale, it is nothing. Nearly every society gives a return to its non-members as well as to its members; they pay a dividend to non-members. The number, however, is comparatively small. The £9,000,000 to which the hon. Member refers consists in the main of contracts that may be undertaken in a wholesale fashion. The Amendment is not drafted with a knowledge of the co-operative movement and it brings those who sponsor it into ridicule and contempt.
  11.25 p.m.
  Mr. MAITLAND: This Amendment has brought forward one substantial point of importance. The opposition to the general principle of this proposal was upon the ground that it interfered with the principle involved in what has been termed "mutuality of interest." But the hon. Member who proposed it, and his friends, as I understand, have shown by this very Amendment that the very principle of mutuality of interest does not, in fact, exist. The hon. Gentleman said that the purpose of the Amendment was to ensure that the surplus resulting from trading should belong to the members actually doing the trade. The proposal which the Government have made secures that. The Chancellor of the Exchequer has agreed to consider between now and the Report stage the acceptance of some words which will fit the purpose of the previous Amendment proposed from the Opposition benches. It was a very wise decision to agree to in-
  1240
  sert words which will give effect to that suggestion, because the intention of the proposal now before the House is to exempt the "divi's" from tax, and that means that those who are doing the trade will still continue to receive the "divi's" in accordance with the amount of trade they do. So far as this particular Amendment is concerned it has demonstrated, from what the hon. Member for Huddersfield (Mr. Mabane) has said, that the principle of mutuality with regard to the disposition of any surplus certainly does not apply, and it has also demonstrated the fact that those who trade will still continue to receive their "divi's" free of Income Tax and thus are not being imposed upon or unfairly treated. I think the hon. Member for Gorbals (Mr. Buchanan) has sufficiently exposed the impracticability of the proposal and I am quite certain that there are no members of the Cooperative Movement who would under any circumstances be prepared to put into practical operation the suggestions embodied in this Amendment, and therefore I hope it will be rejected, as I am sure it will be.
  11.27 p.m.
  Mr. CHAMBERLAIN: The hon. Member for Huddersfield (Mr. Mabane) offered two reasons for moving his Amendment. One was to help the Government out of a tight corner, and the other was to try to bring back the cooperative societies to a stricter path of virtue. He does not seem to have pleased the representatives of the cooperative societies by his suggestion, and, in fact, the hon. Member for Gorbals (Mr. Buchanan) has torn to pieces the practicability of the suggestion. I am afraid I cannot give the hon. Member any more encouragement from the Government side. He seems to have in his mind that the undistributed income of societies must belong either to the shareholders or to the purchasers. It does not seem to have occurred to him that it is possible that neither may be the case. The Government theory, at any rate, is that the undistributed balance belongs not either to the shareholders or to the purchasers as such, but to the society as an entity, and I venture to suggest to the House that the very terms of the Amendment, which shows that a society can make rules which will limit the priv-

  1241
  ileges of the shareholders with regard to the surplus, indicates that this money is the property of the society as an entity. That being so it is obvious that the Government cannot accept the Amendment.
  11.29 p.m.
  Sir S. CRIPPS: So far as we are concerned, this is so obviously a wrecking Amendment that we shall support it. It seems to be quite impracticable but, on the other hand, if it were passed, it would entirely defeat the Government's scheme. We shall, therefore, support the hon. Member.
  Amendment negatived.
  Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
  11.30 p.m.
  Mr. LUNN: We shall vote against this Resolution. I do not intend to say very much at this late hour of the evening, as there will be other opportunities for discussing this matter in the Debates on the Finance Bill. This establishment has added many lines to its business during this Parliament, and, if we are to take the Chancellor of the Exchequer's speech to-night on the Heavy Oils Duty at its face value, it is very likely, if he remains in his present position, that other lines will be added. I am sure that it is not really money that is sought for in this Resolution; the proposal is put forward to satisfy the prejudices of the Government's supporters and to injure the co-operative societies, which are the greatest thrift organisations in this country.
  It has been understood in the past that Income Tax was a personal tax. Millions of members of co-operative societies are not liable to it. In my own society, which is one of the largest in the Kingdom, 90 per cent. of the members are not liable to Income Tax, but the Government are seeking to make them pay by bringing them within the Income Tax limit. The money that the Government are seeking to get is money that belongs to the members. Until now they have not been liable to pay anything in that direction. The reserves are the undistributed surplus resulting from mutual trading among the members of the societies, and those reserves are used for various purposes, including the ad-
  1242
  vancement of co-operation. They may be used for depreciation, because the co-operative movement is a business organisation and looks after matters of that description in the interests of its future. Co-operative societies do a, great amount of educational work, assisting the Government and education commits tees by their activities among their members and sometimes among the general public, and making a certain allowance from their funds for the purpose. We hear a great deal about the position of the voluntary hospitals; there is not a town in this country but whose hospital is in a sad financial position. One of the activities of the co-operative societies is to support, equally with any other body in our towns and cities, the funds of the voluntary hospitals.
  The proposal of the Government is an attack upon the future development of the movement which has done so much good for the people, and upon mutual trading, and there is no justice in it. As has been said by the hon. Member for Gorbals (Mr. Buchanan), most of the trade of the co-operative societies is with their own members, and that done with non-members is infinitesimal. The surplus is simply the saving on the household expenditure of the members. I would ask the Chancellor a question which I am sure he will be able to answer: Does a private trader pay tax on the profits on the goods which he takes from his shop for his household use? I guarantee that there is not a Member in this House who will not say that he does not. Then why should a number of people who have banded together for mutual trading, and who are in a similar position, be called upon to pay tax? These surpluses have never been taxed before, and never ought to be taxed. Unlike the company, the reserves of co-operative societies do not affect the shares of the members, and do not add a penny to the interest. Another question that I should like to ask is, why are the savings of a member of any co-operative society up to £200 to be taxed, when a person may have £500 in Savings Certificates which are not taxed? I think we ought to have some explanation of this discrimination between individuals.
  We realise that this is an attack upon the best of the citizens in our country. Those who, like the members of co-

  1243
  operative societies, are the most careful and thrifty, are the deserving part of the population. Realising that there will be further opportunities, I conclude by saying that I believe that this proposal will have more to do with the downfall of the present Government than any other proposal that they have brought forward up to the present, and I hope that I shall be here to see it. It will be shown that this Government is not a Government that looks after the interests of the deserving and decent people
  among the poorer section of the population. Because of the prejudices of its Members against the co-operative societies, it has taken, is taking, and will continue to take action the result of which, I hope and believe, will be that another Government will take its place when the opportunity arises.
  Question put, "That this House doth agree with the Committee in the said Resolution."
  The House divided: Ayes, 241; Noes, 60.

  Division No. 193.]

  AYES.

  [11.37 p.m.

  Acland-Troyte, Lieut.-Colonel

  Duckworth, George A. V.

  Levy, Thomas

  Adams, Samuel Vyvyan T. (Leeds, W.)

  Dugdale, Captain Thomas Lionel

  Liddall, Walter S.

  Albery, Irving James

  Duggan, Hubert John

  Lindsay. Noel Ker

  Anstruther-Gray, W. J.

  Duncan, James A. L. (Kensington, N.)

  Lloyd, Geoffrey

  Apsley, Lord

  Eady, George H.

  Lockwood, John C. (Hackney, C.)

  Bailey, Eric Alfred George

  Eastwood, John Francis

  Lockwood, Capt. J. H. (Shipley)

  Baldwin, Rt. Hon. Stanley

  Elliston, Captain George Sampson

  Loder, Captain J. de Vere

  Balfour, George (Hampstead)

  Elmley, Viscount

  Lovat-Fraser, James Alexander

  Balniel, Lord

  Emmott, Charles E. G. C.

  Lumiey, Captain Lawrence R.

  Banks, Sir Reginald Mitchell

  Emrys-Evans, P. V.

  MacAndrew, Lt.-Col C. G. (Partick)

  Barclay-Harvey, C. M.

  Entwistle, Cyril Fullard

  MacAndrew, Capt. J. O. (Ayr)

  Barton, Capt. Basil Kelsey

  Erskine, Lord (Weston-super-Mare)

  Macdonald, Sir Murdoch (Inverness)

  Bateman, A. L.

  Essenhigh, Reginald Clare

  Macdonaid, Capt. p. D. (I. of W.)

  Beauchamp, Sir Brograve Campbell

  Fraser, Captain Ian

  McLean, Major Sir Alan

  Beaumont, Hon. R.E.B. (Portsm'th.C.)

  Fremantle, Sir Francis

  McLean, Dr. W. H. (Tradeston)

  Benn, Sir Arthur Shirley

  Fuller, Captain A. G.

  Macmillan, Maurice Harold

  Sevan, Stuart James (Holborn)

  Gibson, Charles Granville

  Macquisten, Frederick Alexander

  Bird, Ernest Roy (Yorks., Skipton)

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

  Maitland, Adam

  Blaker, Sir Reginald

  Glossop, C. W. H.

  Makins, Brigadier-General Ernest

  Bossom, A. C.

  Gluckstein, Louis Halle

  Manningham-Builer, Lt.-Col. Sir M.

  Boulton, W. W.

  Goff, Sir Park

  Margesson, Capt. Rt. Hon. H. D. R.

  Bowyer, Capt. Sir George E. W.

  Goldie, Noel B.

  Marsden, Commander Arthur

  Bracken, Brendan

  Goodman, Colonel Albert W.

  Mason, Col. Glyn K. (Croydon, N.)

  Braithwaite, J. G. (Hillsborough)

  Gower, Sir Robert

  Mayhew, Lieut.-Colonel John

  Briscoe, Capt. Richard George

  Graham, Sir F. Fergus (C'mb'rl'd, N.)

  Meller, Richard James

  Broadbent, Colonel John

  Graves, Marjorie

  Mills, Sir Frederick (Leyton, E.)

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

  Grimston, R. V.

  Mills, Major J. D. (New Forest)

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

  Guest, Capt. Rt. Hon. F. E.

  Mitchell, Harold P.(Br'tt'd & Chisw-kr

  Browne, Captain A. C.

  Guinness, Thomas L. E. B.

  Monsell, Rt. Hon. Sir B. Eyres

  Buchan-Hepburn, P. G. T.

  Gunston, Captain D. W.

  Moore, Lt.-Col. Thomas C. R. (Ayr)

  Burghley, Lord

  Hacking, Rt. Hon. Douglas H.

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

  Burnett, John George

  Hales, Harold K.

  Morris, John Patrick (Salford, N.)

  Butt, Sir Alfred

  Hall, Capt. W. D'Arcy (Brecon)

  Morris-Jones, Dr. J. H. (Denbigh)

  Campbell, Edward Taswell (Bromley)

  Hanbury, Cecil

  Morrison, William Shephard

  Campbell, Vice-Admiral G. (Burnley)

  Hanley, Dennis A.

  Muirhead, Major A. J.

  Caporn, Arthur Cecil

  Hartington, Marquess of

  Munro, Patrick

  Carver, Major William H.

  Hartland, George A.

  Natl, Sir Joseph

  Castlereagh, viscount

  Harvey, George (Lambeth,Kenningt'n)

  Nation, Brigadier-General J. J. H.

  Cayzer, Ma]. Sir H. R. (P'rtsm'th, S.)

  Haslam, Sir John (Bolton)

  North, Edward T.

  Cazalet, Theima (Islington, E.)

  Heilgers, Captain F. F. A.

  O'Donovan, Dr. William James

  Chamberlain, Rt. Hon. N.(Edgbaston)

  Heneage, Lieut.-Colonel Arthur P.

  O'Neill, Rt. Hon. Sir Hugh

  Chapman, Col.R. (Houghton-le-Spring)

  Hep worth, Joseph

  Ormsby-Gore, Rt. Hon. William G.A.

  Clarry, Reginald George

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

  Palmer, Francis Noel

  Clayton, Dr. George C.

  Hope, Sydney (Chester, Stajybridge)

  Patrick, Colin M.

  Cochrane, Commander Hon. A. D.

  Hore-Belisha, Leslls

  Peake, Captain Osbert

  Coltox, Major William Philip

  Hornby, Frank

  Penny, Sir George

  Colman, N. C. D.

  Horne, Rt. Hon. Sir Robert S.

  Perkins, Walter R. D.

  Colville, Lieut.-Colonel J.

  Horobin, Ian M.

  Peto, Sir Basil E. (Devon, Barnstaple)

  Conant, R. J. E.

  Horsbrugh, Florence

  Peto, Geoffrey K.(W'verh'pt'n,Bliston)

  Cooke, Douglas

  Howitt, Dr. Alfred B.

  Pickford, Hon. Mary Ada

  Copeland, Ida

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

  Pike, Cecil F

  Courtauld, Major John Sewell

  Hudson, Robert Spear (Southport)

  Powell, Lieut.-Col. Evelyn G. H.

  Courthope, Colonel Sir George L.

  Hunter, Capt. M. J. (Brigg)

  Ramsbotham, Herwaid

  Crooke, J. Smedley

  Hutchison, W. D. (Essex, Romford)

  Rankin, Robert

  Crookshank, Col. C. de Windt (Bootle)

  Jesson, Major Thomas E,

  Ray, Sir William

  Crookshank, Capt. H. C. (Gainsb'ro)

  Joel, Dudley J. Barnato

  Reed, Arthur C. (Exeter)

  Culverwell, Cyril Tom

  Ker, J. Campbell

  Reid, Capt. A. Cunningharn-

  Davidson, Rt. Hon. J. C. C.

  Kerr, Hamilton W.

  Reid, William Allan (Derby)

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

  Lamb, Sir Joseph Quinton

  Remer, John R.

  Denman, Hon. R. D.

  Law, Richard K. (Hull, S.W.)

  Roberts, 8lr Samuel (Ecclesall)

  Despencer-Robertson, Major J. A. F.

  Leighton, Major B. E. P.

  Ropner, Colonel L.

  Drewe, Cedric

  Lennox-Boyd, A. T.

  Rosbotham, Sir Samuel

  Ross, Ronald D.

  Simmonds, Oliver Edwin

  Thomson, Sir Frederick Charles

  Ross Taylor, Waltar (Woodbridge)

  Slater, John

  Thorp, Linton Theodore

  Runge, Norah Cecil

  Smiles, Lieut.-Col. Sir Walter D.

  Tryon, Rt. Hon. George Clement

  Russell, Albert (Kirkcaldy)

  Smith, Sir Jonah W. (Barrow-in-F.)

  Vaughan-Morgan, Sir Kenyon

  Russell, Alexander West (Tynemouth)

  Smith, Louis W. (Sheffield, Hailam)

  Wallace, Captain D. E. (Hornsey)

  Russell, R. J. (Eddisbury)

  Smith, R. W. (Aberd'n & Kinc'dine.C.)

  Ward, Lt.-Col. Sir A. L. (Hull)

  Rutherford, John (Edmonton)

  Smith-Carington, Neville W.

  Ward, Sarah Adelaide (Cannock)

  Rutherford, Sir John Hugo (Liverp'l)

  Somervell, Donald Bradley

  Warrender, Sir Victor A. G.

  Salmon, Sir Isidore

  Somerville, Annesley A. (Windsor)

  Waterhouse, Captain Charles

  Salt, Edward W.

  Sotheron-Estcourt, Captain T. E.

  Wells, Sydney Richard

  Samuel, Sir Arthur Michael (F'nham)

  Southby, Commander Archibald R. J.

  Whiteside, Borras Noel H.

  Samuel, Samuel (W'dsworth, Putney)

  Spens, William Patrick

  Whyte, Jardine Bell

  Sandeman, Sir A. N. Stewart

  Stanley, Lord (Lancaster, Fylde)

  Williams, Herbert G. (Croydon, S.)

  Sassoon, Rt. Hon. Sir Philip A, G. D.

  Stanley, Hon. O. F. G. (Westmorland)

  Wilson, Clyde T. (West Toxteth)

  Savery, Samuel Servington

  Stevenson, James

  Wise, Alfred R.

  Scone, Lord

  Strauss, Edward A.

  Woimer, Rt. Hon. Viscount

  Shaw, Helen B. (Lanark, Bothwell)

  Strickland, Captain W. F.

  Wragg, Herbert

  Shepperson, Sir Ernest W.

  Sueter, Rear-Admiral Murray F.

  Shute, Colonel J. J.

  Thompson, Luke

  TELLERS FOR THE AYES—

  Mr. Blindell and Mr. Womersley.

  NOES.

  Acland, Rt. Hon. Sir Francis Dyke

  Grenfell, David Rees (Glamorgan)

  Mander, Geoffrey le M.

  Asks, Sir Robert William

  Griffith, F. Kingsley (Middiesbro',W.)

  Maxton, James

  Attlee, Clement Richard

  Groves, Thomas E.

  Milner, Major James

  Banfield, John William

  Grundy, Thomas W.

  Nathan, Major H. L.

  Batey, Joseph

  Hail, George H. (Merthyr Tydvil)

  Parkinson, John Allen

  Bevan, Aneurin (Ebbw Vale)

  Hamilton, Sir R. W.(Orkney & Zeti'nd)

  Price, Gabriel

  Brown, C. W. E. (Notts., Mansfield)

  Hicks, Ernest George

  Rea, Walter Russell

  Buchanan, George

  Hirst, George Henry

  Roberts, Aled (Wrexham)

  Cape, Thomas

  Holdsworth, Herbert

  Rothschild, James A. de

  Cocks, Frederick Seymour

  Janner, Barnett

  Salter, Dr. Alfred

  Cove, William G.

  Jenkins, Sir William

  Smith, Tom (Normanton)

  Cripps, Sir Stafford

  Jones, Morgan (Caerphilly)

  Soper, Richard

  Daggar, George

  Kirkwood, David

  Stones, James

  Davies, David L. (Pontypridd)

  Lansbury, Rt. Hon. George

  Tinker, John Joseph

  Davies, Rhys John (Westhoughton)

  Lawson, John James

  Wallhead. Richard C.

  Dickie, John P.

  Leonard, William

  Williams, David (Swansea, East)

  Dobble, William

  Lunn, William

  Williams, Edward John (Ogmore)

  Edwards, Charles

  McEntee, Valentine L.

  Williams, Thomas (York, Don Valley)

  Foot, Dingle (Dundee)

  McGovern, John

  Foot, Isaac (Cornwall, Bodmin)

  Maclean, Nell (Glasgow, Govan)

  TELLERS FOR THE NOES.-

  George, Major G. Lloyd (Pembroke)

  Mallalieu, Edward Lancelot

  Mr. John and Mr. G. Macdonald.

  Resolution agreed to.

  Ordered,
  "That it be an Instruction to the Committee on the Finance Bill that they have power to make provision therein pursuant to the said Resolution".— [Mr. Chamberlain.]

EDUCATION (NECESSITY OF SCHOOLS) [MONEY].
Resolution reported,
"That, for the purposes of any Act of the present Session to amend Sub-section (1) of Section nineteen of the Education Act, 1921, and for purposes consequential on such amendment, it is expedient to authorise the payment out of moneys provided by Parliament of such sums as may become payable by the Board of Education by way of grants to local education authorities in respect of expenditure incurred by them under the said Act, in paying to teachers in public elementary schools appointed before the commencement of the said Act, for whom such compensation is not provided by any
1246
other enactment, compensation for direct pecuniary loss suffered by determination of their appointments or the diminution or loss of fees, salaries, or emoluments which they would not have suffered if the said Act had not been passed."

TROUT (SCOTLAND) BILL.
Read the Third time, and passed.
The remaining Orders were read, and postponed.
It being after Half-past Eleven of the Clock, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
Adjourned at Twelve Minutes before Twelve o'Clock.

  COTTON PIECE-GOODS (EXPORTS TO DENMARK).
  COTTON PIECE-GOODS (EXPORTS TO DENMARK).
  NAVAL AND MILITARY PENSIONS AND GRANTS.
  NAVAL AND MILITARY PENSIONS AND GRANTS.
INDIA.
  OPIUM.
  OPIUM.
  OIL DUTY RECEIPTS (ASSAM).
  OIL DUTY RECEIPTS (ASSAM).
  ECCLESIASTICAL COMMISSIONERS (ROYALTIES, ETC., DURHAM COUNTY).
  ECCLESIASTICAL COMMISSIONERS (ROYALTIES, ETC., DURHAM COUNTY).
  FORESTRY COMMISSIONERS ESTATES (FIRE-PATROL WORK).
  FORESTRY COMMISSIONERS ESTATES (FIRE-PATROL WORK).
  UNEMPLOYMENT (CASTLEFORD AND PONTEFRACT).
  UNEMPLOYMENT (CASTLEFORD AND PONTEFRACT).
Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
Edward Arthur, Lord Bishop of Ripon—Was (in the usual manner) introduced.
ESSEX COUNTY COUNCIL BILL. [H.L.]
The King's Consent signified; and Bill reported from the Select Committee, with Amendments.
MALDENS AND COOMBE URBAN DISTRICT COUNCIL BILL. [H.L.]
Committed: The Committee to be proposed by the Committee of Selection.

SAMARITAN FREE HOSPITAL FOR WOMEN BILL. [H.L.]
THE CHAIRMAN OF COMMITTEES (THE EARL OF ONSLOW): My Lords, I beg to move the Motion that stands in my name. The reason is that the Attorney-General's Report did not come in.
Moved, That Standing Order No. 105 be considered in order to its being dispensed with in respect of the said Bill, and that the Bill he now read 2a—(The Earl of Onslow.)
On Question, Motion agreed to: Bill read 2a accordingly.

CITY OF LONDON (VARIOUS POWERS) BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.

SCOTTISH MILK MARKETING SCHEME, 1933.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I beg to move the Motion which stands in my name.
Moved, That the Special Order, as reported from the Special Orders Committee yesterday, be approved—(Lord Strathcona and Mount Royal.)
VISCOUNT ASTOR: May I ask the noble Lord if the Government are not going to give any explanation of this Motion?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, the noble Lord asks me for an explanation. I had one ready, but I understood the House was anxious to get on to other business. This scheme is one which has been approved by the Secretary of State. It was submitted to him some time ago. It is one of great importance, not only on account of the commodity with which it deals, but in respect of the number of producers who will participate in it. The scheme applies to an area covering, roughly, the whole of Scotland south of the Grampians, within which, it is estimated, there are some 15,000 to 20,000 producers of milk. There is justifiable anxiety amongst those producers regarding the present position of their industry, and they are in general agreement as to the urgent need for the introduction of a scheme to establish orderly marketing. The scheme provides for the marketing of the milk of producers to or through the agency of an Administrative Board at prices fixed by the Board. The accounts for the sale of the milk are to be collected by the Board and the proceeds will be distributed amongst the producers, after deduction of administrative expenses, on the basis of a uniform price, irrespective of whether their milk is sold for liquid milk consumption or for manufacturing purposes.
The scheme comes before your Lordships after very full consideration. It is framed in strict accordance with the provisions of the Act, and the Secretary of State for Scotland is satisfied that the proposals in the scheme are on sound lines and that it will conduce to the more efficient production and marketing of milk. There is good reason to believe that the scheme will be generally acceptable to the producers who are affected by it; but I may remind your Lordships that it will not become operative unless it is approved at a poll of the producers by two-thirds of those voting, and this majority must represent two-thirds of the producing capacity of those voting. I hope that your Lordships by passing this Resolution will enable the scheme to be submitted to the final judgment of the producers.
VISCOUNT ASTOR: My Lords, I do not apologise for having invited the noble

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Lord to explain this scheme, because it affects a vast industry. Some people think it is going to bring salvation, others think that it is going to bring ruin to the industry. I think it would have been monstrous if this House had allowed this to go through without a single word of explanation, or if the Government had attempted to do in this case as they did in the case of the raspberry scheme. Your Lordships may remember that some two months ago another place passed a scheme for dealing with raspberries, and two days afterwards, without any notice whatever on the Order Paper, it went through your Lordships' House without a word of explanation. On that occasion that scheme had received a great deal of criticism in another place, but this particular scheme was challenged. There was a Division on it. Although some people claim that they will derive benefit from the only scheme which is in existence —namely, the hop scheme—I have received a letter from a large hop grower who states that, owing to the existence of the hop scheme, he himself has lost several thousands of pounds.
It does not by any means follow that this scheme is going to be a tremendous success. There are difficulties about it, and I would like to ask the noble Lord one question. Before the scheme is submitted to Parliament there is a public inquiry and examination, and as a result of that examination and as a result of taking evidence, a report is submitted to the Minister. When your Lordships are invited to pass this scheme you have no idea whatever what that tribunal of inquiry felt about the evidence and the objections which were submitted against the scheme. It might well be that whoever held the inquiry was convinced that substantial modifications ought to be made in the original scheme, and he might have advised the Minister to make substantial alterations. We have no means whatever of knowing whether whoever held the inquiry approved of it as drafted, or whether he suggested modifications, or whether, if he did, those modifications have been adopted or not. I hope very much that the noble Lord will be able to arrange that in future the results of these investigations and the reports and recommendations made to the Minister shall be made available so that we may have the benefit of the advice of whoever holds an inquiry.
THE CHAIRMAN OF COMMITTEES (THE EARL OF ONSLOW): My Lords, perhaps as Chairman of the Special Orders Committee I might say a word upon this point. As your Lordships see from the Motion upon the Order Paper, this is a Special Order reported from the Special Orders Committee. I would like to explain that the Special Orders Committee had a difficult task to perform, because the Order came forward and had to be decided as the first of its kind, and a decision had to be made by the Examiners (in fact, I myself) as to whether it was a matter coming within the provisions as to Special Orders—the words are:
"would, but for the provisions of the Act authorising the making of the Special Order, require to be enacted by a Public Bill,"
or whether it had to be a Private Bill. It is rather difficult to decide that when there is no precedent, but your Lordships will see, as my noble friend said in his explanation, that it covers practically the whole of Scotland, but not quite all the Islands. Acting on the advice of the Examiners—the technical people—I came to the conclusion that it should be treated as a Private Bill. The reason for that is that if it were treated as a Private Bill it would be open to petition before the Special Orders Committee. No petition did come before the Special Orders Committee, but the matter was investigated by the Special Orders Committee, of which my noble friend, Lord Marks, is also a member, and the Committee endorsed the view that it should be treated in the manner in which it has been treated. There was, therefore, an opportunity for petition against the Order. I thought perhaps, in view of what my noble friend Lord Astor said, that I should mention these facts to your Lordships.
On Question, Motion agreed to.

WYTHENSHAWE PARISHES (TRANSFER) MEASURE, 1933.
THE LORD BISHOP OF MANCHESTER THE LORD BISHOP OF MANCHESTER moved to resolve, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Wythenshawe Parishes (Transfer) Measure, 1933, be presented to His Majesty for the Royal Assent.

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The right rev. Prelate said: My Lords, the Measure is one for the transfer from the diocese of Chester of two parishes and a portion of a third parish to the diocese of Manchester, and the circumstances in which that transfer has seemed to be necessary are these. Some two and a half years ago the Corporation of the City of Manchester promoted a Bill for the incorporation within the City of three parishes in the County of Chester named Northenden, Northen Etchells and Baguley. That BiI1 received the assent of both Houses of Parliament and became law. The purpose of the Manchester Corporation was that Wythenshawe—that name was given to the three parishes—should become a large housing estate. Wythenshawe Park, just outside the confines of the then City, had been presented by two citizens to the City as a public park, and a very large area of land around the park has now become a great housing estate to which people from the centre of Manchester, and especially from the urban and crowded slum districts, are gradually being transferred. The population of Wythenshawe when the Act was passed was somewhere between 3,000 and 4,000. Owing to the enterprise of the City Corporation, and to some extent of private people, the population of Wythenshawe to-day is estimated to be something over 30,000. Plans are already in being for further development over the next few years, and it is expected that Wythenshawe will be a kind of satellite town to Manchester with a population of some 100,000.
At first, from the ecclesiastical point of view, it seemed possible for the diocese of Chester to look after the people in that area although it was very far from Chester, although it was on the confines of the diocese, and although most of the people were Manchester citizens. That, however, became increasingly difficult and the late Bishop of Chester asked me if we in Manchester would be willing to assume responsibility for these parishes in view of the fact that the people living within them were Manchester citizens. It seemed to me perfectly right that we should do so and in my own diocese the whole matter was carefully discussed, as it was also in the diocese of Chester. It was agreed with practically no opposition of any kind that the transfer should
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be made. In the Chester diocesan conference some few speeches were made and some few votes given against the scheme on sentimental grounds. Chester did not like parting with any part of the County. In my own diocesan conference one or two speeches were made deprecating the transfer on the ground of the very large financial responsibility which it would throw on the diocese. It was suggested that if Chester gave her daughter in marriage to Manchester she should give us a dowry or, at least, accompany the transfer with some wedding gifts, but I am proud to say for the credit of the diocese that when the resolution was put not one single hand was put up against the scheme. The proposal was brought before the Church Assembly in one session and the Measure was presented in the next session and passed through all stages without a single word of opposition.
The proposal is that these three townships shall be transferred to the diocese of Manchester. Unfortunately, the boundaries of the townships and the ecclesiastical parishes are not identical, so it is proposed that the parish of Northenden and the parish of Baguley, except such part of it as lies to the west of the Bridgewater Canal, and such part of the parish of Timperley as is now within the boundaries of the City of Manchester shall be transferred from the diocese of Chester to the diocese of Manchester. The first clause of the measure enacts that, and transfers to the parish of St. Mary Magdelene, Ashtonupon-Mersey, the part of the parish of Baguley west of the Bridgewater Canal. Then the question of patronage arises. The patronage of the parish of Northenden was in the hands of the Dean and Chapter of Chester, but with their cordial good will and in view of the fact that large responsibility will fall upon the Bishop of Manchester, die patronage is transferred to the Bishop of Manchester for the time being. The parish of Baguley is in private patronage and will so remain. Documents belonging to the parishes of Northenden and Baguley will be transferred from the registrar of the diocese of Chester to the registrar of the diocese of Manchester. Lest there be any possible chance of harm being done to anyone, the Ecclesiastical Commissioners are given power to make

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schemes to preserve the rights of everyone concerned.
That, briefly, is the purport of the Measure. The real reason for it is that the City of Manchester is one whole and that the people who live in Wythenshawe look to Manchester as their centre in every other department of life. I think your Lordships will agree that it is a pity to divorce the spiritual interests of the community from other interests. On that ground, although it does mean a heavy burden thrown on the diocese of Manchester, I gladly accept it. I am sorry to have had to detain your Lordships with this description of the Measure, but perhaps it is good that in London Manchester should be sometimes remembered. No one in your Lordships' House except myself has the wisdom to live in the diocese of Manchester and consequently it is necessary that I should explain the Measure which I now ask your Lordships to accept.
Moved to resolve, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Wythenshawe Parishes (Transfer) Measure, 1933, be presented to His Majesty for the Royal Assent—(The Lord Bishop of Manchester.)
On Question, Motion agreed to.

WORLD ECONOMIC CONFERENCE.
VISCOUNT SNOWDEN VISCOUNT SNOWDEN rose to call attention to the forthcoming World Economic Conference, and to ask for a statement of the policy of His Majesty's Government on the questions to be discussed; and to move for Papers. The noble Viscount said: My Lords, I hope that I shall not detain your Lordships at any considerable length, for the purpose of the Motion which I now submit is not to provide an opportunity for the expression of my own views but mainly to try to extract from the Government a statement of their policy at the forthcoming Economic Conference. I confess to your Lordships that I put forward this request with no very great hope, in view of the failure of the many attempts which have recently been made elsewhere to get from the Government a statement of their policy upon this important matter. Whether the reason for that is that the Government have no policy, or whether it is due to the constitutional
1000
inability of the Prime Minister to make any clear and understandable statement upon any question, I do not know. But be that as it may, the fact remains that so far all the attempts which have been made to get a clear statement of the policy of the Government at the forthcoming Conference have met with little result.
I noticed yesterday that the Prime Minister in another place replied to a question asking if the Government would publish a statement of the proposals they intend to submit to this Conference. The Prime Minister made a reply which cannot be described by any milder words than absolutely staggering. He referred the questioner to a speech made by the President of the Board of Trade in March this year, which, he said, contained a full statement of the policy of the Government. I have referred to that speech and there is not in the speech from beginning to end a word about the Government's policy at the World Economic Conference. There is no reference indeed to the Conference except the expression of a wish that it may be held as soon as possible. The rest of the speech of the President of the Board of Trade was an outline of the steps that he is taking to promote mutual trade agreements between this country and certain other countries. Well, I would suggest that the Cabinet, should look into the case of the Prime Minister, not only in his own interests, but in the interests of the country; for it is a positive danger to the country that its affairs should be in the hands of a man who every time he speaks exposes his ignorance or incapacity.
I said that we have had no statement, no clear statement, of the policy of the Government for the forthcoming important Economic Conference. The Prime Minister has been to Washington, and if all that we have heard about the results of his conversations there indicate the extent of the accomplishment on his visit, then he might just as well have saved his time and the expense; for in the joint statement issued by the Prime Minister and the President of the United States there is nothing except a repetition of platitudes which we have heard scores of times in connection with the forthcoming Conference. An experts' committee which prepared a most elaborate

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and most excellent agenda for the forthcoming Conference laid special stress upon the importance of the countries coming together at once for consultation about the work of the Conference and especially, they said, with a view of preparing recommendations to the Conference which would enable the different countries to make mutual concessions. I want to know if anything has been done. The joint statement issued by the Prime Minister and the President of the United States referred to this matter and said that it was intended that the Ministers who had been at Washington should at once get to work to consider the agenda of the Conference. I want to know if that has been done. I want to know if the recommendation of the experts' committee has been acted upon. I want to know if the principal countries which will meet at the Conference have been for some time, and are at the present time, negotiating upon these matters and preparing a joint programme. I have had experience of at least four International Economic Conferences and the weakness of all of them has been the lack of adequate preparation. The lack of preparation, the lack of general agreement, before the Conference met resulted in an enormous waste of time and open differences in the Conferences which might otherwise have been avoided.
I have referred to the statement issued by the British Prime Minister and the President of the United States. I have said that it adds nothing to our information upon these matters, and it gives not a glimmering of an indication of the policy of the two countries at the forthcoming Conference. May I just mention to your Lordships some of the paragraphs in that statement? It begins by saying that the primary and fundamental cause of the world economic depression is in the fall of commodity prices. Well, that statement is sheer nonsense. The fall in commodity prices is not a cause, either primary or fundamental; it is a result of other causes, and until the other cause or causes has been or are removed it is useless to attempt to deal either with commodity prices or with such questions as exchange chaos. With your Lordships' permission I will refer in a moment to what the primary and fundamental cause of the economic depression is. But after having made that astounding statement,
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which indicates the ignorance of those who made it, of the nature of the problem they are supposed to be going to discuss at the Conference, they go on to say that "commercial policies have to be set to a newer orientation" Well, I know who drafted that sentence. The British Prime Minister drafted that. He is very fond of high-sounding words and I am quite sure that he was very well pleased with himself when he got that sonorous word "orientation" into this statement. Now what does "orientation mean? Orientation means looking towards the East, and the only explanation Ivan suggest of this phrase, that we need "a newer orientation" of commercial policy, is that it is an obscure reference to the necessity of dealing with Japanese competition.
Let me pass on. The important questions of excessive tariffs, quotas, exchange restrictions, are disposed of in about three lines:
"There should be constructive effort to moderate the network of restrictions of all sorts by which commerce is at present hampered, such as excessive tariffs, quotas, exchange restrictions, etc."
Now, "etc." is a very useful expression. It is used when a person has exhausted his knowledge and information, and it conveys the impression; or at any rate it is intended to convey the impression, that those who use it know a great deal more if they would only tell it. Here we have in excessive tariffs, quotas and restrictions the fundamental and primary cause of the world depression, and it is dismissed in, less space in this statement than the reference to the silver question. We are told that:
"the central banks should by concerted action provide adequate expansion of credit, and every means should be used to get the credit thus created into circulation."
My Lords, there is no lack of credit. Banks exist for the purpose of giving credit. They make their profit by giving credit, and it is not the lack of credit facilities which is hindering trade development but the lack of opportunities for the profitable investment of credit.
The next suggestion made is that:
"Enterprise must be stimulated by creating conditions favourable to business recovery."
I do not think that there can be very much objection to that. I think we shall all agree that enterprise must be

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stimulated by creating conditions favourable to business recovery. What are those conditions? How are the Government going to stimulate industry by creating favourable conditions Not a word. The next point is very important and I must ask what the Government are going to do to implement the next quotation that I give:
"Governments can contribute to the development of appropriate programmes of capital expenditure."
I see that in a broadcast talk given by a member of Mr. Roosevelt's "Brain Trust," the other day, he minimised the importance of the work which can be accomplished by the coming Conference. He said that the problem, especially as it applies to the United States, is mainly a national problem, and its solution must be found by capital expenditure on works of national development. I have never favoured the squandering and shovelling-out of public money for public works, but I have always favoured, and when in office always supported, sound schemes of national development which would be remunerative in their character; in other words, which would at the same time give the public a valuable asset and would be revenue producing, and incidentally provide much needed employment. Merely relief works, finding work for the sake of work, has never been part of my programme of national development.
Now the next illuminating suggestion is this:
"The ultimate re-establishment of equilibrium in international exchanges should also be contemplated."
There is something that the Government can do The Government are good at contemplating. If they were equally good at acting, then their prestige in the country, to-day, would stand very much higher than it does. I am quite sure that the present Government can be trusted to carry out this recommendation of the President and the Prime Minister, and that they will go on contemplating, hoping that perhaps they may reach the ultimate stage some time, contemplating the chaos of the international exchanges. Then with reference to the international monetary standard we are told that we must have, perhaps, some time when circumstances permit, a new standard which will operate successfully. How illuminating!
Then there is a reference to silver. I am very sorry that the British Prime Minister has allowed himself to be drawn into the net of the silver interests in the United States. They have apparently captured the present Administration. The Democratic Party in the United States has always been largely influenced by the silver interests. They spent millions about forty years ago attempting to establish a bimetallic system at the time of Mr. Bryan's presidential campaign, which was fought backed by the silver interests, and I repeat that I am very sorry that the Prime Minister has been giving, apparently, on behalf of this country, some countenance to this selfish financial agitation.
I think that is practically all that there is in this joint statement issued by the Prime Minister and the President of the United States, and I think I might sum it up in the words of Bassanio, speaking of Gratiano, that when you try to find its usefulness and value you may search all the day ere you find them, and when you have found them they are not worth the search. I think it would have been interesting, and certainly useful, if this statement had elaborated more fully two or three points in particular, and especially the question of tariffs, and given us some indication of what the policy of the Government will be at the forthcoming Conference upon this fundamental matter. We have had indications, or we have had statements, rather, which seem to indicate what the policy of the Government will be, without any definite declaration. We have, for instance, their attitude towards the proposed economic truce, a proposal which was first made by the experts' committee five or six months ago, and which was suggested about a month ago by the President of the United States.
What reception did that proposal get from the British Government? As soon as the proposal was made, the Prime Minister made a public statement to the effect that it could only be accepted with certain reservations. Those reservations have been made, and they amount to a practical rejection of any tariff truce during the sitting of the Economic Conference. The Imports Committee, the May Committee, is to continue its work as actively as before. The Government have reserved the right to impose addi-

1005
tional duties recommended by that Committee on applications which were received before May 12. The Committee, I say, is not to discontinue its work, but all the time the Conference is sitting this Committee is to be actively at work considering applications for an increase in our tariff duties. The World Economic Conference will be denouncing tariffs, declaring how injurious they are to international trade, how important it is that they should be reduced, and at the same time the British Government will be actively engaged in making preparations for a further increase in tariffs.
We have had indications as to what the attitude of the Government is likely to be, and, so far as the Prime Minister is capable of making a definite statement, or one which is not capable of half a dozen different interpretations, we have his statement that the tariff truce "was not intended to prevent us from continuing our work, the work we have now begun and which we are developing." Now what is the work? The work is the establishment of a system of High Protection in this country. He talks about a low-tariff country, but we are not a low-tariff country. Every country which has tariffs has certain tariffs at a very low rate, but surely nobody is going to maintain that a duty of 33 per cent., which is common in our present tariff schedule, can be regarded as either a moderate duty or a low duty? Then again, the Prime Minister said that excessive barriers, or unnatural barriers, should be moderated, but he went on to say that only those tariffs should come under consideration for reduction which were more than a sufficient natural economic protection. Well, I submit that that is giving away the whole case for High Protection. There is not a tariff in existence in any country in the world to-day which is not regarded by that country as necessary for its national economic defence. How is the Conference going to determine what rate would constitute a national economic defence? Every country will settle that for itself; and so long as that principle is laid down as the governing policy in national tariffs, the coming Economic Conference is wasting its time in discussing the question of tariffs.
Now with regard to prices, I say that prices were not the primary and funda
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mental cause of the world depression, but I do not mean to imply that the catastrophic reduction in prices is not a grave aggravation of the primary cause. In this country it is very difficult indeed to deal with this problem of prices because of the wide divergence there is between prices and costs. We have not been able to reduce our costs at the same rate as the fall in prices. One reason for that is that wages have remained relatively high, and wages cannot be reduced. Therefore our employers and manufacturers will have to look elsewhere for a reduction of costs, and they will have to find it mainly in a reduction of the expenses of production. Of course, the standing charges of interest rates have been very heavy, but now there is a favourable opportunity for a reduction of those charges, and I see that many concerns are taking advantage of the opportunity, and are converting their debentures at a lower rate of interest. But for any substantial relief that might come from an increase in prices we shall have to wait until the channels of trade have been opened and trade can flow freely between the various countries of the world. That is the primary cause of world depression. Every country now for years has been doing everything that it possibly could to prevent trade between itself and other countries, with the result that stocks have accumulated. The Report of the Preparatory Committee of Experts tells us that there are about two years accumulation of stocks. And, when trade cannot be carried on, then inevitably prices must fall.
Now, I want to say a few words about another very vital, urgent, pressing matter, and that is the question of International Governmental Debts. There is not in the statement of the Prime Minister and the President a single word about this urgent matter. The Prime Minister has told us that they discussed Debts, but what the outcome of their discussion was, if there was any outcome, we are not told. This question of the American Debt has been woefully bungled and mismanaged, especially during the last year or so. Mr. Hoover's suggestion for a moratorium was a magnificent gesture, and it would have been of very great benefit if opportunity had been taken during the twelve months' operation of the moratorium to

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come to a permanent settlement of this difficult question. Nothing was done. The European debtors of America met at Lausanne about the middle of last year, and they came to certain conclusions, and I think I am saying what is a fact when I state that those conclusions were arrived at on the assumption that if the European Reparations question could be settled, then the Government of the United States would be prepared to make some concessions in regard to Debts. Whether the British Government had any good reason to believe that that was so I do not know, but at any rate they were quickly disillusioned, for the Government of the United States told them, when an appeal was made to them, that they did not recognise the Lausanne Agreement as calling upon the United States of America to make any concession in regard to Debts.
However, just after the Presidential Elections in America, and during the interval between the Elections and the old President's leaving office, Mr. Hoover made an offer, or proposal, to the British Government that they should enter into negotiations in regard to the Debt. He invited Mr. Roosevelt into consultation. Mr. Roosevelt naturally was anxious not to commit himself until he had authority, and as soon as he took office he approached the British Government. He asked them to send representatives to discuss this question, and, as we all know, the British Ambassador in Washington had conversations with Mr. Roosevelt, and later he came over to this country to report to the Government the results of those conversations. What they were we do not know. We have never been told. But what we do know is that up to the present moment there has been nothing definite done in the settlement of that question. The next instalment is due in three weeks time. What is going to happen? Are we going to pay, or are we going to default? It is very significant, my Lords, that there is not a word in that Roosevelt-MacDonald statement about Debts? Why? I think the explanation is this, that Mr. Roosevelt dare not at present make any declaration on this question. As we have been told so often by the United States Government, this is not a matter for the Executive: it is a matter for Congress.
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Congress is very jealous of its rights upon questions like this, and Mr. Roosevelt, if he made a declaration at the present time, would, I think, find that Congress would not accept it.
The experts' committee, although they were precluded by their terms of reference from dealing with this question of Debts, said that they could not refrain from pointing out the important connection there was between Governmental Debts and the world economic depression, and that until the Debt question was settled there was little hope of anything being done which would materially improve that position. I want to know what is the position to-day. The Prime Minister said they talked about the Debt question and that they left it over for this Conference. And the Prime Minister said: "We are going to talk about it at the Conference," in between, so to speak. It will take, he said, some time, well, not a longish time, just a little time—that is, I suppose, five or ten minutes or may be a quarter of an hour—but at any rate they are going to talk about Debts at the Conference. But there is nobody coming from America to this Conference who has any authority to deal with the Debts question. It will not be settled at the Conference, and I do not believe that the United States will make, or even propose or suggest, any definite concessions on Debts until they see the outcome of the Disarmament Conference at Geneva. If America gets something out of that Conference, then it is very likely that Mr. Roosevelt will have the courage to approach Congress on the Debts question, to point out what America has gained by the reduction of armaments, and to propose that that should be an offset to a reduction of the Debt. Seeing that we are within three weeks of the time when we have either to pay another instalment of the Debt or default, I think we should have a declaration from the Government of what their intentions are. My own views are not worth much, but I have always been strongly opposed—I look upon the idea with abhorrence—to repudiation or default. I think that the honour and credit of Great Britain is worth more than the sum that the heavily-burdened taxpayers may have to contribute if we continue to pay the American Debt.
Well, my Lords, I apologise for detaining you so long. I have spoken longer than I intended, but I hope we shall get from the Government this afternoon something which those who have made similar appeals within recent weeks have failed to secure. Unless the Government go into the World Economic Conference with a clear-cut, well-thought-out, practical plan we may at once abandon all hope of any practical and successful results from that Conference. I have mentioned that Mr. Moley, the Assistant Secretary to the United States Treasury, expressed himself as being very doubtful last week whether any good will come from it or not. I do not want to appear as a pessimist—I do not want to throw cold water even by suggestion upon any well-meant effort—but I know something of the problem that this Conference will be up against. There have been four International Conferences, I believe, since 1920. The Economic Conference at Geneva in 1927 had precisely the same agenda as the agenda which has been suggested by the experts' committee. It passed unanimously magnificent resolutions on the restriction of tariffs, the regulation of currency—everything which is on the agenda for this Conference—and it all came to nothing. The Governments went home, put these resolutions into the waste-paper basket, and continued to pursue a policy of strangling international trade by increased tariffs, quotas, and restrictions. I hope, however, that that will not be the fate of this Conference, and it may be that if all the Governments represented at the Conference are determined that something shall come from it, something which will relieve the world from the terrible depression from which it has been suffering for so long—if they are determined that that shall be done, then the fears of the pessimists will be disappointed and the sanguine hopes of the optimists may be realised. I beg to move for Papers.
THE MARQUESS OF LINLITHGOW: My Lords, I always admire the speeches of the noble Viscount on the Cross Benches. I one capacity or another he has spent most of his active life in either skimming or threatening to skim the cream off the milk of commercial profits. But this experience has not in his case caused him to forget that when all is said and done
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a healthy cow is the foundation of all things, that the productive capacity of the creature is limited, or that, if there are to be cows and milk in the future, it is prudent in the present to leave a drop or two for the calf. If I have any criticism of his views to offer, it is that these are somewhat too conservative, and do not in my judgment take sufficient cognisance of existing trends and emergencies. I shall venture to return to that in a moment or two. Nevertheless, I am bound to confess that I find myself in substantial agreement with many of the opinions with which his name has come to be associated.
Thus, with regard to tariffs and their effect, I have never found myself able to escape from the truth of the proposition that the import duty which keeps out goods yields no revenue, while the duty which is fruitful of revenue has failed to exclude the goods. As regards the rider that where goods enter over the duty the consumer pays the tax, I am able, within the limited field of my own commercial experience, to reject this as in many cases quite unsound, for, except where the exporter controls the market, it is his everyday experience that he has to cut profit in order to hold that market. In cases of that kind no rise of consumer's prices occurs and no advantage is enjoyed by the home producer. As for the consumer, I should myself shed far more of my heart's blood for him if I could forget that by and large he is none other than the home producer, and I should think that the experience of the last four years would have taught most people that cheapness at the expense of purchasing power is fatal alike to the individual and to the State.
I regret that the noble Viscount, Lord Snowden, escaped experience at the Treasury in an emergency such as that through which we have been passing during the last four years. I should very much like to have observed his response to that emergency. If I may put the point picturesquely, it is really no use saying to the unhappy householder whose water pipe has burst, and who is busy cramming a sock into the vent: "My good man, you fail to apprehend the true nature of the calamity which is over whelming you. Have regard to the science of hydraulics and wait until the world outside your domain is pleased to

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reduce the pressure." What is the good of offering, if I may put it so, highbrow stuff of that sort to a man whose kitchen table is floating round the room? I do not believe that any Government which in that emergency had acted in the fiscal field in any manlier very different from that in which the National Government have acted could have survived for a month.
How serious in the case of agriculture that emergency was your Lordships know only too well. The industry was within measurable distance of irretrievable disaster. I ask leave to deal for a moment or two with the case of agriculture as it appears to me to stand oh the eve of this most important Conference. I do so partly because it is a subject to which I have had occasion from time to time for a good many years now to apply my mind, but much more because it appears to me that the rehabilitation of the primary producer and the restoration of his purchasing power is the most important of all the things that must be done if national and world prosperity are to be revived, and the very first to which Governments should address themselves at this Conference. The percentage fall in the price of primary produce, as the noble Viscount pointed out from another angle, is substantially larger than that registered for manufactured produce. Primary producers in the aggregate constitute the most important market for manufactured goods. That is the picture.
By great misfortune, a period of falling prices has synchronised with a marked anti substantial rise in the potential out-turn of produce per acre cultivated. This rise is due to technical improvements in agriculture, and it obtains in practically every important agricultural country throughout the world. Moreover, it is within the knowledge of all of us that the machine is increasing the potential output of processed goods more rapidly than science and improved practice are raising the output of the fields. When it is remembered that this rise in output both of the field and of the factory comes at a time when the populations of many important countries are about to enter upon a decline, the full significance of these facts is apparent. I dare say your Lordships were surprised, as I certainly was, to notice that in the United States
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of America the national survey instituted by Mr. Hoover during his Presidency shows that in that country, as in our own, the population is destined to commence a decline within the lifetime of persons now adult. Again, the rapid extension and progressive cheapening of transportation have thrown producers in every part of the world into mutual competition, and that process, too, is destined, there can be no doubt, to grow.
These are circumstances the importance of which is self-evident. They mean nothing less than this that the crux now and henceforth is not where it has lain from the beginning of things—that is to say, in production. In that regard, man's battle with nature is largely won. The issue now is in terms of distribution, and it is to improved distribution that we must look for higher standards of living. The implications of this indisputable truth are profoundly significant. Thus, territorial expansion is unlikely, in the future, to lead to the enriching of the conqueror. Rather, as I shall show in a moment, will betterment flow from the international integration of commerce. That much is plainly implicit in a world of potential over-production. It will be our own fault if the British Empire is not the first group to appreciate the importance of these new conditions and to organise to meet them. Under stress of gross over-production price as a controlling and regulating factor has largely failed us. In face of the price collapse, farmers the world over, instead of reducing out-turn have sought to sustain their individual purchasing power by growing and selling not less produce but more, and the effect of this avalanche has been cumulative, and has spread throughout the whole range of produce and throughout the entire economic system of every country.
May I say with great respect to the noble Viscount that I myself feel quite certain that the full significance of these novel circumstances—because they are novel—has escaped his attention? I agree with him entirely in holding that if you are to tackle successfully the problems of world agriculture, you have got to think in terms of commodities, of world production, stocks, prices, consumption, purchasing power. A national or parochial outlook is foredoomed to failure. You may surround your own

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agriculture with towering tariff walls and reinforce those walls by rigidly restricted quotas, but in doing so you will, as surely, cause your export markets to contract and diminish the purchasing power of your own consumers, and this, in turn, will re-act on the price of domestic farm produce. To attempt to raise the prices of agricultural produce by purely national devices is, to use an expressive Americanism, like trying to "lift yourself by your own bootstraps." It is just as futile, I say this with great respect, to believe that a complete return to laissez faire in agriculture will be any more effective. You cannot abolish the past. You must recognise that, however culpable, however foolish national policies may have been, world production and still more world capacity for production of the staple agricultural products, is hopelessly in excess of current or even prospective demand.
What schemes have so far been tried to meet this crisis? Some surplus-producing countries have attempted to assist their producers by such methods as direct export subsidies or competitive currency depreciation. Others have tried either by themselves or in agreement with other areas of surplusage, to sustain prices by regulating production, or shipment, or both. In no case that I can recall has this been undertaken in agreement with leading importing countries. Therefore increased markets are open to that exporting country which disregards an agreement, and the danger is always present of such a breakaway or of increased production by countries not party to the exporters' agreement but ready to take advantage of the opportunity of an extended market. A plethora of produce has confronted most industrial countries with a most unhappy dilemma. If they open their ports they destroy domestic agriculture, and if they shut out imported supplies they destroy what remains of international trade and the livelihood of an important section of their people. In some eases the outcome has been a bitter political struggle between the town and the countryside.
Some there are who advocate Customs duties as the appropriate means of regulating imports of agricultural produce. For my part I am glad that His Majesty's Government have rejected that expedient, for I can-
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not think that in practice and in face of the extent of world surpluses it would prove effective. Such is the pressure that no conceivable duty in my opinion could keep out the produce. Examples are always dull things, but consider for example the difficulties of the Argentine, which in the period 1927–1931 sent us in this country 85 per cent. of her total exports of meat and meat products, and over 90 per cent. of her butter exports. Or consider the case of Denmark, which in 1930 shipped to Great Britain 100 per cent. of her bacon exports, 80 per cent. of her export of eggs, 70 per cent. of her butter exports and over 85 per cent. of her exports of preserved milk.
Again, Customs duties cut across too many commercial treaties. They throw—and I attach great importance myself to this—too heavy a burden of adjustment upon unorganised producers in exporting countries, and they give no guarantee to the consumer that the home producer will respond in terms either of sufficient produce or of adequate marketing arrangements. Heavy import duties upon primary products would in my judgment unduly embitter feeling abroad and might prejudice materially our exports in manufactured goods. Frequent variations in Customs duties to meet changed conditions of commerce are none too easy of achievement since they disturb the balance of national accounts and tend also to excite the hostility of vested interests. These, I suppose, are some of the considerations which have induced the Government to adopt the twin principle of quantitative regulation of imports and the organisation of home supplies. That organisation is covered, of course, by the Agricultural Marketing Act of 1931 which stands to the credit of the Government of which the noble Viscount on the Cross Benches was a member, and by the Agricultural Marketing Bill which is now before another place. We shall have an opportunity in this House of discussing that later on, and I do not propose to do more to-day than to express the hope that at the Economic Conference the British representatives may make known the outlines of their policy as it affects other countries, and may preserve to this country full liberty to implement such plan.
I believe myself that a policy of that nature should commend itself to the Dominions and to foreign countries as the

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one best calculated to rescue from collapse our home producers, to safeguard the reasonable interests of consumers and the well-being of producers overseas, and to interfere as little as possible with the free flow of international commerce. It seems to me that the principle of quantitative control is one capable of very wide application. Indeed, I can discern no reason at this stage to suppose that ultimately it will not be found usefully applicable in the case of manufactured goods as well as primary produce. In so far as it offers a working alternative to the slaughter of international trade, through either competitive import duties or a bout of rival currency depreciation, I for one should rejoice at its wider adoption. It is elastic and should be easy of adjustment to changing circumstances. Reasonably managed, it should rather encourage than inhibit the rehabilitation of world trade, the return of prosperity and the growth of inter-regional harmony.
If the World Economic Conference is to have results of any substantial value it will have to tackle in a constructive fashion the problems which are now confronting producers of primary agricultural products. The reason is very plain. Agriculture is the occupation of over 70 per cent. of the world's population. The products of agriculture account for much the larger part by value of the products entering world trade, and on tae prosperity of world agriculture depends to a very large extent prosperity in the export trades of the great manufacturing countries like our own. It will, trust, be the primary task of the Conference to find means of bringing about a readjustment, to adopt concerted measures for raising prices to remunerative levels, by increasing the demand where possible, but also if need be—and circumstances differ of course from one commodity to another—by calling a temporary halt on further production, by regulation of marketing, and by other means. That is the first objective, but it is clearly possible that, in co-operating together for the purpose of meeting the present crisis in world agriculture, the nations of the world, without derogation of their national sovereignties but acting through organisations of producers in their respective territories, may be able to lay the foundations of an enduring system of planned production and trade based on an expanding international
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market for the staple agricultural products.
Be that as it may, it is most earnestly to be hoped that the Conference will get down to business and to this vital matter of the exchange of commodities. That is the thing that matters. Commodities are the focus of interest between peoples; they transcend frontiers; they unite nations. Commodities and their exchange should claim the constant attention of this Conference, which is primarily economic and not political.
Of all the projects born of this crisis through which we are passing it appears to me that currency devaluation or the sister policy of violent inflation are the most mischievous and the most dangerous. At best its favourable results are transitory. It is a step which, if taken by one country is certain to be followed by others. All experience shows that it is a process extraordinarily difficult of control. It invades directly and grossly the very delicate field of the consumer's acquired sense of values, distorts and cripples the selective virtue of his marketing sense, and opens the road for the worst kind of profiteering. Pushed to the extreme it bilks the holders of fixed interest securities and beggars the best of the saving elements of the population, the middle class. Thus it destroys political stability, paving the way for either social collapse or pure dictatorship. It is the road to ruin, and an unmoral road at that.
Nor can I take comfort in any proposals to found currency values upon the metal silver, whether upon the principle of bimetallism or of parallel currencies. Who advocates these nostrums?—a few Senators from silver-producing States in America, here and there persons interested in silver mining and the like, supported by those whom the noble Viscount, Lord Snowden, once in my presence described as currency maniacs. It is an illusion to suppose that a rapid rise in silver values would assist Oriental trade. In those countries silver is largely held as the woman's dower and is not readily available in the form of purchasing power. Any swift and exaggerated inflation of silver values would block China trade and for a prolonged period of time do a great deal of damage. I submit that we shall be wise to reject

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this notion of currency manipulation in any shape as a means to a higher price level. Leave increased gold production and the sale of India's hoarded gold to do their work. Remove the circumstances of fear and uncertainty as to currency values which have led to gold hoarding in Europe and very nearly led a few weeks ago to a currency collapse in the United States of America. Have patience. Eschew quack remedies. World commerce is far too sick to be cured by five grains of aspirin. The disease is deep-seared and the recovery is certain to be slow.
Found your hopes and your energies on the creation of conditions that will lead to the rehabilitation of international trade. In the present state of the world, a sustained rise in prices can only flow from increased demand, and increased and sustained demand will only come with improving trade. The mere lavish creation of credit will not serve your purpose unless you can induce at the same time the appetite to take it up and usefully to employ that credit. That appetite can only result from the establishment of favourable opportunities for trade and from the restoration of confidence amongst world traders. Remove where you can or lower your Customsduties. Resolve exchange embargoes. Discourage subsidies and export bounties. Restore, as soon as prudently you may, gold as the international measure of values and the common basis for currencies. Stability of relative currency values is vital to the full restoration of international trade. By all means explore the virtues of international arrangements and of international agencies as these may be used for the attainment of these ends, remembering always that relative currency values must in the long run, and in spite of any expedient you may choose to employ, reflect the inter-relation of the trade balances of the countries to which those currencies belong. Most of us are aware of some of the difficulties attaching to the setting up and the successful conduct of a central bank or banks. Nevertheless I trust that the Conference may fully explore this expedient. Such examination should at least serve to emphasise the folly of economic nationalism and to stress the futility of confining within the limits of the political unit economic policies designed
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for the relief of world-wide commercial decline.
In Europe there is much to be done. The banking and credit structures of South-Eastern Europe are, many of them, rotten to the core. Everywhere it has been the same story. War, the politicians, and the catchword "self-determination," have created conditions incompatible with healthy trade and sound finance. Insolvency, actual or incipient, has followed. Governments, usurping the functions of a higher power, have sought to temper the wind to the lambs that were shorn by themselves supporting the debtors. Financial skeletons may be a little harder to discern when concealed in governmental cupboards, but they remain as dead as door-nails and must sooner or later be given decent burial. In a frenzied attempt to sustain falling revenues, tariff barriers have been ruthlessly imposed against the natural flow of produce. Reason has been bound and gagged, and passion and prejudice have had their way. Empires have been and shattered mutilated—dynasties dragged into the dust. Vanity of race has been pandered to. Democracy has been enthroned. But the people, what of them? What of the peasant ruined by the disastrous collapse of his markets, the trader beggared by the decline of commerce, the professional classes robbed of their savings by currency collapse and borne down by the grievous imposts of the fisc?
This load of undeserved misery must be lifted if it can be. Humanity requires it. Nor can we hope for a prosperous Europe while these conditions in our midst are allowed to stand. Neither local prejudice nor the selfish policy of any great nation must be allowed to stand in the way of recovery. Financial help from outside there must be. But loan conditions must protect the lenders. Drastic steps are required. It is worse than useless to make loans to peoples who are virtually bankrupt, and who have been deprived, by the errors of post-War policy, of the means to pay their way. If specific matters of this kind are not on the agenda paper of the Economic Conference may I respectfully suggest that the sooner this omission is repaired the better? What in the world is the use of churning out credit when

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you have not the least idea of who is to use it and how?
The world is very sick and not a moment must be lost. How grave is its case your Lordships are fully aware. I think it is impossible to overstate the weight of responsibility that at this time lies upon the British Government. It has been the universal experience of mankind that at moments of crisis the thing that is essential is leadership. Let there be no mistake as to whence leadership must come in this particular crisis, and it is perhaps worth stating that effective leadership requires a sound and comprehensive plan of action. The nations are looking to this country. Never, I think, has our prestige throughout the world stood more high. I hope His Majesty's Government will be in good heart. I believe, in spite of what has been said in this House this afternoon, that in this matter of the Economic Conference they enjoy the confidence and the good will of an overwhelming proportion of the people of this country. Unrivalled knowledge in business, in commerce, and in world finance, is at their disposal, and their arm is supported by long centuries of experience and by traditions of statesmanship with-out equal. But wisdom alone is not enough. Faith also is required; and courage above all.
THE MARQUESS OF LOTHIAN: My Lords, you have heard this afternoon from two quarters an analysis of the causes of the world depression and the functions of the World Economic Conference. I only propose to detain you for a few minutes by considering one further aspect of the question to which, think, not enough attention has been directed as one of the primary causes, if at this moment it is not the primary cause, of the depression, and that is the effect of international indebtedness, both private and public. I confess that I do not expect, any more than the noble Viscount who opened this debate, any very precise answer from the Government as to their policy at the Conference, and I am venturing to make these remarks more in the hope of drawing their attention to facts and figures, than that they will here and now explain the policy which they propose to pursue with regard to the Conference.
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Your Lordships may have read the speech of Professor Moley in a broadcasting address in the united States a few days ago. He is, as has been said, the leader of what is called "the Brain Trust" behind the new President of the United States, and in that broadcast address he was clearly concerned to indicate to the American people—for it was an address broadcast from one end of the country to the other—the sort of programme that they could expect the World Economic Conference to follow, so far as American interests were concerned. In that address there were these two sentences:
"The American delegates were especially enjoined not to permit the introduction of the subject of the Debts owed to the United States by foreign Governments into the list of the topics to be discussed at the Conference.
It was the firm conviction of President Roosevelt, expressed even before his inauguration, that the subject of these Debts should not be considered in connection with general economic matters of mutual interest, although they might be discussed concurrently."
Now, my Lords, it is very difficult to see how measures for the promotion or restoration of international trade, for the reduction of tariffs, and for the stabilisation of international curencies, can possibly be either discussed or agreed to without taking into account the consequences of international debts, private and public.
May I give a few figures? I do not suggest that the figures which I am going to give are strictly accurate. They are very difficult to find out, but they are the best that I have been able to get, and from my point of view it is the lesson which can be drawn from them, rather than the strict accuracy of the figures themselves, which matters. In 1910 Sir George Paish estimated that British investments overseas amounted to £3,349,000,000 These investments, to-day, are considerably larger. How much larger it is impossible to say, and nobody at this moment can tell what the precise figure is, but under normal circumstances the figure is probably something in the nature of £4,000,000,000, if not more. So far as I can make out, about half represents fixed interest bearing securities, which at the rate of 5 per cent. means an annual return on them due to this country of about £100,000,000 per annum. The balance represents shares and

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properties owned by citizens of this country in foreign countries, and the return on these obviously varies according to whether the world is prosperous or in depression. On an abstract calculation one might estimate that the return due to this country on all these investments would vary between £150,000,000 per annum in times of depression and as much as £300,000,000 in times of prosperity.
In looking at the actual figures, these were the figures for 1924 to 1931—The actual amounts received by way of interest and dividends on foreign properties and shares owned by Great Britain. In 1924 the amount was £220,000,000; in 1925, £270,000,000; in 1929, £250,000,000; in 1930, £220,000,000; and in 1931, £165,001,000. The whole of these payments, or practically the whole, reached this country in the shape of foodstuffs, raw materials, or some kind of manufactured articles. The whole of these payments represent one-way traffic, and there was no corresponding export of goods from this country at all. They are payments for investments which were made many years ago by the export of machinery from this country, for the equipment of railways and other things Overseas.
Let us consider for a moment the investments of the United States. They are estimated, excluding War Debts, at about £3,000,000,000. The larger part has been made since the War. It is estimated that two-thirds represent fixed interest bearing securities, and the return would amount to about £100,000,000 per annum by way of interest on these loans. If you add to that the return on shares and properties in South America and other countries, the return normally would be about £200,000,000 per annum. This is also one-way traffic inwards. The United States can only receive payment by goods and raw materials imported into the United States, without corresponding exports from the United States.
Contrast the position of the United States to-day with the position occupied by the United States before the War. It was then a debtor and not a creditor nation. We owned very large investments in American railway and other stocks and shares, and the United States met the interest obligations upon those investments by the export to this country,
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and other countries, of cotton, wheat, and other products. Its whole internal economy rested upon that export, which was the only way in which it fulfilled its obligations to pay interest and dividends upon investments in the United States, before the War, for the equipment of that country. Now, just contrast the position in which, instead of having to export, say, £100,000,000 a year of foodstuffs and raw materials in order to meet its obligations, it has to receive £100,000,000 to £200,000,000 a year in order to pay interest on Debts owing by other countries, either in the form of War Debts or in the form of investments in South America or in Europe. It is an absolutely vital change in the position of the United States. Applied in terms of commodities, which is the right way of thinking about it, this fundamental change in the position of the United States means that instead of having to export £100,000,000 worth of foodstuffs and cotton abroad in order to meet its obligations, it has to receive £100,000,000 to £200,000,000 instead.
The foreign loans of other countries—France, Holland, Belgium and Switzerland—have been estimated to amount to about £1,500,000,000. That is also a one-way traffic, so far as interest and sinking fund payments are concerned. International indebtedness represents a one-way traffic of between £350,000,000 and £500,000,000 per annum, carrying with it no corresponding export trade at all. You have got to add to this Reparations and War Debts if you are going to see the full effect of international indebtedness on the international trade position since the War. Under the Young Plan, which is now practically dead, the obligations of Germany amounted to something like £120,000,000 a year. The interest on the War Debts to the United States amounts to about £50,000,000 a year. Therefore your grand total liability of one-way trade during the years since the War has been between 2500,000,000 and £700,000,000, assuming that those obligations are met in full. That is far the most formidable factor which has brought about the present crisis in the world, for these one-way liabilities represent something like a quarter of the total import trade of Great Britain and the United States. How has that situation been met

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hitherto? It has been met just in one way—by international lending. We have lent abroad as much as, or more than, we were due to receive in the shape of interest and sinking fund payment. We exported, in other words, in the form of machinery an equivalent, or more than an equivalent, of what we received in the form of foodstuffs and raw materials, and that was the way in which the economy of the world was balanced up to 1929.
Now, just consider what has happened in the matter of international lending since the War. Before the War our annual investment, I think, was estimated at something like £200,000,000, which is not very far off the amount we were due to receive on account of our own foreign investments. Since the War the lending has been mainly by the United States and Great Britain, especially between the years 1924 and 1929-30. If you look at the League of Nations Report which was published in 1931—a very remarkable document—you find that the United States capital issues on foreign account for the years 1927 to 1930 amounted to 4,649,000,000 dollars, that is, about £1,000,000,000 at par of exchange. The United States balanced its account by lending abroad a great deal more than it was due to receive on account of its private and Governmental Debts. The British issues were rather less than that. The total investments abroad, both British and American, were probably about £2,000,000,000 as far as I can make out. There were also the elements of tourist traffic and shipping, and it is those elements which alone enabled the economy of the world to balance in the years since the War. Yet since the year 1929 those investments have ceased, and you have a strain on the exchanges of the obligations for the Debts, private and Governmental, which, as I say, total up to about £500,000,000 a year without any corresponding export at all.
I do not think there is any dispute, certainly not from these Benches, that one of the principal causes, if not the principal cause, of our present depression is tariffs, embargoes, exchange restrictions, subsidies and so on, which dislocate production, producing glut in one product or another, and reducing prices, and making the exchange of any kind of goods extremely difficult. But
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the thing which makes the reduction of tariffs impossible at this moment is the debt charge on the exchanges. I am not going to quote my own opinion on this matter. I am going to quote from the review of world trade issued by the League of Nations in 1931–32, which has at the bottom of it the signature of Mr. Loveday, a very distinguished British economist, who is the Secretary of that Section, and this is his analysis of the effect of international indebtedness:
"When the creditor countries stopped lending abroad, the transfer of the Debt -payments due to them demanded an increase in their purchases from the debtor countries While their export industries were already suffering from the reduced purchasing power of the last-mentioned [i.e. debtor] countries, their production for the whole market was thus menaced by a heavy inflow of goods at low and steadily falling prices. This threat to their economic organisation induced the majority of creditor countries to check imports in protection of their home market industries. The adoption of the Hawley-Smoot tariff in the United States in 1930 may be regarded as an early expression of this policy, which, from the second half of 1931. became prevalent in a number of European creditor countries. Thus France adopted a rigid system of import quotas on a number of food products in the autumn of 1931, and later extended this system to numerous industrial goods. The United Kingdom introduced Customs duties on the bulk of her imports as an emergency measure in November and December, 1931, and later imposed as a more definite measure duties for protective purposes, thus departing from a tradition dating from the middle of the preceding century. Switzerland in- creased her tariffs, and established quotas for numerous agricultural and industrial products. A more restricted use of quotas has been made by Belgium and the Netherlands.
"This increase in the trade barriers of creditor countries naturally resulted in a further drying up of international trade. At the same time, it rendered international Debt payments still more difficult; in some cases the transfer of such payments was suspended by the debtor countries, and the market value of the foreign assets of creditor countries fell rapidly. Finally, the shrinkage of the international market hastened the fall in the prices of goods outside the protected areas."
Now these were the consequences of the Debt situation unrelieved by foreign lending.
In the light of these facts what meaning can we attach to Professor Moley's statement that the Debt question is to be excluded from the purview of the World Economic Conference? Is it conceivable that the depression can possibly

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be dealt with without taking this vital cause into consideration? In the last words of the sentence I quoted, it is implied that possibly they may be discussed on the side. I hope that is going to be the case, because otherwise this Conference is inevitably and inexorably doomed to failure, as every other Conference that has been held sine the War in which this vital issue has been left out of account, has been doomed from the start. We are either faced with cancellation or bankruptcy on a large scale, or else we have got to restore the conditions of international trade so that international lending may begin again. Those are the only two conditions on which prosperity and employment can be restored.
I would conclude by venturing to suggest that there are just two conditions on which this Conference may succeed and only two, apart, that is to say, from the very important matters of a more political character which are being discussed at Geneva. The first is that we should be willing to forego the artificial advantages we have gained in the world market through any undue depreciation of the pound as compared with other currencies. We must be willing to make an arrangement about the relative value of currency which is fair to all, otherwise we shall have a competition in depreciated currencies which would add enormously to the difficulties with which we are now confronted. The second is that the United States should be willing to face the fact that without dealing with the problem of international indebtedness no progress whatever, either about currency stabilisation or the reduction of tariffs or the restoration of world trade can possibly be made.
THE UNDER-SECRETARY OF STATE FOR WAR (EARL STANHOPE): My Lords, we have listened to three very remarkable speeches. I think many members of your Lordships' House regretted sincerely when the noble Viscount on the Cross Benches withdrew his advice from the counsels of the Government. I think the House also regretted that he made so strong an attack on an old friend and colleague in the person of the Prime Minister. At any rate, I can say with all sincerity that we who sit on this Bench have no spirit of hostility whatever to the noble Viscount, and I hope that the hostility which he displayed this evening was merely an effervescence which does
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not really belong to him in fact. I personally very sincerely regret that the noble Viscount no longer sits on this Front Bench, and for very obvious reasons. It has been my lot to attempt to reply for the Government on behalf of the Treasury to a series of extraordinarily difficult questions—bimetallism, the Equalisation Account, and now this question, which is the hardest of them all. These things are outside any experience I have ever had in municipal affairs or in polities, and it has entailed long hours and hard reading to put them before your Lordships even in the inadequate way in which I have dealt with them.
The question which I am faced with to-day is by far the hardest I have had to meet in your Lordships' House. It is one which has puzzled the best financial brains throughout the world for a period not only of months but of years. The noble Viscount intimated that he did not expect any very full or complete reply on behalf of the Government, and of course he is quite right because when the noble Viscount himself was in the position in which I stand to-day he absolutely refused to lay down the definite policy which he was about to follow. Let me remind the noble Viscount that when he was asked by Mr. Lloyd George in another place, in 1929, for the policy which he was about to follow at The Hague Conference his reply, given on the 26th of July, was as follows:
"I am sure that honourable members will realise that in speaking upon this subject to-day I am in a very delicate and difficult position. Indeed I feel a certain amount of hesitation in dealing with the matter, and I envy the right honourable gentleman his position of greater freedom and less responsibility."
VISCOUNT SNOWDEN: Very good.
EARL STANHOPE: That, I think, applies at the present time. Therefore the House will not be surprised if I follow the good example which the noble Viscount has set me and only reply in very general terms. The Government, of course, entirely agree with President Roosevelt when he said "the Conference must succeed "—" the future of the world demands it." That is borne out by the statements which have been made by the three noble Lords who have addressed us this evening. Every one of them has said that the situation in the world is so serious in these days that unless

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there is to be a, crash the Conference must be made to succeed. The noble Viscount on the Cross Benches was pessimistic as to results of the Conference. I venture to suggest to him that perhaps his pessimism is greater than it need be.
After all, this Conference starts with two great advantages, if advantages they can be called. The first is that the work of the Conference has been very carefully prepared by the Preparatory Committee at Geneva, and by the discussions which President Roosevelt has held with the Prime Minister and representatives of other countries. The noble Viscount asked specifically what steps this Government have taken to carry out the recommendation of the Preparatory Committee that we should get into touch with other countries. I think the noble Viscount will agree that the two countries which are most important of all in this matter are the United States and France. He will remember that the Prime Minister has been over at Washington and had consultations in company with British experts with the President and experts of the United States. He will remember also that France sent over M. Herriot shortly after the Prime Minister was there for similar consultations with the United States. He will also remember that M. Georges Bonnet has been over from Paris having discussions with British Ministers here in London. Therefore already we have been definitely in touch with two of the greatest countries attending the Conference in order to thrash out something which will be settled at this Conference. There is this further point to the advantage of the Conference, that the situation is so critical that the Governments will be compelled to overcome difficulties which have proved insuperable on the occasion of previous Conferences, and that is particularly true of the economic nationalism to which the noble Viscount referred at some length.
I think the noble Viscount was perhaps, if he will allow me to say so, a little unfair to the President of the Board of Trade. I think if he will read that speech of the 15th of March he will find that the President of the Board of Trade dealt specifically with several matters of very great importance which will obviously have to come before the Conference. At any rate there is one statement he made with which I know
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the noble Viscount will agree, and that is that in the past countries have been practising what the President of the Board of Trade described as economic warfare and the Government have been doing their utmost during the past few weeks to try to get them to practise economic agreement. The noble Viscount ascribed a large part of the troubles of the world to the Protectionist system, and he suggested that that made it difficult, if not impossible, to get a reduction of tariffs anywhere. But surely the contrary is already shown to be the case? We have made arrangements with Denmark, Sweden and Norway. I admit these are all low-tariff countries, but I think the noble Viscount will agree that the result of these negotiations has been that these three countries have reduced their tariffs on a large number of articles imported from this country, and in return we have in certain cases also reduced our tariffs on products coming from those countries into the United Kingdom. That is a policy which we hope will be carried a great deal further at the Economic Conference.
I admit that it is very difficult to get countries which have very high tariffs to reduce them materially, but the other policy has been tried and has failed. The noble Viscount will agree, I think, that when he was Chancellor of Exchequer the late Mr. William Graham went to Geneva and tried to arrange for a reduction of tariffs throughout the world. But he had nothing to offer in exchange. They had everything already; they had free trade with us, and the possibility of dumping as much as they pleased of any kind of goods into this country. And what happened? Nothing happened. No country reduced its tariffs; a good many countries, in fact, after that period increased their tariffs. One result at least we can point to as a result of having imposed Protection in this country, and that is this. Already we have succeeded in getting other countries to reduce their tariffs on goods which were imported thither from this country.
The noble Viscount said that he looked on the question of prices and exchange as entirely subsidiary, but that is not the view of His Majesty's Government, or, indeed, of a great many other people. In the joint statement by the Prime

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Minister and President Roosevelt, published on the 26th April, I find the following:
"The necessity for an increase in the general level of commodity prices was recognised as primary and fundamental. To this end simultaneous action needs to be taken both in the economy and the monetary field."
Then the Preparatory Committee at Geneva, in their report, said:
"We believe that the Governments of the world must make up their minds to achieve a broad solution by concerted action along the whole front. Action in the field of economic relations depends largely upon monetary and financial action and vice versa. Concerted measures in both fields are essential if progress is to be made in either."
With that the Government agree entirely. They feel that in economics, in trade, in prices and in currency we must pursue the matter equally and not merely on one line only.
As regards monetary policy, the policy of His Majesty's Government and of the other British Empire Governments was stated at Ottawa, and is already well known. Concerted action to raise price levels must be taken concurrently both in the monetary and in other spheres. For this purpose a policy of cheap and plentiful money is an essential condition. For the time being it is our object to smooth out daily fluctuations in the exchange value of the pound so as to facilitate the conduct of international trade. Your Lordships will remember that you passed the Exchange Equalisation Account Bill only last week. Before we can go back to gold there must, as has often been stated, be a rise in wholesale prices to a level which will give an economic return to the producer and a prospect of more stable prices in the future. For this purpose there must be a continuous cooperation on the part of central banks, and the working of the gold standard must be reformed in various, ways. As is stated in the recently issued annual report of the Bank of International Settlements, "this standard will work no hotter in the future than in the past if the unregulated anarchy which has prevailed in its application and the shortsighted individualism which has been practised in its operation commence all over again."
The noble Viscount, I think, made a statement that the Government was
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opposed to the tariff truce and had made all sorts of objections to it. That, my Lords, is not the case. The Resolution of the 12th May contained a sentence covering the policy of His Majesty's Government to regulate the production of meat, dairy products and agricultural products. His Majesty's Government made no reserves whatever. France and Italy did make reserves about currency depreciation which were recorded in the proc ès verbal. Your Lordships, therefore, will see that the tariff truce has been accepted. Although we admit that that is only a beginning in dealing with the tariff question, at any rate it does stabilise the situation for the time being, and give an opportunity for dealing with it on wide lines at the Conference.
The noble Marquess, Lord Linlithgow, dealt, with the question of silver. The communiqu é which was produced at the conversations at Washington contained no commitment whatever in regard to silver. I am advised that the wording of the statement was that the question of silver was "discussed."
"The proposals examined will be discussed with the representatives of the other nations who have been invited to Washington."
There is no undertaking whatever that we are going to commit ourselves to bimetallism. I think the remarks which I ventured to make to your Lordships' House some time ago on that subject will already have made that point clear.
Both my noble friend behind me (the Marquess of Linlithgow) and the noble Marquess, Lord Lothian, dealt with the question of International Debts. As the noble Marquess said quite truly, that has been ruled out of the discussions at the Economic Conference by the United States, and, if we had insisted upon including it, we should probably have found that the United States would have refused to take any further part. As the noble Marquess will appreciate, we necessarily had to rule it out. The extremely interesting speech which he made to your Lordships will, I know, he considered most carefully by the Government, and will be of very real value to the Economic Conference when it meets. He produced a mass of figures and information which obviously will have a very real bearing on solving the

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questions which will be under consideration at that Conference.
My noble friend the Marquess of Linlithgow dealt with a large variety of subjects, on all of which he is an expert, and I certainly am not going to attempt to follow him, but I may say that the Government entirely agree with his view that there can be no real improvement in trade until there is a restoration of confidence between the countries of the world. That has been the policy of the Government, as he knows, both at Geneva and at the Disarmament Conference, and also in the preparations which are being made at the present time for the Economic Conference. The Government are engaged upon a detailed consideration of the many questions which are to arise at the Conference, and although I am unable to make a statement to-day, for the same reasons as the noble Viscount gave in 1929, he will appreciate that it is not because the Government have got no policy but simply that they think the
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best time to produce that policy in its completeness and in its fullness is at the Conference itself rather than even to your Lordships' House.
VISCOUNT SNOWDEN: My Lords, there is a strong temptation to reply to some of the statements which have been made by the noble Earl, but out of consideration for the difficulty of his position, with which I very much sympathise, I shall refrain from doing so. The noble Earl has had an extremely difficult task to undertake this afternoon, and he has succeeded in a most enchanting way in saying nothing and in giving no information whatever to the House. As I said, I do not propose to reply to any of the points he has raised, because if I once got going upon them there is no saying how long I should detain your Lordships. I will, with the permission of the House, withdraw my Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at ten minutes past six o'clock.