Sitting of 1 March 1937

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

PRIVATE BUSINESS.
Lancashire Electric Power Bill,
Liverpool Exchange Bill,
Read the Third time, and passed.

PRIVATE BUSINESS.
  CALEDONIAN POWER BILL (SUBSTITUTED BILL),
  "to incorporate and confer powers upon the Caledonian Power Company and for other purposes," presented, and read the First time; and ordered to be read a Second time.
ORAL ANSWERS TO QUESTIONS.
  INDIA.

    ELECTIONS.
    Major-General Sir Alfred Knoxasked the Under-Secretary of State for India whether his attention has been drawn to the decoration of polling-booths with party slogans in the recent elections in Bombay; and whether it has been the custom in elections throughout India for polling-stations to be so decorated with party slogans?
    The Under-Secretary of State for India (Mr. Butler): I understand that polling booths in Bombay were not decorated
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    with party slogans, and, so far as I am aware, this has not been the custom elsewhere in India.
    Sir A. Knox: Has the hon. Gentleman seen the picture in the "Times," which shows a party slogan on one of these polling booths?
    Mr. Butler: Perhaps the hon. and gallant Gentleman is confusing the polling booths with the agents' booths, which are usually adjacent to the polling booths, and are generally so decorated.
    Mr. Sorensenasked the Under-Secretary of State for India how many persons have been arrested and how many sentenced for taking the independence pledge during the elections; and whether any arrests have been or are likely to be made for reading out in public a statement of this pledge printed in official Government publications?
    Mr. Butler: I have no information as to the number of arrests, if any, made in this connection. In view of the action taken by local governments in declaring copies of the independence pledge of 1930 to be forfeited, the Congress President cancelled his instructions that the reading of this pledge should form an essential part of the celebration of "Independence Day," so it is improbable that there was any large number of such arrests.
    Mr. Sorensen: Will the hon. Gentleman give me a reply to the last portion of my question, in which I draw attention to the fact that the pledge has been printed in Government publications, and has, in fact, been read out on several occasions?
    Mr. Butler: The hon. Member asked me a specific question about the independence pledge, and as the Congress President withdrew his instructions upon this point, I think it is very unlikely that any arrests were made.
    Mr. Sorensen: Can the hon. Gentleman give any information regarding the last sentence in the question?
    Mr. Butler: No, Sir, but I will certainly look into the matter again. I thought I had answered the points the hon. Gentleman put.

    ALLOWANCES, CLERICAL SERVICE.
    Mr. Sorensenasked the Under-Secretary of State for India why the Government of India has refused to implement sanctions granted by the Secretary of State for India in 1920 for certain allowances and privileges enjoyed by clerks employed in the civil secretariats of the Government of India to be also enjoyed by the clerical service at Army headquarters?
    Mr. Butler: If the hon. Member will give me details of the allowances and privileges to which he refers I shall be glad to look into the matter.
    Mr. Sorensen: May I take it that the hon. Gentleman will, in fact, investigate grievances, which, I assure him, are felt very strongly by this clerical class in India?
    Mr. Butler: If the hon. Gentleman will give me particulars of the exact grievances he has in mind, I will do so. The only grievance that I can connect with the matter is one entertained by the ex-military class which was civilianised in 1920, and which was remedied in 1928.

    EUROPEAN SITUATION.
    Mr. A. Hendersonasked the Secretary of State for Foreign Affairs whether the recent agreement made between the Government of Czechoslovakia and representatives of the German minority in that country will in any way assist His Majesty's Government in their efforts to secure a general European settlement?
    The Secretary of State for Foreign Affairs (Mr. Eden): I am awaiting a full report on this subject.

    RUSSIA (BROADCASTS).
    Mr. Marcus Samuelasked the Secretary of State for Foreign Affairs whether he is aware that the Russian wireless station known as Radio Moscow is broadcasting messages in English and expressed as being for English listeners, inviting them to send questions upon political matters to which a reply is promised, and asking that such listeners should communicate with Radio Moscow any criticisms they may have of the programmes; and, in view of the fact that when these broadcasts in English were first instituted it was stated that their purpose was solely to instruct Russians in the use of the English language, whether any assurance to this effect was given to His Majesty's Government; and if so, whether he will take up this matter with the Government of the Union of Soviet Socialist Republics?
    Mr. Eden: As regards the character of the messages broadcast in English from Radio Moscow, I would refer my hon. Friend to the reply returned on 9th November last to a similar question asked by my hon. Friend the Member for Bilston. According to my information, the Moscow station extends a general invitation to listeners to communicate to the office of the station any criticisms or observations they may have to make on any item in the programmes. These programmes, however, are not specifically political in character. As regards the second part of the question, I am not aware that, when these broadcasts were instituted, it was definitely stated that their purpose was solely to instruct Soviet citizens in the English language. No assurance to that effect has been given by the Soviet Government. As regards the last part of the question, if my hon. Friend can furnish me with evidence showing that any particular broadcast contained a direct attack on the Government or institutions of this country, I will certainly undertake to consider the question of representations.
    Mr. Thurtle: Is it not open to the hon. Member himself to send his criticisms to Moscow if he wishes to do so?
    Sir William Davison: Is it not the fact that there is an expressed international agreement against political messages being sent in international broadcasts?
    Mr. Eden: Yes, Sir, but I must have the evidence before I can take action. I am bound to say that the continuance of the broadcasts in their present form do not seem to me to form a suitable subject for complaint.
    Mr. Thorne: Can the right hon. Gentleman say whether our broadcasts satisfy the people in other parts of the world?

    THE CORONATION.
    Mr. A. Hendersonasked the Secretary of State for Foreign Affairs whether any communication has been received from the Italian Government with regard to their being represented at His Majesty's Coronation?
    Lieut.-Commander Fletcherasked the Secretary of State for Foreign Affairs whether the Ethiopian representative in London has informed him who will represent Ethiopia at the Coronation ceremonies?
    Mr. Eden: It is the intention of His Majesty's Government, at the earliest practicable moment, to publish a complete list of foreign representatives at the Coronation. Perhaps the hon. Members will be good enough to await this.
    Mr. Charles Williams: Can my right hon. Friend say why Abyssinia was asked?
    Mr. Eden: The invitation was issued in accordance with precedent, which is based entirely on the de jure position. It would be a mistake to attach special political significance to a matter of purely normal procedure.
    Sir Hugh Seelyasked the Parliamentary Secretary to the Ministry of Health, as representing the First Commissioner of Works, whether he will make representations with a view to securing that the decorations and illuminations on the occasion of the Coronation shall remain during the week ending 22nd May, in view of the large number of persons desiring to visit London and the many arrangements that have been made to enable them to do so during this week?
    The Parliamentary Secretary to the Ministry of Health (Mr. R. S. Hudson) (for the First Commissioner of Works): It is proposed that the street decorations erected by the Office of Works shall remain
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    in place until Thursday, 27th May, unless the weather conditions are such as to render them unsightly prior to that date. For the reasons stated in the reply given to my hon. Friend the Member for Westbury (Mr. Grimston) on the 15th of last month, my Noble Friend regrets that it is not possible to extend the period of flood-lighting beyond that proposed.

    SPAIN.
    Mr. Dayasked the Secretary of State for Foreign Affairs whether he has received sufficient information from the representative of His Majesty's Government in Spain to make an estimate of the numbers of men and nationalities of foreigners at present taking part in the Spanish civil war either on the side of the Government or General Franco; and whether he can give particulars as to the manner in which these nationalities and numbers are made up?
    Mr. Eden: I would refer the hon. Member to the reply given by my noble Friend on l0th February to a question asked by my hon. and gallant Friend the Member for South Paddington (Vice-Admiral Taylor) to which I have nothing to add.
    Mr. Day: Has not the right hon. Gentleman any knowledge of the numbers at all, as the answer to which he refers says that the numbers were about equal?
    Mr. Eden: If the hon. Member will refer to that answer, he will see that it says:
    "such reports as can be obtained regarding the arrival of foreigners in Spain are already being received but…the material available is not sufficiently complete to enable His Majesty's Government to make any accurate estimates of the numbers of men involved."—[OFFICIAL REPORT, l0th February, 1937; col. 377, Vol. 320.]
    Mr. Denvilleasked the Secretary of State for Foreign Affairs whether he can give details of the arrangements which have been made to prevent the passing into Spain of volunteers across the Franco-Spanish frontier; and whether he will call for any report on this matter from British diplomatic representatives in the vicinity?
    Mr. Eden: The French Government, in accordance with the agreement of the Governments concerned to extend their non-intervention undertakings to cover

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    the despatch of volunteers to Spain, have put into force strict regulations designed to prevent the passage of volunteers over the Franco-Spanish frontier. The Non-Intervention Committee, as my hon. Friend is aware, have under active consideration a supervision scheme, which will, I understand, cover the Franco-Spanish frontier. I do not, therefore, consider it necessary to call for a special report from His Majesty's representatives on this question.
    Mr. Denville: Is the right hon. Gentleman aware that volunteers are being enlisted in Paris to-day for the Spanish Government?
    Mr. Eden: I am not aware of anything of the kind, but I am aware that the French Government have issued very stringent regulations, and I deprecate any suggestions that they are not being carried out.
    Sir Nairne Stewart Sandeman: May I ask whether Spaniards coming from Bilbao to Bayonne can be repatriated through Perpignan?
    Mr. Eden: I should like notice of that question. I may tell the hon. Gentleman that our Consul-General at Marseilles who is, naturally, in close touch with these regulations, has already informed me that no British subject is allowed to enter Spain from France.
    Captain Ramsayasked the Secretary of State for Foreign Affairs whether, in view of the unreliability of the Spanish news received from news agencies and journals, he will state what reliable sources of information the Foreign Office have on happenings in Spain; and whether he will place such information before the public from time to time by means of the British Broadcasting Corporation and the Press?
    Mr. Eden: Such information as is available in the Foreign Office regarding events in Spain is derived from reports from His Majesty's diplomatic and consular officers in that country and from reports from His Majesty's ships stationed in Spanish waters. It is already the practice of the Foreign Office to make available to the Press and to the British Broadcasting Corporation such information derived from these sources as is suitable for publication.
    Captain Ramsay: Can my right hon. Friend say whether the Press and the
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    British Broadcasting Corporation have made full use of this information?
    Mr. Eden: That is a matter for them, and not for me.
    Captain Ramsayasked the Secretary of State for Foreign Affairs whether, as there are precedents for recognising the belligerency of both sides in a civil war while according diplomatic recognition to only one, and as General Franco is not yet regarded as a belligerent by this country, he will give this House some guidance as to the conditions under which His Majesty's Government would be prepared to recognise him as a belligerent?
    Mr. Eden: I regret that I cannot undertake to enter into a discussion of hypothetical circumstances. In view, however, of the existence of the International Committee and the measures resulting from its activities, I would deprecate too close an analogy between the present dispute and other disputes of the kind which my hon. and gallant Friend has in mind.
    Captain Ramsayasked the Secretary of State for Foreign Affairs whether, in order to counteract the misleading impression which has been created not only in Spain but throughout Europe and America that this country favours the present Government in Valencia, he will take steps to make it clear that this country maintains its position of neutrality.
    Mr. Eden: The full support which His Majesty's Government have given to the principle of non-intervention in Spain and the part which they have played in the activities of the Non Intervention Committee, together with the humanitarian activities which His Majesty's Government have undertaken in many parts of Spain on behalf of Spaniards irrespective of their political opinions, have already made it sufficiently clear that their attitude towards present events in Spain is one of strict impartiality.
    Mr. Sorensen: Does the right hon. Gentleman mean by that that he, in fact, recognises the actual Government of Madrid to be the de facto and the de jure Government?
    Mr. Eden: The Government's attitude towards that, I think, is already quite clear.
    Mr. Kennedyasked the Secretary of State for Foreign Affairs whether he is satisfied that the policy of non-intervention by European Powers in the Spanish war is now being effectively applied so far as it relates to the provision of men, material and financial support to the rebel forces?
    Mr. Eden: The right hon. Gentleman will be aware of the measures which, as a result of agreement in the International Committee, have recently been taken with this aim in view. I am convinced that since the ban imposed on 20th February on the despatch of volunteers and the acceptance by the Powers of the Control Scheme shortly to come into force, a great advance has been made towards the complete cessation of intervention in Spain. The question of financial aid to the two parties in Spain is not at present covered by the non-intervention undertakings of the various Powers concerned, but is the subject of examination by the committee.
    Commander Locker-Lampsonasked the Secretary of State for Foreign Affairs whether his attention has been drawn to the explosion of a floating mine near Gibraltar involving injury to a Union-Castle liner; whether he can say who laid the mine; and what steps he intends to take to prevent the possibility of a recurrence?
    Mr. Eden: Yes, Sir; such information as I have at present leads me to suppose that the mine in question was a moored mine laid by the insurgent authorities in Spanish territorial waters in the vicinity of Cape Creus. The investigation into the circumstances is not yet complete, and I am not at present in a position to say what action will be taken. A warning has, however, been broadcast to British ships that mining in Spanish territorial waters has been intensified and that they enter such waters at considerable risk.
    Mr. Thurtle: Is it the intention of the right hon. Gentleman to make strong representations to the insurgents against this danger to British shipping?
    Mr. Eden: I should like a complete report, but I would point out that this is in Spanish territorial waters.
    Colonel Wedgwood: Are these Spanish territorial waters controlled by the rebels or by the Government?
    Mr. Leachasked the Secretary of State for Foreign Affairs whether His Majesty's Government will take steps, through the League of Nations Council, to obtain a discussion as to the best means of ending the Spanish war, with due regard to the people's right of self-determination and to the independence of the country?
    Mr. Eden: I would remind the hon. Member that the Council of the League of Nations examined the Spanish situation last December under Article 11 of the Covenant. After considering the possibility of action such as is indicated in the hon. Member's question, the Council then affirmed that every State was under an obligation to refrain from intervening in the internal affairs of another State, referred to the activities of the Non-Intervention Committee and recommended League Members to spare no pains to render the non-intervention undertakings as stringent as possible. The hon. Member will be aware that, as the result of the Committee's labours, a scheme for the control of the Spanish frontiers by sea and land has recently been adopted and will shortly be put into operation. Every effort will be made, so far as His Majesty's Government are concerned, to render it as effective as possible. I can assure the hon. Member that His Majesty's Government have the aspect of the situation, to which he refers, constantly in mind.
    Mr. Leach: Is it not true that the present state of war in Spain constitutes al right on the part of the League to intervene, on the ground that a general European conflagration may arise from it; and had not the matter better be reexamined?
    Mr. Eden: Fortunately, the dangers of a general European conflict have been considerably reduced in part owing to the action of His Majesty's Government.
    Mr. Grenfellasked the Secretary of State for Foreign Affairs whether the question of recalling the foreign nationals already serving in the fighting forces in Spain has been considered by the Non-Intervention Committee; and whether steps are being taken in this direction?
    Mr. Eden: I would refer the hon. Member to the reply which my noble Friend gave to my hon. and gallant

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    Friend the Member for Cambridge (Lieut.-Commander Tufnell) on 22nd February, to which I have at present nothing to add.
    Sir W. Davisonasked the Secretary of State for the Home Department whether his attention has been drawn to the enlistment during many months past of unemployed and other workers in Great Britain in the forces of the Spanish Government by Communist agents, who inter alia have displayed recruiting posters in the neighbourhood of Employment Exchanges; whether he is aware that many of such recruits are being despatched to Madrid on week-end tickets to Paris; and what steps are being taken in this matter?
    The Under-Secretary of State for the Home Department (Mr. Geoffrey Lloyd): Information has been received from time to time to the effect suggested in the first part of the question, but I have no knowledge of the display of recruiting posters. Any information that is received as to the soliciting of individuals is followed up, but the question what further action can be taken necessarily depends on whether evidence is forthcoming of the commission of an offence.
    Sir W. Davison: Is the hon. Gentleman aware that Members of Parliament are receiving quite a number of letters from the relatives of these unfortunate men who are in the fighting lines in Spain alleging that they were enlisted under false pretences on promises of £6 a week behind the lines?
    Mr. Lloyd: Any information which any hon. Member cares to forward will certainly be considered.
    Captain Heilgers: Will the hon. Gentleman inform me whether passports are necessary for these week-end tickets, and if they are not, will he consider advising his right hon. Friend the Foreign Secretary to reintroduce them?
    Mr. Petherickasked the Secretary of State for Foreign Affairs the conditions and terms of recruitment of the British controllers or observers in Portugal who will assist in carrying out the Nonintervention Agreement?
    Mr. Eden: These terms and conditions are now under consideration and have not yet been settled.

    JAPAN (NAVAL CONSTRUCTION).
    Mr. Sorensenasked the Secretary of State for Foreign Affairs whether he can make any statement on the proposals made in Japan for the expansion of her naval construction in consequence of the new British re-armament proposals?
    Mr. Eden: So far as I am aware, the Japanese Government have made no statement regarding naval construction since the re-armament proposals of His Majesty's Government contained in Command Papers 5368 and 5374.
    Mr. A. V. Alexander: Has the right hon. Gentleman seen the announcement made in America that they intend to increase their naval building programme because of yours, and will not that mean necessarily that Japan will increase hers?
    Mr. Eden: I have not seen any such statement.
    Mr. Sorensen: Has the right hon. Gentleman seen a statement in the "Times" to this effect?
    Mr. Eden: The only statement I have seen was that the new Japanese Government soon after taking office announced their intention of somewhat reducing naval construction.
    Mr. Alexander: Will the right hon. Gentleman look in the "New York Times" of 19th February?

    TOURIST TRAFFIC.
    Mr. Dayasked the Secretary to the Overseas Trade Department whether he will state, according to the figures that may be available, the amount spent on encouraging tourist traffic for the 10 months ended to the last convenient date by the Government of Great Britain, including the grants made to the Travel Association of Great Britain; and which foreign countries maintain State subsidised bureaux in Great Britain?
    Captain Euan Wallace (Secretary, Overseas Trade Department): I cannot give figures for 10 months, but His Majesty's Government made a grant of £5,000 to the Travel and Industrial Development Association for the financial year 1936–37, ending on the 31st of this month. With regard to the second part of the question,

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    a number of countries, including France, Germany, Italy, Portugal, Sweden and Switzerland, maintain State-subsidised bureaux in Great Britain.
    Mr. Day: Is it a fact that Continental countries have made much bigger grants than we do, and could we not increase the grants?
    Captain Wallace: The present Government has made this country so attractive that an extra grant is not necessary.

  AGRICULTURE.

    GOVERNMENT POLICY.
    Mr. De la Bèreasked the Minister of Agriculture what steps he proposes to take to balance agriculture so that farmers may devote their attention to large -scale production of wheat, beef, etc., instead of encroaching on market gardener's business?
    The Minister of Agriculture (Mr. W. S. Morrison): The agricultural policy of the Government is designed to improve the position of the industry as a whole. In particular, the production of wheat and beef is being assisted by the Wheat Act and the Cattle Subsidy. Since 1931 the area under wheat in Great Britain has increased by 44 per cent. and the home production of beef by nearly 20 per cent.
    Mr. T. Williams: Can the right hon. Gentleman say whether he agrees with the question on the fact that agriculture is unbalanced?
    Mr. Morrison: I am never quite certain what people mean by the unbalanced state of agriculture. It is a term to which people apply different meanings.

    POULTRY INDUSTRY.
    Sir Gifford Foxasked the Minister of Agriculture whether he is aware that large hatcheries, which in recent years have built up a large volume of business in supplying day-old chickens to poultry farmers, have had many thousands of orders cancelled in view of the present situation in the poultry industry; and whether he proposes to take any steps to ensure that the recent expansion of the British poultry industry is not imperilled?
    Mr. W. S. Morrison: I believe it to be true that in certain cases hatcheries have recently experienced a reduced demand
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    for day-old chickens, but I am not aware that this state of affairs is in any way general. With regard to the last part of the question, I have nothing to add to recent replies on this subject.

    BRITISH BROADCASTING CORPORATION.
    Mr. Dayasked the Postmaster-General what is the number of wireless receiving licences issued at the last convenient date; and, in view of the large number of cripples and people of small means who apply for wireless licences, will he consider whether these licences, in special circumstances, could be issued half-yearly or, alternatively, by giving facilities for needy people to pay for the same by two half-yearly instalments?
    The Postmaster - General (Major Tryon): The number of wireless receiving licences in force on 31st January last was 8,071,464. The work of securing the annual renewal of this large number of licences is very heavy; and it is essential that the licensing machinery should be kept as simple as possible. The adoption of a system of half-yearly payments could hardly be restricted to needy persons, and would practically double the work of collection. This would involve a large amount of additional expense which would, it is considered, be out of proportion to the advantage derived.
    Mr. Day: Will the right hon. and gallant Gentleman consider the application of such an arrangement to those who are not able to find the full yearly licence in advance?
    Sir A. Knoxasked the Postmaster-General whether there is any practical difficulty in furnishing to the House of Commons Library daily verbatim reports of broadcasts, since Members of Parliament are unable, through lack of time, to check the complaints of constituents either by listening-in or by visiting the British Broadcasting Corporation?
    Major Tryon: The number of words broadcast weekly is substantially in excess of 400,000, and over 1,300 foolscap pages would be required for their reproduction. The task of compilation would involve a great amount of labour and for that reason, apart from

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    any other, it does not seem to me reasonable to call upon the British Broadcasting Corporation to undertake it.
    Sir A. Knox: Does the right hon. Gentleman realise that millions of people are reached by these broadcasts every day who do not trouble to read the most eloquent speeches made in this House, and is it not the duty of Members of Parliament to keep in touch with these broadcasts and see that they are run on proper lines?
    Major Tryon: The difficulty is not with the people who hear the broadcasts, but the people who hear unfair accounts of them.
    Mr. Alexander: Will the right hon. Gentleman consider arranging with the First Commissioner of Works to have at least one room in the House where we could listen to the broadcasts?
    Major Tryon: That is not for me to decide, but I will consider the right hon. Gentleman's suggestion.
    Mr. Petherick: Is it not possible at least to place in the Library reports of the news as sent out by the British Broadcasting Corporation, because that would not involve nearly 400,000 words?
    Sir N. Stewart Sandeman: Surely if we get wrong accounts of what is broadcast, why should we not have the right account if we wish it to be sent here, no matter the number of words? A great many of us wish it.
    Sir A. Knox: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.

  SCOTLAND.

    HISTORICAL BUILDINGS.
    Mr. Erskine Hillasked the Parliamentary Secretary to the Ministry of Health, as representing the First Commissioner of Works, whether on any occasion the Department have submitted schemes for the retention of buildings of historical or architectural interest to local authorities in Scotland which were not accepted by these authorities; and whether he can give particulars of any
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    such occasions, stating whether the refusal to accept such schemes was justified by substantial additional cost?
    Mr. R. S. Hudson (for the First Commisioner of Works): The answer to the first part of the question is in the affirmative. In regard to the second part, the local authorities who have not accepted such schemes during the last 10 years are the Corporation of Edinburgh, the County Council of Ayrshire and the Kirkwall Town Council, but I am not in a position to state whether the refusal to accept the schemes was justified by substantial additional cost.
    Mr. Erskine Hillasked the Parliamentary Secretary to the Ministry of Health, as representing the First Commissioner of Works, which local authorities, if any, in Scotland have consulted his Department on ancient monuments regarding the retention and preservation of old buildings condemned under housing schemes during the last 10 years?
    Mr. Hudson: The following is a list of the local authorities which have consulted the Office of Works regarding the retention and preservation of old buildings condemned or proposed to be condemned under housing schemes during the last o years, namely, the Corporation of Edinburgh, the town councils of Aberdeen, Stirling, Inverness, Linlithgow, Inverkeithing and Kirkcudbright, and the county council of Ayrshire.

    BUCKHAVEN HARBOUR.
    Mr. Kennedyasked the Secretary of State for Scotland whether he can now state the result of any conversations between the representatives of the Government Departments and the representatives of the local authorities and interests concerned regarding the condition of Buck-haven harbour?
    The Under-Secretary of State for Scotland (Mr. Wedderburn): My right hon. Friend has been actively examining, in consultation with other Departments, the general situation which has arisen at Buckhaven in connection with the Colliery Bing on the foreshore. As the right hon. Member is aware, the condition of the harbour is only one part of a general problem. The conversations are still in progress and have not yet reached a stage at which I could usefully make a statement.

    TRADE AND COMMERCE (AUSTRALIA).
    Mr. Perkinsasked the Secretary of State for Dominion Affairs whether he can give an assurance to the House that in any future trade agreement made with the Australian Government British manufacturers will be afforded reasonable facilities for fair competition in the Australian market?
    The Under-Secretary of State for Dominion Affairs (Marquess of Hartington): It is doubtful whether any early negotiations are likely to be undertaken with His Majesty's Government in the Commonwealth of Australia for a revision of the trade agreement concluded at Ottawa in 1932. The point mentioned by my hon. Friend has been noted.
    Mr. Lennox-Boyd: Is it not the case that the Commonwealth of Australia gave us Imperial preference in 1903, 29 years before we did anything in return? Would not a little patience now be a good thing?

  ROYAL NAVY.

    NEW CAPITAL SHIPS (COST).
    Mr. Parkerasked the First Lord of the Admiralty by how much will the increase in the price of base metals, since the publication of the White Paper on 16th February, augment the cost of each of the three new capital ships to be built in 1937–38 above the cost of approximately £8,000,000 each for the two ships included in the 1936 new construction programme?
    The Civil Lord of the Admiralty (Mr. Kenneth Lindsay): The figure of £8,000,000 for the new type of capital ship is a round sum estimate of complete building costs. On the information at present available, I foresee no appreciable difference in the costs of the 1937 capital ships as compared with those of the two ships included in the 1936 programme. Naturally any rise in the prices of base metals will be reflected in the price of ship construction, and this matter is being closely watched.
    Mr. Alexander: Will the Civil Lord lay before the House a White Paper giving the reasons for this extraordinary increase of £1,000,000 in these ships since 1926?
    Mr. Lindsay: That matter will come up on the Estimates.

    COAL CONSUMPTION.
    Mr. Craven-Ellisasked the First Lord of the Admiralty how many of His Majesty's naval vessels were fuelled with coal in 1909 and what was the quantity of coal consumed by the Admiralty for the 12 months ended December, 1929; and how many naval vessels are now fuelled with coal and the quantity consumed for the year ended 1935?
    Mr. Lindsay: I assume that the comparison intended is between the year 1909 and the present. Excluding small auxiliary craft such as trawlers and drifters, there were, in 1909, 447 vessels of the Royal Navy fitted to burn coal, and at present there are 51. In 1909 His Majesty's ships consumed 1,192,000 tons of coal and in 1935, 209,000 tons. In addition, shore services accounted for a further consumption of 168,000 tons in 1909 and 227,00o tons in 1935.
    Mr. Craven-Ellis: Have the Admiralty any intention of using more coal on their vessels in the future?
    Mr. Lindsay: No, Sir.

    UNEMPLOYMENT (INSTRUCTIONAL CENTRES).
    Sir W. Davisonasked the Minister of Labour whether he has now considered the suggestion for the establishment of an unemployment camp in the New Forest under the direction of the Forestry Commissioners, whereby healthy employment could be provided in making good the footpaths, roads, and ditches in the forest which are urgently in need of repair?
    The Parliamentary Secretary to the Ministry of Labour (Lieut.-Colonel Muir-head): As my right hon. Friend informed the hon. Member for Stroud (Mr. Perkins) in reply to his question on 25th February, he is not at present contemplating the establishment of an instructional centre in the New Forest.
    Sir W. Davison: Will the hon. and gallant Member consider the establishment of such a camp, as the New Forest is eminently suitable for such a camp, especially if the existing camps are full up?
    Lieut.-Colonel Muirhead: My right hon. Friend is of course prepared to consider the suggestion, but at the moment we have sufficient camps for the number of applicants.

  AVIATION.

    MAYBURY COMMITTEE'S REPORT.
    Mr. Perkinsasked the Prime Minister whether he proposes to allocate a day for discussion of the Maybury report?
    The Prime Minister (Mr. Baldwin): I have no doubt that this matter will be referred to during the Debate on the Air Estimates.
    Mr. Perkins: Is the right hon. Gentleman aware that on the last three occasions the House debated the Air Estimates it sat until an early hour in the morning, and does he not consider that by adding the Navy Estimates to the Air Estimates the House will have to sit later than usual?
    The Prime Minister: I hope the hon. Member will be more fortunate.

    AERODROMES (LAND ACQUISITION).
    Mr. G. Hardieasked the Prime Minister to whom questions should be addressed in order to obtain information as to the purchase price of lands acquired for the purpose of aerodromes by local authorities, and as to their value for purposes of Income Tax assessment?
    The Prime Minister: Questions relating to the purchase price of land required for aerodromes by local authorities are, in so far as a loan consent by a Minister is necessary, matters for the Minister of Health. All questions relating to Income Tax assessment are a matter for the Chancellor of the Exchequer. I am informed, however, that it is not the practice of the Board of Inland Revenue to make public the annual value of a particular property as assessed to Schedule A except to the owner or occupier or to the rating authority under the provisions of the Rating Acts.
    Mr. Hardie: Does not the Prime Minister think it is the duty of any Department to give the information asked for on a public question like this? Already seven questions have been put, and we have not got an answer?
    The Prime Minister: I do not think it is my place to give an opinion on that particular matter, but as the hon. Member takes an interest in this subject, I suggest it may be raised in Debate on the suitable Estimate. It is a difficult matter to pursue by question and answer.
    Mr. Hardie: Is it not the fact that whenever we ask a question in this House relating to the purchase of land for armament purposes, we never get an answer?
    Mr. Craven-Ellis: Can the right hon. Gentleman confirm the statement that Income Tax assessment has no relation to value?

    SEADROMES.
    Commander Locker - Lampsonasked the Chancellor of the Exchequer whether he will reserve a sum of money for research to enable the Air Ministry to determine the value of seadromes before any private money is spent upon this enterprise?
    The Financial Secretary to the War Office (Sir Victor Warrender): I have been asked to reply. Careful consideration has been given to a number of schemes for the use of seadromes for trans-oceanic flights, but it does not appear that these offer sufficient advantages over the alternative experiments now in active preparation to justify the large additional expenditure involved in my hon. and gallant Friend's suggestion.

    GREAT BRITAIN AND UNITED STATES (COLLABORATION).
    Mr. A. Hendersonasked the Prime Minister whether His Majesty's Government will take steps to collaborate with President Roosevelt for the purpose of reducing tariff barriers and securing disarmament, as methods of achieving the beginnings of peace, in view of the offer of collaboration for such purposes made on 23rd February by Mr. Eullitt, the United States Ambassador in Paris, on behalf of President Roosevelt?
    The Prime Minister: His Majesty's Government at all times welcome the collaboration of the United States Government in reducing tariff barriers and in promoting such an appeasement of the international situation as might make it possible to pursue profitably the question of general disarmament.
    Mr. Henderson: In addition to welcoming offers of collaboration, will not the Prime Minister, on behalf of His Majesty's Government, actually get into touch with President Roosevelt and ascertain whether the United States Government really mean business when their representatives make such speeches?
    The Prime Minister: I do not think I should put it in quite that form, but I think the hon. Member may trust my right hon. Friend to take whatever steps may be appropriate to achieve the desire shared by himself and by us.
    Mr. Henderson: Is the right hon. Gentleman aware that statesmen in all countries are continually making speeches advocating the necessity for co-operation, and is it not time that action was taken instead of making speeches?
    Mr. H. G. Williams: Will the Prime Minister also bear in mind that we buy from the United States three times as much as we sell to them?

    HOUSING (LONDON).
    Mr. Sandysasked the Minister of Health what was the average number of dwellings built per week by the London County Council during the eight years ending 31st March, 1934, and the average number built since that date?
    Mr. R. S. Hudson: The number of dwellings built during the eight-year period referred to represents a weekly average of 103. The number built in the -period 1st April, 1934, to 31st January, 1937, represents a weekly average of approximately 97.
    Mr. Sandys: Do not these figures show that during the last three years, in spite of added encouragement from the Government, the building record of the London County Council has actually slightly deteriorated?
    Mr. T. Johnston: Is it in order for an lion. Member to use this House for the purpose of propaganda on the eve of the London County Council elections?

    MUITSAI (COMMISSION'S REPORT).
    Mr. Thorneasked the Secretary of State for the Colonies whether he has received a copy of the report in connection
    22
    with the sale of girl slaves in Hong Kong and the Malay States; whether the report will be circulated to Members of the House; and whether the Government have accepted the recommendations put forward by the committee on this question?
    The Secretary of State for the Colonies (Mr. Ormsby-Gore): The report of the recent Commission on Mui Tsai, who, I may say, are not girl slaves, has been published to-day and copies of the report and of the evidence have been placed in the Library of the House. The recommendations in the report will receive my careful consideration in consultation with the Governments in Hong Kong and Malaya.
    Miss Rathbone: Will the right hon. Gentleman give full consideration to the recommendations of the minority as well as the majority report before arriving at a decision?
    Mr. Ormsby-Gore: My duty, and also the duty of the Government of Hong Kong, is to examine both reports.

  MERCANTILE MARINE.

    STATISTICS.
    Mr. Kellyasked the President of the Board of Trade in connection with the application of the Draft Convention on Seamen's Hours of Work to ships between 2,000 and 2,500 gross registered tons, how many ships are there in the British Mercantile Marine whose gross registered tonnage is between 2,000 and 2,500 tons?
    The Parliamentary Secretary to the Board of Trade (Dr. Burgin): The number of vessels registered under Part I of the Merchant Shipping Act, 1894, of 2,000 tons and under 2,500 tons gross that remained on the register at ports in the United Kingdom on the 31st December, 1935, the latest date for which the information is available, was 158.

    BUNKER COAL.
    Major Sir Herbert Cayzerasked the Secretary for Mines (1) whether he is aware that, consequent upon the operation of the Coal Mines Act, 1930, merchant vessels are unable to obtain supplies of British coal at recognised coaling stations, particularly in the Mediterranean, and are compelled to take foreign supplies; and, having regard

    23
    to the representations made by the Government to the shipping industry urging a greater utilisation of coal for bunkering so as to assist the British coal mining industry, whether he will undertake immediately to revise the regulations under the said Act to ensure that there shall be no restrictions on the production, distribution, and shipment of coal destined to stock depots at recognised coaling stations;
    (2) whether he is aware that, consequent upon the operation of the Coal Mines Act, 1930, merchant vessels are experiencing difficulty in obtaining supplies of bunker coal at home bunker ports; that in some cases owners have had to divert their vessels from British ports to the Continent to obtain bunker supplies; and whether, having regard to the representations made by the Government to the shipping industry urging a greater utilisation of coal for bunkering, so as to assist the British coal mining industry, he will undertake immediately to revise the regulations under the said Act to remove all restrictions in connection with the production and distribution of coal destined for use as ships' bunkers?
    The Secretary for Mines (Captain Crookshank): I am aware that there are difficulties in obtaining supplies of coal for bunkering purposes, but I do not agree that they are consequent on the operation of the Coal Mines Act, 1930. In these circumstances, I am not prepared to take the action suggested in the second parts of the questions. I would add that no complaint that the shortage of coal for bunkering purposes is due to the operation of the schemes in force under the 1930 Act has been lodged with any of the committees of investigation set up under Section 5 of that Act.
    Sir H. Cayzer: Is the Minister aware that cases are happening every day of boats being unable to get coal, and is it not also a fact that the Government have asked British shipowners to use British coal, and that by this Act the ships are unable to get supplies; and will he see whether some action cannot be taken so that they can get supplies without having to go to foreign ports and get foreign coal?
    Captain Crookshank: I do not think the hon. Baronet can have grasped the
    24
    significance of my answer, because I said that in my opinion that was not the case. The reason it is difficult to get coal at the moment is that, for once in a way, the demand is in excess of the supply for many purposes.

    NURSERY SCHOOLS (LONDON).
    Mr. Sandysasked the President of the Board of Education how many new nursery schools have been built by the London County Council since 3rst March, 1934?
    The Parliamentary Secretary to the Board of Education (Mr. Shakespeare): No new nursery schools have been built by the London County Council since 31st March, 1934. The plans of a new school in Bermondsey are at present under consideration.
    Mr. Sandys: Is my hon. Friend aware that the building of nursery schools was an outstanding feature in the programme of the Socialists in 1934?
    Mr. Kelly: Can the hon. Gentleman tell me how many nursery classes have been set up during the last three years, and will the hon. Gentleman also say that no nursery schools have ever been built by the Tories in London?

    AIR RAID PRECAUTIONS.
    Mr. Parkerasked the Home Secretary by whom an investigation was carried out into the observations of the Cambridge Scientists Anti-War Group; what were the results of such investigation; and what were the criticisms which have been made on these observations?
    Mr. Lloyd: The investigation to which the hon. Member refers was carried out by the Chemical Defence Research Department and the Chemical Defence Research Committee. In regard to the second and third parts of the question, I would refer the hon. Member to my reply to him of 22nd February.
    Mr. Parker: Is the hon. Gentleman aware that the Cambridge scientists have no connection with the Communist party?
    Mr. Petherick: Is it not the case that these gentlemen held very strong political views and then tried to prove that they were correct by investigations in the laboratories at the University?
    Mr. Goldie: Can the hon. Gentleman say whether any similar action has been taken by the University of Oxford?

    PRISONERS (LETTERS).
    Sir W. Davisonasked the Home Secretary whether prisoners in any of His Majesty's prisons are allowed to write letters to their relatives and friends in any other language than English?
    Mr. Lloyd: Yes, Sir. Special arrangements are occasionally made for the censoring of letters written by prisoners whose ordinary language is not English.
    Sir W. Davison: Is there any ground for the statement recently made that, at the public expense a special interpreter has been engaged at Wormwood Scrubs Prison in order that the Welsh gentlemen recently convicted of arson can correspond with their families in Welsh?
    Mr. Lloyd: No, Sir. I think the prison officer concerned was one in the prison who understood Welsh.

    ARMAMENT FACTORIES (SABOTAGE).
    Mr. Remerasked the Home Secretary whether his attention has been called to the recent cases of suspected sabotage in factories engaged in the rearmament programme both by fires and disorganisation of machinery; and whether he will give assurances that suitable efforts to counteract this danger will be taken?
    Mr. Lloyd: Yes, Sir; the attention of my right hon. Friend has been called to this matter, and my hon. Friend may be assured that appropriate action is being taken by the responsible authorities.
    Mr. Remer: If I send the hon. Member particulars of several cases in my possession, will he have a full inquiry made?
    Mr. Lloyd: Certainly.
    Mr. Thorne: When the hon. Member receives that information, will he publish it in this House, and will he also be good enough to give the names of the factories?

    DISCHARGED PRISONERS' ASSOCIATION.
    Mr. Kellyasked the Home Secretary whether he is aware that officers at
    26
    Wormwood Scrubs prison interfered on 11th February last with the Discharged Prisoners' Association by instructing that association to refuse to a sympathiser a copy of its last annual report; and will he state what authority was given to such officer?
    Mr. Lloyd: I do not know to what the hon. Member is referring. If he will send me further particulars I will have inquiries made.

  NATIONAL FINANCE.

    ARMAMENTS (PROFITS).
    Mr. Perkinsasked the Chancellor of the Exchequer whether he is aware of the substantial increase in the profits of many firms engaged directly and indirectly in the manufacture of armaments during the last 12 months; and whether he will consider including some form of excess profits duty in his next Budget?
    The Financial Secretary to the Treasury (Lieut.-Colonel Colville): I cannot anticipate my right hon. Friend's Budget statement.
    Mr. Perkins: Will the right hon. and gallant Gentleman give an assurance that in the event of excess profits being made, he will at some future date introduce such legislation?
    Lieut.-Colonel Colville: I cannot add anything to my answer.
    Mr. Alexander: Will the right hon. Gentleman answer the first part of the question—whether there were any substantial increases in profits?
    Lieut.-Colonel Colville: The right hon. Gentleman is aware that my right hon. Friend is aware of all relevant considerations.
    Mr. Parkerasked the Financial Secretary to the Treasury whether the Government intend to introduce special legislation to tax profits in speculative commodity transactions so as to prevent the profiteering now taking place out of the rearmament programme?
    Lieut.-Colonel Colville: I would refer the hon. Member to the reply given last Thursday to a question by the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) regarding the market in metals. I cannot anticipate my right hon. Friend's Budget statement.

    RETAIL LICENCE DUTIES.
    Mr. Craven-Ellisasked the Chancellor of the Exchequer the amount received in respect of retail licence duties under Section 6 of the Finance Act, 1911, in October, 1936, with the corresponding figure for October, 1935?
    Lieut.-Colonel Colville: The amounts in question were respectively £1,033,660 and £1, 069, 964.

    DEFENCE LOAN.
    Commander Locker-Lampsonasked the Chancellor of -the Exchequer whether he will allocate special sums out of the Defence Loan for the creation of non-wasting assets such as aerodromes; and whether he will remember in particular the strategic position of Birmingham and the backward condition of its defences in planning for the future?
    Lieut.-Colonel Colville: As stated in the Memorandum on the Resolution (Command Paper No. 5368), the sums to be isued from the Consolidated Fund will be appropriated in aid of those Defence Votes which will bear the major part of the exceptional expenditure envisaged in the programme: they will not, however, be specifically allocated to particular works in the manner my hon. and gallant Friend suggests. As regards the second part of the question, inquiry should be addressed to my right hon. Friend the Under-Secretary of State for Air.

    PUBLIC WORKS LOANS (INTEREST).
    Mr. David Adamsasked the Secretary to the Treasury what is the present rate of interest on advances made by the Public Works Loan Board to local authorities in England and Wales for the purposes of housing; and whether any early alteration in the present rate is contemplated by the Treasury?
    Lieut.-Colonel Colville: The present minimum rate of interest on loans to local authorities, which applies to housing loans, out of the Local Loans Fund is 3i per cent. In reply to the second part of the question, the position is being watched, but I am not able to make any further statement at present.
    Mr. T. Williams: Has this rate of interest been varied recently?
    Lieut.-Colonel Colville: Not very recently, but I cannot give the exact date without notice.
    Mr. Kelly: Has the right hon. Gentleman any information as to the amount borrowed by the London County Council for the enormous number of houses they have in course of construction?

    TRANSPORT (TYNESIDE).
    Mr. David Adamsasked the Minister of Transport whether he has given further and favourable consideration to the demand for more adequate cross-river traffic east of Newcastle than river ferries; and, as the proposed tunnel presents no engineering difficulties, is he prepared to support the same?
    The Parliamentary Secretary to the Ministry of Transport (Captain Austin Hudson): My right hon. Friend has already promised considerable grants for the improvement of traffic facilities in this area. He has offered to contribute 60 per cent. towards the working expenses and outstanding loan charges of the Jarrow-Howdon Ferry, a grant of 50 per cent. of the approved cost of the abolition of tolls on both the Redheugh and high level bridges over the Tyne, and a grant of 60 per cent. towards the approved cost of purchase of the vehicle and passenger ferries over the Tyne between Tynemouth and South Shields. The annual contribution to the Jarrow-Howdon Ferry would be approximately £9,200 per annum, and the estimated cost of the other improvements is in the neighbourhood of £355,000. He is also prepared to consider any submissions for the construction of a new by-pass road on the west of Newcastle-on-Tyne and the construction of a new bridge at Scotswood, as such a scheme would appear to be the most satisfactory method of reducing existing congestion and facilitating through traffic between north and south.
    Mr. Adams: Is the Minister aware that ferries were in use on that part of the Tyne in the Middle Ages; and does he not think that the time has arrived for something more modern?
    Captain Hudson: My right hon. Friend is endeavouring to improve the communications there, and he thinks that the arrangements which I have outlined are the best in the circumstances.
    Mr. Ede: Will the hon. and gallant Gentleman draw his right hon. Friend's

    29
    attention to the fact that Scotswood Bridge does not help the communications between North and South Shields at all?
    Captain Hudson: It does help the communications between the North and South of England.

    RELAY EXCHANGE LICENCES.
    Sir Percy Harris (for Mr. Graham White)asked the Postmaster-General the number of licences for relay exchanges given during 1936; the number of licences not renewed; and the total number at the latest convenient date?
    Major Tryon: During the year 1936 one new relay exchange licence was issued and four licences lapsed owing to the closing of the exchanges. The total number of licences in force on 31st December, 1936, was 333. Arrangements are being made for the renewal of these licences for a further period of three years, subject to compliance with certain conditions; and with the addition of one new licence issued since 31st December last the total will be 334.

    POST OFFICE (ENGINEERING DEPARTMENT).
    Mr. Viantasked the Postmaster-General the number of employés in the London district of the Post Office engineering department who were absent through illness, and the average duration of such illness, for the years 1934, 1935 and 1936, and the number of employés employed for each of the aforementioned years?
    Major Tryon: As the information asked for contains a number of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.
    Following is the reply:

    Year.

    Number of employes.

    Number who were absent at any time during the year on sick leave.

    Average sick absence per person employed (in days).

    1934

    9,360

    4,928

    8·8

    1935

    10,177

    5,396

    8·2

    1936

    11,068

    6,187

    7·7

    Mr. Viantasked the Postmaster-General the number by which the staff of the Post Office engineering department at Bristol has been increased since the month of November, 1936?
    Major Tryon: The increase during the three months ended 1st February was 64, or approximately 10 per cent.

    ARMS MANUFACTURE (ROYAL COMMISSION).
    Sir P. Harris (for Mr. White)asked the Prime Minister whether he is now in a position to state the intention of His Majesty's Government with regard to the findings of the Royal Commission on the Private Manufacture of Arms?
    The Prime Minister: I will communicate with the hon. Member as soon as I am in a position to make a statement on this subject.
    Sir P. Harris: Will it be before the rising of the House for the Easter Recess?
    The Prime Minister: I hope so.

BUSINESS OF THE HOUSE.
Mr. Attlee: May I ask the Prime Minister what business it is proposed to take to-night in the event of the Eleven o'Clock Rule being suspended?
The Prime Minister: We propose to take the first five Orders on the Paper, and, if there is time, we would like to take also Order No. 8 and the Import Duties Orders, which are exempted business.
Mr. Attlee: Is it proposed to take those last items at a very late hour after Eleven o'Clock?
The Prime Minister: No, Sir.
Motion made, and Question put,
"That the Proceedings on Government Business be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[The Prime Minister.]
The House divided: Ayes, 209; Noes, 89.

Division No. 92.]

AYES.

[3.35 p.m.

Agnew, Lieut.-Comdr. P. G.

Apsley, Lord

Balniel, Lord

Albery, Sir Irving

Assheton R.

Barclay-Harvey, Sir C. M.

Allen, Lt.-Col. J. Sandeman (B'kn'hd)

Baldwin, Rt. Hon. Stanley

Baxter, A. Beverley

Anstruther-Gray, W. J.

Balfour, Capt. H. H. (Isle of Thanet)

Beamish, Rear-Admiral T. P. H.

Beauchamp, Sir B. C.

Grattan-Doyle, Sir N.

Petherick, M.

Beaumont, M. W. (Aylesbury)

Gridley, Sir A. B.

Pickthorn, K. W. M.

Beit, Sir A. L.

Grigg, Sir E. W. M.

Pilkington, R.

Bennett, Sir E. N.

Grimston, R. V.

Raikes, H. V. A. M.

Blair, Sir R.

Gritten, W. G. Howard

Ramsay, Captain A. H. M.

Blaker, Sir R.

Guest, Hon. I. (Brecon and Radnor)

Ramsbotham, H.

Boulton, W. W.

Hanbury, Sir C.

Rathbone, Eleanor (English Univ's.)

Bowater, Col. Sir T. Vansittart

Hannah, I. C.

Rayner, Major R. H.

Bower, Comdr. R. T.

Hannon, Sir P. J. H.

Remer, J. R.

Briscoe, Capt. R. G.

Harbord, A.

Rickards, G. W. (Skipton)

Brocklebank, C. E. R.

Haslam, H. C. (Horncastle)

Robinson, J. R. (Blackpool)

Brown, Rt. Hon. E. (Leith)

Haslam, Sir J. (Bolton)

Ropner, Colonel L.

Brown, Brig.-Gen. H. C. (Newbury)

Heilgers, Captain F. F. A.

Ross, Major Sir R. D. (Londonderry)

Burgin, Dr. E. L.

Heneage, Lieut.-Colonel A. P.

Russell, R. J. (Eddisbury)

Butler, R. A.

Hepburn, P. G. T. Buchan-

Salmon, Sir I.

Campbell, Sir E. T.

Hills, Major Rt. Hon. J. W. (Ripon)

Salt, E. W.

Castlereagh, Viscount

Holmes, J. S.

Samuel, M. R. A.

Cayzer, Sir H. R. (Portsmouth, S.)

Hope, Captain Hon. A. O. J.

Sandeman, Sir N. S.

Cazalet, Thelma (Islington, E.)

Hopkinson, A.

Sanderson, Sir F. B.

Chamberlain, Rt. Hn. Sir A. (Br. W.)

Horsbrugh, Florence

Sandys, E. D.

Chamberlain, Rt. Hn. N. (Edgb't'p)

Howitt, Dr. A. B.

Shakespeare, G. H.

Channon, H.

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

Shaw, Major P. S. (Wavertree)

Chapman, Sir S. (Edinburgh, S.)

Hudson, R. S. (Southport)

Simon, Rt. Hon. Sir J. A.

Churchill, Rt. Hon. Winston S.

Hulbert, N. J.

Smiles, Lieut.-Colonel Sir W. D.

Clydesdale, Marquess of

Hunter, T.

Smith, Bracewell (Dulwich)

Cobb, Captain E. C. (Preston)

Hurd, Sir P. A.

Somervell. Sir D. B. (Crewe)

Colville, Lt.-Col. Rt. Hon. D. J.

Jarvis, Sir J. J.

Somerville, A. A. (Windsor)

Cooke, J. D. (Hammersmith, S.)

Kerr, H. W. (Oldham)

Southby, Commander A. R. J.

Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)

Knox, Major-General Sir A. W. F.

Spears, Brigadier-General E. L.

Cooper, Rt. Hn. T. M. (E'nburgh, W.)

Lamb, Sir J. Q.

Stanley, Rt. Hon. Lord (Fylde)

Caurtauld, Major J. S.

Lambert, Rt. Hon. G.

Stanley, Rt. Hon. Oliver (W'm'l'd)

Cranborne, Viscount

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

Stewart, J. Henderson (Fife, E.)

Craven-Ellis, W.

Leighton, Major B. E. P.

Stewart, William J. (Belfast, S.)

Croft, Brig.-Gen. Sir H. Page

Lennox-Boyd, A. T. L.

Strauss, E. A. (Southwark, N.)

Crooke, J. S.

Levy, T.

Strickland, Captain W. F.

Crookshank, Capt. H. F. C.

Lewis, O.

Stuart, Lord C. Crichton- (N'thw'h)

Cross, R. H.

Liddall, W. S.

Sutcliffe, H.

Crowder, J. F. E.

Lindsay, K. M.

Tate, Mavis C.

Davies, Major Sir G. F. (Yeovil)

Llewellin, Lieut.-Col. J. J.

Taylor, C. S. (Eastbourne)

Davison, Sir W. H.

Lloyd, G. W.

Taylor, Vice-Adm. E. A. (Padd., S.)

De Chair, S. S.

Looker-Lampson, Comdr. O. S.

Touche, G. C.

De la Bère, R.

Lumley, Capt. L. R.

Tree, A. R. L. F.

Denman, Hon. R. D.

MacAndrew, Colonel Sir C. G.

Tryon, Major Rt. Hon. G. C.

Denville, Alfred

MacDonald, Rt. Hon. J. R. (Scot. U.)

Tufnell, Lieut.-Commander R. L.

Doland, G. F.

Macdonald, Capt. P. (Isle of Wight)

Turton, R, H.

Dorman-Smith, Major R. H.

McKie, J. H.

Wakefield, W. W.

Drewe, C.

Macnamara, Capt. J. R. J.

Walker-Smith, Sir J.

Dugdale, Major T. L.

Maitland, A.

Wallace, Capt. Rt. Hon. Euan

Duggan, H. J.

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

Ward, Irene M. B. (Wallsend)

Duncan, J. A. L.

Maxwell, Hon. S. A.

Warrender, Sir V.

Dunglass, Lord

Mayhew, Lt.-Col. J.

Waterhouse, Captain C.

Eden, Rt. Hon. A.

Meller, Sir R. J. (Mitcham)

Watt, G. S. H.

Ellis, Sir G.

Mellor, Sir J. S. P. (Tamworth)

Wedderburn, H. J. S.

Elliston, Capt. G. S.

Mills, Sir F. (Leyton, E.)

Wickham, Lt.-Col. E. T. R.

Emrys-Evans, P. V.

Mitchell, H. (Brentford and Chiswick)

Williams, C. (Torquay)

Erskine-Hill, A. G.

Moore, Lieut.-Col. T. C. R

Williams, H. G. (Croydon, S.)

Evans, Capt. A. (Cardiff, S.)

Morris-Jones, Sir Henry

Wilson, Lt.-Col. Sir A. T. (Hitchin)

Findlay, Sir E.

Morrison, Rt. Hon. W. S. (Cirencester)

Winterton, Rt. Hon. Earl

Fox, Sir G. W. G.

Muirhead, Lt.-Col. A. J.

Wise, A. R.

Fremantle, Sir F. E.

Munro, P.

Womersley, Sir W. J.

Furness, S. N.

Neven-Spence, Major B. H. H.

Wood, Rt. Hon. Sir Kingsley

Ganzoni, Sir J.

O'Neill, Major Rt. Hon. Sir Hugh

Wright, Squadron-Leader J. A. C.

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

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

Young, A. S. L. (Partick)

Gluckstein, L. H.

Orr-Ewing, I. L.

Glyn, Major Sir R. G. C.

Palmer, G. E. H.

TELLERS FOR THE AYES.—

Goldie, N. B.

Patrick, C. M.

Sir George Penny and Lieut.-

Graham, Captain A. C. (Wirral)

Perkins, W. R. D.

Colonel Sir A. Lambert Ward.

NOES.

Acland, Rt. Hon. Sir F. Dyke

Cove, W. G.

Grenfell, D. R.

Adams, D. (Consett)

Dalton, H.

Griffith, F. Kingsley (M'ddl'sbro, W.)

Adams, D. M. (Poplar, S.)

Davidson, J. J. (Maryhill)

Griffiths, G. A. (Hemsworth)

Adamson, W. M.

Day, H.

Hall, J. H. (Whitechapel)

Alexander, Rt. Hon. A. V. (H'lsbr.)

Dunn, E. (Rother Valley)

Hardie, G. D.

Ammon, C. G.

Ede, J. C.

Harris, Sir P. A.

Attlee, Rt. Hon. C. R.

Edwards, Sir C. (Bedwellty)

Hayday, A.

Banfield, J. W.

Evans, D. O. (Cardigan)

Henderson, A. (Kingswinford)

Barnes, A. J.

Fletcher, Lt.-Comdr. R. T. H.

Henderson, T. (Tradeston)

Benson, G.

Gardner, B. W.

Hicks, E. G.

Buchanan, G.

George, Major G. Lloyd (Pembroke)

Jagger, J.

Chater, D.

Gibbins, J.

Johnston, Rt. Hon. T.

Cluse, W. S.

Gibson, R. (Greenock)

Jones, Morgan (Caerphilly)

Clynes, Rt. Hon. J. R.

Greenwood, Rt. Hon. A.

Kelly, W. T.

32

33

Kennedy, Rt. Hon. T.

Pritt, D. N.

Thurtle, E.

Kirby, B. V.

Ridley, G.

Tinker, J. J.

Leach, W.

Roberts, W. (Cumberland, N.)

Viant, S. P.

Logan, D. G.

Robinson, W. A. (St. Helens)

Walker, J.

McEntee, V. La T.

Rothschild, J. A. de

Watkins, F. C.

McGhee, H. G.

Salter, Dr. A.

Wedgwood, Rt. Hon. J. C.

MacLaren, A.

Sanders, W. S.

Westwood, J.

Mathers, G.

Seely, Sir H. M.

Williams, E. J. (Ogmore)

Maxton, J.

Short, A.

Williams, T. (Don Valley)

Montague, F.

Silverman, S. S.

Wilson, C. H. (Attercliffe)

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

Simpson, F. B.

Windsor, W. (Hull, C.)

Muff, G.

Smith, Ben (Rotherhithe)

Woods, G. S. (Finsbury)

Naylor, T. E.

Smith, E. (Stoke)

Young, Sir R. (Newton)

Paling, W.

Sorensen, R. W.

Parker, J.

Stewart, W. J. (H'ght'n-le-Sp'ng)

TELLERS FOR THE NOES.—

Pethick-Lawnnce, F. W.

Taylor, R. J. (Morpeth)

Mr. Groves and Mr. Charleton.

Potts, J.

Thorne, W.

BILL PRESENTED.
  LOCAL GOVERNMENT (FINANCIAL PROVISIONS) (SCOTLAND) BILL,
  "to amend Part III of the Local Government (Scotland) Act, 1929, and to repeal, so far as relating to Scotland, Section forty-five of the Unemployment Assistance Act, 1934," presented by Mr. Elliot; supported by the Lord Advocate, Lieut.-Colonel Colville, and Mr. Wedderburn; to be read a Second time To-morrow, and to be printed. [Bill 93.]
  NEW MEMBER SWORN.
  George Steven Harvie Watt, Esquire, for the Borough of Richmond.
  NAVY (SUPPLEMENTARY ESTIMATES, 1936).
  Estimate presented,—of the further numbers and sums required to be voted for the Navy for the year ending 31st March, 1937 [by Command]; Referred to the Committee of Supply, and to be printed.
  NAVY ESTIMATES (EXCESSES, 1935).
  Copy presented,—of Statement of the sum required to be voted in order to make good Excesses of Navy Expenditure beyond the grants for the year ended 31st March, 1936 [by Command]; Referred to the Committee of Supply, and to be printed.
ORDERS OF THE DAY.

  DEFENCE LOANS BILL.
  Considered in Committee.
  [Sir DENNIS HERBERT in the Chair.]

  DEFENCE LOANS BILL.

    CLAUSE 1.—(Provision of money for defence services.)
    The Chairman: It may be for the convenience of the Committee if I state at this stage that the only Amendments which I propose to call, of those on the Order Paper, are the first one, in the name of the hon. Member for East Edinburgh (Mr. Pethick-Lawrence), and the last one, in the name of the hon. Member for Huddersfield (Mr. Mabane). The other Amendments, I think, are all out of order as varying the incidence of the burden on the taxpayer.
    Sir Percy Harris: On a point of Order. May I point out that the third Amendment in the name of my hon. Friend the Member for West Middlesbrough (Mr. K. Griffiths) will ultimately reduce the charge on the taxpayer, as it will not mean so many years' interest on the loan? May I ask for your Ruling on that point?
    The Chairman: I am told by the mathematicians that it makes no difference whatever as to the actual amount of the liability. The reason for my Ruling is based upon Standing Order No. 63, which, as the hon. Baronet knows, is one dealing with the subject of the King's Recommendation, and if he will refer to Erskine May on that subject, he will see that it is stated there that the Commons have always faithfully observed, and therefore I think it is my duty to continue to observe, the provisions of that particular Standing Order. The passage in Erskine May goes on to refer to Amendments which vary the incidence of a tax having been ruled out of order as inconsistent with the King's Recommendation. As a result, I must rule out of order any Amendment which alters the incidence of the burden. Hon. Members will see that an Amendment which would shorten the period during which a particular sum has to be repaid would alter the incidence of the burden by placing a heavier burden on the taxpayers in the earlier years during which it has to be repaid. In regard to the Amendment in the name of the hon. Member for Huddersfield which
    44
    would extend the period, that again is out of order for a similiar reason, in that it would impose a liability for repayment on certain future generations of taxpayers who, under the Resolution, would be under no liability whatever.
    3.49 p.m.
    Mr. Pethick-Lawrence: I beg to move, in page r, line 19, to leave out "four," and to insert "two."
    The effect of the Amendment, as hon. Members will no doubt appreciate, would be to cut down the borrowing powers conferred upon the Chancellor of the Exchequer under the Bill by one-half, to reduce them, that is to say, from £400,000,000 to £200,000,000, and my principal purpose in moving this Amendment is to limit the borrowing powers of the Chancellor to what I imagine to be the outside figure for genuine capital expenditure. There are other reasons to which I will refer later, but that is the principle of the Amendment. I am prepared to admit that the figure of £200,000,000 selected for this purpose is in the nature of conjecture, but the reason I cannot put forward any more accurate figure is that the information which the Chancellor has supplied up to now is so exceedingly meagre that no more close approximation can be suggested. In the course of his speech in winding up the first day's Debate on the Financial Resolution, the Chancellor attempted to answer a challenge I had thrown out to him earlier in the day to relate the amount of borrowing either to the capital or to the non-recurrent expenditure.
    Those hon. Members who heard the right hon. Gentleman or read in the OFFICIAL REPORT what he said will realise that he was exceedingly vague on the subject. He argued that of the total expenditure of £1,500,000,000 estimated roughly for the next five years, some part, at any rate, would be non-recurrent, and that he was allocating something like £1,100,000,000 to be paid out of current revenue and only the comparatively small balance of £400,000,000, which was only just over one-quarter, to non-recurrent expenditure. I venture to challenge the validity of that argument. In the current financial year, I think the Chancellor told us, something like £188,000,000 was the estimate of the expenditure on the Services, and that some quite small part

    45
    of that might be regarded as non-recurrent. I do not think the Committee will differ from me in thinking that the bulk of that £188,000,000 is ordinary expenditure below which it is not likely to fall again. Five times £188,000,000 is 940,000,000, which will be the expenditure based on the present figure. Taking that amount from £1,500,000,000, we have £560,000,000 left. That is really the estimate of the additional expenditure which the Chancellor proposes roughly to devote to the Services, both on recurrent and non-recurrent expenditure, in the next five years. Of that amount he proposes to borrow no less than £400,000,000. I venture to say that it is practically impossible that capital expenditure on this rearmament programme will amount to anything like so large a proportion.
    Let us examine what are the real items of capital expenditure which the Chancellor is likely to incur. The items which he actually mentioned were the purchase of land, the erection of shadow factories, the erection of barracks, and, rather surprisingly, he spoke of the creation of stores. There are, of course, one or two other items which I can imagine will be legitimately included in the total capital, but, as far as I recollect, these were the only ones to which the Chancellor referred. I put it to the Chancellor whether he can really maintain for a moment that the total he expects to spend during the next five years upon the items to which I have referred, even if there are one or two additional ones which he likes to mention, can amount to anything like as much as £200,000,000. Perhaps he will be able to give us grounds for thinking that he does, but I am firmly of opinion that £200,000,000 is the outside upper limit of what genuine capital expenditure can reach during that period.
    It may be, of course, that the Chancellor prefers the word "non-recurrent," and that he will attempt to include under non-recurrent expenditure things like battleships and items of that kind which can only by a stretch of the imagination be called capital expenditure, although they might conceivably be classed as non-recurrent. If the Chancellor attempts to make that addition to the list of capital expenditure I would remind him that although battleships last in service for a considerable time, the Navy has a way of continually increasing. Further, many new designs come along, which make it
    46
    very problematical whether there would be a reduction in the Estimates on account of these particular items. But whether he can add to the list in that way or not by calling them non-recurrent, I deny that they are capital, I have attempted to confine this figure to the limit of the real genuine capital expenditure. I should be interested to hear from the Chancellor—and the Committee is entitled to the information—whether he considers that the genuine capital expenditure which will be incurred in the next five years can possibly exceed the figure of £200,000,000. That is the main object of my moving the Amendment.
    I should like to add this, and I think it is strictly relevant to the question of the reduction of the amount. A discussion has been aroused in the course of the Debates which we have had up to now on this subject on how far anything like the sum of £400,000,000 can be added to the debt at the present time without creating inflation. The Chancellor was glad to avail himself of a statement that he found expressed by a leading economist, Mr. J. M. Keynes, that if the depressed areas were brought into active working, obviously a far larger sum than £80,000,000 a year could be raised without creating inflation, because the savings at the present time were far in excess of that figure. Of course, if the whole of the savings, or a very large part of them, were to be available for this loan, there would be a great deal in that argument, but the point I have been making all along has been that the state of industry being what it is at the present time, these savings are likely to be fully used up in other things.
    We have to remember that the Government's programme of rearmament is by no means to be confined to armaments manufacture by the Government themselves. A very large part of the rearmament is to be carried on through private manufacturers. Not only will there be private manufacturers of armaments, but there will be the persons who are making the materials—finished products from their point of view, but raw materials from the armament manufacturers' point of view—which will go to swell the total. The Government's rearmament programme involves capital expenditure by both the armament manufacturers and those who produce the subsidiary materials. So that at a time when

    47
    industry on its own is expanding in all directions and laying down a large amount of additional capital, the Chancellor of the Exchequer is coming into the market, first of all, to make a demand upon the armament manufacturers to increase their plant, and the figure that he is putting forward is on top of all that.
    In that connection I would point out that the amount of new capital being invested every month is rapidly increasing at the present time. The amount of capital issued during the month of February was very considerable. I shall not go into the figures, because of course the actual force of the figures depends very much on how far the money is really new money and how far it is merely a conversion process. Therefore one cannot push the argument too far. But I do not think the Chancellor will seriously deny that ordinary business is expanding very much at the present time, is making very great demands on capital, and that it is on top of that situation that the proposals of the Chancellor are superadded. Quite apart from the correlation of the amount that the Chancellor proposes to borrow and the amount of capital that he proposes to create, I suggest that the smaller figure of something like £40,000,000 a year instead of the larger figure of £80,000,000 a year will create a much less upset in the financial apparatus and do much less to create inflation than the larger figure which is proposed in this Bill. For those two reasons, first of all in order to confine the amount of the loan to the actual amount of physical capital likely to be created, and, secondly, in order to minimise the danger of inflation, I move the Amendment.
    4.3 p.m.
    Mr. Kingsley Griffith: I wish to associate myself with the Amendment, and I shall put my reason for doing so very shortly. Borrowing for expenditure the object of which is exhausted or superannuated before the time for repayment has been completed, is the mark of wartime finance. We are not at war yet, and I think we all want to avoid the position in which my mortgaging ahead in time of peace we may find our financial position weakened in the actual need of war, if that should come. For that reason we do want to reduce the amount of the borrowing to that which may be
    48
    proved to be absolutely necessary, and to have a scientific basis which can be explained by the proportion of lasting assets which are produced in expenditure as against those which are immediately or rapidly perishing.
    It would not be in order to challenge the principle of borrowing altogether, because the House has decided in favour of that on the Second Reading of the Bill, but it is not disputed that, other things being equal, if we were not being driven to a rather dire necessity we should all of us regard a measure for borrowing in time of boom as being in itself unsatisfactory. We may be driven to do a thing from which our economic consciences revolt all the time, but we are entitled to be satisfied that the amount we are asked to assent to is strictly necessary, and we ought to be given some definite reason for it. So far no such basis has been given, and we shall listen with interest to anything that the Chancellor of the Exchequer may have to say on the subject.
    4.6 p.m.
    Major Hills: The hon. Member for East Edinburgh (Mr. Pethick-Lawrence) made two points. The first was that the amount raised by loan ought to be limited to capital and non-recurrent expenditure. I think he would limit it to capital expenditure without including non-recurrent expenditure. I want to know by what measure he can judge what the capital or non-recurrent expenditure will be over five years. The hon. Member may have formed an estimate. I may have formed an estimate, but whatever either of us does is only a guess. All that we are committing ourselves to by allowing the Chancellor to borrow up to £400,000,000 is putting a limit above which he cannot borrow. No one says that he will borrow up to that limit; all that the Bill gives him is the power to borrow up to that limit. I confess that I cannot see any reason for restricting it, even admitting, which I do not admit, that it ought to be limited to capital expenditure. I can foresee a great deal of expenditure which is quite properly charged on loan, a great deal of cost which may go forward to the following years, but even on the hon. Gentleman's own saying I do not know how he can determine what will be the capital expenditure for the next five years.
    The hon. Member's second point was that borrowing was inflationary. To-day

    49
    he used a somewhat different argument from that which he used on the Financial Resolution. On that Resolution he said—and I agreed with him—that if you pump money into the currency, other things being equal you inflate that currency, prices begin to rise, and so forth. But the hon. Gentleman forgets that as well as pumping money in you are pumping money out. You are not only borrowing £80,000,000 a year, but you are taking £220,000,000 a year out of money that remains in the hands of individuals and public companies in this country. On that argument I very respectfully differ from the hon. Member, and I am glad to see that that great authority whom I admire as much as the hon. Member, Mr. Maynard Keynes, agrees also. [Laughter.] I certainly do not laugh at Mr. Keynes. He was the one man who told us that we were wrong in going back to Gold in 1925, and who said that we would have industrial troubles as a result. He was right. Anyhow I am glad to see that so great an authority says that if the Chancellor is prudent he can borrow this money without inflation.
    To-day the hon. Member for East Edinburgh used a somewhat different argument. He asked, "How do you know that the money coming forward for investment will be sufficient to allow you to borrow this £80,000,000 a year?" I agree very much with what my right hon. Friend the Member for Hillhead (Sir R. Home) said from this seat last week. I believe that the Chancellor can "take it in his stride." I have not the least fear, looking at all the conditions that exist now, that the money will not be available. No one can look around him and see the returns of public companies, nearly all of them paying increased dividends, without seeing that we are on the up-grade, and in those circumstances I cannot feel the least doubt that this money will be easily available without the evil which the lion. Member for East Edinburgh fears. I certainly think that the Committee ought not to limit the Chancellor of the Exchequer. I think the Chancellor ought to have liberty to borrow up to £400,000,000 over the five years.
    4.10 p.m.
    Mr. Benson: I generally have a very high opinion of the views of the right hon. and gallant Member for Ripon
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    (Major Hills) on financial matters, but I must say that on practically every point that he has made to-day I differ from him fundamentally. As a matter of fact on one point we do agree, and that is that it is common ground that we do not know how much capital expenditure the Government propose in their rearmament programme. The Chancellor of the Exchequer said that himself, and to-day my hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) has made that very point, that he has had no indication whatever of the amount of capital expenditure. Our point is this: We are not prepared to trust the Government with £400,000,000 of borrowing powers. They may require more capital or less. If they find that they require more than the £200,000,000 that we suggest, let them come to this House and make their case for it. We know nothing in the record of this Government which entitles them to ask the House for what is practically a blank cheque. I was rather surprised at the attempts that the right hon. and gallant Member for Ripon made to defend the Government against the charge of playing with inflationary matters. He admitted, I thought, that the pumping of £80,000,000 of fresh purchasing power a year into the pool was inflation.
    Major Hills: It might be inflation.
    Mr. Benson: But he says it is counteracted by the fact that the Chancellor proposes to take by taxation for armament purposes £230,000,000. It is true that, taxation curtails their spending power on motor cars, shaving soap, the "Times" and other luxuries. But it increases the spending power of the Government by exactly the same amount; it is not taking a penny out of the pool but is merely deflecting the spending power from one type of industry to another.
    I am surprised that the right hon. and gallant Member for Ripon should use such an extraordinary argument in the defence of his Government. It really shows the depth to which those on the Government side have gone in the attempt to defend what is really an inflationary proposal. The right hon. Member for Ripon said there was no fear that the money would not be available. No one on this side has ever suggested that the money would

    51
    not be available. Of course the Government can borrow £400,000,000. If they wanted they could borrow £4,000,000,000. Our point is not that the money is not there. If it is not there, it can always be created by inflation. Our point is that by this borrowing the Government are throwing a strain upon the available resources, available after industry has had its quota, and that in order to obtain that money it will be necessary to inflate and create fictitious money.
    That is our point, not that the Government will not get it, but that they will get it only as a result of increasing the stringency of fresh capital for industry, or by the creation of credit, which is in itself inflation, just as inflationary as if the Government issued unbacked Treasury notes. The Government have made various attempts to defend themselves against the charge of inflation, but they have not yet succeeded. If there is long-term borrowing the inflation is very mild, but short-term borrowing is very inflationary. One has only to realise the effect of the borrowing by Treasury Bills in connection with the Exchange Equalisation Fund. The Chancellor of the Exchequer borrowed £350,000,000, and the immediate effect of that borrowing was to change the whole course of prices. Previously prices had been steadily falling. I quote from "Lloyds Bank Magazine" to show the course of wholesale prices:
    "1929, 150; 1931, 107; 1932, 103.5; 1933, 103.5; 1934, 106.4; 1935, 108.1; 1936, over 120."
    That £350,000,000 of borrowing had an inflationary effect, and in so far as it was inflationary at that time it was valuable, just as the borrowings of the Labour party in 1929–31 were inflationary and, therefore, valuable. Inflation is bad only when you try to inflate on the verge of a boom. If you are in a slump, a little inflation by Government borrowing or spending is a healthy stimulus. What the Government are now proposing is that we shall stimulate industry to a high degree at a time when it is working at the top of its energy. The result will be that we shall have a vicious spiral of increased prices, further capital expansion, a rise in interest rates and further increased prices, and we shall find that this borrowing has been one very vital factor in pushing us into a boom and into the consequent slump.
    4.18 p.m.
    Mr. Charles Williams: The hon. Member for Chesterfield (Mr. Benson) began by saying that we ought not to allow the Government to borrow this money because no one could trust them, but towards the end of his speech he was saying that one reason why we should not borrow was because trade is doing so well. Surely if the Government have brought trade from a bad period into a good period we may have some trust in them, and I rather think he defeated the object of his speech in his last remark. But I rise to say why I think that at the present time it is probably wiser on the whole, for the Government to borrow this money. Naturally I was immensely pleased to hear one or two speeches like that of my hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) taking the line of what I call purist finance, that is to say, that a Government should never borrow money at any time, or, at any rate, should never borrow it when it does not suit the policy of the Socialist party. The Government want to borrow about £80,000,000 a year, and the Opposition Amendment says the borrowing should be reduced by a half. It is a curious fact, but the amount the Government are proposing to borrow is almost exactly the same as the amount they are taking year by year out of the capital pool of this country in the form of Death Duties. I should not he in order in going into that subject now, but if it is wrong to borrow this money for the purpose of using it for things which are almost immediately or soon consumed, it is equally wrong to take the other money for that same purpose.
    I think I noticed another error, if I may say so with great respect, in the speech of the Mover of the Amendment. He laid it down that the sum to be borrowed should only be enough to cover what might be considered capital expenditure. Without entirely disagreeing with him on that matter—at any rate in certain conditions, though not in these conditions—there are a great many items on which the money will be spent which may be regarded as capital expenditure. A considerable sum will go in the purchase of sites for aerodromes, and another considerable amount is likely to go, I understand, on factories, which will last for a very long while.

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    Some of us do not pretend to be financiers and are not among the few hundreds of men who were, apparently, against the return to the Gold Standard. The right hon. and gallant Member for Ripon (Major Hills) referred to one of them; I do not know how many there are, but I am always hearing that assertion made about individuals. As an ordinary individual I look at the position in this way: For many years we have not been expending as much as we ought to have spent to meet our obligations under the League of Nations among other things, and for the purpose of defending ourselves, and we are now endeavouring to make up that lag. During those years capital has been able to accumulate, and we are now making a demand on that accumulated capital for the purpose of overtaking those arrears. If this Amendment were adopted and the Chancellor could borrow only some £200,000,000 the rest would have to come from direct taxation, and that undoubtedly would impose a much more heavy burden on trade and industry. While I dislike either Government borrowing or municipal borrowing at any time, I consider that in an emergency of this kind, when we have a definite lag, the Government are justified in saying that rather than discourage the growth of industry by fresh taxation it is better to borrow some of the surplus money which we are told by financiers is available, as long as we put a limit to the amount we borrow, which the House is doing. We are not saying the Government shall borrow £400,000,000, but we are limiting their authority to borrow up to that amount. Though I am among those who very much dislike borrowing, I think as a private individual and a private Member of Parliament that the Government are doing what, in the circumstances, is best in the interests of the nation as a whole.
    4.25 p.m.
    Mr. Muff: I wish to support the Amendment, but for different reasons from those which have so far been advanced. My chief reason is that I want to make certain that we get value for our money, and judging by the rise in prices which has already taken place it looks as though we shall get only about £200,000,000 worth of goods and materials as an actual return for the £400,000,000. If this Amendment were accepted it would mean that we should lose only £100,000,000. I
    54
    put it to the Chancellor of the Exchequer that there is a grave fear that those effusively patriotic men who operate somewhere near Threadneedle Street—up a yard or something like that, or in a street—on what are called "margins" are going to render a distinct disservice to this country by their method of inflating the cost of materials and not allowing the country to get value for its money.
    I will illustrate the position in this way. In a place called Robert Town, on the top of a hill, somewhere in the West Riding, two men invested in what they call in our part of the world a hencote. They bought it in a town called Heckmondwike-in-the-Hollow. They were economical and they went one night, in the dark, to fetch this hencote. A third man volunteered to help them to carry it. The two purchasers got hold of the hencote, one in front and one behind, and trudged up the hill to this place called Robert Town. On the way they missed the man who had so effusively proffered his services and called out, "Where are you, Bill?" He answered, "I'm inside t'hencote carrying the pegs." In plain language, the man was sitting there as a passenger carrying the perches on which the hens roost. I think that illustrates the position of some of those in the City who have so effusively come forward to help to carry through this £400,000,000 loan scheme. They produce nothing—to use the language of Birmingham, "They toil not, neither do they spin"—and I am hoping that the Chancellor will reintroduce the old Birmingham doctrine of ransom when the Budget is drawn up.
    4.29 p.m.
    Mr. Lewis: After three full days of Parliamentary discussion of this problem there does not remain very much fresh to be said. I think the House has already accepted the general proposition of the Government, including the proposition that part of the expenditure shall be found by borrowing. All I would like to say about the three days of Debate is that it has been remarkable to notice the agreement there is in all parts of the House that we dare not allow our inferiority in armaments to continue any longer, let alone to increase. To-day we are invited to consider what proportion of the proposed expenditure shall be raised by borrowing, and it has been

    55
    suggested that instead of the limit of borrowing being £400,000,000, that sum should be halved. The Chancellor of the Exchequer had to consider this problem from two points of view, the demands of the Services on the one hand and the possibility of finding the money on the other.
    With regard to the size of the demand, he evidently came to the conclusion that he could not safely provide entirely by taxation the amount which he wished to provide. It is obvious that the larger the borrowing powers he asked for, the greater would be the sum total that he could offer to provide for rearmament. Once he has exhausted the taxable possibilities and added the borrowing possibilities, the higher he pitches the borrowing possibilities the greater the sum total at which he arrives. There is a great advantage in pitching the sum total as high as possible. The comments that have appeared in foreign newspapers show us clearly that the size of the programme has had a beneficial effect in foreign countries, both upon those who, like ourselves, wish to keep the peace and upon those who may contemplate breaking it. Foreign countries know that we are not a warlike people and that we are slow to go to war. They have seen that we are slow to rea-arm. It is well that we should realise that, just as when we go to war we see it through, so, faced with this problem of rearmament we shall, if necessary, see it through.
    As to the objections which have been put forward to borrowing for such purposes, I must confess that I thought there was great weight in some of the arguments used by the hon. Member for East Edinburgh (Mr. Pethick-Lawrence). He drew a clear distinction between providing money for such purposes as aerodromes or new barracks and providing it for battleships, guns or shells. I agree further with him that we have no evidence before us to show that any large proportion of this proposed borrowing will be covered by works which may properly be described as of a capital nature, as, for example, the purchase of land or the erection of buildings. Probably the hon. Member was right further when he said that nothing like the whole sum will be covered by things which could be described as items of a non-recurring character. In this matter it is a case
    56
    of necessity drives. If a practical alternative to borrowing the money could be shown, I think that we should all hesitate a long time before we agreed to borrow, but no practicable alternative has been put before us. If we are to face any programme such as the Chancellor has outlined, we must borrow, and borrow largely.
    While I am willing to support the Chancellor of the Exchequer in the request which he makes this afternoon to extend his powers of borrowing to the amount of £400,000,000, I express the hope that he will not find it necessary to use the borrowing powers to anything like the proposed extent, and that he will exhaust his ingenuity in looking for new methods of taxation and in widening the field of taxation. The growing prosperity of the country will increase the tax yield, possibly beyond even his expectations, but if the worst comes to the worst and such hopes should prove unfounded, and it should be necessary to borrow up to the full sum that he has named for the purpose for which he has asked for powers, this House, in the situation in which we find ourselves, will not hesitate to give him the powers, and the country will not hesitate to approve of our doing so.
    4.36 p.m.
    The Chancellor of the Exchequer (Mr. Chamberlain): When I saw the Amendment of the hon. Gentleman on the Paper, I had some little difficulty at first in deciding what must be the ground of his proposal to substitute £200,000,000 for £400,000,000. I thought it must have some relation to what is regarded as the wickedness of borrowing in any circumstances, and that he was taking the view that to borrow £200,000,000 would be only half as wicked as borrowing £400,000,000; and that therefore we should come down to that amount. If that had been the consideration in his mind, I should certainly have expected him to go lower than £200,000,000, but it now appears that I was mistaken and that that was not the theory upon which his Amendment is based. It seems that the hon. Gentleman is drawing a distinction between legitimate borrowing for capital purposes and illegitimate borrowing for purposes which are not capital. I welcome this advance. We are getting on, as Mr. Asquith used to say. The hon.

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    Gentleman is coming in our direction, and if he has already come as far as that, I do not despair of converting him entirely during the proceedings on the Bill.
    Having established that laudable basis for borrowing, the hon. Gentleman has made his own calculation as to how much of the respective expenditure, no figure for which has yet been fixed although a figure has been suggested, may properly be called capital. As my right hon. and gallant Friend the Member for Ripon (Major Hills) so justly said, any calculation of that kind is guess work. The hon. Gentleman does not know what we are going to spend the money upon, and he has to make a completely arbitrary assumption in order to arrive at any calculation at all. Although he draws a distinction between capital and non-recurrent expenditure, he admits that some of the expenditure is properly capital. He admits that we are spending money upon buildings of a permanent or semi-permanent character such as barracks which may properly be called capital expenditure, but he seemed to be surprised that, when I was mentioning one or two items the other day, I included among them stores. Surely there is nothing to be surprised at in that. If you decide that, in order to comply with some new standard of safety, it is necessary to add to your reserves and stores of ammunition in this country and to bring them up to an entirely new level, that is not recurrent expenditure. Once you have expended that money and got up to your new level, you stop there, unless you alter your level again. It, therefore, seems to me that you may properly describe expenditure of that kind as non-recurrent, and you may go so far as to say that it may be called capital expenditure, too. The distinction between what you may borrow for and what you may not, is one which has been introduced by the hon. Gentleman opposite, and not by me. Although it is true that I said that some of this expenditure was non-recurrent, I did not say I based myself entirely on that distinction in fixing the limit of borrowing at £400,000,000.
    Speaking of that, may I just make a comment upon an observation which fell from the hon. Member for Chesterfield (Mr. Benson), who has not a very high opinion of this Government? I am, however, glad to note that he would trust us to the extent of borrowing £200,000,000.
    58
    How did he describe this operation? He said that he was not prepared to give the Government a blank cheque. I sometimes think that hon. Gentlemen opposite slip into phrases which they are accustomed to use when they are addressing their constituents and others, without thinking very carefully what they really mean. I daresay that the hon. Gentleman has handled many blank cheques in his life, whether drawn by himself or by other people in his favour, and if he will cast back his recollection he will remember that in the case of a blank cheque there is no figure on the face of it. Surely you cannot call this a blank cheque, because there is a sum written on the face of it. True, it is not a cheque for £400,000,000, but it is the limit of the amount which the Government can borrow under the Bill, if passed in its present form. I think the hon. Gentleman will have to withdraw the description of what we are doing as a blank cheque, because it is only a request for a limited amount of borrowing power. It is not even true, that the House of Commons, having given this power, will have no more control over the borrowing. As I have said before, Estimates will be presented to the House which will show, in each year or from time to time if Supplementary Estimates are presented, how much of the gross amount of the Estimates is to be provided out of borrowed money and how much out of revenue. It would then be for the House to express its opinion as to whether there is anything improper in the proportions which are then shown.
    Let me deal with the distinction made by the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) between recurrent and non-recurrent expenditure, and remind him that when I attempted to lay down the general principle to guide the Government in this matter I did not go nearly as far as he did by suggesting that it would be proper to borrow the whole of the non-recurrent expenditure. That is his view.
    Mr. Pethick-Lawrence: Oh, no.
    Mr. Chamberlain: Perhaps I should say capital expenditure?
    Mr. Pethick-Lawrence: No.
    Mr. Chamberlain: I am sorry that the hon. Gentleman is not coming along a little bit further. At any rate, I did not

    59
    say I proposed to borrow the whole of the non-recurrent expenditure. I said that a part of the non-recurrent expenditure will have to be paid out of revenue; what part and how much it would be, would have to be decided from time to time, in the light of the considerations which have to be taken into account. I do not base my case for borrowing upon any such distinctions as those made by the hon. Gentleman. A large part of this expenditure is of a capital character. I say, further, when you consider that we are compelled to contemplate this enormous expenditure in a comparatively short time, and that it is largely due to the fact that you have to make up arrears for expenditure over a much longer time, that that seems to be a justification in itself for the altogether exceptional procedure that we are following.
    Mr. de Rothschild: Could the right hon. Gentleman state what the proportion is between the capital expenditure and the recurring expenditure?
    Mr. Chamberlain: No, that is precisely what I am not prepared to do, and it is not necessary that I should do it if I do not rest my case upon that distinction. I think it is extremely difficult to draw with certainty a line between recurrent expenditure and non-recurrent expenditure; there are certain items as to which it is arguable whether they should be on the one side of the line or on the other. But if the argument which I have just suggested to the Committee be accepted, it really does not very much matter that you should divide your expenditure into these two separate and distinct categories, because that is not really the foundation of what I am asking the Committee to allow me to do.
    The hon. Member for East Edinburgh and the hon. Member for Chesterfield have spoken once again about the evil effects of inflation which will follow on this borrowing, and the difficulties which will be imposed by it on the capital market. I speak with diffidence in the presence of those who have studied this question and have arrived at those views, but, on the other hand, those views are not held by all authorities on the subject, and, without referring again to Mr. Keynes, I may say that naturally I have tried to inform myself as best I could, on the best advice available to me, as to
    60
    whether any injurious effects such as those contemplated by the hon. Members are in fact likely to occur, and I am satisfied, myself, that there is no likelihood either of any difficulty in the capital market or of any undue inflation in consequence of the borrowing of £400,000,000. The hon. Member for Chesterfield told us that after we had borrowed for the Exchange Equalisation Account there was immediately a tremendous rise in prices. That merely amounts to saying post hoc propter hoc. Because the one thing happened first, and the other happened afterwards, the hon. Member assumed that the second event was the necessary result of the first.
    Mr. Benson: I said that borrowing on Treasury bills was definitely inflationary, and I merely instanced the effect that it had on prices. If the right hon. Gentleman wishes to consult an authority on the subject of Treasury bills and inflation, may I suggest that he should read the very excellent book of the right hon. and gallant Member for Ripon (Major Hills), who is very specific on that point?
    Mr. Chamberlain: I am familiar with the excellent book of my right hon. and gallant Friend, but I understood the hon. Member's argument to be that the rise in prices which followed was the direct result of borrowing for the Exchange Equalisation Fund. When one considers the circumstances, when one remembers that the Exchange Equalisation Account was started in a time of prolonged and intense depression, when prices had reached exceptionally low levels, and when one remembers that those levels had just reached a turning point, it surely is rather far-fetched to attribute to that particular operation an effect which was world-wide and which certainly did not depend upon one single operation in one single country.
    Mr. Benson: It is not true to say that the effect was world-wide. European prices went on falling. French prices were going down, and Italian prices were going down. The only prices which rose as well as our own were the American prices, and America was also injecting large amounts of her currency into her market. I was not condemning the right hon. Gentleman for the inflationary effect; I said definitely that at that time it was a very valuable circumstance.
    Mr. Chamberlain: Of course it is perfectly true that a world movement does not operate simultaneously throughout the world, but my general proposition was that the world movement began here, as so many movements do, and was followed elsewhere, and I still maintain that it is far-fetched to attribute to that single operation something which was bound to happen, and hound to happen at about that time. Really, the question of inflation depends upon, and is linked up with, the question of savings, and the hon. Member is beginning to doubt now whether savings will be adequate to provide for the £400,000,000—on the assumption that £400,000,000 is borrowed—as well as for the demands of private concerns at the same time. Again, I speak after having consulted other authorities, and having regard to the amount of the savings and the tendency of savings at the present time, I would point out to the hon. Member that the new expenditure by the Government on the rearmament programme itself will tend to make new savings, and also that the demands which are going to be made by private firms for the purpose of armaments will largely be met by the Government themselves. The hon. Member has no doubt appreciated that, I think in reply to an interruption by him the other day, I said that in the case of the
    shadow factories the capital is largely going to be provided by the Government.
    Mr. Pethick-Lawrence: I said that.
    Mr. Chamberlain: Then they will not need savings; they will get their capital from the Government. Considering also the general upward progress of trade in all directions, I have not the slightest doubt that the savings will be amply sufficient to provide for any demands that may be comprised within this £400,000,000. I submit to the Committee that the hon. Gentleman has made out no case for halving the £400,000,000 which I am asking for power to borrow. It is true that he has not attempted to alter the period over which the money can be borrowed—
    Sir P. Harris: That was ruled out, quite correctly, if I may say so, by the Chair. There was an Amendment on the Paper to that effect.
    Mr. Chamberlain: The hon. Gentleman did not put anything on the Paper—
    Sir P. Harris: Other Members did.
    Mr. Chamberlain: I submit that no case has been made out for the Amendment, and I ask the Committee to reject it.
    Question put, "That the word' four stand part of the Clause."
    The Committee divided: Ayes, 199; Noes, 87.

    Division No. 93.]

    AYES.

    [4.55 p.m.

    Acland-Troyte, Lt.-Col. G. J.

    Cazalet, Capt. V. A. (Chippenham)

    Evans, Capt. A. (Cardiff, S.)

    Agnew, Lieut.-Comdr. P. G.

    Chamberlain, Rt. Hn. Sir A. (Br.W.)

    Findlay, Sir E.

    Albery, Sir Irving

    Chamberlain, Rt. Hn. N. (Edgb't'n)

    Fox, Sir G. W. G.

    Allen, Lt.-Col. J. Sandeman (B'kn'hd)

    Channon, H.

    Furness, S. N.

    Anstruther-Gray, W. J.

    Chapman, Sir S. (Edinburgh, S.)

    Ganzoni, Sir J.

    Apsley, Lord

    Clarr, Sir Reginald

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

    Baldwin, Rt. Hon. Stanley

    Cobb, Captain E. C. (Preston)

    Gluckstein, L. H.

    Balfour, Capt. H. H. (Isle of Thanet)

    Colville, Lt.-Col. Rt. Hon. D. J.

    Glyn, Major Sir R. G. C.

    Balniel, Lord

    Cooke, J. D. (Hammersmith, S.)

    Goldie, N. B.

    Barclay-Harvey, Sir C. M.

    Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)

    Graham, Captain A. C. (Wirral)

    Barrie, Sir C. C.

    Cooper, Rt. Hn. T. M. (E'nburgh, W.)

    Gridley, Sir A. B.

    Baxter, A. Beverley

    Courtauld, Major J. S.

    Grigg, Sir E. W. M.

    Beamish, Rear-Admiral T. P. H.

    Crooke, J. S.

    Grimston, R. V.

    Beauchamp, Sir B. C.

    Crookshank, Capt. H. F. C.

    Gritten, W. G. Howard

    Beit, Sir A. L.

    Crossley, A. C.

    Guest, Hon. I. (Brecon and Radnor)

    Bennett, Sir E. N.

    Crowder, J. F. E.

    Hacking, Rt. Hon. D. H.

    Blair, Sir R.

    Culverwell, C. T.

    Hanbury, Sir C.

    Blaker, Sir R.

    Davison, Sir W. H.

    Hannah, I. C.

    Boulton, W. W

    Dawson, Sir P.

    Hannon, Sir P. J. H.

    Bowater, Col. Sir T. Vansittart

    Denman, Hon. R. D,

    Harbord, A.

    Bower, Comdr. R. T.

    Denville, Alfred

    Haslam, H. C. (Horncastle)

    Braithwaite, Major A. N.

    Doland, G. F.

    Haslam, Sir J. (Bolton)

    Brocklebank, C. E. R.

    Dorman-Smith, Major R. H.

    Heilgers, Captain F. F. A.

    Brown, Rt. Hon. E. (Leith)

    Drewe, C.

    Heneage, Lieut.-Colonel A. P.

    Brown, Brig.-Gen. H. C. (Newbury)

    Duckworth, Arthur (Shrewsbury)

    Hepburn, P. G. T. Buchan

    Bull, B. B.

    Dugdale, Major T. L.

    Herbert, Major J. A. (Monmouth)

    Burgin, Dr. E. L,

    Duggan, H. J.

    Hills, Major Rt. Hon. J. W. (Ripon)

    Butler, R. A.

    Duncan, J. A. L.

    Holmes, J. S.

    Campbell, Sir E. T.

    Dunglass, Lord

    Hope, Captain Hon. A. O. J.

    Carver, Major W. H.

    Ellis, Sir G.

    Hopkinson, A.

    Cary, R. A.

    Elliston, Capt. G. S.

    Hore-Belisha, Rt. Hon. L.

    Castlereagh, Viscount

    Emrys-Evans, P. V.

    Horsbrugh, Florence

    Cazalet, Thelma (Islington, E.)

    Errington, E.

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

    Hudson, R. S. (Southport)

    Moore, Lieut.-Col. T. C. R.

    Somervell, Sir D. B. (Crewe)

    Hume, Sir G. H.

    Morris-Jones, Sir Henry

    Somerville, A. A. (Windsor)

    Hunter, T.

    Muirhead, Lt.-Col. A. J.

    Southby, Commander A. R. J.

    Jarvis, Sir J. J.

    Munro, P.

    Span, W. P.

    Jones, L. (Swansea W.)

    Neven-Spence, Major B. H. H.

    Stanley, Rt. Hon. Oliver (W'm'l'd)

    Kerr, H. W. (Oldham)

    O'Neill, Major Rt. Hon. Sir Hugh

    Strauss, E. A. (Southwark, N.)

    Kerr, J. Graham (Scottish Univs.)

    Orr-Ewing, I. L.

    Strickland, Captain W. F.

    Knox, Major-General Sir A. W. F.

    Palmer, G. E. H.

    Stuart, Lord C. Crichton- (N'thw'h)

    Lamb, Sir J. Q.

    Patrick, C. M.

    Sutcliffe, H.

    Lambert, Rt. Hon. G.

    Penny, Sir G.

    Tate, Mavis C.

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

    Perkins, W. R. D.

    Taylor, C. S. (Eastbourne)

    Leighton, Major B. E. P.

    Petherick, M.

    Taylor, Vice-Adm. E. A. (Padd., S.)

    Lennox-Boyd, A. T. L.

    Pickthorn, K. W. M.

    Touche, G. C.

    Levy, T.

    Pownall, Lt.-Col. Sir Assheton

    Tree, A. R. L. F.

    Lewis, O.

    Procter, Major H. A.

    Tufnell, Lieut.-Commander R. L.

    Liddall, W. S.

    Raikes, H. V. A. M.

    Turton, R. H.

    Lindsay, K. M.

    Ramsay, Captain A. H. M.

    Wakefield, W. W.

    Llewellin, Lieut.-Col. J. J.

    Rathbone, J. R. (Bodmin)

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

    Lloyd, G. W.

    Rayner, Major R. H.

    Ward, Irene M. B. (Wallsend)

    Locker-Lampson, Comdr. O. S.

    Reid, Sir D. D. (Down)

    Warrender, Sir V.

    MacAndrew, Colonel Sir C. G.

    Remer, J. R.

    Watt, G. S. H.

    McCorquodale, M. S.

    Rickards, G. W. (Skipton)

    Wedderburn, H. J. S.

    MacDonald, Rt. Hon. J. R. (Scot. U.)

    Ropner, Colonel L.

    Wells, S. R.

    Macdonald, Capt. P. (Isle of Wight)

    Ross, Major Sir R. D. (Londonderry)

    Wickham, Lt.-Col. E. T. R.

    McKie, J. H.

    Russell, R. J. (Eddisbury)

    Williams, C. (Torquay)

    Maonamara, Capt. J. R. J.

    Salmon, Sir I.

    Williams, H. G. (Croydon, S.)

    Maitland, A.

    Salt, E. W.

    Winterton, Rt. Hon. Earl

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

    Samuel, M. R. A.

    Wise, A. R.

    Mason, Lt.-Cal. Hon. G. K. M.

    Sandeman, Sir N. S.

    Withers, Sir J. J.

    Maxwell, Hon. S. A.

    Sanderson, Sir F. B.

    Womersley, Sir W. J.

    Mayhew, Lt.-Col. J.

    Shaw, Major P. S. (Wavertree)

    Young, A. S. L. (Partick)

    Meller, Sir R. J. (Mitcham)

    Simon, Rt. Hon. Sir J. A.

    Mellor, Sir J. S. P. (Tamworth)

    Smiles, Lieut.-Colonel Sir W. D.

    TELLERS FOR THE AYES.—

    Mills, Sir F. (Leyton, E.)

    Smithers, Sir W.

    Major Sir George Davies and

    Mitchell, H. (Brentford and Chiswick)

    Captain Waterhouse.

    NOES.

    Acland, Rt. Hon. Sir F. Dyke

    Green, W. H. (Deptford)

    Paling, W.

    Adams, D. (Consett)

    Greenwood, Rt. Hon. A.

    Parker, J.

    Adams, D. M. (Poplar, S.)

    Grenfell, D. R.

    Pethick Lawrence, F. W.

    Adamson, W. M.

    Griffith, F. Kingsley (M'ddl'sbro, W.)

    Potts, J.

    Alexander, Rt. Hon. A. V. (H'lsbr.)

    Griffiths, G. A. (Hemsworth)

    Pritt, D. N.

    Ammon, C. G.

    Groves, T. E.

    Ridley, G.

    Attlee, Rt. Hon. C. R.

    Hall, J. H. (Whitechapel)

    Robinson, W. A. (St. Helens)

    Banfield, J. W.

    Hardie, G. D.

    Rothschild, J. A. de

    Barnes, A. J.

    Harris, Sir P. A.

    Sanders, W. S.

    Benson, G.

    Hayday, A.

    Seely, Sir H. M.

    Broad, F. A.

    Henderson, A. (Kingswinford)

    Short, A.

    Bromfield, W.

    Henderson, T. (Tradeston)

    Silverman, S. S.

    Buchanan, G.

    Hicks, E. G.

    Simpson, F. B.

    Burke, W. A.

    Jagger, J.

    Smith, Ben (Rotherhithe)

    Chater, D.

    Jenkins, A. (Pontypool)

    Smith, E. (Stoke)

    Cluse, W. S.

    Jenkins, Sir W. (Neath)

    Sorensen, R. W.

    Clynes, Rt. Hon. J. R.

    Johnston, Rt. Hon. T.

    Stewart, W. J. (H'ght'n-le-Sp'ng)

    Cove, W. G.

    Jones, Morgan (Caerphilly)

    Strauss, G. R. (Lambeth, N.)

    Dalton, H.

    Kelly, W. T.

    Taylor, R. J. (Morpeth)

    Davies, S. O. (Merthyr)

    Kennedy, Rt. Hon. T.

    Thorne, W.

    Day, H.

    Kirby, B. V.

    Thurtle, E.

    Dunn, E. (Rother Valley)

    Lathan, G.

    Tinker, J. J.

    Ede, J. C.

    Leach, W.

    Viant, S. P.

    Edwards, Sir C. (Bedwellty)

    Logan, D. G.

    Walker, J.

    Evans, D. O. (Cardigan)

    McEntee, V. La T.

    Watkins, F. C.

    Fletcher, Lt.-Comdr. R. T. H.

    McGhee, H. G.

    Westwood, J.

    Foot, D. M.

    MacLaren, A.

    Williams, E. J. (Ogmore)

    Frankel, D.

    Maxton, J.

    Williams, T. (Don Valley)

    Gardner, B. W.

    Messer, F.

    Windsor, W. (Hull, C.)

    Garro Jones, G. M.

    Montague, F.

    Woods, G. S. (Finsbury)

    George, Major G. Lloyd (Pembroke)

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

    Young, Sir R. (Newton)

    Gibbins, J.

    Muff, G.

    Gibson, R. (Greenock)

    Naylor, T. E.

    TELLERS FOR THE NOES.—

    Mr. Charleton and Mr. Mathers.

    5.2 p.m.
    Mr. Denman: I beg to move, in page 3, line 7, to leave out from "Parliament" to the end of the Sub-section.
    I move this Amendment formally on behalf of the hon. Member for Huddersfield (Mr. Mabane) so as to put myself in order, and I shall eventually withdraw the
    64
    Amendment. The point that it raises seems worth an answer from the Chancellor of the Exchequer. The Clause as it stands says that the money to be paid into the Exchequer shall be paid from moneys provided by Parliament for the several Defence Services. The Amendment seeks to delete the words "for the

    65
    several Defence Services," thereby making it possible to take the money from any Vote. The point has this significance, that we have been blamed outside for not attaching sufficient importance in the Debates on this Bill and on the Money Resolution to the problem of the home front, and my hon. Friend is seeking to make the money payable from Votes that deal with the home front. It is worth while the Chancellor making it perfectly plain that the Bill has no relation to what is known as the home front. The money to be borrowed is to be spent upon the Defence Services, and subjects like gas masks and the anti-gas services will, I suppose, come on the Home Office Vote, and no part of this money that is to be borrowed can be used on that. Similarly it would not be permissible to borrow for any capital developments on agriculture. Again, food storage for the civilian population would not be an object for which it would he legitimate to borrow. It seems to me, therefore, desirable, for the public information, that the Chancellor should make it clear that this money is solely to be expended within the Defence Services and not on any of those subjects which we ordinarily describe as the home front.
    5.5 p.m.
    Mr. Chamberlain: I am sorry that the hon. Member for Huddersfield (Mr. Mabane) is not here to put his own case. I fancy that the case made by the hon. Member for Central Leeds (Mr. Denman) does not reveal the purpose for which the Amendment was put down. It is plain on the face of the Bill that this money is confined to the Defence Services. It says so on the very first page of the Bill. The £400,000,000 is to be
    "applied as appropriations in aid of the moneys provided by Parliament for the Defence Services for those years."
    It goes on in the last Sub-section to define what is meant by Defence Services, and it says they mean
    "the Navy, Army (including Royal Ordinance Factories) and Air Services."
    It is, therefore, impossible that the Home Office Vote should be included in the matter.
    Sir P. Harris: The hon. Member made one very serious point with regard to food storage. It is assumed that great storage tanks or concrete buildings are to be constructed for defence purposes. It is
    66
    interesting to know that this £400,000,000 will be expended on what, after all, would be really capital expenditure.
    The Chairman: I have listened to the hon. Member who proposed the Amendment with a view to realising what it meant. Now it seems to me that not only the hon. Baronet but probably the hon. Member who moved the Amendment also are both entirely out of order. The Amendment has nothing whatever to do with expenditure. It refers to repayment.
    Mr. Maxton: Do I understand from the Chancellor of the Exchequer that any sums spent by the Home Office or by the Minister of Agriculture would be additional to the estimates of £1,500,000,000?
    The Chairman: I am afraid I did not sufficiently include all the offenders in my condemnation. I should have said that the Chancellor of the Exchequer was also out of order. The hon. Member for Bridgeton (Mr. Maxton) is equally out of order in the question that he asks.
    Mr. Maxton: I am prepared to accept your Ruling, Sir, that the Amendment is out of order, but we are in Committee and I should imagine perhaps that a manuscript Amendment would be in order. I notice that the purpose of the Bill is to provide money for the Defence Services and for purposes connected therewith. I should imagine that the point that I am putting to the Chancellor now comes within the "purposes connected therewith."
    The Chairman: I am sorry, but that is not within the Question that is before the Committee.
    Mr. Chamberlain: On a point of Order. Would it not be in order to raise this point on the Question, "That the Clause stand part of the Bill"?
    The Chairman: That might be, but I am sure that it is not in order now.
    Mr. Maxton: I understand that the Amendment is to leave out the words
    "out of moneys provided by Parliament for the several Defence Services."
    Later on we have to deal with a Subsection which defines the Defence Services.
    The Chairman: The hon. Member has not read the whole of paragraph (d).It begins:

    67
    "the sums required to be paid into the Exchequer under this Sub-section shall be paid."
    Mr. Maxton: The paragraph reads:
    "The sums required to be paid into the Exchequer under this Sub-section shall be paid, at such times and in such proportions as the Treasury may from time to time direct, out of moneys provided by Parliament for the several Defence Services."
    The Chancellor has told us that the House of Commons control over this is found in our control over the Estimate. Now we are told that the Defence Services only have an expenditure within the scope of this £400,000,000 that we are discussing.
    The Chairman: The hon. Member is still labouring under a misapprehension. He is dealing entirely with the objects upon which the money is to be expended. The Amendment has nothing whatever to do with that. The Sub-section deals with the way in which interest and capital sums are to be repaid to the Exchequer, and paragraph (d) says that they are to be repaid out of moneys provided by Parliament for the several Defence Services. There might be expenditure on something totally different and yet it might be provided that it should be repaid out of moneys provided for certain Services. This reference is simply and solely to repayment and we cannot discuss expenditure on the Amendment.
    Sir P. Harris: If these words were left out, the money could be repaid from money voted for other Departments, such as the Board of Trade. If they remained in, it would be limited to moneys voted for the Army, Navy and Air Force.
    The Chairman: That is not the point at all.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    5.13 p.m.
    Mr. Pethick-Lawrence: This is practically a one Clause Bill and all the discussions which it would have been out of order to raise by Amendments to the Sub-sections have to be compressed into a single discussion on the question that the operative Clause stand part of the Bill. I propose to take the opportunity of putting some questions to the Chan-
    68
    cellor. In the dialogue that took place between him and my hon. Friend the Member for Chesterfield (Mr. Benson), as far as I could make out, my hon. Friend was handing out bouquets to the Chancellor for his handling of the crisis some years back and the Chancellor was pushing them away from him. It would not be your wish, Sir Dennis, that I should repeat the discussion we had on that occasion. The first point to which I want to address myself occurs both in Subsection (1) and Sub-section (2). I should like the Chancellor of the Exchequer to tell me whether my reading is correct or not. I understand the words—
    "issue from time to time … sums not exceeding—L400,000,000"—
    to mean that the total amount of cash which the Treasury will obtain owing to these powers, is not to exceed £400,000,000. That is to say, supposing, for instance, the Treasury were to issue a 3 per cent. loan at a discount. Say they were to issue a £10,000,000 loan at a discount of, say, 2½ per cent., then clearly the actual amount of cash which the Treasury would get from that loan would be only £9,750,000, but the loan would be for £10,000,000, and so on throughout the whole of the amount. From the wording of the Bill the Treasury is empowered to raise money to the extent of £400,000,000 which might involve a total debt substantially in excess of £400,000,000 if most of it was in fact issued at a discount. The wording is rather obscure on that point, and I should be glad if the Chancellor of the Exchequer would tell me whether I am right.
    With regard to the power of the Treasury to issue the loan as and how it may please, there are several points which I want to put to the Chancellor of the Exchequer, and several views I want to impress upon him. During the Great War the rate of interest on loans rose from a modest figure at the beginning to a very high figure at the end, and the Chancellor of the Exchequer in those days had to pay, on behalf of the nation, a very large amount in order to get the money from those who had it in the later stages of the War. Compared with the War finance this £400,000,000, much as it is for certain purposes, is a comparatively small amount, but I am sure that not only we on these benches but the nation as a whole is determined that certain individuals shall not reap rich profits from the emergency

    69
    which the Chancellor of the Exchequer tells us we are in at the present time.
    I am one who believes that the new powers which the Chancellor of the Exchequer has got through the Exchange Equalisation Fund and through the departure from Gold give him the means of regulating to a very large extent not merely the day-to-day interest which he pays on his Treasury Bills, but to a certain extent the long range of interest also. We had an illustration of that when the Chancellor of the Exchequer carried through the very successful conversion of the 5 per cent. War Loan two years ago. Owing to the great powers of dealing with money which are in the hands of the Government at the present time, the Chancellor was able to force down the rate of interest then to 3f and to the surprise of a great many people he was able only recently to carry it considerably below the 3½ per cent.
    The second point I want to put to the Chancellor is, therefore, will he give us an assurance that, in the floating of this succession of loans, he will adopt a hardhearted attitude towards those who have money to invest, and that he will not try and coax them, as they were coaxed during the Great War, by higher and higher rates of interest, but that he will use such powers as he has in order to get the money for the nation at a reasonable rate? That brings me, in passing, to refer to the actual rate of interest at the present time. A little while back the rate of interest was below 3 per cent. but it rose to 3 per cent., and the effect of the Chancellor's announcement of his £1,500,000,000 was to drive up the rate of interest until it reached very nearly a figure of 3½ per cent. I was careful, as the Chancellor will remember, last week not to prophesy that it would stay at that figure, and as I anticipated there is some recovery to-day. I believe in the long run by various means which are open to him at the present time and were not open to the Chancellor of the Exchequer during the War it is possible for him to keep the long-range interest down. Will the Chancellor of the Exchequer give us an assurance that he will not allow rich men to make large profits out of charging high rates of interest on the loans, but will do everything in his power to keep the rate of interest low throughout the currency of these flotations?
    70
    Further, I would Like to raise the question of the flotation of loans at a discount. I have already referred to that point and asked the Chancellor of the Exchequer whether I am right in assuming that the total loans to be floated may be considerably in excess of £400,000,000 if issued at discount. But whether that is right or wrong, it is well known that there is a predilection at the Treasury in many cases for a lowish rate of interest at a discount, the reason being, of course, that more money can be raised from well-to-do people if they think they are going to get not only the rate of interest, but a premium on the redemption of the loan. If the Chancellor of the Exchequer allows the Treasury to float these loans in that way, then, when these five years are over, the country will be saddled with not merely £400,000,000, but something substantially in excess of that sum. The third point, therefore, is to ask him to give an assurance that there will be no attempt made to float loans at an appreciable rate of discount, by which I mean at a rate of 1 per cent. or 2 per cent. A quarter or half per cent. may be necessary for the purpose of performing the operation, but no appreciable rate of discount should be given.
    The next point refers to a method which was largely adopted during the Great War for floating loans. It was found sometimes during the War that it was very difficult for the public to subscribe the money, and therefore the Government took what was financially a very grave and unfortunate step. It said to possible investors, "It does not matter whether you have the money or not, the Bank will advance you the money on your existing assets, and later on by arrangement between you and the bank, it may be this year, next year or some years hence, you can repay the bank." I have been arguing against the proposals of the Chancellor all through that they might be inflationary, and I still adhere to that opinion. There is one thing that I am clear about, and that is, that if he were to float his loans in the way that I am now describing by pure bank credit, then the inflationary effect on his loans would he very much greater still. The effect of getting the banks in effect to subscribe the money and not to place the burden upon their clients until some time afterwards, is to float a loan purely on bank money, and that means that the total

    71
    credit so created can be a very much larger amount even than the amount of the loan.
    Therefore, I hope that the Chancellor will on no account resort to the pernicious practice adopted during the War of making these vast inflationary loans based on bank credit. It had some of the most serious effects during the Great War, and, incidentally, brought immense riches to the banks and sent up prices and rates of interest far more than would otherwise have been the case. If it were really the intention of the Chancellor of the Exchequer to raise his loans in such a way as that, it would be far better, if the money was to be pure credit, that the nation should produce its own credit and get its own profit on it. That at any rate would be intelligible, but to allow banks to make vast profits out of loans guaranteed by the State would, incidentally, produce the worst evils of inflation, which, I hope, even the present Chancellor of the Exchequer will refrain from doing. That is all that I have to say on Sub-section (2), and the Committee will no doubt be relieved to hear that my remarks on the later Sub-sections will not be so detailed. Sub-section (3) I can entirely support, and therefore I need not say anything about it.
    On paragraph (a) of Sub-section (4), it had been proposed to move an Amendment. The effect of that Amendment, if it had been possible, would have been simply to reduce the amount of borrowing. Therefore I do not think it was a very important Amendment, though I should have supported it had it been in order and been allowed to go to a division. Paragraph (b) of that Sub-section contains the conditions upon which the sums issued shall be repaid, and when the Chancellor of the Exchequer was speaking about this matter on the 17th of last month, he described it as a mere book-keeping entry between the Departments. If I understand the provisions of Sub-section (4) aright, I cannot think that that accurately describes the proposed transaction. I am not, of course, falling into the error of imagining that these are the terms upon which the loans are issued to the public. I appreciate that it has nothing whatever to do with that matter, but if I understand the Sub-section aright, it
    72
    imposes upon the future revenues the charge of meeting the interest and the sinking fund of these loans. I am aware of the fact that no one Parliament can bind another, and that it would be perfectly possible for some future Parliament to rescind this either in so many words or in effect.
    Unless I am wrong the effect of Subsection (4) as it stands will be that the Chancellor of the Exchequer in the year beginning six years from now will have to find the money in his Budget, presumably out of revenue—unless he raises fresh loans—to pay the interest and such Sinking Fund as is provided in Subsection (4, b) in order to effect the repayment of the loan. If, therefore, I am right, it seems to me that this Sub-section is a good deal more than a mere bookkeeping entry between the Departments. It is a proposal which Parliament will have to honour, unless Parliament, as any Parliament can do, reverses its decision and extends the period of repayment, or alters it in any other way.
    That brings me to the question of the rate of interest. When the Money Resolution was brought forward it was the opinion of the House that the effect of this Sub-section was that the debt will be paid off at the end of 35 years from now—that is, for five years from now there is no Sinking Fund, and the repayment period will be for 30 years afterwards. As I see it, that is not necessarily the case. It is true that if the loans were borrowed exactly at 3 per cent., then the loan would be paid off at the end of that time. If they were borrowed at 3 per cent., without discount, and redeemable in 30 years, the effect of Subsection (4) would be that the close of the repayment of the loan would be at the end of 30 years. But if the Chancellor of the Exchequer departs from those terms, and issues the loan at, say, 3i per cent. or at 3 per cent., say, with 5 per cent. discount—both of which courses I very strongly deprecate—then, although the Treasury have got moneys out the the Defence Services year by year up to the end of 35 years—the amount of repayment specified in Sub-section (4)—it might well be that so far as the Exchequer as a whole was concerned they would not fully have accomplished the repayment. If I am right in thinking that, I should like the Chancellor of the

    73
    Exchequer to tell us what, if any, is the further provision that is made for extinguishing the balance of the debt left over after the transaction has been completed. I admit that it is rather a complicated point.
    Provided the rate of interest is precisely the same as is specified in Sub-section (4) I can see quite clearly that the debt will be extinguished in 35 years, but in so far as the arrangement differs from that, for instance, if the Chancellor of the Exchequer is able to borrow at a cheaper or a dearer rate, there will clearly be a balance, either in our favour or against us, which will remain at the end of the 35 years. Therefore, we need some explanation from the Chancellor of the Exchequer, before we pass this Clause, as to how precisely it is intended to handle the matter. I do not think that there is anything further that I should like to raise, but I should be glad if the Chancellor of the Exchequer would enlighten me on the points of fact about which I have requested information. Further, I hope that he will be able to give us some firm assurance as to the conduct of this matter in future which will relieve us from the feeling of anxiety that posibly something might happen similar to what happened in the Great War, and that we may have great windfall profits made either by investors at high rates of interest, or by the banks owing to credit inflation similar to that which took place during the Great War.
    5.36 p.m.
    Mr. Benson: I wish to confine my remarks to Sub-section (4). The Sinking Fund or terminable annuity has not received as much attention in our Debates as the major problem of the borrowing of the £400,000,000. I think it is desirable that this matter should be discussed, because I can see neither rhyme nor reason why it should appear in the Bill. As my hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) has pointed out, everyone knows that this House is not capable of binding a future House. The House of Commons cannot lay down a law which some future House cannot repeal, and the whole policy of sinking funds has always broken down on that point. This House from time to time has played with the idea of Sinking Fund to pay off debt ever since Walpole tried it 200 years ago, and, with one or
    74
    two trifling exceptions, they have invariably proved failures. Therefore, it seems to me utterly ridiculous to put into a Bill machinery which has invariably proved futile in the past and will unquestionably prove futile in the present case.
    There is nothing in this particular Sinking Fund that makes it any better than any of the previous ones. On the contrary, it is a good deal worse in many respects. In the first place, it is extraordinarily clumsy. It is an inter-departmental Sinking Fund. As I understand it, when we start our repayments there will appear in the Service Estimates a sum representing the repayment of capital and interest, which will be handed over to the Treasury. That means that the Treasury will provide the Departments with certain sums of money which the Departments will then hand over to the Treasury in repayment of the debt. It is a clumsy inter-departmental cross-entry in the books. It may have the effect, so long as it remains law, of throwing the responsibility of cancelling so much debt each year on the Government, but by linking it up with payments between the Departments it will have the effect of making the various Service Estimates difficult to compare, and it will swell the total and produce no real good.
    I cannot understand what was the difficulty in understanding the Amendment which should have been moved by the hon. Member for Huddersfield (Mr. Mabane). He merely proposed to short-circuit the Service Departments, and the result would have been that Sub-section (4b) would have provided that the Exchequer shall issue money to itself to repay itself for the money which it has just issued. I think that on the whole that was as sensible a proposal as making these cross-entries through the various Departments. There is nothing in this proposal of the Government which really binds the future. As a matter of fact this Sinking Fund is weak in this respect, that it actually can fulfil the full letter of the law without reducing a single penny of the Debt. A Chancellor of the Exchequer who wishes to obviate the burden has only to borrow on Ways and Means advances or Treasury Bills, repay these Treasury Bills and Ways and Means advances out of the capital repayment of this Sinking Fund, and he will have fulfilled the letter of the law without reducing the Debt by a single penny.

    75
    What is the motive of putting all this cumbersome machinery into the Bill? I am not quite sure whether it is sheer window-dressing or whether the Chancellor of the Exchequer has really good intentions. If he has good intentions I hope that he will excuse my quoting some words on the subject of sinking funds and good intentions by Mr. Gladstone. This is the authentic statement of what Mr. Gladstone said in 1875:
    "The misfortune of having these good intentions, and of giving them form, is this—that they induce people to believe that they have done something for the public service and the reduction of the Debt when they really have done nothing whatever—to suppose themselves to have done something real when they have made an imaginary sacrifice to economy and public interest, for which, unfortunately, they are much more disposed to compensate themselves by substantial additions to the public expense."
    How better could the Chancellor of the Exchequer's proposal be described? His good intentions are of a rather peculiar character. In this Sinking Fund he actually arranges that his repayments shall increase as the period of time grows more and more distant. If he borrows his £400,000,000, his first year's annual repayment will be £8,400,000, and it is not until 35 years' hence that the maximum figure of £20,000,000 a year will be reached. In other words, as far as the Chancellor of the Exchequer is concerned, the greater the distance in time, the brighter and more radiant will his good intentions shine. In the first 15 years he will repay only £160,000,000, and in the second 15 years £240,000,000. The right hon. Gentleman reminds me of the small girl who was asked whether she was going to grow up into a good girl, and she replied that she would rather be beautiful and repent. The Chancellor of the Exchequer, like all other rakes, when he sows his wild oats has no doubt at the back of his mind that he intends to reform and that ultimately he will repent in full. That is quite common among sinners, but I think the Chancellor of the Exchequer is an exceptionally cautious case, for he must be the only sinner who has ever attempted by Act of Parliament to postpone his final repentance to his 103rd birthday.
    What is the use of cumbering this Bill with fantastic and futile machinery which will not work? There is only one guarantee of debt repayment, and that is
    76
    the financial integrity of the Chancellor of the Exchequer. If that integrity exists, sinking funds are not necessary; if it does not exist they are of no avail.
    5.45 p.m.
    Mr. Chamberlain: I will endeavour to answer the questions which the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) has very courteously addressed to me, and I need hardly say that on matters of fact I am unable to find any fault in his interpretation. The amount of the sums aggregating £400,000,000 is, as he rightly suggested, the amount of cash which can be raised by the Treasury. The hon. Member asked me to give an assurance on three points. In the first place, that in floating loans I would use my powers to keep the interest low. Let me say with regard to that, as to the other assurances for which he asked, that they all deal with matters of some importance which must undoubtedly be watched, but it really would not be a good principle for me to give specific and definite assurances on them at this stage. I think he will agree with me that as this period of borrowing is to last over five years there may be changes. No one knows how long he may remain in the particular position he happens to hold at the moment, and, therefore, I have to contemplate that during the course of the next five years I may no longer be in charge of the Exchequer. The hon. Member says that this Parliament cannot bind its successors. I do not think it can, and, therefore, I am not in a position to give specific and definite assurances, but I have no hesitation in saying that I intend to use all the power I have to keep the interest on any loans which I raise as low as I can.
    The hon. Member asked also for an assurance that I would make no attempt to float any loan at an appreciable rate of discount. There again I cannot say what the position may be for five years, hence, or what may be the best way of raising money at any given time. I do not think I can go further than that, except to say that I shall endeavour, as far as I am concerned, to raise all the money I have to raise on terms which at the moment seem to me most favourable for the taxpayer. The third point on which the hon. Member asked for an assurance was with reference to certain loans raised during the War on bank credits; he asked that I would not resort

    77
    to a practice of that kind. If I remember aright there was considerable difficulty at the time to which he referred in obtaining subscriptions direct from the public and that that was the reason why the the banks were called in. I do not anticipate that any such difficulty will arise now, and whilst guarding myself against any specific assurances over this long period of time, I think the hon. Member may feel no anxiety on that point.
    Mr. Pethick-Lawrence: I appreciate the difficulty of the Chancellor of the Exchequer in giving actual pledges on the other two points, but on this last point I think he should give us a little more, because it is universally agreed that it was a colossal blunder and cost the country a great deal of money. I hope the Chancellor of the Exchequer will go a little further on this point.
    Mr. Chamberlain: I can only say that I have no intention of resorting to any such practice, and I have no reason to suppose that I shall be put in the position which existed in 1914–18 when that procedure was adopted. Let me come to the points raised on Sub-section (4). What I had in mind was that there was no relation between the rate of interest and the period of repayment of any loans which might be raised under the terms set down. They are to regulate the procedure between the Exchequer and the Departments concerned. It is true that under these provisions, provided they are not upset by any Act of Parliament hereafter, the accounts will be squared as between the various Departments and the Treasury. The hon. Member will appreciate that that does not necessarily mean that any loans raised from the public will have been paid off. He said that if there was, in fact, a difference between the average rate of interest at which the loans were raised to the public and the rate of 3 per cent., it might be either way; either the public debt will be paid off or it will not be paid off. He asked what provision in that case would be made for a Sinking Fund which was not provided for under these arrangements. I think he will find the answer in Sub-section (3), where it is provided that the interest on the public loans falls within the Fixed Debt Charge, which is recouped in turn by the interest derived from the Defence Departments
    78
    out of money voted by Parliament. Therefore, if it should prove at the end of the period that there is still something unpaid it would fall within the Fixed Debt Charge and provision would be made to discharge it.
    Mr. Pethick-Lawrence: Surely Subsection (3) refers only to the period of five years and has nothing to do with the Fixed Debt Charge?
    Mr. Chamberlain: It is my fault; I should have said Sub-section (2). I was in fact referring to Sub-section (1) of Section (2) of the War Loan Act, 1919. Sub-section (2) of this Bill authorises the Treasury to raise money:
    in any manner in which they are authorised to raise money under and for the purposes of Sub-section (1) of Section one of the War Loan Act, 1919; and any securities created and issued to raise money under this Subsection shall be deemed for all purposes to have been created and issued under Subsection (1) of Section one of that Act."
    The effect is to provide that the interest shall be within the Fixed Debt Charge. I appreciate that the position is not very clear.
    Mr. Pethick-Lawrence: I cannot possibly question what the right hon. Gentleman says, but I should like to be quite clear what it is he really means. Do I understand him to mean that if Section 1 of the Act of 1919 is read into this Sub-section, it will have the effect, after the period of 35 years, that any repayments still left over, either of interest or Sinking Fund, will come out of the ordinary services of the year? I am not clear what the position is.
    Mr. Chamberlain: I am afraid it is rather technical, but the interest on the loans raised is provided for under the Fixed Debt Charge. If the hon. Member will look at Sub-section (5) paragraph (b) he will see that in regard to the repayment arrangements as between the Defence Departments and the Treasury
    "so much thereof as represents interest shall be applied in payment of an equivalent amount of interest which would, but for this provision, have been paid out of the permanent annual charge for the National Debt."
    That is the Fixed Debt Charge. Therefore, the Fixed Debt Charge is recouped for any interest it provides by interest paid by the Defence Departments. If there is a difference between the rates of the two and after 35 years some part

    79
    of the principal is still unpaid, it will have to be provided for by the Fixed Debt Charge. The hon. Member said that before the debt is paid off another Government might rescind these proposals and put an end to the Sinking Fund. I cannot possibly prevent that. The hon. Member is perfectly right in saying that no one Parliament can bind its successors, but all the same I think it is right to put it on record that this is our intention, and, of course, it is equally arguable that a future Parliament will not upset the arrangements. At any rate, I think the provisions will have a healthy effect on the expenditure of the Defence Departments, and although I cannot deny that they may be upset in the future, nevertheless, I attach some importance to them.
    5.59 p.m.
    Mr. A. V. Alexander: I am very disappointed at the answer of the Chancellor of the Exchequer. On the last point, with regard to the charge to be made against the Service Departments, all I can say is that it seems to me that in any given year the Defence Departments may have deducted from their Estimates such charge in relation to the loans which have been of service to them in the past, as the Treasury may think fit. They are to be charged at the rate of 3 per cent., but when the Chancellor of the Exchequer speaks about the Service Departments being charged, he means nothing of the kind. I can well understand the public being puzzled unless they were dealing with a revenue Department enjoying a payment made to them out of revenues earned, but in effect there is nothing more in this provision of the Bill, than that such charge will be deducted from the gross estimate of the expenditure of the Fighting Service Departments in any given year after the expiry of the five years period.
    Another thing which struck me very forcibly in the answers which the Chancellor made in the earlier discussion on the Clause is that apparently it is all right for the Government to put forward arguments on the principle of budgeting and balance sheets that would never be accepted by the directors of ordinary companies or by those running ordinary institutions. From that point of view, I consider that the Chancellor has not made an adequate answer to the points so forc-
    80
    ibly expressed by my hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) in the discussion of the Money Resolution and on the Second Reading of the Bill.
    Let me take, for example, the suggestion that, in connection with the rearmament programme, the ordering of stores for the future must legitimately be regarded as capital expenditure. I did not spend a very long time in a Service Department—I was at the Admiralty for about two and a-half years—but after my experience there, it is news to me that the ordering of stores can in any way be justified as capital expenditure. In support of that contention, the Chancellor quoted the ordering of possible reserve ammunition. In what way does the ordering of reserve ammunition in this respect differ from the provision which has been made over and over again in the Estimates of the Fighting Services for reserves of oil fuel for the Navy and the Air Force? The reserves which have been laid up from time to time by the Service Departments, whenever they were permitted to do so by the Treasury—which was not nearly so often as the Service Departments desired—have always had to be met out of revenue. I do not believe for one moment that hon. Members who are company directors, when dealing with a question of this sort in their own business would listen to the argument that such provisions should legitimately be charged to capital account.
    With regard to the suggestion made by the Chancellor, in reply to my hon. Friend, that he is satisfied that there will not be a shortage of savings, to which reference has been made, and that therefore, as was said by the right hon. Gentleman the Member for Hillhead (Sir R. Horne) last week, the country will be able to take this loan procedure in its stride, I must say that the Chancellor's statement to-day that the giving out of orders for the rearmament programme will stimulate a certain amount of new saving and that consequently the position will be eased, supports the case we are putting forward that, instead of raising £400,000,00o by loan, it would be practicable and reasonable, in view of the stimulation of expenditure on the one hand and the savings of individuals on the other, to meet a large part, if not the whole, of the armaments expenditure out of taxation.

    81
    I hope that on reflection, and after reading what he has said on this point tonight, the Chancellor will see that he has supported the case of the Opposition against this expenditure being provided by loans, and will admit our case, which is that we believe, in the interests of the public, the Exchequer and the taxpayer in the long run, this expenditure ought to be met far more out of direct taxation. After listening to the Chancellor's two speeches this afternoon, I am more convinced
    than ever that this sort of procedure, far from being sound, is in the main an effort by the Government to escape from the political obloquy and criticism, which would arise on their rearmament programme if they did their duty and taxed direct for what are wasting assets.
    Question put, "That the Clause stand part of the Bill."
    The Committee divided Ayes, 213; Noes, 101.

    Division No. 94.]

    AYES.

    [6.6 p.m.

    Acland-Troyte, Lt.-Col. G. J.

    Dugdale, Major T. L.

    McEwen, Capt. J. H. F.

    Agnew, Lieut.-Comdr. P. G.

    Duggan, H. J.

    McKie, J. H.

    Albery, Sir Irving

    Duncan, J. A. L.

    Macnamara, Capt. J. R. J

    Allen, Lt.-Col. J. Sandeman (B'kn'hd)

    Dunglass, Lord

    Manningham-Buller, Sir M.

    Anstruther-Gray, W. J.

    Ellis, Sir G.

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

    Apsley, Lord

    Elliston, Capt. G. S

    Markham, S. F.

    Asks, Sir R. W.

    Emrys-Evans, P. V.

    Mason, Lt.-Col. Hon. G. K. M.

    Assheton, R.

    Errington, E.

    Maxwell, Hon. S. A.

    Baldwin, Rt. Hon. Stanley

    Evans, Capt. A. (Cardiff, S.)

    Mayhew, Lt.-Col. J.

    Balfour, Capt. H. H. (Isle of Thanet)

    Everard, W. L.

    Meller, Sir R. J. (Mitcham)

    Barclay-Harvey, Sir C. M.

    Findlay, Sir E.

    Mellor, Sir J. S. P, (Tamworth)

    Baxter, A. Beverley

    Fox, Sir G. W. G.

    Mills, Sir F. (Leyton, E.)

    Beamish, Rear-Admiral T. P. H.

    Furness, S. N.

    Mitchell, H. (Brentford and Chiswick)

    Boauchamp, Sir B. C.

    Ganzoni, Sir J.

    Moore, Lieut.-Col. T. C. R.

    Beit, Sir A. L.

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

    Muirhead, Lt.-Col. A. J.

    Bennett, Sir E. N.

    Gluckstein, L. H.

    Munro, P.

    Blair, Sir R.

    Goldie, N. B.

    Neven-Spence, Major B. H H.

    Blindell, Sir J.

    Graham, Captain A. C. (Wirral)

    O'Connor, Sir Terence J.

    Boulton, W. W.

    Granville, E. L.

    O'Neill, Major Rt. Hon. Sir Hugh

    Bowater, Col. Sir T. Vansittart

    Gridley, Sir A. B.

    Orr-Ewing, I. L

    Bower, Comdr. R. T.

    Grigg, Sir E. W. M.

    Palmer, G. E. H.

    Bracken, B.

    Grimston, R. V.

    Penny, Sir G.

    Braithwaite, Major A. N.

    Gritten, W. G. Howard

    Percy, Rt. Hon. Lord E.

    Briscoe, Capt. R. G.

    Guest, Hon. I. (Brecon and Radnor)

    Perkins, W. R. D.

    Brocklebank, C. E. R.

    Hanbury, Sir C.

    Pstherick, M.

    Brown, Rt. Hon. E. (Leith)

    Hannah, I. C.

    Pickthorn, K. W. M.

    Brown, Brig.-Gen. H. C. (Newbury)

    Hannon, Sir P. J. H.

    Pilkington, R.

    Bull, B. B.

    Harbord, A.

    Procter, Major H. A.

    Burgin, Dr. E. L.

    Haslam, H. C. (Horncastle)

    Radford, E. A.

    Campbell, Sir E. T.

    Haslam, Sir J. (Bolton)

    Raikes, H. V. A. M.

    Carver, Major W. H.

    Heilgers, Captain F. F. A.

    Ramsay, Captain A. H. M.

    Cary, R. A.

    Heneage, Lieut.-Colonel A. P.

    Rathbone, J. R. (Bodmin)

    Castlereagh, Viscount

    Hepburn, P. G. T. Buchan-

    Rawson, Sir Cooper

    Cayzer, Sir C. W. (City of Chester)

    Herbert, Major J. A. (Monmouth)

    Rayner, Major R. H.

    Cazalet, Thelma (Islington, E.)

    Hills, Major Rt. Hon. J. W. (Ripon)

    Reed, A. C. (Exeter)

    Chamberlain, Rt. Hn. Sir A. (Br.W.)

    Holmes, J. S.

    Reid, Sir D. D. (Down)

    Chamberlain, Rt. Hn. N. (Edgb't'n)

    Hope, Captain Hon. A. O. J.

    Remer, J. R.

    Channon, H.

    Hopkinson, A.

    Rickards, G. W. (Skipton)

    Chapman, Sir S. (Edinburgh, S.)

    Hore-Belisha, Rt. Hon. L.

    Robinson, J. R. (Blackpool)

    Clarke, Lt.-Col. R. S. (E. Grinstead)

    Horsbrugh, Florence

    Ropner, Colonel L.

    Clarry, Sir Reginald

    Howitt, Dr. A. B.

    Ross, Major Sir R. D. (Londonderry)

    Clydesdale, Marquess of

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

    Russell, R. J. (Eddisbury)

    Cobb, Captain E. C. (Preston)

    Hudson, R. S. (Southport)

    Salmon, Sir I.

    Colville, Lt.-Col. Rt. Hon. D. J.

    Hume, Sir G. H.

    Salt, E. W.

    Cooke, J. D. (Hammersmith, S.)

    Hunter, T.

    Samuel, M. R. A.

    Cooper, Rt. Hn. T. M. (E'nburgh, W.)

    Inskip, Rt. Hon. Sir T. W. H.

    Sandeman, Sir N. S.

    Courtauld, Major J. S

    Jarvis, Sir J. J.

    Shaw, Major P. S. (Wavertree)

    Courthope, Col. Sir G. L.

    Jones, Sir G. W. H. (S'k N'w'gt'n)

    Simon, Rt. Hon. Sir J. A.

    Crooke, J. S.

    Keeling, E. H.

    Smiles, Lieut.-Colonel Sir W. D.

    Crookshank, Capt. H. F. C.

    Kerr, Colonel C. I. (Montrose)

    Somervell. Sir D. B. (Crewe)

    Cross, R. H.

    Kerr, H. W. (Oldham)

    Somerville, A. A. (Windsor)

    Crowder, J. F. E.

    Kerr, J. Graham (Scottish Univs.)

    Southby, Commander A. R. J.

    Culverwell, C. T.

    Knox, Major-General Sir A. W. F.

    Spens. W. P.

    Davies, Major Sir G. F. (Yeovil)

    Lamb, Sir J. Q.

    Davison, Sir W. H.

    Lambert, Rt. Hon. G.

    Stanley, Rt. Hon. Oliver (W'm'l'd)

    Dawson, Sir P.

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

    Stewart, J. Henderson (Fife, E.)

    De Chair, S. S.

    Leighton, Major B. E. P.

    Strauss, E. A. (Southwark. N.)

    Donman, Hon. R. D.

    Levy, T.

    Strauss, H. G. (Norwich)

    Denville, Alfred

    Lewis, O.

    Strickland, Captain W. F.

    Doland, G. F.

    Liddall, W. S.

    Stuart, Lord C. Crichton- (N'thw'h)

    Dorman-Smith, Major R. H.

    Lloyd, G. W.

    Tate, Mavis C.

    Drewe, C.

    MacAndrew, Colonel Sir C. G.

    Taylor, C, S. (Eastbourne)

    Duckworth, Arthur (Shrewsbury)

    MacDonald, Sir Murdoch (Inverness)

    Taylor, Vice-Adm. E. A. (Padd., S.)

    Duckworth, W. R. (Moss Side)

    Macdonald, Capt. P. (Isle of Wight)

    Thomson, Sir J. D. W.

    Touche, G. C.

    Waterhouse, Captain C.

    Withers, Sir J. J.

    Tree, A. R. L. F.

    Watt, G. S. H.

    Womersley, Sir W. J.

    Tryon, Major Rt. Hon. G. C.

    Wedderburn, H. J. S.

    Wood, Rt. Hon. Sir Kingsley

    Tufnell, Lieut.-Commander R. L.

    Wells, S. R.

    Young, A. S. L. (Partick)

    Turton, R. H.

    Wickham, Lt.-Col. E. T. R.

    Wakefield, W. W.

    Williams, C. (Torquay)

    TELLERS FOR THE AYES.—

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

    Williams, H. G. (Croydon, S.)

    Dr. Morris-Jones and Lieut.-Colonel

    Ward, Irane M. B. (Wallsend)

    Winterton, Rt. Hon. Earl

    Llewellin.

    Warrender, Sir V.

    Wise, A. R.

    NOES.

    Acland, Rt. Hon. Sir F. Dyke

    Greenwood, Rt. Hon. A.

    Paling, W.

    Adams, D. (Consett)

    Griffith, F. Kingsley (M'ddl'sbro,W.)

    Parker, J.

    Adams, D. M. (Poplar, S.)

    Griffiths, G. A. (Hemsworth)

    Pethick-Lawrence, F. W.

    Adamson, W. M.

    Hall, J. H. (Whitechapel)

    Potts, J.

    Alexander, Rt. Hon. A. V. (H'lsbr.)

    Hardie, G. D.

    Pritt, D. N.

    Ammon, C. G.

    Harris, Sir P. A.

    Ridley, G.

    Attlee, Rt. Hon. C. R.

    Hayday, A.

    Robinson, W. A. (St. Helens)

    Banfield, J. W.

    Henderson, A. (Kingswinford)

    Sanders, W. S.

    Barnes, A. J.

    Henderson, J. (Ardwick)

    Seely, Sir H. M.

    Barr, J.

    Henderson, T. (Tradeston)

    Short, A.

    Benson, G.

    Hicks, E. G.

    Silkin, L.

    Bevan, A.

    Jagger, J.

    Silverman, S. S.

    Broad, F. A.

    Jenkins, A. (Pontypool)

    Simpson, F. B.

    Bromfield, W.

    Jenkins, Sir W. (Neath)

    Smith, Ben (Rotherhithe)

    Buchanan, G.

    Johnston, Rt. Hon. T.

    Smith, E. (Stoke)

    Burke, W. A.

    Jones, H. Haydn (Merioneth)

    Sorensen, R. W.

    Charleton, H. C.

    Kelly, W. T.

    Stewart, W. J. (H'ght'n-le-Sp'ng)

    Chater, D.

    Kennedy, Rt. Hon. T.

    Strauss, G. R. (Lambeth, N.)

    Cluse, W. S.

    Kirby, B. V.

    Taylor, R. J. (Morpeth)

    Clynes, Rt. Hon. J, R.

    Lathan, G.

    Thorne, W.

    Cove, W. G.

    Leach, W.

    Thurtle, E.

    Davidson, J. J. (Maryhill)

    Lee, F.

    Tinker, J. J.

    Davies, S. O. (Merthyr)

    Leonard, W.

    Viant, S. P.

    Dunn, E. (Rother Valley)

    Logan, D. G.

    Walkden, A. G.

    Ede, J. C.

    McEntee, V. La T.

    Walker, J.

    Edwards, Sir C. (Bedwellty)

    McGhee, H. G.

    Westwood, J.

    Fletcher, Lt.-Comdr. R. T. H.

    MacLaren, A.

    Williams, E. J. (Ogmore)

    Foot, D. M.

    Maclean, N.

    Williams, T. (Don Valley)

    Frankel, D.

    Maxton, J.

    Windsor, W. (Hull, C.)

    Gardner, B. W.

    Messer, F.

    Woods, G. S. (Finsbury)

    George, Major G. Lloyd (Pembroke)

    Montague, F.

    Young, Sir R. (Newton)

    George, Megan Lloyd (Anglesey)

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

    Gibbins, J.

    Muff, G.

    TELLERS FOR THE NOES.—

    Gibson, R. (Greenock)

    Naylor, T. E.

    Mr. Groves and Mr. Mathers.

    Green, W. H. (Deptford)

    Oliver, G. H.

    Bill read the Third time, and passed.

    Clause 2 ordered to stand part of the Bill.
    Bill reported, without Amendment; to be read the Third time To-morrow.

LOCAL GOVERNMENT (FINANCIAL PROVISIONS) BILL.
Considered in Committee.
[Sir DENNIS HERBERT in the Chair.]

LOCAL GOVERNMENT (FINANCIAL PROVISIONS) BILL.

  CLAUSE 1.—(Amount of General Exchequer Contributions in respect of third and subsequent fixed grant periods.)
  The Chairman: I have certain manuscript Amendments before me in regard to Clause 1, which deals with a very complicated matter. I received a copy of these after two o'clock and I find that these Amendments were not handed in at the Table or to the Minister until after the House had commenced its sitting today. In those circumstances and in a
  84
  complicated matter of this kind, it is difficult for the Chair to deal with such Amendments. Indeed there might be good, reason in a case of that sort—and I only say this as a reminder to hon. Members with regard to other occasions—for the Chair to exercise its right to decline to select such Amendments. In the time at my disposal I have given the best possible attention to these Amendments, which, I gather, are intended to stand together. With regard to the third Amendment, there is no question whatever about the fact that it is out of order because it proposes a remission of a debt to the Crown. Under Standing Order 64 that cannot be done without a Resolution in Committee with the Recommendation of the Crown. The other two Amendments, as far as I can see at present, propose merely to reduce the amount to be paid to the local authorities. To that extent so far as I am at present advised, they are in order, but I imagine that in the circumstances the hon. Members who have put their names to those Amendments will not wish to move them.
  Mr. A. Jenkins: It is true that there has been some difficulty in getting these Amendments put down earlier than to-day. It will be remembered, however, that very little time was given by the House to this Bill and we found it impossible to have these Amendments prepared sooner. The third Amendment is consequential upon the first two and no good purpose would be served by moving the first two if it is out of order. I think, therefore, that I had better take the opportunity to raise the point with regard to the Goschen loans, the point with which these Amendments are concerned, on the Question, "That the Clause stand part of the Bill."
  The Chairman: I take it, then, that the hon. Member does not wish to move either of the first two Amendments. With regard to what he said about raising the point on the Question, "That the Clause stand part of the Bill," we must wait until we come to that Question.
  Motion made, and Question proposed, "That the Clause stand part of the Bill."
  6.20 p.m.
  Mr. Jenkins: I desire to raise the question of the Goschen loans. These loans were contracted by a number of local authorities some eight or nine years ago and the repayment of those loans and the interest upon them has since been a charge upon those authorities. When the Bill reviewing the block grant came up for consideration, it was felt that the Goschen loans should be dealt with in the same way as the contributions under the Unemployment Insurance Acts which have now been merged into the block grant and will be distributed equally over all the local authorities. The point I wish to make is that payments in connection with the Goschen loans should rank for grant in precisely the same way as any of the other local government expenditure which comes into the block grant. I, therefore, feel that I am in order in raising this matter now, and I wish to draw attention to the fact that last year the Goschen loan payments attracted to the block grant no less a sum than £79,000 from Exchequer Funds.
  These loans impose a liability at the present time on only 16 authorities and they apply more particularly to those authorities which are very highly rated including a number of authorities in the
  86
  special areas. I may cite one or two examples. Merthyr Tydfil has a rate liability of 8.2d. and a yearly liability of £7,324 in respect of the Goschen loans; Sheffield has a rate liability of 5.05d. and an annual liability of £60,809; Monmouthshire has a rate liability of 10.36d. and an annual liability of £40,525, and Glamorganshire has a rate liability of 3.45d. and an annual liability of £35,313. The total amount of payments in respect of the Goschen loans annually is £340,844 and the total amount of debt outstanding is in the region of £2,000,000 and all that liability rests, as I say, upon 16 authorities nearlly all of whom are highly rated. London has a small liability under this head representing a rate of .07d. and a total amount of £16,700 annually but apart from London the other authorities affected are—
  The Chairman: I am sorry but I do not see how the hon. Member can discuss this matter on Clause 1. I have followed him very carefully and he appears to be dealing with the burden on certain local authorities of these liabilities with regard to the Goschen loans; presumably with a view to asking for some form of relief for those particular authorities. Clause I, I must point out to him, does not deal with any question of apportionment between local authorities.
  Mr. Jenkins: The total amount of money in the block grant originally was £48,000,000. A deduction was made in respect of unemployment insurance contribution which brings it down to £46,000,000. I desired by my Amendments to bring it down to £45,000,000 in order to deal with the Goschen loan repayments.
  The Chairman: I think the hon. Member is not on the point which I raised. He appears to be discussing the incidence of relief given, or proposed to be given, to various local authorities in various proportions, but Clause 1 does not deal with that question at all. It deals with the amount of the general Exchequer contribution, and there is no question of apportionment raised in it. Whether the hon. Member can raise his point on another Clause later on remains to be seen, but it seems to be clear that he cannot do so on Clause 1.
  Mr. Jenkins: With every possible respect, Sir Dennis, I submit that I am

  87
  attempting to deal with the Exchequer contribution. As I say, before the Unemployment Insurance contributions were taken into account, the total amount of the block grant was about £48,000,000 made up of certain amounts representing, roughly, 22½ per cent. of Exchequer money. Already that £48,000,000 has been reduced to £46,000,000 by applying to Unemployment Insurance contributions the principle which I am now seeking to apply to the liabilities in respect of the Goschen loans.
  The Chairman: I think the hon. Member is right to that extent but he cannot, on this Clause, discuss the relative proportion of the relief to be given to different authorities. He can discuss the inclusion or otherwise of the payments in connection with the Goschen loans in the General Exchequer Contribution, but that is as far as he can go on this Clause.
  Mr. Jenkins: As I have pointed out, there is in this £46,000,000 a payment amounting to £79,000 last year which was attracted to the block grant in consequence of the repayment of the Goschen loans, and it seems to me, with every respect to you, Sir Dennis, that since that is included in Clause 1 it ought to be possible to raise the issue which I am seeking to raise, as a general principle. If you so desire, I shall not go into the details of the expenditure imposed upon certain local authorities in this respect but I want to say that the incidence of that expenditure is most unfair. If the principle were applied here which has been applied in respect of unemployment contributions, then it would be deducted from the £46,172,000 in the way I suggest and spread over the whole country and not left as a burden on these 16 authorities. This matter has received the consideration of the associations representing local government bodies during the last year when the block grant was under discussion. It was indeed mentioned by the Minister as one of the factors that should come up for consideration. The County Councils Association discussed it and made a recommendation that the Goschen loans should be dealt with not less favourably than the finances under which the trunk roads have been taken over. I understand that the Association of Municipal Corporations has not arrived at a decision upon it, but there is a favourable
  88
  view held by a substantial number of local government people in this country that the Goschen loans should be dealt with in the manner that I have suggested.
  Since so little time has been given to the House to deal with this Bill, I would like to ask the Minister whether it is not possible for him to make representations to the local government associations for the purpose of getting the matter considered. If that were done, I think it would be possible to reach agreement upon it. Then I would like to ask the right hon. Gentleman whether it would not be possible to introduce a short Measure to this House embodying such decision, so as to avoid the necessity of going on for a very long period, probably 10 years, during which time these 16 local authorities would be called upon to continue to meet this very heavy burden. I think there is a possibility of getting the matter dealt with in that way, and since the Amendments which I wished to move have not been in order, I would like to ask the Minister to make a statement on the question and to say whether he is prepared to make representations to the associations of local government bodies on the subject.
  6.32 p.m.
  Mr. E. J. Williams: I appreciate that my hon. Friend the Member for Pontypool (Mr. Jenkins) found it somewhat difficult to talk within the radius of Clause 1 of this Bill, and I do not wish to stray beyond the Ruling given by the Chair, but I would like to reinforce what my hon. Friend has said by showing how this burden actually falls twice upon the same personnel in a given local authority's area. It is known by most Members of the Committee that the Goschen loans were contracted by the old boards of guardians prior to 1929, and in the merging of the guardians into the public assistance committees, which, in fact, are the county councils of the country, a large number of the boards of guardians actually met their liabilities contracted through the Goschen loans. The board of guardians in my constituency, known as the Bridgend Board of Guardians, had contracted loans, but in the merging of that board into a public assistance committee it had to meet liabilities that had fallen upon other boards of guardians in the county which had failed to meet their obligations in that regard. I am sure that the Minister fully

  89
  appreciates that this means that the same people in a county have now to face an obligation that is thrust upon them under the 1929 Act after they have in fact met their previous obligation.
  I am sure that the Minister would like to meet this difficulty to the best of his ability, and I know that it is difficult—I have seen what has been taking place —to find a way to do it. I should like the Minister to explain how it might be done and whether his Department is prepared to help, because it is really a very serious obligation that is falling on the shoulders of people who have already met their financial obligations in this connection. I have cited in this regard the authority that comes within the radius of my constituency. If it is possible for a distressed area like my constituency to agree, as they have agreed for the last two years, to meet as far as possible the obligations placed upon them under the 1929 Act, it should be possible for the whole of the country to take upon itself the obligation that falls upon these 16 authorities. That is really the substance of the case that my hon. Friend has placed before the Minister, who, I hope, will endeavour to meet us in this regard.
  6.36 p.m.
  The Minister of Health (Sir Kingsley Wood): May I say how much I sympathise with the hon. Member for Pontypool (Mr. Jenkins) in not getting his Amendments past the Chair? I should like to thank him for all the help that he has given us at the Ministry and the local authorities in connection with these proposals, and so any suggestion that he brings forward in relation to them, at any rate, has my sympathy. He has made a considered speech and an informed one, and for all these reasons I was very anxious that he should, if possible, be able to make a fair statement of his case. The right hon. Member for Wakefield (Mr. Greenwood), whom I see opposite me once again, doubtless remembers the Goschen loans as much as I do, and I think that anyone who bears the responsibility, even for a brief period, of a Minister of Health would desire, if possible, to deal with a matter like this, which has been outstanding for some considerable time.
  I think there are some 16 local authorities concerned, but I think it right to say
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  that not all of them are in the position which has been represented to us to-day and that some of them, like Derby, Essex and London, are not perhaps in a position to make such a powerful case for relief as has been made on behalf of certain other areas. I think I should also remind the Committee that while the outstanding balance of loans in this respect amounted in 1930 to £6,000,000, at the end of this month it will be about £2,726,000, and is well that the Committee should be reminded that under Section 114 of the 1929 Act a considerable measure of mitigation was made by extending the period of repayment to 15 years and by excusing the payment of interest, and, in any case where the annual charge exceeded the equivalent of the product of a 9d. rate, by limiting the annual repayment throughout the 15 years to that amount. Therefore, speaking roughly, I think that by that provision in the 1929 Act this liability was about halved.
  When the matter of the block grant revision came to be considered, we were anxious, at the Ministry of Health, to see whether it was possible, within the limits of the scheme, to deal with this problem, and I and my advisers suggested to the local authorities concerned whether it would be possible within the scheme to come to some arrangement and so deal with the matter. The local authorities have agreed, as the Committee knows, on most of the matters in connection with these proposals, and I hoped that, in connection with these Goschen loans, a similar sort of agreement might be arrived at. In fact, the financial advisers to the local authorities did consider this matter, but I regret to say that they were not able to secure agreement, and therefore I was not able to put any proposals touching this question in the Bill, because, as hon. Members will appreciate, it would mean a certain amount of sacrifice on the part of other local authorities, and perhaps not unnaturally they take the view that they have already given considerable assistance by the agreements they have arrived at so far as the necessitous areas are concerned.
  I regret that at present, as the hon. Member knows, that agreement was not arrived at. I have done my best in the matter, and so have my advisers, to

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  bring about an agreement, and if the associations could come to an agreement, I should be very glad to facilitate their efforts. If they feel that they should have more time to consider the matter, and if the hon. Member and others would take some steps to see whether agreement could not be arrived at on these lines, I would do my best to help. I hesitate to say that I would call them together, because that might not be the most helpful way to go about it, but anything that I can do to bring about a common agreement within the terms of the scheme I shall be glad to do. If some agreement were arrived at, I have no doubt there would not be very great difficulty as far as Parliamentary time was concerned. I feel that, so far as this whole scheme is concerned, that this is the only matter, speaking from the point of view of details of administration, in regard to which we have not been able to secure agreement, and anything that I can do to help I shall be very glad to do.
  6.42 p.m.
  Mr. Arthur Greenwood: I should like to press the right hon. Gentleman a little farther. One realises that he has succeeded in getting a very considerable measure of agreement among the various organisations of local authorities, each of which have their own particular interests and problems, and while the right hon. Gentleman prides himself on his success in having reached agreement, I think he might gather another scalp by settling this outstanding problem, because it is one of considerable importance to certain local authorities which have been very badly hit by economic circumstances. In a town like Barrow, their annual repayment of the Goschen loan amounts to about 9d. in the pound. Barrow is not a rich town; its annual rates are over 13s. in the pound; it did its best; the loans were duly authorised by the Minister of Health at the time; and they were incurred as a contribution to the solution of the problem of dealing with the able-bodied unemployed. In the case of Merthyr Tydfil, where the rates are over 28s. in the pound, their annual repayment amounts to nearly 9d.; and in the case of the Monmouthshire County Council, having to repay each year over £40,000, that amounts to a rate well over 10d. in the pound, and their total rates are 21s. 5d. So one could go on.
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  In these circumstances the sum involved in relation to the whole amount is not very large, but in relation to the 16 authorities which are still having to pay, it is a very considerable burden. I know that the right hon. Gentleman is anxious to do what he can in this matter, but I should have thought that he might now, if the Committee feels that it would be reasonable, himself take the initiative. Seeing that the right hon. Gentleman is anxious to get agreement and that he would be prepared to accept an agreement, I think that if it were the expressed desire of this Committee that he should again meet the organisations of local authorities, it might help towards a solution. I should like to pay my tribute to those local authorities which have helped to share the burden which is resting on the more distressed areas. It was a gesture of which we can be proud. I know that the local authorities would rather have placed the burden on the right hon. Gentleman's shoulders, and I admire his skill in getting them to take some of it, but at least it shows their public spirit and their desire to help more unfortunate local authorities. On this last one problem which remains I feel that even now it is not too late to get the local authorities to make some proposal which might result in agreement. If the right hon. Gentleman will himself take the initiative on the good will of this Committee, it may serve a very useful purpose, and to the many laurels in his crown another will be added.
  6.47 p.m.
  Mr. David Adams: I want to raise the question of the establishment of new industries which get the benefit of de-rating, and for which the loss of rates amounts to three-quarters of the whole of the rates that would be payable—
  The Deputy-Chairman (Captain Bourne): I do not think that that question arises on this Clause.
  Mr. Adams: There was not time to put down Amendments, and I wanted to appeal to the Minister to take this new position into consideration—
  The Deputy-Chairman: It will not be possible to get anything that the hon. Gentleman requires in that direction in this Bill, for it would he outside the scope of the Bill.
  Clauses 2 to 4 ordered to stand part of the Bill.

  CLAUSE 5.—(Compensation for losses on account of special and parish rates during third fixed grant period.)
  Motion made, and Question proposed, "That the Clause stand part of the Bill."
  6.49 p.m.
  Sir Francis Acland: I have given the Minister notice of a point which I desire to raise, but not as long notice as I should have liked, because the matter was only brought to my attention at a county council meeting at the end of last week. It is not a very complicated point, and the right hon. Gentleman will no doubt be able to deal with it. This Clause deals with compensation to be given by county councils for losses suffered by parish councils on account of special rates during the third fixed grant period. The original Act said that compensation was to be given by the county councils through the district councils to the parish councils for special rates levied in the standard year during the first and second fixed grant periods, but that thereafter the county councils should give such sums as they might determine. A point arises owing to the fact that these grants were given to the parishes to make up loss of revenue due to derating, and were based on the expenditure of the standard year. When that expenditure of the parish was a recurring expenditure like a loan charge, this was a fair thing to do, but a lot of the expenditure which happened to be falling upon the parishes in that standard year was not recurring but capital expenditure for that year alone, and the parishes have been compensated every year since then for expenditure which fell on them only in the one particular year.
  I have an example of a parish which laid a waterpipe in the standard year. It cost them about £20, which they met out of revenue. The loss due to derating was assessed at £22, and they have had to receive from the county council that sum every since. As this is one of the happy parishes which does not levy a parish rate, it has piled this money up in the bank and it has nothing to spend it on. At the Coronation, no doubt, they will do their best to levy a 2d. rate and "blue" some of it. That seems to me
  94
  to be a thing which ought to be modified as soon as reasonably possible. I have another case of a parish which lost 45 per cent. of its revenue through derating and spent £263 in the standard year on a water undertaking. It received, partly direct from the county council and partly by the stopping of the grant to the county council, £119 a year. The cost of the water undertaking has now gone down to £90 a year, so that the parish council receives £29 a year more than it needs in order to pay the present cost. If we are to get sanitary matters, water supply and sewerage, dealt with on a reasonable basis in the rural areas, the sooner we get rid of the difficulty of special rates on parishes the better. Perpetuating grants under this Section of the Act simply reinforces the principle of special rates and puts off the day when the rural councils will spread their charges with proper help from the county councils.
  I would like the Minister to consider whether there is not still time for him to take power to cancel the prolongation of the grants under Section 92, particularly in those cases where it is only given to meet a capital expenditure which has long since ceased in a parish where the county council has made full provision to assist rural councils in their water supply and sewerage works. At present the county councils are forced to give their grants with their eyes shut to parishes which happened to be doing something in the standard year, whereas what county councils would like to do is to have their money free and to give it to places which really need it and which are willing to spread the parish burdens. That is the best way of getting work done, for surely this system is out of date. The Minister will very likely say that it is a bargain between the district councils and the county councils. If so, the county councils were rather "had." If it is a bargain it must be stuck to, but if it is possible, as I gather from a discussion on a previous Amendment it is, for the Minister to get in touch with the local authorities concerned, I feel sure that he will do his best to consider my point, because, clearly, the longer special compensation to parishes which do not need it has to be continued, the longer we delay the proper spending of what the county councils can afford in order to help the rural district councils in the matter of sewerage works and water supply,

  95
  in which, unfortunately, so much still needs to be done.
  6.55 p.m.
  The Parliamentary Secretary to the Ministry of Health (Mr. R. S. Hudson): I have made inquiries, and I understand that there may be in one or two cases, such as those quoted by the right hon. Gentleman, capital expenditure entering into the grants in a particular year, but as far as the great bulk of the amount is concerned, it represents, not capital expenditure, but revenue expenditure and loan charges on capital expenditure. The right hon. Gentleman quoted two small cases where £22 and £29 a year were concerned, but when I remind the Committee that the total of these grants represents something like £400,000 a year and that that represents over all the rural areas a rate of something like 3½d., the right hon. Gentleman will appreciate that if the Government were to make any alteration and cut down the grants the areas would suffer very considerably. There is, of course, the further argument that the scheme embodied in the Bill is really the result of a compromise negotiated with the local authorities, and it is very difficult to go back on the agreement.
  Clauses 6 to 10 ordered to stand part of the Bill.
  Schedules agreed to.
  Bill reported, without Amendment; to be read the Third time To-morrow.

  MERCHANT SHIPPING BILL.
  Not amended (in the Standing Committee) considered.
  Mr. Speaker: The new Clause (Repeal of s. 461 of Merchant Shipping Act, 1894), which stands on the Order Paper in the name of the hon. Member for Rotherhithe (Mr. Benjamin Smith) is not in order.
  Motion made, and Question proposed, "That the Bill be now read the Third time."
  7.2 p.m.
  Sir Hugh Seely: During the Second Reading Debate I said that this Bill was brought forward on the "La Crescenta"
  96
  case. I have heard that people have thought that I meant by that that if this Bill had been in operation the persons involved in the "La Crescenta" case would have been found guilty, and therefore they were fortunate to avoid the result of their action because of the hiatus in the law. Of course it was not so, because even under this Bill the same thing applies, that a ship has to be proved to be overloaded before the persons in charge can be found guilty, and in the "La Crescenta" case it was stated by the judge that the reason it failed was that it was not proved that the ship was overloaded. That case, therefore, was outside this hiatus, and what is now being remedied is really putting back to the 1894 Act what was done by the 1932 Act. I felt I should like to say that, because any feeling that may have arisen that anything I said assumed that if this Bill had been in operation the result of that case would have been different, is unfounded. I knew at the time that the case failed because the judge held there was no evidence of overloading.

  BRITISH SHIPPING (CONTINUANCE OF SUBSIDY) BILL.
  Order for Third Reading read.
  7.5 p.m.
  The Parliamentary Secretary to the Board of Trade (Dr. Burgin): I beg to move, "That the Bill be now read the Third time."
  As the House is aware, this Bill has for its object the continuation of the possibility of payment of £2,000,000 as subsidy to the tramp section of British shipping for a further period of 12 months. Conditions subject to which this subsidy is payable are substantially the same as have been adopted in two previous years. The present freight index figure is so high that were it to continue the subsidy would in fact not become payable. It is because freight conditions have so much improved that the proposal is made that the subsidy should not as on previous years, become payable at the end of three months, but that the entire 12 months should run in order to make sure that the average of the freight rates prevailing during the 12 months is such as to justify the payment of the subsidy.

  97
  The only reason I am making any observations on the Third reading of a Bill which commands substantial approval, is to answer this question which hon. Members may ask—why, if freight rates are so high, do you move the Bill at all? It does not seem to me possible, after years and years of depression, during which all forms of reserve funds for depreciation and rebuilding have been exhausted, and in which profits have not been made so that those reserve funds could be built up, that after a few months or perhaps a year of better times the tramp shipping industry should be restored to the level at which we would like to see it. There is a long leeway to make up. Let us rejoice that conditions are better, but do not let us make the mistake of thinking that a single swallow makes a nautical summer. It does nothing of the kind.
  There is one other reason that I would ask the House to take into account. Under the stimulus of the subsidy it has been found possible to introduce order into the freight markets, and a large number of markets have been so controlled that freight rates have been maintained at satisfactory levels. The whole of that measure of co-operation has been built up under the influence of and with the sanction of the subsidy. Various voluntary committees of the shipping industry have found it possible to secure a measure of agreement by the simple expedient of saying that "Only those who agree can qualify for subsidy." I ask the House, as business men, to realise that that measure of co-operation has been invaluable, and that it would be the height of folly to allow it to disintegrate because the tide has turned. The only way we can see of keeping that co-operation in being is to renew the subsidy, hoping that freight rates may be so high that it will not be necessary to pay it, but having the power to pay it should occasion so require.
  7.9 p.m.
  Mr. Short: I do not think we can quarrel with the speech of the Parliamentary Secretary. He has not spread himself as I should have desired, and has not provided me with any peg on which I might reasonably hang my oratorical cap. During the Second Reading Debate an hon. Member opposite made reference to "Big Ben of Rotherhithe." I am not "Big Ben." His
  98
  knowledge of the sea has made his contributions interesting to the House. Having helped to build ships, and having sailed in some of them, perhaps I may tell the same story in a different manner. We are on common ground in desiring a fine mercantile marine. We would like to see British ships built by British labour and manned by British labour, and we would like to see the conditions of that labour put beyond dispute. In so far as the subsidy has made any contribution to the improvement of those conditions—and I believe it has—we welcome it. But conditions are by no means as satisfactory as they might be, and as this subsidy might well terminate at the end of the year, and as conditions of labour are attached to the payment of the subsidy, we shall expect some substantial efforts to be made by the hon. Member and his chief to ensure that still further improvement is made in the conditions governing the labour and employment of seamen in this section of the industry. On the Second Reading the hon. and gallant Member for Lewes (Rear-Admiral Beamish), who speaks with knowledge and authority, said:
  "I know something of those conditions. They are better now than they were formerly, but they are still in many ways disgraceful. Indeed, it is not possible to use strong enough language to describe the conditions almost of squalor under which the merchant seaman gallantly pursues his employment."— [OFFICIAL REPORT, 4th February, 1937; col. 1907, Vol. 319.]
  I am entitled to criticise the further provision of £2,000,000 of public money for the purpose of assisting tramp shipping when the conditions of labour are spoken of so badly by so distinguished a Member of this House. Up to now the subsidy, whatever its virtues may have been, has not remedied or redressed these wrongs completely, nor indeed has it led to the effective and thorough organisation of the industry. Up to now we have provided some £4,000,000, and the subsidy is being continued for another 12 months, though, as the Parliamentary Secretary has pointed out, if existing freight rates prevail the subsidy will not be paid. He said the subsidy had led to some organisation in the industry, to some lessening of the internal competition; but when it terminates I suppose the Government will have no power or authority over the industry, will be unable to initiate schemes to assist the industry or force reforms on

  99
  it, and I wonder what will happen if the industry becomes once again subject to world conditions such as led to the depression.
  Another point I wish to make is that the Opposition have been placed in some difficulty in debating this Bill, not having been supplied with particulars to show how the subsidy was spent during 1936, and to whom the money was paid. Without the names of the recipients we cannot make contrasts or comparisons. The Parliamentary Secretary, at a moment when his temper was frayed, accused one of my hon. Friends of talking "old stuff." I shall not indulge in old stuff by quoting from the Command Paper particulars of the payments made during 1935, but I do not think sufficient reasons have been given to explain the failure to produce the particulars for 1936. We are now in March, and I should have thought that two months allowed ample time to gather together the necessary data for the information of Members. I do not think any Government, much less this one, is entitled to ask for the continuance of the subsidy unless it puts all the cards on the Table, because the payment of this subsidy is conditioned by the readiness of the shipowners to apply Maritime Board conditions.
  In the course of our Debate a good deal of evidence has been adduced that Maritime Board conditions have not always been adopted but that in spite of it shipping firms have received the subsidy. Case after case, ship after ship, and owner after owner were cited by my hon. Friend the Member for Rotherhithe on 19th March, 1936—cases of firms who had received the subsidy but had not complied with Maritime Board conditions. The Parliamentary Secretary shakes his head, but he can look up that speech in the OFFICIAL REPORT. I have given him the date, and he will find it in column 752. As we have not the information for 1936 we are unable to see whether the firms who were previously the subject of complaint have since adopted Maritime Board rates, and I say that the Opposition have not been treated fairly. We could have thrown the floodlight of publicity on some matters.
  We know that much of this subsidy has gone to the fairly wealthy, prosperous and successful shipping companies, has gone
  100
  to swell their profits, and I must make the inevitable protest from these benches that there has been no means test. We have not treated shipowners, and we are not going to treat them up to the end of 1937, as we treat the unemployed who are out of work through no fault of their own and have to seek public assistance. This discrimination in the dispersal of public funds must excite hostility and ill-will not only on these benches but in the country. The Parliamentary Secretary waxed eloquent in trying to prove the futility of a means test for shipowners, and I wish he would use the same arguments to the Minister of Labour and the Cabinet in the matter of the impoverished members of the working class. If there is a slight improvement in the income of those subject to the means test, there is an immediate reduction in the money they receive from public funds. We cannot view this subsidy in the same light as the Parliamentary Secretary. Personally, I wish that we could remove from our Debates this distressing question of the means test, this discrimination as between one class of citizens and another.
  I wish to refer, also, to the organisation of the industry. I understand that the Government attach great importance to it, and when the announcement of the termination of the subsidy was sent to the appropriate authority representing the shipowners, the President of the Board of Trade indicated his hope that the measure of co-operation among them which had so far been achieved would not be dissipated. That applies only as, I understand it, to internal competition in the matter of freights; it does not apply to the effective organisation of the industry in matters other than freights, its organisation to meet world competition. The Government have left that matter entirely alone, though we have already provided £4,000,000 and another £2,000,000 is in the offing. Should this subsidy terminate at the end of 1937 the shipowners in this particular branch of the industry will be left, high and dry, to please themselves and to do as they like so far as their future and the future of the industry are concerned.
  The whole criticism from this side of the House is that if it was necessary to revive the industry, to keep it alive, the Government ought to have sought and obtained a larger measure of control, the

  101
  right to interfere and ensure that conditions are applied which will enable the industry to reach a stage of perfection which will make it equal to any other section of foreign shipping. I do not know whether the Parliamentary Secretary will say that it is the subsidy which has led to the improvement of which he has spoken, but I think the improvement is due to world recovery rather than to the subsidy. I hope he will be able to tell us that during the next 12 months the industry will address itself to the problem of its effective organisation, and when I say that I am not referring solely to cooperation in the matter of freight rates but am speaking of the bigger issues. I think we are entitled to ask those responsible to do something more than they have done so far, having regard to the needs of the community and to the possibilities and probabilities of the future.
  I do not like to talk of war, I hope it will never arise, but an efficient mercantile marine is essential. After the contribution the State has made the House will expect something more material than has been forthcoming up to the present. Let me quote the opinion of another Member of the House on this point. Speaking on 1st February, the hon. Member for Paisley (Mr. Maclay) said:
  "At the moment there are conflicting opinions in the industry. Some say, 'If the subsidy finishes, let us go on with organisation voluntarily.' Others say. 'Let us have no schemes at all'; and there are those, a pretty strong section, who say, 'Let us have an enabling Bill passed through the House of Commons, without any subsidy, which will force co-operation.' That is the present position among owners—a complete confusion of thought as to what is best for the future." —[OFFICIAL REPORT, 1st February, 1937; col. 1364, Vol. 319.]
  That is a disquieting situation for the House to contemplate after the State has provided £4,000,000 of public money. On the other hand, we had the hon. and gallant Member for Barkston Ash (Colonel Ropner) saying that the £4,000,000 which tramp shipping had received had been of the utmost value to that section of the industry, but that no permanent result had been achieved. These are not amateurs who are speaking but the men who are responsible for running our merchant fleet. He went on to speak of the brave words of the President of the Board of Trade:
  "The brave words of the President of the Board of Trade have been translated into a
  102
  defeatist policy. Conditions [have been imposed] which in fact have helped the foreign owners as much as they have helped British owners."—[OFFICIAL REPORT, 4th February, 1937; col. 1917, Vol. 319.]
  He ought to know something about it because he has revelled in the dispersal of public money. I-1 e has accepted some of it and I do not blame him. I make no criticism. He is entitled to it under the terms and conditions of the subsidy, but those are his opinions regarding the position of the industry on 4th February.
  finless there is effective reorganisation of the industry between now and the end of the year, the £4,000,000 that is already spent, together with what may be contemplated for 1937, will have been ill-spent. I have indulged in no bitter or hostile criticism of the industry because I am as anxious as any Member of the House to see it put upon its feet and be successful and flourishing in its own interests. Those who are responsible for the industry have some eight months to run, and they should make sure of the support of the Government and the encouragement of this House. When the Parliamentary Secretary comes to this House again, for some reason connected with the continuance of the shipping subsidy, I hope that he will be able to give us a satisfactory account of the reorganisation and the progress of the industry, and that many of his hon. Friends on the benches behind him will be able to speak more favourably of the situation.
  7.34 p.m.
  Sir H. Seely: The one redeeming feature of the situation in regard to this subsidy is that perhaps we shall not be called upon to find the money, and that is something. Everybody must feel that this is not the best way to dole out public money to an industry. The industry is certainly in trouble and is suffering from strong foreign competition, but when this system of help was started, public money was given without anything being got in return by this House as regards better conditions for the people who work in the tramp ships. Since then, some of the shipping companies have, I admit, agreed to organisation. I am not proposing to go into the question of where the money has actually gone. One cannot but feel that it is wrong that public money should go to people who do not actually need it, when there are so many large disbursements to make to people

  103
  who need the money at the present time. Hon. Members who listened to the speech made by the hon. Member for Rotherhithe (Mr. Benjamin Smith) will have realised the sincerity with which such speeches are made. They have had an effect, and reorganisation will undoubtedly go on in the industry and better conditions be brought about for some of the people who work in it. I oppose the Bill as a bad method of giving public money. The only merit is that we may not have to pay the money.
  7.36 p.m.
  Mr. David Adams: The continuance of this subsidy is, I suppose, a case of agreement on the third year of asking, and it is in my judgment, a model form of subsidy. If various industries are to be assisted, the form of subsidy based upon certain standards of trade or price, without which the subsidy cannot be claimed, is almost ideal in dealing with those industries. Hon. Members must bear in mind that freight rates are based upon a normal year, and that to-day's rates have so far not exceeded those of 1929. If the subsidy is not paid, the shipping industry will still have very heavy financial arrears to make up. I know from personal knowledge that there is not the money in the industry, generally speaking, to enable fresh vessels to be built. The temptation to dispose of ships, now that the market is rising, is pretty considerable. From the national point of view, it is unfortunate that there has been a depreciation in British-owned tonnage since the War of no less than 2,000,000 gross tons. It is the business of the Government to attempt to arrest that depreciation, which is still going on.
  I regret that the subsidy may come to an end at the end of the year. Aided by good trade, the industry could have been brought more up-to-date, and more in line with certain qualities of foreign tonnage. As to reorganisation in the industry, there certainly is co-operation among British owners generally, and an agreement has been prevalent at all times. The difficulty is that we are confronted with a vast amount of tonnage
  owned by foreign owners and competing with British tonnage throughout the world. That is where the prime difficulty exists. The question of which companies obtain a share of the subsidy is worthy of careful examination. Since I have been in this House this last time, many subsidies have been granted, but I have seen no discrimination made, with regard to the rich concerns or the poorer concerns, as to the share which they ought to obtain. There ought certainly to be an examination of that position. The subsidy was granted in order to aid vessels being sent to sea. When shipowners put forward vessels and received a proportion of the subsidy, that was a temptation to send their boats to sea. Thus we had more seagoing vessels than would, without the subsidy, have been engaged.
  It has been mentioned here that the conditions of labour in the industry are in a grossly neglected state. That is a misunderstanding. There has been a general agreement—it is right to state the facts of the case—on the National Maritime Board between seafarers and owners, and very substantial advantages have been granted. The position is therefore satisfactory from the national point of view, and relatively so from the point of view of the shipowners. The House must not be under the delusion that the money which has been granted so far will enable the industry to be put upon a sound financial basis, because such is not the case. If hon. Members were to examine the balance sheets of most of the tramp owning companies, they would see that there are heavy depreciation and indebtedness to the bank, and a state of relative insolvency. It will take many years of good trade, such as is prevailing at the present moment, before the industry is in a position of safety from the national point of view and able to play its part in warlike preparations, owing to the necessity of relying upon the Mercantile Marine in the defence of the State.
  Question put, "That the Bill be now read the Third time."
  The House divided: Ayes, 180; Noes, 97.

  Division No. 95.]

  AYES.

  [7.43 p.m.

  Acland-Troyte, Lt.-Col. G. J.

  Aske, Sir R. W.

  Balfour, Capt. H. H. (Isle of Thanet)

  Agnew, Lieut.-Comdr. P. G.

  Assheton, R.

  Barclay-Harvey, Sir C. M.

  Albery, Sir Irving

  Baldwin, Rt. Hon. Stanley

  Baxter, A. Beverley

  Allen, Lt.-Col. J. Sandeman (B'kn'hd)

  Balfour, G. (Hampstead)

  Beamish, Rear-Admiral T. P. H.

  Beauchamp, Sir B. C.

  Hanbury, Sir C.

  Perkins, W. R. D.

  Beaumont, M. W. (Aylesbury)

  Hannah, I. C.

  Pickthorn, K. W. M.

  Beit, Sir A. L.

  Hannon, Sir P. J. H.

  Pilkington, R.

  Bennett, Sir E. N.

  Harbord, A.

  Porritt, R. W.

  Blair, Sir R.

  Haslam, Sir J. (Bolton)

  Proctor, Major H. A.

  Blindell, Sir J.

  Heilgers, Captain F. F. A.

  Radford, E. A.

  Boothby, R. J. G.

  Herbert, A. P. (Oxford U.)

  Raikes, H. V. A. M.

  Boulton, W. W.

  Herbert, Major J. A. (Monmouth)

  Rathbone, J. R. (Bodmin)

  Briscoe, Capt. R. G.

  Hills, Major Rt. Hon. J. W. (Ripon)

  Rawson, Sir Cooper

  Brooklebank, C. E. R.

  Holmes, J. S.

  Rayner, Major R. H.

  Brown, Rt. Hon. E. (Leith)

  Hopkinson, A.

  Remer, J. R.

  Brown, Brig.-Gen. H. C. (Newbury)

  Hore-Belisha, Rt. Hon. L.

  Robinson, J. R. (Blackpool)

  Bull, B. B.

  Horsbrugh, Florence

  Ropner, Colonel L.

  Burgin, Dr. E. L.

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

  Ross, Major Sir R. D. (Londonderry)

  Campbell, Sir E. T.

  Hunter, T.

  Ross Taylor, W. (Woodbridge)

  Carver, Major W. H.

  Inskip, Rt. Hon. Sir T. W. H.

  Rowlands, G.

  Gary, R. A.

  Jarvis, Sir J. J.

  Russell, R. J. (Eddisbury)

  Cayzer, Sir H. R. (Portsmouth, S.)

  Jones, Sir G. W. H. (S'k N'w'gt'n)

  Salmon, Sir I.

  Clarke, Lt.-Col. R. S. (E. Grinstead)

  Keeling, E. H.

  Salt, E. W.

  Clarry, Sir Reginald

  Kerr, Colonel C. I. (Montrose)

  Samuel, M. R. A.

  Colville, Lt.-Col. Rt. Hon. D. J.

  Kerr, J. Graham (Scottish Univs.)

  Shaw, Major P. S. (Wavertree)

  Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)

  Knox, Major-General Sir A. W. F.

  Simon, Rt. Hon. Sir J. A.

  Cooper, Rt. Hn. T. M. (E'nburgh, W).

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

  Smith, Sir R. W. (Aberdeen)

  Crooke, J. S.

  Leighton, Major B. E. P.

  Somervell. Sir O. B. (Crewe)

  Crowder, J. F. E.

  Lennox-Boyd, A. T. L.

  Southby, Commander A. R. J.

  Culverwell, C. T.

  Levy, T.

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

  Lewis, O.

  Spens. W. P.

  Davies, Major Sir G. F. (Yeovil)

  Liddall, W. S.

  Stanley, Rt. Hon. Lord (Fylde)

  Dawson, Sir P.

  Lindsay, K. M.

  Stanley, Rt. Hon. Oliver (W'm'l'd)

  Denman, Hon. R. D.

  Llewellin, Lieut.-Col. J. J.

  Strauss, E. A. (Southwark, N.)

  Denville, Alfred

  Lloyd, G. W.

  Strauss, H. G. (Norwich)

  Despencer-Robertson, Major J. A. F.

  MacAndrew, Colonel Sir C. G.

  Strickland, Captain W. F.

  Donner, P. W.

  MacDonald, Rt. Hon. J. R. (Scot. U.)

  Stuart, Lord C. Crichton- (N'thw'h)

  Dorman-Smith, Major R. H.

  MacDonald, Rt. Hon. M. (Ross)

  Sutcliffe, H.

  Dower, Capt. A. V. G.

  MacDonald, Sir Murdoch (Inverness)

  Tate, Mavis C.

  Duckworth, W. R. (Moss Side)

  McEwen, Capt. J. H. F.

  Thomson, Sir J. D. W.

  Dugdale, Major T. L.

  McKie, J. H.

  Touche, G. C.

  Duncan, J. A. L.

  Macnamara, Capt. J. R. J.

  Tryon, Major Rt. Hon. G. C.

  Ellis, Sir G.

  Macquisten, F. A.

  Wakefield, W. W.

  Emrys-Evans, P. V.

  Manningham-Buller, Sir M.

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

  Entwistle, Sir C. F.

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

  Ward, Irene M. B. (Wallsend)

  Errington, E.

  Markham, S. F.

  Waterhouse, Captain C.

  Evans, Capt. A. (Cardiff, S.)

  Mason, Lt.-Col. Hon. G. K. M.

  Watt, G. S. H.

  Everard, W. L.

  Mayhew, Lt.-Col. J.

  Wedderburn, H. J. S.

  Findlay, Sir E.

  Mellor, Sir J. S. P. (Tamworth)

  Wells, S. R.

  Fleming, E. L.

  Mills, Sir F. (Leyton, E.)

  Wickham, Lt.-Col. E. T. R.

  Fox, Sir G. W. G.

  Mills, Major J. D. (New Forest)

  Williams, C. (Torquay)

  Furness, S. N.

  Mitchell, H. (Brentford and Chiswick)

  Wise, A. R.

  Fyfe, D. P. M.

  Morris-Jones, Sir Henry

  Withers, Sir J. J.

  Ganzoni, Sir J.

  Muirhead, Lt.-Col. A. J.

  Wolmer, Rt. Hon. Viscount

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

  Munro, P.

  Womersley, Sir W. J.

  Gluckstein, L. H.

  Nevan-Spence, Major B. H. H.

  Wood, Rt. Hon. Sir Kingsley

  Gower, Sir R. V.

  O'Connor, Sir Terence J.

  Wragg, H.

  Graham, Captain A. C. (Wirral)

  O'Neill, Major Rt. Hon. Sir Hugh

  Young, A. S. L. (Partick)

  Granville, E. L.

  Orr-Ewing, I. L.

  Gridley, Sir A. B.

  Palmer, G. E. H.

  TELLERS FOR THE AYES.—

  Grimston, R. V.

  Penny, Sir G.

  Captain Arthur Hope and Mr. Cross.

  Gritten, W. G. Howard

  Percy, Rt. Hon. Lord E.

  NOES.

  Acland, Rt. Hon. Sir F. Dyke

  Edwards, Sir C. (Bedwellty)

  Jones, Morgan (Caerphilly)

  Adamson, W. M.

  Fletcher, Lt.-Comdr. R. T. H.

  Kennedy, Rt. Hon. T,

  Alexander, Rt. Hon. A. V. (H'lsbr.)

  Frankel, D.

  Kirby, B. V.

  Attlee, Rt. Hon. C. R.

  Gardner, B. W.

  Lathan, G.

  Banfield, J. W.

  Garro Jones, G. M.

  Leach, W.

  Barr, J.

  George, Major G. Lloyd (Pembroke)

  Lee, F.

  Benson, G.

  George, Megan Lloyd (Anglesey)

  Leonard, W.

  Bevan, A.

  Gibbins, J.

  Logan, D. G.

  Broad, F. A.

  Gibson, R. (Greenock)

  McEntee, V. La T.

  Bromfield, W.

  Greenwood, Rt. Hon. A.

  McGhee, H. G.

  Brooke, W.

  Griffith, F. Kingsley (M'ddl'sbro, W.)

  MacLaren, A.

  Burke, W. A.

  Griffiths, G. A. (Hemsworth)

  Maclean, N.

  Cape, T.

  Hall, G. H. (Aberdare)

  Mainwaring, W. H.

  Charleton, H. C.

  Hardie, G. D.

  Milner, Major J.

  Cluse, W. S.

  Harris, Sir P. A.

  Montague, F.

  Clynes, Rt. Hon. J. R.

  Hayday, A.

  Morrison, Rt. Hon. H. (Hackney, S.)

  Cove, W. G.

  Henderson, J. (Ardwick)

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

  Cripps, Hon. Sir Stafford

  Henderson, T. (Tradeston)

  Mull, G.

  Dalton, H.

  Hollins, A.

  Oliver, G. H.

  Davidson, J. J. (Maryhill)

  Jagger, J.

  Paling, W.

  Davies, S. O. (Merthyr)

  Jenkins, A. (Pontypool)

  Parker, J.

  Dobbie, W.

  Jenkins, Sir W. (Neath)

  Pethick-Lawrence, F. W.

  Dunn, E. (Rother Valley)

  Johnston, Rt. Hon. T.

  Potts, J.

  Ede, J. C.

  Jones, H. Haydn (Merioneth)

  Ridley, G.

  106

  107

  Roberts, W. (Cumberland, N.)

  Smith, E. (Stoke)

  Walker, J.

  Robinson, W. A. (St. Helens)

  Stewart, W. J. (H'ght'n-le-Sp'ng)

  Watson, W. McL.

  Salter, Dr. A.

  Strauss, G. R. (Lambeth, N.)

  Westwood, J.

  Sanders, W. S.

  Taylor, R. J. (Morpeth)

  Williams, E. J. (Ogmore)

  Seely, Sir H. M.

  Thorne, W.

  Williams, T. (Don Valley)

  Short, A.

  Thurtle, E.

  Windsor, W. (Hull, C.)

  Silkin, L.

  Tinker, J. J.

  Young, Sir R. (Newton)

  Silverman, S. S.

  Viant, S. P.

  Simpson, F. B.

  Walkden, A. G.

  TELLERS FOR THE NOES.—

  Mr. Mathers and Mr. Groves.

  Question put, and agreed to.

  Bill accordingly read the Third time, and passed.

  REGENCY BILL.
  Order for Consideration of Lords Amendments read.
  7.50 p.m.
  The Secretary of State for the Home Department (Sir John Simon): I beg to move, "That the Lords Amendments be now considered."
  It may be for the convenience of the House if I state briefly how I suggest that the Lords Amendments should be regarded. I propose to move that we agree with these respective Amendments. If the House will look at a copy of the Bill, they will see that three or four points are dealt with. In the first place, an addition is proposed to Clause 2 which arises in this way. The House will recollect that when the Bill was before us there was a discussion whether or not the evidence of physicians should be insisted upon in a case in which it was alleged that it was necessary to appoint a Regent by reason of the infirmity of mind or body of the Sovereign, and the conclusion was reached, in which both sides of the House concurred, that words should be inserted which would modify the Bill as it left this House. In another place it was pointed out that there is another contingency which should be provided against, although the contingency is improbable, that is to say, that the Sovereign, though not incapable of acting by reason of infirmity of mind or body, none the less might not, in fact, be available. There was the historic case of Richard I, who ceased to be available for particular reasons; perhaps a more probable reason would be the possibility of shipwreck or accident when out of the country. I think it is desirable to insert the words suggested by the House of Lords, in order to complete the scheme of that Clause of the Bill.
  Then the omission of the word "wholly," in page 2, line 26, appears on reflection to be right. Some of the legal
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  Members of the House of Lords pointed out that, since eminent legal authorities were among those who would have to pronounce on this question, a quite unnecessarily hard task would be imposed upon them if the word "wholly" were insisted upon. The Sovereign might be perfectly well able to sign his name and yet not able to perform some of his other functions, and there is no advantage to be gained by inserting the adverb. These are the only points that arise on Clause 2.
  With regard to Clause 3, I feel that I ought to observe, though my hon. Friend the Member for Cambridge University (Mr. Pickthorn) is not here, that on reflection the Government have thought it well to insert, in page 3, line 13, words which I rather think my hon. Friend did suggest, either in the House or privately to myself. Anyhow I wish to make my acknowledgment to him. He pointed out that, as Sub-section (3) of Clause 3 of the Bill was drawn, it was conceivable, though of course it was not intended, that there might be two Regents at the same time. I think the whole scheme of the Bill is so plainly to the contrary effect that there would be no danger of that misunderstanding arising, but none the less we thought it well to put in these words, and that has been done in another place.
  The only other point that arises on the Clauses is that a change has been made at the very end of Clause 5, which is of a slightly technical character, but which is plainly right. Paragraph (c) of Clause 5, as the Bill left this House, ran as follows:
  "The Regent shall administer the Sovereign's property, and shall, save in the cases aforesaid, have the guardianship of His person."
  This makes no provision for the case in which private property might be the subject of a trust which had been set up by a previous Sovereign, and it certainly was not intended that the Regent should have power to interfere with the administration of such a trust by the trustees named in the deed. It is a technical

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  point, but I have no doubt whatever that the change proposed is a proper one to make, and I commend it to the House.
  Lastly, in the Schedule it has been observed that the third of the three forms of Oath there set out, in the form in which the Schedule passed this House, contained an implication which was not intended. In the Regency Act, 1910, which was the last passed before the present Measure, there was a form of Oath which was shorter than the form now set out. I will, if I may, read it to the House:
  "I do faithfully promise and swear that I will inviolably maintain and preserve the Settlement of the true Protestant religion with the government, discipline, rights and privileges of the Church of Scotland as established by law."
  It became necessary to change these words because in the interval there had been passed an Act of Parliament which Scottish Members will remember, the Church of Scotland Act, 1921, which provided for the union of the Church of Scotland and the United Free Church. That being so, modification of the words was plainly necessary, and the modifications made have given rise to a possible implication that England is now apparently entirely left out. Under the form of oath as we sent it to another place, there is clearly no reference to England, and that is not, I think, a conclusion which we wish should follow. Therefore, it has been thought desirable, in order to avoid possible misconception, that the Lords Amendment should be made, so that the form should not suggest that the Regent's Oath in this respect applied only to the country North of the Tweed. These are all the changes of which I am aware, and, I shall, with the permission of the House, move in turn that we agree with these different Amendments.
  Lords Amendments considered accordingly.

  CLAUSE 2.—(Regency during total incapacity of the Sovereign.)
  Lords Amendment: In page 2, line 24, leave out "on the evidence of physicians or otherwise," and insert "by evidence which shall include the evidence of physicians."
  7.59 p.m.
  Sir J. Simon: I beg to move, "That this House doth agree with the Lords in the said Amendment"
  This is to carry out the promise which I gave to the hon. Member for the Scotland Division of Liverpool (Mr. Logan).
  Lords Amendment: In page 2, line 27, after "functions," insert:
  "or that they are satisfied by evidence that the Sovereign is for some definite cause not available for the performance of those functions."
  Sir J. Simon: I beg to move, "That this House doth agree with the Lords in the said Amendment."
  Mr. Attlee: The right hon. Gentleman suggested a historical reference to King Richard I. Was that the only kind of instance in the mind of those who made the Amendment, or can the right hon. Gentleman suggest other circumstances that might arise?
  Sir J. Simon: I looked at the words very much from the same point of view as the right hon. Gentleman, because I am as anxious as he is that we should not unwittingly open the door too wide. The instance of shipwreck was suggested, but instances of a different kind can be imagined. There is the case in which the Sovereign might be abroad, not intending to be away more than a short time, so that no special arrangements had been made, but, owing to some definite cause, he was not available to discharge his functions. The phrase "for some definite cause" is essentially limiting, and that is the reason why we drew it in that form, because I do not want to open the door too wide, but with the best will in the world it is extraordinarily difficult to find a phrase which is narrower than "not available," because we are dealing with a number of improbable but, none the less, conceivable accidents.
  Mr. Attlee: Have not all the instances given been instances of absence and, if the word "absence" was in, and the cause is absence from the kingdom, whether through shipwreck or any other reason, does not that narrow the cause?
  Sir J. Simon: I have a certain embarrassment in suggesting conceivable but, no doubt, improbable causes. I can conceive a case in which this country was invaded, and the situation would not be one in which the King was absent from the Kingdom. I did personally, with the help of my legal advisers, try to limit the words as much as I could, and every time I did so I found that there was a certain danger of omitting something which, however unlikely, was possible.
  Remaining Lords Amendments agreed to.

  GENEVA CONVENTION BILL [Lords].
  Not amended (in the Standing Committee) considered; read the Third time, and passed, without Amendment.

  IMPORT DUTIES (IMPORT DUTIES ACT, 1932).
  8.6 p.m.
  Dr. Burgin: I beg to move,
  "That the Additional Import Duties (No. 1) Order, 1937, dated the tenth day of February, nineteen hundred and thirty-seven, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said tenth day of February, nineteen hundred and thirty-seven, be approved."
  This Order and the next one on the Paper deal respectively with tomatoes and with hand sewing needles and bodkins. The Order with regard to tomatoes brings forward the date during which there is an Import Duty of 2d. per lb. on foreign tomatoes. Until the making of this Order the first date at which foreign tomatoes were taxed at this rate was 1st June. There has been a tendency, particularly at Cheshunt and the Lea Valley in Hertfordshire, for British tomato growers to grow their early crop earlier than 1st June, and the committee report that that definite trend should be encouraged. But early production is discouraged by the quantity of tomatoes arriving in the latter half of May, which are sold early in June in competition with British produce. These tomatoes come from the Canary Islands, Holland and other places. So that the effect of the Order is to advance the close or protected season from 1st June to 15th
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  May, and after 15th May in future down to 31st August the duty will be 2d. per lb. Previously it was 10 per cent. The home production of tomatoes, especially under glass, increased considerably in 1935 and 1936. The Eastern and. South-Eastern counties together account for about 60 per cent. of the area under glass and the most important areas are Chesham and the Lea Valley. It is difficult to obtain any separate statistics as to the numbers employed, but the homegrown tomato industry is valuable and important.
  The particulars of the imports of tomatoes during the last two weeks of May show that there is a very considerable volume coming in normally in the third and fourth weeks in May, from the Canary Islands and Holland. In 1936 for that fortnight the Canary Islands sent in a little over 82,000 cwts. The figure from Holland was a little over 16,000 cwts., and we received from the Channel Islands some 69,000 cwts. which, of course, came in duty free. There is no reason whatever to anticipate any shortage of tomatoes with home production increasing and with the duty-free production from the Channel Islands. The import of tomatoes during the whole of May has been quite considerable. The figure for the Canary Islands for May, 1936, was 242,000 cwts. That represents £384,000. The average C.I.F. value of the total foreign imports in May, 1936, was something like 3s. 8d. a lb. The relative landing prices per peck of 12 lbs. of first or second quality tomatoes are interesting. Take the week ending 8th May—first quality English, 14s. 9d.; first quality Channel Islands, 13s. 9d.; first quality Dutch, 10s.; first quality Canary Islands, 4s. 8d. For the second week in May the figures are English, 14s. 2d.; Channel Islands, 12s. 7d.; Dutch, 10s. 3d.; Canary Islands, 6s. 8d. I do not know whether it would be more convenient to stop there and take the discussion on tomatoes separately before I introduce the figures about needles.
  Mr. Alexander: I am a little doubtful about one case in which the hon. Gentleman gave the value per lb.
  Dr. Burgin: That is the C.I.F. value of the total foreign imports in May, 1936. I think that must be for 12 lbs. but there is a gap in the information I possess. I will have it checked.
  Mr. Deputy-Speaker (Captain Bourne): It has been customary, with the consent of the House, to discuss these Import Orders together. On this occasion, if it is more convenient to dispose of the Order dealing with tomatoes and then take that dealing with needles, I am in the hands of the House.
  Mr. Alexander: I think it would be convenient if the tentative suggestion of the hon. Gentleman were accepted. It is not that we desire to create any precedent, but when we are asked to discuss matters like this after II o'clock a single discussion on a number of duties is convenient. To-night I shall be glad if the hon. Gentleman will adopt the other course.
  Mr. Deputy-Speaker: As it appears to be the wish of the House that the Orders should be taken separately, we had better do so, on the understanding that it does not necessarily constitute a precedent.
  8.15 p.m.
  Mr. Alexander: It is interesting to note that in 1937 apparently the Government are to follow the plan of previous years, in devising imposts upon food and other commodities used by the people. The No. 1 Order, 1937, is not to be an impost of an additional character for the whole period of the fiscal year but is merely to make an additional impost for 14 or 15 days. Nevertheless, it raises once more the important point of principle in relation to, first, the advisability of taxing food at all, and, secondly, the process of spreading the burden of taxation as much as possible in order to relieve the charge upon the direct taxpayer. It does not seem to be possible for the Parliamentary Secretary to argue to-night that, in fact, the consumer of tomatoes is not going to pay this duty. I am obliged to him for the clear and fair way in which he has presented the case. Sometimes I have had to raise a point of criticism because we felt that we had not enough information upon which either to criticise or to express approval or disapproval of the fiscal proposals which came up under Import Duties Orders. But to-night he has given us quite a number of statistics. I have no doubt in my own mind, not being without knowledge of the particular trade, that, if it were necessary to detain the House—he did not think it was—so as to produce a much wider range of statistics
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  over a longer period, very largely the same results that he has indicated in the statistics he has given for 1936 would obtain. I am content to take them on the figures he has given to the House to-night.
  We are being asked to approve of the extension of the period of the duty on tomatoes upon the ground that the tendency has been for the English producers in the Lea Valley in Hertfordshire and in Chesham to produce their crops of tomatoes for the seasonal demand at an earlier date than formerly. If that is so, I do not understand why it is necessary to ask for the increased duty. If they have been able to do this successfully in the existing circumstances and have actually been producing that crop earlier, why is it now necessary to ask for a duty? That is the first point which the Parliamentary Secretary will have to answer in putting this proposition to the House. The next point I will put on the information which he has given to the House, is, how can it possibly be argued that, in regard to the prices and quantities of the imports of tomatoes which he has given to us from the Canary Islands, for example, the addition of the small duty which is now proposed will be an effective check upon the use in this country of that particular type of tomato? Therefore, how much can it possibly help this industry which, in spite of the existing conditions, it is said has been increasing its output in the particular fortnight of the fiscal year now to be covered by the additional duty?
  According to the figures which I took down, the Canary Islands imports into this country come in, during the first of the two weeks quoted, at 4s. 8d. per dozen lbs., and in the second week at 6s. 8d. per dozen lbs., whereas, as I understand it, the prices of the English fruit for these two weeks were 14s. 9d. per dozen lbs., and 14s. 2d. respectively. Even with the whole of the 2d. per lb., which is the additional duty, how on earth is it to be argued that the average difference of between 5s. 6d. and 14s. 6d. per dozen lbs., is to be bridged by the imposition of a duty of 2d. per lb.? How is it to be bridged to the extent of discouraging the use of Canary Island tomatoes and improving the demand for the English? It is a case very much like the recent imposition of duties upon meat, in which the Treasury, gaining, of course, the plaudits of home producers, because

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  they hope that it will discourage the foreign imports, hope to collect from the home producer something with which to relieve the direct taxpayer and help the Chancellor of the Exchequer along the way of his difficult task of balancing his Budget in face of the suicidal expenditure upon which the Government are engaged.
  The Parliamentary Secretary will have to answer on that point. Even when one comes to the type of tomato which is much nearer to the quality and variety of the home-produced article, that is the Dutch, there is still a substantial margin between the two kinds—10s. as compared with 14s. 9d. and 10s. 3d. as compared with 14s. 2d. From what I know of the trade and of the quality of the best White Heart Dutch tomatoes—and, by the way, probably they have supplied the British growers with some of the vines upon which their fruit is grown—I cannot see that the imposition of this additional duty will make all that difference in demand, but it will in fact actually result in a collection from the consumer. Let us see what will happen in respect of the Canary product. If it is to be argued that because the Hertfordshire and Essex product will be labled English, and therefore have a psychological preferential demand from the British consumer, I am convinced that the only result of this duty will be that the purchaser of the English as well as of the Dutch will pay the duty, and that the real aim of the producers in dealing with this particular competitive article will be to get an enhanced price.
  Sir Patrick Hannon: Would the right hon. Gentleman say, on behalf of the immense organisation with which he is so intimately associated, not say that it is desirable, in the interests of producers in this country, that British tomatoes produced in Essex, Hertford or wherever it may be, should have a preference over tomatoes produced in foreign countries?
  Mr. Alexander: Oh, yes, we are only too willing to do so, if as a result of that preference we can get the article without having to pay an enhanced price because of the duty. Most certainly the hon. Member for Moseley (Sir P. Hannon) knows quite well that the organisation with which I am connected is perhaps the best customer of the English producer of meat, of offals and grain, of
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  vegetables and of everything you can produce in the list of the agricultural products of this country. Again and again it gives preference to home-grown produce, but that is no reason why I should stand here and admit the rightness of an impost upon the people's food. If the hon. Member can find me any single organisation which, compared with the organised consumers, gives better preference to British products, I should be much surprised.
  Mr. Beverley Baxter: Is it not true that the organisation with which the right hon. Gentleman is so intimately associated is also the largest purchaser of imported foodstuffs at the cheapest possible price?
  Mr. Deputy-Speaker: The question of what the co-operative society may or may not purchase has nothing to do with this Order.
  Mr. Alexander: I bow to your Ruling. I did not raise the point, but I am perfectly willing to answer the question. All I can say is that the records show that we are the largest purchasers of British products. With regard to tomatoes, we have experience in growing them. We grow large quantities in different parts of the country. That, apparently, is not a crime in the view of hon. Members, because it is encouraging British production. That does not, however, make it right to do what we are asked to do to-night, in view of the fact that whenever there is a rise in prices our working-class consumers always find a lag in wages and get only such increases of wages as they are able to wring out by means of their trade union organisations. I hope that I shall always find myself standing in the position of opposing duties of this character unless a much better case can be made out for them than has been made out to-night.
  Let us look at the imports, and compare them with the needs of the population. With all the pressure that is being brought to bear, largely upon medical advice, in favour of the kind of diet which is considered to be advantageous, more vegetarian and fruitarian in character, I should have thought that the Parliamentary Secretary would have admitted that the figures of imports of tomatoes which he mentioned are not too large to make adequate provision for the needs of the people at reasonable prices. Therefore, whilst I should always be willing

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  to consider, and I hope I have always been willing to consider, any case which is sound and presented with facts which will show justice to the producer and the consumer, I consider that to-night there has been no real case made out for the new imposition, and I hope that I shall be able to persuade my hon. Friends to go into the Lobby against it.
  8.29 p.m.
  Mr. MacLaren: It is amazing how these Orders are passed and the manner in which they are introduced. To-night we have a very good example of it. Contrasts have been made between the prices ruling for English tomatoes and the prices at which foreign tomatoes are sold, and the House is asked to impose this new duty because of the contrast in the figures. I was interested in the statement of the hon. Member for the Moseley Division of Birmingham (Sir P. Hannon). He asked my right hon. Friend whether the society with which he is associated would give preference to British products as against foreign products. Surely he knows as well as anyone that the one thing that the English working man's wife prefers is English-grown produce, because it is fresher than the stuff she is very often obliged to buy. Londoners would rather eat fresh eggs than consume, as they do every day at the great organisation which has its catering shops at every street corner, tons of Chinese eggs, but the price is the question. British people would certainly rather eat British produce if they could get it at a price within the ambit of their spending power. It is no impeachment of the British housewife who cannot afford to buy English produce to say that she is disloyal because she does not buy it.
  Coming back to the figures that have been given by the Parliamentary Secretary, I would say that if there is one thing more essential than another it is that when figures are given relating to specific commodities the costs of production ought to be tabled. Prices have been given of the cost of Dutch tomatoes as 10s. 3d. per 12 lbs. against English tomatoes at 14s. 3d., but we are not told What is the cost of production that necessitates such a price for the English commodity. We are just given the ft: ores, as if the prices were enough to make us say, "We must keep the foreign
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  produce out." While the Parliamentary Secretary was speaking I was wondering whether this Order had any relation to the coming Coronation and the belief that there will be a heavy demand for tomatoes. The cost of the production of the English tomato ought to be stated and we ought to be told the reason why the English tomato needs protection.
  In this country we have had derating, and that has given a great impetus to tomato growers. In Scotland, where we produce the finest tomatoes, perhaps, in the world, we could compete with any tomato grower on the Continent if we were given a fair field and no favour, but there are incidental expenses thrown in which the producer of tomatoes has to meet. It would be very interesting if the Parliamentary Secretary would take us into his confidence and give us the reason why this Order has been introduced. I agree with my right hon. Friend that the twopence extra duty will not level' up the difference between the lowest-priced foreign tomato at 6s. 8d. per 12 lbs. and the English tomato at 14s. 3d. It might have appeared that my right hon. Friend was complaining that the twopence was not high enough.
  Mr. Alexander: Of course, that was not my complaint.
  Mr. MacLaren: I recognise that, but while my right hon. Friend was speaking one hon. Member whispered: "Why not make it 8d, a pound?" He says that that is logic. When you are standing on your hands looking at the universe your logic differs from that of anybody else. The logic of Orders of this kind is to keep the foreigner out, but that was not the idea that was supposed to be behind the bringing in of these import duties. It is unfair to come to the House and merely, by a few pious statements and figures of contrast between our selling prices and the foreign selling prices, expect the House immediately to agree to an import duty. The cost of production ought to be tabled and we ought to be given the reason why the English tomato is so much dearer than other tomatoes, so that we could as intelligent human beings know exactly for what we are voting.
  This Order is another in the series of ramps which have been going on steadily in this House for years, despite the fact that we hear so much about bringing the nations of the earth together and bringing

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  peace and amity among them. You shake the hand of the foreigner in the morning and talk piously about the League of Nations and peace, but when you find him trading up your street in the afternoon you give him a black eye. One of the greatest of Englishmen, Cobden—if I may use his name in this House at this time—said, "Give me tariffs and all forms of restrictions, and I have the breeding ground for future wars." It is a far cry from tomatoes to the peace of the world, but I think it is worth while drawing the moral. I wish hon. Members when they are making speeches about bringing the nations of the world into amity would remember that they are continually bringing in these import duties and harassing conditions on trade and industry, which do not make for peace.
  Sir P. Hannon: Will the hon. Member tell me whether he prefers tomatoes grown in this country or those grown abroad? Would he not prefer to have tomatoes produced by some working gardener in this country rather than in any European country, assuming that they are presented at the same price?
  Mr. MacLaren: I would far rather have a Scotch tomato than any other tomato. But what are the reasons for the inflated price of the Scottish commodity as against the Dutch tomato? That is what the Parliamentary Secretary should tell us. We are just given figures of 14s. 3d. for the British tomato as against 10s. 3d. for the Dutch. Why is there that difference in the price? We are not told the reason. If we were I think it would be illuminating to the women of Scotland and to the women of England.
  8.39 p.m.
  Mr. R. J. Taylor: I want to protest against this Order. The Parliamentary Secretary referred to a figure of 69,000 cwts. I submit that these Canary tomatoes do not enter into competition with English tomatoes at that particular season of the year. When you have tomatoes at about 4d. per lb. for Canary tomatoes as compared with 1s. 2¾d. for English, to talk of competition with English at that price is absolutely ridiculous. The reason why working people do not buy English tomatoes in May is because there are not enough coming on to the market, and the price
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  is prohibitive as far as they are concerned. They cannot afford to buy them, and it is only when English tomatoes some into the market in quantities that the price comes down to 8d. or 10d. per lb. Then a big volume of English tomatoes is consumed. I object to this Order because it is clearly a tax on the working people. They would buy English tomatoes every time, but these tomatoes come in at a time when there are few supplies of English tomatoes. In other words, you are going to put a tax of 2d. per lb. on the poorest of our people. The Government, if they pursue this policy, are going to goad the poorest people of this country with these continuous duties and the extraction of money from their pockets, until the people sweep them out at the next election. It is a very great penalty the Government are inflicting on people who can least afford to pay it.
  8.42 p.m.
  Mr. George Griffiths: I want to protest against this increased 2d. per lb. on tomatoes for a very special reason. I have been home this week-end. There was a snowstorm, which I believe was also experienced in the South of England. I was talking to the district nurse in my own town. She told me that she had a case of a workman's wife who is supposed to spend 16s. 9d. per week on insulin. The husband gets £2 15s. per week for his wife and himself and cannot afford to spend much in the purchase of insulin. Besides that, she must have tomatoes. Any doctor who is treating diabetes will tell you that you must have so-and-so—tomatoes, lettuce, watercress and half-a-dozen other things. Tomatoes enter largely into the diet of that woman and myself, but I can afford to buy tomatoes now better than I could before I entered this House. For 10 months before I came here I drew 110 days' unemployment benefit at 3s. 10½d. per day. I could not afford to buy English tomatoes; I had to buy cheap tomatoes, as would anybody else if he was getting only 3s. 10½d. for his wife and himself.
  I protest against this 2d. being put on tomatoes because of the 250,000 people in this country who are diabetics. It is true that some of them can afford to buy them, but while there may be a few who are in this position, I should say that there are 150,000 who are unable to afford it, and to cut off their

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  supplies of tomatoes may mean death very soon. I know that if I talk about insulin to-night I shall be out of order, but there are scores in the same class as I am, and those people, because they are not able to get the insulin and the diet prescribed for them, pass out like flies. I raised this matter with the Ministry of Health 12 months ago. I wonder whether the Parliamentary Secretary to the Board of Trade, in asking the House to put 2d. per lb. on tomatoes, which are part of the diet of the 250,000 people to whom I have referred, has thought about it. If he has not thought about it so far, I hope he will do so from now onwards and, instead of putting 2d. per lb. on, will say that it shall be left off, so that these people will have a chance of getting a little sunshine in their lives. I protest against this tariff being put on this food. There is a tariff on lettuces as well. If I go on to talk about that, Sir, you will say that lettuces have nothing to do with this Order, but there is a tariff on lettuces and they are not as cheap as they used to be. When I was in Leeds hospital 3o years ago, when my breakfast was brought to me, I could hardly see the nurse who was bringing it, because I had to have four ounces of lettuce, and the nurse was behind the lettuce.
  There is one other point I wish to bring to the attention of the Minister. If the wife, for instance, is a diabetic, she cannot be served with the same food as her husband, who is not a diabetic. When the man comes home from the pit, he finds his dinner prepared, but the wife has to have a separate diet, and the point to which I wish to direct the Minister's attention is that it costs far more to prepare these two lots of food than it would cost to prepare the same food for both. On top of that, there is to be imposed this 2d. a lb. on tomatoes. It is time the Government opened their eyes and understood these things from the workmen's standpoint as well as from the capitalists' standpoint of getting a profit on English tomatoes.
  8.50 p.m.
  Mr. Muff: I wish to emphasise the point made by the hon. Member for Hemsworth (Mr. G. Griffiths). At the present time, there is a vigorous appeal being made for cancer research and cancer dietetics. Not long ago I went to an exhibition, and, in going round it. I saw a tomato on a plate
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  in splendid isolation. I asked the doctor in charge, "Why do you put that tomato in that position?" and he said, "So that you will ask why it is put there." He then went on to tell me that tomatoes are one of the most valuable foods for cancer patients and that, as far as they had gone in cancer research, the eating of tomatoes is a good preventive of a cancer growth. I rise to express the point of view of those folk who cannot pay the price which the Government, by their legislation, are practically fixing on tomatoes; that is to say, anything from is. 4d. to is. 8d. a lb. from the end of March into May. The only way in which the textile workers in Yorkshire or Lancashire, or the dockside workers in Hull, can enjoy this precious food, which has been immortalised even by Dickens, and which even brings love into the household, for it is known as the "love apple," is to buy the tomato which comes from a warmer climate than the North of England—they buy the Canary tomato. It is, without exaggeration, a godsend to them to be able to buy the Canary tomato, or shortly afterwards the Dutch tomato, at anything from 5d. to 7d. or 9d. a lb.
  There is another reason why it is inopportune for the Minister to ask us to-night to tax the people's food by another 2d. Unfortunately, there is a war going on in Spain, one of the sources of supply. If one goes round the mining districts in Yorkshire, one will find that the householder until quite recently was able to buy what was called a quarter-kilo tin of tomatoes for 2½d., but that tin of tomatoes has now gone off the market altogether owing to the dreadful catastrophe in Spain. The same thing happened when we applied sanctions against Italy. The Italian tomato was a godsend to working-class people, who were able to buy a 3 lb. tin of tomatoes for 5½ and very fine tomatoes they were. Those tomatoes are beginning to come in again, but the price is increased. At the present time, the standby of the person with moderate means is the Canary tomato or the Dutch tomato, which comes shortly afterwards.
  I regret that the policy of the Government should be to impose these duties bit by bit, or, to use a scriptural phrase, "line upon line, precept upon precept." But they have forgotten the precepts. The principles of some of the right hon.

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  Gentlemen on the Government Front Bench have also been forgotten. The food of the people is being taxed, bit by bit, while there is no increase in wages. My own constituency is a distressed area, and there is no relief for the people there in the form of advances in wages. Their spending power is being decreased, and the Minister comes along now with a proposal to impose what is almost a cruel tax upon the very poor. I know that I shall appeal in vain to hon. Members opposite if I ask them to withdraw this Duty. I remember as a youngster reading of the proceedings in Parliament and sometimes being present at them when I was able to get a ticket of admission to the gallery. In those days the place where the Parliamentary Secretary is sitting was occupied by Sir Henry Campbell-Bannerman, and when Members of the Opposition brought forward pernicious proposals of this kind he always said, "Send for the sledge-hammer, and we shall soon finish off these hon. and right hon. Gentlemen opposite." Then Mr. Asquith would come along. [An HON. MEMBER: "With a hammer?"] No, but with such powers of argument and debate as acted almost like a sledgehammer. I sigh sometimes for those days, and for a Press which would show up, as it were by a spotlight, the proposals of hon. and right hon. Gentlemen opposite in their efforts to make the food of the people dearer by these taxes. I believe if we could get a Press which would—
  Mr. Deputy-Speaker: The hon. Member is now going beyond the subject under discussion.
  Mr. Muff: I come back to tomatoes, and my chief point is that while 2d. may seem a little sum it is—as the right hon. Gentleman the Member for Epping (Mr. Churchill) once said to a Tory Member who objected to the 5s. pension—a fairly big sum of money if you have not got it in your pocket. I do not suppose I can melt the hard hearts of hon. Members opposite, but I say to them that there will be a day of reckoning. When the people of this country realise that this and similar imposts prevent them getting at reasonable prices, the beneficent gifts of nature, they will in the near future change the occupants of that Front Bench.
  8.59 p.m.
  Lieut.-Colonel Heneage: The districts in my constituency where tomatoes are grown, and where there are many smallholders and market gardeners engaged in that branch of industry, will undoubtedly benefit by this increase of 2d. I am grateful to the two hon. Members who have just spoken, because they have supplied additional arguments in favour of growing tomatoes. The hon. Member for East Hull (Mr. Muff) mentioned tomatoes in connection with the cure or prevention of cancer, and that is certainly a powerful reason in favour of their increased cultivation. If it can be shown, as we hope it will be, that this form of food is a cure or a partial cure of cancer we should do everything possible to encourage its growth in this country. The hon. Member for Hemsworth (Mr. G. Griffiths) mentioned the use of tomatoes in connection with diabetes, and that is a further strong argument in favour of developing tomato-growing in this country. I hope that what they have said in respect will be spread abroad in the country, and will provide a propaganda which has perhaps been lacking to some extent up to the present. The last speaker mentioned Mr. Asquith and Sir Henry Campbell-Bannerman, but what hon. Members opposite do not appreciate is that we are no longer living in those days, but in a time when conditions have become entirely different, and when our small industries, agricultural and otherwise, cannot succeed without protection in a world which is governed by tariffs to an extent of which those right hon. Gentlemen had no idea. I welcome this additional duty.
  9.2 p.m.
  Mr. Paling: I do not disagree with the hon. and gallant Member about the necessity for growing more tomatoes in his district or any other district in England, and helping to find work in that industry for British workers. But from the figures which have been given here I understand that the price of British tomatoes in the fortnight to which reference has been made, is 14s. 6d. per 12 lbs., while the cheapest tomatoes in the same period are in or about 4s. or 5s. per 12 lbs. There is the trouble. An addition of 2d. per lb. will not make the people of this country buy any more British tomatoes than they are buying

  125
  now. They do not buy the cheap tomato because they like it.
  Lieut.-Colonel Heneage: The hon. Member appears to be falling into the fallacy that 2d. on the import duty necessarily means a rise of 2d. in the price, but that is not always the case.
  Mr. Paling: I leave it to the Parliamentary Secretary to say, but I am pretty sure that it will mean an increase in price. That is one of the reasons why it is put on at all. I am sure that the Chancellor of the Exchequer hopes that it will bring in something. That, however, is not my main point. The reason why hundreds of thousands of people in this country buy foreign tomatoes, particularly during the first fortnight, is because the foreign tomatoes are the only tomatoes they can afford. We were discussing recently the price of English beef as compared with imported chilled beef. The same thing applies in both cases. People buy the cheaper article because it is all they can afford to buy, and by putting 2d. on the Import Duty in this case you will not make people who cannot afford to do so, buy British tomatoes during the fortnight under consideration. All you can succeed in doing is in making them pay, probably, 2d. per lb. more for the relatively cheap tomato, and if there is any result at all it will probably be that people will consume fewer tomatoes. They certainly will not buy more British tomatoes. This appears to me to be what I would call for want of a better term a "cock-eyed" method of increasing the use of British tomatoes. The way to do that is to increase the purchasing power of the people, and not to decrease it. Hon. Members opposite have never approached the subject from that angle.
  There is a good deal of talk nowadays about nutrition, and it is admitted that hundreds of thousands of people in this country, among the poorest of the poor, are suffering from malnutrition. It is said, among other things, that one of the things to be deplored is the dreadful monotony of diet. In tens of thousands of poverty-stricken homes in this country the importation of cheap foods has helped to vary this diet, and in so far as people are getting this variety, I think they ought to be encouraged rather than discouraged, but I do not think anybody would disagree with the proposition that
  126
  the imposition of this 2d. a pound on tomatoes will discourage rather than encourage it. The present Government are interested in improving the physique of the people. We hear a lot about it and that we are a C3 nation once again. We are approaching, as some people think, a war in the future, and great efforts are to be made to improve our physique. I do not know much about vitamins, but I am told that tomatoes contain a tremendous lot of vitamins and that in that respect they are an excellent food. This increased duty does not seem to me to be the way to go about improving the physique of the nation, for if tomatoes contain a large number of vitamins, the people ought to be encouraged to eat them by having them made cheaper to buy. From every angle that I can see, this 2d. a pound is to be deplored, except for the fact that it will bring more grist to the mills of the Chancellor of the Exchequer.
  We hear a lot about: Germans preferring guns to butter. They say it boldly. They say, "You want big armaments, you want guns, and so you cannot have butter." We in this country are a bit more subtle. We also want big armaments, and we have to raise about £220,000,000 out of revenue and another £80,000,000 by loan. We want all the money we can get, but it would not be policy to tell the people of this country, "You can have guns, but you cannot have butter," nor would it do to tell them, "You can have guns, but you cannot have tomatoes." That would be bad electioneering, and the last thing of which hon. Members opposite, or some of them, can be accused is of being stupid at electioneering. They certainly know something about that, and so they are more subtle in this matter, and they find these devious ways of putting this money on and stopping the consumption, on the ground, presumably, of helping British industry. I am very doubtful whether it will help British industry, but the idea is, in the main, to get more and more revenue by indirect taxation on the poorest of the poor, in order to provide the guns which the Chancellor is providing. For all these reasons, we shall vote against this Motion.
  9.9 p.m.
  Mr. K. Griffith: Appeals have been made to the names of Sir Henry Campbell-Bannerman and Mr. Asquith,

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  and I cannot resist the challenge. At the same time the reason why I have not risen before is that I have suspected that perhaps rather too big a thing has been hung on rather a small hook. I am ready at all time to resist taxes on food, and I shall do so to-night, but it is only fair to point out that this 2d. per lb. affects only one fortnight in the year.
  Dr. Burgin: It is not 2d. The duty is 10 per cent. until 31st May, and at the date of 1st June the duty becomes 2d. The proposal in this Order is that, instead of To per cent., there shall be a duty of 2d. in the fortnight immediately preceding 1st June.
  Mr. Griffith: I do not think I was misunderstanding the hon. Gentleman, because all that we are concerned with is the 2d. duty, which is spread over a fortnight; and though I agree on the question of principle that has been raised, I am not prepared to risk my whole fiscal life on this particular Measure. But I was more concerned with the hon. and gallant Member for Louth (Lieut.-Colonel Heneage), who really did raise a point of principle. He gets up to cast doubts as to whether there will be any increase in price as the result of an increased duty. That is a challenge, and—
  Lieut.-Colonel Heneage: I spoke about the exact sum of 2d. An hon. Member opposite assumed that the duty of 2d. would cause a rise of 2d. per lb., and with that I did not agree.
  Mr. Griffith: The hon. and gallant Member discreetly cast doubts by his speech—that was the impression which it left on me—as to whether we were getting an increase of price. If he amends that speech now and says that perhaps the increase may be only 1¾d., that may be correct. But really this is put forward on every occasion. What is the object of this duty if it is not to raise the price? Some growers say that English tomatoes are being undersold from abroad; they go to the Treasury, and they say, "Please give us some help in this matter." If the kind of help given does not raise the price, then the hon. and gallant Member and his friends are not getting the advantage which they want. It is the confusion of thought that we always get in this House, of people trying to get it both ways, believing that they can get protection without any increase of price to the con-
  128
  sumer, which is, of course, a delusion. On a falling market in the world, you may possibly find that the effect of a tariff is merely to prevent your benefiting by that fall, but under normal circumstances a tariff fails entirely in its object unless it produces the increase in price which it is always liable to show. I rise really for the purpose of answering the hon. and gallant Gentleman opposite, in order that we may make this point of principle, and although this duty is not a very large peg to hang it on, it does raise the principle. We object at all times to tariffs on food, and I shall certainly, if a Division is challenged, vote against the duty.
  9.13 p.m.
  Mr. Broad: I have listened to a good many of these Debates, and I have never heard one in which less attempt has been made really to justify the imposition of a duty. It amounts to taxation for the sake of taxation, it seems to me, and the Government are nibbling away like rats in a pantry at the foundations of the building. No consideration is given to the consumers or to the poor people in any way. If there be any English tomatoes on the market at the end of May, they are a luxury article grown under glass, at great expense and with a great deal of risk, and the only competition will be that of tomatoes grown under similar conditions perhaps in Holland. Any housewife or any expert will know quite easily which is a cheap open-air tomato from the Canary Islands and which is a hot-house production from Holland or from this country, and if there had been any concern at all for the poorer people, the Minister would have made that restriction and allowed the cheaper tomato to come in free for the poorer people. Apparently, however, there is no consideration whatever for them.
  The hon. and gallant Member for Louth (Lieut.-Colonel Heneage) represents an area of smallholders and allotment holders, but he did not seem to me to understand what he was talking about. Anyone knows that the smallholder or the allotment holder is not interested in marketing tomatoes in May or June, or even until the end of July. These are the productions of the particular area of the Lea Valley about which the Minister spoke, which I know so well, having lived in it. The workings

  129
  of the markets, and the care and system required in growing these tomatoes so as to put them on the market at that time of the year, are such that you must be either big or nothing in that business. I have seen those who get away with it and have backing, become very rich. Under Free Trade they became very rich indeed, probably millionaires some of them, and this is still the business of the big man with big capital. There is no need why he should be given this extra protection for the extra fortnight. He deals only with the luxury article, but the tomato in which we are particularly interested, from the point of view of the housewife, is the tomato grown in the open air in sunnier climes than this. It is not only a question of diabetes or cancer patients. A great many of our people have to take "packed" foods to work upon, and for them it is meat at the beginning of the week and bread and cheese at the end, and the one little appetiser they have with their food is the cheap tomato which is to be taxed 2d. a lb. The Minister ought to be ashamed of himself for bringing forward such a proposal. Perhaps the reason why he did not seek in the least to justify it was the economic position of the industry which is thriving so well on the luxury tomato, which is the only one with which he ought to have dealt.
  9.18 p.m.
  Dr. Burgin: The way of a junior Minister is hard. The hon. Member for Edmonton (Mr. Broad) has told me that I ought to be ashamed of myself and criticised me for the paucity of the information with which this matter was introduced. His Front Bench Leader, the right hon. Member for Hillsborough (Mr. Alexander), in making his moderate and courteous speech, was kind enough to congratulate me on having given so much more than the usual ration of information. Whether special food ought to be given to those suffering from incurable diseases such as diabetes or cancer is not a matter which it would be in order for me to discuss to-night. The House has been moved by the contribution of the hon. Member for Hemsworth (Mr. G. Griffiths), who has spoken with force and special knowledge on this subject, and were it in my power to accede to his request I would willingly do so, but it is not a matter which concerns my Department.
  130
  The House has heard very forcibly put the plea of the consumer. Nobody can take exception to that plea being put in this House as plainly and as clearly as Members can put it, but bear in mind that when our great problem is to absorb the enormous number of unemployed industrial workers, it is not from the consumer that we obtain help. It is the producer who has to be helped if the unemployment numbers are to be reduced. It is a very interesting study, which some hon. Members opposite may make, to see the way in which the large figures of unemployed have steadily been reduced by the policy of assistance to the producers, bearing in mind that it is not in the consumers' interest that the producer should be impoverished. That cannot be argued at length to-night, but it is essential that it should be stated. An hon. Member asked, Why not increase the purchasing power of the masses? Does he know that during 1936 wage increases for 4,000,000 insured workpeople amounting to £500,000 a week were granted? If that is not increasing the consuming power, I do not know what is. These increases were granted to 4,000,000 insured workers out of a total of only just over 12,000,000.
  Mr. Mainwaring: How many millions lost?
  Dr. Burgin: That is another matter. No doubt it was my own fault, but in introducing this Order I assumed on the part of the House some understanding of the tomato trade. I ought, perhaps, to have been more elementary and to have explained what happened during this fortnight of the second half of May in each year. Of course, tomatoes selling at something like 14s. per 12 lbs. are not going to have an enormously increased market because there is a duty of 2d. per lb. put upon tomatoes that come from abroad and are sold at 7s. per 12 lbs. The right hon. Gentleman was quite right when he asked how that gap can be bridged. The difference in price during that fortnight is only one of the parts of the story. The right hon. Gentleman knows the industry perfectly well, and he will bear me out when I tell the House that what has happened is this: Realising that the duty of 2d. per lb. only applies from 1st June, and realising that 1st June is a time when the great English bulk supply comes on to the market, Continental countries have been sending

  131
  in green unripe tomatoes in the fortnight that precedes the 1st June, thus unloading them on to the market and damaging the prices of the British producers for the whole of their main crop. That is a very serious thing.
  If we are to help employment and help the producers we must consider other things besides cheapness. The doctrine that cheapness is the only consideration will never absorb the large numbers of unemployed with which the Government have to deal. Let me make it clear that unripe tomatoes can come in and be stored for a relatively small period. By altering this duty and applying the 2d. duty instead of the 10 per cent. from 15th May instead of 1st June, we forestall that idea of the Continent to send in their green unripe tomatoes. Such an industry as this is not as simple a matter as some hon. Members seem to think. The truth is that in the production of many foods we have lagged behind in the home industry. One of the most encouraging features about tomato growing has been the increased area under glass, the extent to which employment under glass has increased, and the extent to which new plant has been erected for the growing of tomatoes. That erection of new plant, these new glasshouses, that increased consumption of fuel at rising prices, have all added to the cost of the production of the home grown article. It is a rising industry employing more and more operatives and it is an industry that should be encouraged at the hands of this House. One of the ways of discouraging it is when expenditure on plant has been made, when the harvest is about to be gathered, suddenly to allow an inflow of foreign tomatoes at a time when the growers are about to reap their reward.
  9.25 p.m.
  Mr. T. Williams: I am quite sure that every hon. Member sitting on these benches and below the Gangway will be pleased to hear the hon. Member's admission that he is a political prisoner. He very frankly told the House that if he could have his way he would withdraw this Order. The hon. Member, referring to the speech of the hon. Member for Hemsworth (Mr. G. Griffiths), declared that if he had it in his power he would readily withdraw this Order.
  Hon Members: No.
  Dr. Burgin: I do not want to be misquoted and it does not matter a rap, of course, what my personal opinions are on anything. What I was doing was this. I was, in common with other Members of the House, profoundly moved, as I always am, by the hon. Member for Hemsworth talking on the subject of diabetes. He was giving an instance of a coke-oven worker and his wife where a large sum had to be paid for insulin every week and under some rule they got no contribution. If I had my way I would have made that a different story.
  Mr. Williams: I should be sorry to misquote the hon. Gentleman. He is so eloquent that he can make out just as good a case for Protection as he used to make out for Free Trade. He waxed eloquent about the wonderful effect which this slight increase in the duty will have on those who grow tomatoes in this country, and he rather hinted that if hon. Members on this side could see all the facts they would readily concede, from the point of view of price, employment and so forth, that they were entirely wrong and would accept the Orders. I want to submit to the hon. Gentleman that the development of tomato growing in this country was as rapid before the imposition of a duty as it has been since. The output of tomatoes between 1925 and 1931 increased by 7,000 tons per annum as against an increase between 1931, after the imposition of the duty, and 1935, of 5,000 tons per annum. The question of employment does not come in. The tomato industry was growing before the National Government came into office. The tomato industry would have continued to grow if the National Government had not come into office.
  Mr. Henderson Stewart: What were the figures for 1931?
  Mr. T. Williams: If the hon. Member wants the figures I can give them to him. In 1925 the output was 47,000 tons. By 1931 it was 54,000 tons, an increase of 7,000 tons. The output in 1935 was 59,000 tons, an increase of 5,000 tons. My point is that the increase between 1925 and 1931 without a duty was actually greater than the increase since 1935 as a result of the imposition of the duty.
  Dr. Burgin: When we quote statistics we are always anxious that the House

  133
  should have all the information. The hon. Member knows, of course, that the production of tomatoes in the open air has gone down while the production under glass has so much increased.
  Mr. Williams: The hon. Gentleman is probably quite correct, but my basic argument remains the same. Before the imposition of a duty, late in 1931 or early in 1932, output was increasing annually. Since then there has been a duty on tomatoes for various months in the year. If we take the figures supplied by the appropriate Government Department we find that in 1931 before the imposition of the duty the price per 12 lbs. of English tomatoes received by the grower was 4s. 4½d. After four years of National Government and nearly four years of duty the price in 1935 was 4s. 6¾d. So that the total effect of all these duties has been that the price of English tomatoes received by the growers has increased by 2¼d. per 12 lbs.
  Mr. Baxter: Is it the hon. Member's point that duties do not put up price?
  Mr. Williams: My point is that almost everything which the Parliamentary Secretary has argued has not been borne out by the facts and that almost everything my hon. Friends have declared is the truth. I think that this is easily demonstrated. Most of my hon. Friends have argued that if you impose a duty of 2d. per lb. on tomatoes which are being sold at 4s. 8d. per 12 lbs., raising the price to 6s. 8d., that will not of necessity compel the would-be buyer to purchase the tomatoes which are sold at 14s. 7d. per 12 lbs. The whole point of my hon. Friends has been that to impose a duty of 2d. a lb. on tomatoes sold for 5s. per 12 lbs. will not persuade them to buy tomatoes which are being sold at 14s. 9d. per 12 lbs. It therefore resolves itself into inflicting a burden on those who can only afford the cheapest kind of tomatoes.
  This Order is worse than it seems at first sight. At the moment, for the two weeks in question the price is 10s. per 12 lbs. for Dutch tomatoes. At the moment the duty is 10 per cent. or 1s. per 12 lbs. The new duty is to be 2d. per
  134
  lb. or 2s., an increase from Is. to 2S. But on the tomatoes from the Canary Isles, the price of which is about 4s. 8d., the duty at the moment is 10 per cent. or 5½d. per 12 lbs. But that 5½d. is now to be increased to 2S., an increase from 10 per cent. on the cheapest tomatoes to 40 per cent. The cheaper the article the higher the duty, and yet it has been demonstrated over and over again that to increase the duty on the cheapest tomatoes imported into this country, since there are no tomatoes grown here at a comparable price, is simply to impose the duty on the buyer and to augment the funds in the Treasury. I suggest that not even the eloquence of the Parliamentary Secretary can justify an Order of this description. The case submitted by my hon. Friend the Member for Hemsworth can be multiplied by the thousand throughout the country.
  The Parliamentary Secretary talked about forestalling the Dutchman or forestalling tomatoes sent from the Canary Islands. At one period in this country there was a law—perhaps my hon. and learned Friend the Member for East Bristol (Sir S. Cripps) will tell me whether I am correct—under which a person who forestalled committed a crime and was hung up by the thumbs for his trouble. If the Parliamentary Secretary is now forestalling I would not hang him up by the thumbs, but I would inflict such punishment upon him as would deter him from introducing any Order similar to this. The question of a fortnight may not mean much, but for people who are unemployed, or living on old age pensions or with small wages, who for health reasons must purchase the cheaper kind of tomato, this 2d. duty is really a burden, and I have no compunction about walking into the Lobby against this Order, as we have so frequently done in the case of other Orders since 1932.
  Question put,
  "That the Additional Import Duties (No. 1) Order, 1937, dated the tenth day of February, nineteen hundred and thirty-seven, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said tenth day of February, nineteen hundred and thirty-seven be approved."
  The House divided: Ayes, 16o; Noes, 84.

  Division No. 96.]

  AYES.

  [9.37 p.m.

  Acland-Troyte, Lt.-Col. G. J.

  Fildes, Sir H.

  Orr-Ewing, I. L.

  Agnew, Lieut.-Comdr. P. G.

  Findlay, Sir E.

  Penny, Sir G.

  Albery, Sir Irving

  Fleming, E. L.

  Percy, Rt. Hon. Lord E.

  Allan, Lt.-Col. J. Sandeman (B'kn'hd)

  Fox, Sir G. W. G.

  Perkins, W. R. D.

  Apsley, Lord

  Furness, S. N.

  Pickthorn, K. W. M.

  Aske, Sir R, W.

  Fyfe, D. P. M.

  Pilkington, R.

  Assheton, R.

  Ganzoni, Sir J.

  Porritt, R. W.

  Astor, Hon. W. W. (Fulham, E.)

  Gluckstein, L. H.

  Radford, E. A.

  Baldwin-Webb, Col. J.

  Goldie, N. B.

  Raikes, H. V. A. M.

  Balfour, G. (Hampstead)

  Gower, Sir R. V.

  Ramsden, Sir E.

  Balfour, Capt. H. H. (Isle of Thanet)

  Graham, Captain A. C. (Wirral)

  Rathbone, J. R. (Bodmin)

  Barclay-Harvey, Sir C. M.

  Grant-Ferris, R.

  Reed, A. C. (Exeter)

  Baxter, A. Beverley

  Granville, E. L.

  Remer, J. R.

  Beamish, Rear-Admiral T. P. H.

  Gridley, Sir A. B.

  Rickards, G. W. (Skipton)

  Beauchamp, Sir B. C.

  Grimston, R. V.

  Ropner, Colonel L.

  Bennett, Sir E. N.

  Gritten, W. G. Howard

  Ross, Major Sir R. D. (Londonderry)

  Blindell, Sir J.

  Guest, Hon. I. (Brecon and Radnor)

  Ross Taylor, W. (Woodbridge)

  Boulton, W. W.

  Hanbury, Sir C.

  Rowlands, G.

  Briscoe, Capt. R. G.

  Hannah, I. C.

  Russell, R. J. (Eddisbury)

  Brocklebank, C. E. R.

  Hannon, Sir P. J. H.

  Salt, E. W.

  Brown, Rt. Hon. E. (Leith)

  Harbord, A.

  Samuel, M. R. A.

  Bull, B. B.

  Haslam, Sir J. (Bolton)

  Shaw, Major P. S. (Wavertree)

  Burgin, Dr. E. L.

  Heneage, Lieut.-Colonel A. P.

  Simon, Rt. Hon. Sir J. A.

  Campbell, Sir E. T.

  Herbert, A. P. (Oxford U.)

  Smiles, Lieut.-Colonel Sir W. D.

  Carver, Major W. H.

  Hills, Major Rt. Hon. J. W. (Ripon)

  Smith, L. W. (Hallam)

  Cary, R. A.

  Holmes, J. S.

  Somervell. Sir D. B. (Crewe)

  Cazalet, Capt. V. A. (Chippenham)

  Hope, Captain Hon. A. O. J.

  Spens. W. P.

  Channon, H.

  Horsbrugh, Florence

  Stanley, Rt. Hon. Lord (Fylde)

  Clarke, Lt.-Col. R. S. (E. Grinstead)

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

  Stewart, J. Henderson (Fife, E.)

  Clarry, Sir Reginald

  Hunter, T.

  Strauss, E. A. (Southwark, N.)

  Colville, Lt.-Col. Rt. Hon. D. J.

  Inskip, Rt. Hon. Sir T. W. H.

  Strickland, Captain W. F.

  Cooper, Rt. Hn. T. M. (E'nburgh, W.)

  Jarvis, Sir J. J.

  Stuart, Hon. J. (Moray and Nairn)

  Cranborne, Viscount

  Jones, Sir G. W. H. (S'k N'w'gt'n)

  Sutcliffe, H.

  Crooke, J. S.

  Keeling, E. H.

  Tate, Mavis C.

  Croom-Johnson, R. P.

  Kerr, Colonel C. I. (Montrose)

  Thomson, Sir J. D. W.

  Cress, R. H.

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

  Touche, G. C.

  Crowder, J. F. E.

  Leckie, J. A.

  Tree, A. R. L. F.

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

  Leighton, Major B. E. P.

  Tufnell, Lieut.-Commander R. L.

  Davies, Major Sir G. F. (Yeovil)

  Levy, T.

  Wakefield, W. W.

  Dawson, Sir P.

  Liddall, W. S.

  Wallace, Capt. Rt. Hon. Euan

  Denman, Hon. R. D.

  Llewellin, Lieut.-Col. J. J.

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

  Denville, Alfred

  MacAndrew, Colonel Sir C. G.

  Waterhouse, Captain C.

  Donner, P. W.

  MoCorquodale, M. S.

  Watt, G. S. H.

  Dorman-Smith, Major R. H.

  MacDonald. Sir Murdoch (Inverness)

  Wells, S. R.

  Dower, Capt. A. V. G.

  Manningham-Buller, Sir M.

  Wickham, Lt.-Col. E. T. R.

  Drewe, C.

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

  Windsor-Clive, Lieut.-Colonel G.

  Duckworth, w. R. (Moss Side)

  Markham, S. F.

  Wise, A. R.

  Dugdale, Major T. L.

  Mayhew, Lt.-Col. J.

  Womersley, Sir W. J.

  Duggan, H. J.

  Mellor, Sir J. S. P. (Tamworth)

  Wragg, H.

  Duncan, J. A. L.

  Mills, Major J. D. (New Forest)

  Young, A. S. L. (Partick)

  Eckersley, P. T.

  Mitchell, H. (Brentford and Chiswick)

  Ellis, Sir G.

  Muirhead, Lt.-Col. A. J.

  TELLERS FOR THE AYES.—

  Entwistle, Sir C. F.

  Munre, P.

  Commander Southby and Sir Henry

  Errington, E.

  Neven-Spence, Major B. H. H.

  Morris-Jones.

  Everard, W. L.

  O'Neill, Major Rt. Hon. Sir Hugh

  NOES.

  Acland, Rt. Hon. Sir F. Dyke

  Gardner, B. W.

  Leonard, W.

  Adams, D. (Consett)

  Garro Jones, G. M.

  Logan, D. G.

  Adamson, W. M.

  George, Major G. Lloyd (Pembroke)

  McEntee, V. La T.

  Alexander, Rt. Hon. A. V. (H'lsbr.)

  George, Megan Lloyd (Anglesey)

  McGhee, H. G.

  Attlee, Rt. Hon. C. R.

  Gibbins, J.

  MacLaren, A.

  Banfield, J. W.

  Gibson, R. (Greenock)

  Maclean, N.

  Barr, J.

  Griffith, F. Kingsley (M'ddl'sbre, W.)

  MacMillan, M. (Western Isles)

  Benson, G.

  Griffiths, G. A. (Hemsworth)

  Mainwaring, W. H.

  Broad, F. A.

  Hall, G. H. (Aberdare)

  Mathers, G.

  Bromfield, W.

  Hall, J. H. (Whitechapel)

  Milner, Major

  Brooke, W,

  Hardie, G. D.

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

  Buchanan, G.

  Hayday, A.

  Muff, G.

  Burke, W. A.

  Henderson, J. (Ardwick)

  Oliver, G. H.

  Cape, T.

  Henderson, T. (Tradeston)

  Parker, J.

  Cove, W. G.

  Hollins, A.

  Potts, J.

  Cripps, Hon. Sir Stafford

  Jagger, J.

  Pritt, D. N.

  Davidson, J. J. (Maryhill)

  Jenkins, A. (Pontypool)

  Roberts, W. (Cumberland, N.)

  Davies, S. O. (Merthyr)

  Jenkins, Sir W. (Neath)

  Robinson, W. A. (St. Helens)

  Dobbie, W.

  Johnston, Rt. Hon. T.

  Rowson, G.

  Dunn, E. (Rother Valley)

  Jones, H. Haydn (Merioneth)

  Silverman, S. S.

  Ede, J. C.

  Kennedy, Rt. Hon. T.

  Simpson, F. B.

  Edwards, Sir C. (Bedwellty)

  Kirby, B. V.

  Smith, E. (Stoke)

  Fletcher, Lt.-Comdr. R. T. H.

  Leach, W.

  Stewart, W. J. (H'ght'n-le-Sp'ng)

  Foot, D. M.

  Lee, F.

  Taylor, R. J. (Morpeth)

  136

  137

  Thurtle, E.

  Watkins, F. C.

  Williams, T. (Don Valley)

  Tinker, J. J.

  Watson, W. McL.

  Young, Sir R. (Newton)

  Viant, S. P.

  Westwood, J.

  Walkden, A. G.

  White, H. Graham

  TELLERS FOR THE NOES.—

  Walker, J.

  Williams, E. J. (Ogmore)

  Mr. Charleton and Mr. Paling.

  9.46 p.m.
  Dr. Burgin: I beg to move,
  "That the Additional Import Duties (No. 2) Order, 1937, dated the seveneenth day of February, nineteen hundred and thirty-seven, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said seventeenth day of February, nineteen hundred and thirty-seven, be approved."
  I start with the observation that this is not a duty on food. This Order imposes, as from 19th February, a specific duty of 1s. per thousand needles, or part of a thousand, as alternative to the present 20 per cent. ad valorem duty, and the goods concerned are hand sewing needles, including darning needles and bodkins. The industry is mainly at Redditch and the number of workpeople about 1,100. The imports are chiefly from Germany and Japan. This specific duty will, broadly speaking, apply to needles that are valued up to 5s. per thousand, but it will not affect needles for special purposes and particular trades which are of a higher value.
  Needles, as the House probably knows, are normally sold in packets of about 19. I have here a specimen packet in which are bodkins, darners, and straw and sharps. These packets of 19, which come from Japan, are marked "3d." and sold at 1d. I believe that is a peculiarity of the needle trade and is not confined to the imports from any one country. The relative value of needles may interest the House. In 1933–34 the census of production of needles showed about 500,000 lbs., at roughly 10s. per lb. The importations which have come in in very large quantities from Germany, have had an average value of something like 2s. a lb. Imports of needles from Japan, which have shown a particular rise since 1934, have fallen as low in value as 9d. per lb. The House will, therefore, see that we are dealing with the question of the British production of an article. We are dealing with an industry which has catered hitherto for the cheaper kind of needle up to the most expensive. The industry has an export trade and expects to cater for all classes of consumer.
  Broadly speaking, it is the object of those who are surveying industry to see that the needs of the whole range of
  138
  consumers are catered for. I do not want an industry to grow up to cater merely for luxury articles and to find that the whole of the cheaper kind of article is supplied by foreign countries. The price of the cheaper article in this case has been knocked down below the level at which British industry can afford to produce it, and to such an extent that the makers of the cheaper product are going out of existence. It is no longer possible for them to make the cheaper needles. The maintenance of a substantial export trade in the better quality indicates that the needle industry as a whole is efficient and able to compete in the markets of the world. What this House is being asked to do now is to say that the very cheap importations coming from Japan, where none of the criteria that go to the making up of the export price of the needle compare with industrial prices in this country, should have attached to them a specific duty which will raise the price sufficiently to enable the British manufacturers of the cheaper needle to continue to produce.
  Assurances have been received from the manufacturers that the prices to the wholesaler will be maintained at levels which will permit the continuance of the usual retail prices. The House must understand that you can have the price of a foreign article brought so low that there is no British production at all, and that if you increase the price of the foreign article a very little above what it is, to a level which will enable British production to compete, you may have your British production maintained and yet bring about no increase in price. That is the object with which I am moving this Order.
  9.52 p.m.
  Mr. G. Griffiths: I want to ask a question, because I am interested in needles. The Parliamentary Secretary said that the price of these articles would not be raised. A duty was put on needles not long ago and the needles in which I am interested, which were 4½d. each before the duty, were 6d. each when I went to buy one after the duty was put on. Is the Parliamentary Secretary sure that the price of these needles will not be

  139
  raised? Will this duty bring in the insulin needle? The tariff which is put on here looks small and, according to the theory which the Parliamentary Secretary has propounded, the duty will not be passed on to the user. This time it is not the consumer who is affected, but in the other case it was the consumer. I had to consume those needles twice a day. Now that the Minister has given an assurance that the duty will not bring in this needle I feel a little easier, and I will sit down on it.
  9.55 p.m.
  Mr. Dingle Foot: I rise because of one statement which the hon. Gentleman made at the end of his speech, when he said that this duty was not going to fall upon the consumer. I understand that to mean that the consumer is not going to pay more as the result of this duty. The hon. Gentleman tells us that German needles were being imported at 2s. per lb., while the Japanese have fallen as low as 9d.—he did not say whether they were 9d. per lb. now—and I think he said that the price of the corresponding British needles was 5s. per lb. The object of this additional duty is, I take it, to cut off the source of supply at 2s. per lb. from Germany, or 9d. per lb. from Japan, and, if the duty is successful in that, how is it possible that the price should not be raised?
  9.56 p.m.
  Mr. Alexander: We have an opportunity to-night which we do not often get, but I do not want, now that we have had a good discussion on the other duty, to take up much of the time of the House on this one. I am anxious, however, that the Parliamentary Secretary, because of the nature of this commodity, should tell us really what the Government are going to do to meet the kind of situation which he put before the House arising from German and Japanese competition. A duty of this kind is quite incapable of meeting the kind of sweated competition which has been mentioned. Of what use is it to put a duty of 20 per cent. ad valorem—for that is what it amounts to—on needles at 9d. per lb. from Japan, in order to protect a British industry whose average price I understand would be about 5s. per lb.?
  What I am concerned about, and what I am sure many of my hon. Friends on
  140
  the Labour benches will be concerned about, is what we are really doing to get in touch effectively with the people who are responsible for German and Japanese industries of this kind, with a view to coming to a really sound understanding on the matter. Recently, at the International Conference of the Institute of Pacific Relations, which took place in California, I met representatives of the Japanese delegation, one of them a former Foreign Secretary of Japan, and we discussed at considerable length the difficulties entailed upon industrial countries of the type of this country by the enormous competition which is taking place from Japan—and in a lesser degree, because of the difference in the price of the commodity, the same thing applies to Germany—on account of great armament proposals which they are financing to a large extent by exporting goods of this kind in order to buy raw materials for their armaments programme.
  I understood quite clearly from those Japanese representatives, and also from some Americans, that already separate commodity trade agreements had been made between the United States of America and Japan, and that it would be quite possible for a similar commodity agreement to be made direct between this country and Japan if the two parties could be got together. I am aware that in regard to the cotton textile industry such agreements have been made, and that in consequence certain steps have been taken with regard to the Colonial Empire in relation to Japanese goods, but there can be no possible protection for the workers in the needle industry in this country as a result of a 20 per cent. duty on an article costing 9d. per lb. as against an English average price of 5s. If they are in such dire need as they are said to be in Japan, that they follow—I am not admitting it—the kind of procedure which is always outlined by hon. Members opposite, that they will get in and will cut their price until they do get in, such a duty will not help.
  For the year 1936, our visible adverse balance of trade was £347,000,000, and, according to the Board of Trade Journal of last week, the actual adverse balance of payments was, as I prophesied in the House, £19,000,000; so that there is no cure for the situation caused by the competition of sweated industries in one country with less sweated industries in this

  141
  country by the imposition of increasingly high protective duties. When one comes up against the kind of illustration that the Parliamentary Secretary has put forward to-night, one sees the hopelessness of proceeding along this line and continuing to tax the consumer in a way that brings no relief. When the Import Duties Advisory Committee continually ask the Government to come forward with duties of this kind to meet the situation, the Government ought not to be merely an Edison Bell record of what the Import Duties Advisory Committee, which sits in camera, says, and put before the House just what the committee says without our getting to know anything about the real facts of the situation. The Government of this country ought to get into touch directly with the other Governments concerned, and, if necessary, with the chief industrialists of those countries, and try to get a real understanding and agreement between the two sides. It has been done in the case of one industry, and it can be done in more.
  10.3 p.m.
  Dr. Burgin: The right hon. Gentleman in the last few minutes has raised the whole question of the importation of Asiatic manufactured goods into Western European countries; he has raised the question of the adverse balance of trade and the balance of payments; and he has raised the whole question of the value of our invisible exports. There must be some limit, I suppose, to the extent to which one can follow this punching-ball operation in moving that an Order of this kind be approved. Let me, however, say that the policy of the Government with regard to these very cheap articles is this: While negotiations may quite possibly go on between groups of industries in two countries, and I am all in favour of it, there must be something done in the interval. You cannot allow a British industry to be steadily undermined by importations that bear no reference whatever to cost, such as needles falling as low as 9d. per lb. when imported, the effect being to put our English industry out of business altogether.
  There is a level at which British needles can be made and supplied to the housewife, who is the consumer, and at which the housewife is eager and prepared to buy. There is that level as a condition of obtaining this extra duty. It is
  142
  not capriciously fixed at is., but it is fixed at 1s. after evidence and calculation. As a condition of obtaining that duty, the manufacturers enter into an obligation with the Import Duties Advisory Committee under which they agree to maintain their prices to their wholesalers at reasonable levels, so that the wholesalers in turn will permit the continuance of the usual retail prices. That means that the price which the British housewife has been prepared to pay for a packet of 19 needles will be maintained as the retail price, and the market of the British manufacturer of these needles will not be undermined and completely cut from under his feet by an importation from Japan at some wholly derisory price. That is the general policy.
  The right hon. Gentleman is at liberty to say that Japan will ultimately give the articles away, so that the cost will be only a shilling. If and when that time comes application can be made to the Import Duties Advisory Committee, but the Committee has made a recommendation that a shilling in this case will be adequate, and I have no evidence before me to suggest the contrary. On the other hand, I am told that behind this duty of a shilling it will be possible to maintain a wide and extensive British industry in needle-making, which goes back a very long way in the history of our country, which is a skilled craft, which uses steel, the product of one of our great industries, and that this industry will still supply these packets of bodkins to housewives at a normal price. Surely in the circumstances there cannot be any substantial complaint. On the broader question of what we are going to do with Japanese goods if the price continues to fall and the Japanese Government give an export subsidy, that is a wide question of politics which does not arise now.
  Mr. Attlee: Will the hon. Gentleman explain the point that his figures do not seem to bear out his contention—the range of prices between 9d. and 5s.?
  Dr. Burgin: I thought in these days of Test Matches we understood something about averages. I used averages all the way through. You have here an industry making all kinds of needles, from very expensive to very cheap. It is not possible to give an enormous number of statistics. I took the total production of the whole manufacture of needles, lumped

  143
  it together in weight and value and divided one by the other and arrived at an average figure of British manufacture of something like ios.—not 5s.— a lb. The cheaper end of the trade is, of course, very much cheaper, just as the more expensive is very much dearer. The Germans, concentrating on the cheaper end of the trade, brought the invoice landed prices down to a figure of about 2s. [Interruption.] The right hon. Gentleman did not make it clear that that was the figure. He asks what is the comparative price for the cheapest British needles. I will make the inquiry at once and get that piece of information. The price in Germany gradually came down so that the landed price was about 2s. a lb. Then I mentioned that in Japan, from 1934 onwards to 1936, the price gradually fell and in December, 1936, the lowest price ever recorded was 9d. per lb. That 9d. per lb. is comparable to the German 2S. The average price of imports on Japan, of course, was much higher than 9d. For the whole year of 1936, taking all qualities of needles, it was something like 2s. 4d.
  Mr. Alexander: I should like this made quite clear. I may have been wrong, but I made some notes while the Parliamentary Secretary was speaking and, whilst I understood that for 500,000 lbs. of English production the average value was 10s., I took down immediately afterwards the average German price, 2s., and the Japanese, 9d. The Parliamentary Secretary also said this range of duties would apply only to those classes of needles up to about is.; therefore, he still has to explain the point as between 9d. and 5s.
  Dr. Burgin: The figure of 5s. a 1,000 is arrived at in this way: This Order is putting a specific duty of a 1s. a 1,000 needles as an alternative to the present 20 per cent. ad valorem. The new duty will apply to all needles imported at any value from nothing up to 5s. a 1,000. I mention that because the trade in the highest grade of articles is possessed by our own country. The object of the duty is to affect needles coming in at low prices—and by low prices I mean 5s. and under. As to whether the figure of 2s. a lb. for Germany was an average or the lowest, the price varies month by month, and the average value of imports from
  144
  Germany was as low as 2s. a lb. in a particular month. The importation from Japan fell in December, 1936, to the lowest figure of 9d., which is an average of all the importations from that country taken together. In that month there were 3,060 lbs. of needles imported from Japan and the average value during that month was 9d. During the same month any needles that came in from the United States were something like £5 a lb. because they were special machinery needles. The equivalent price per lb. from Germany in December was something like 25s.—that is, all different kinds of needles. They are imported in different periods of the year and they are imported from a number of different countries.
  Sir Stafford Cripps: What was the price of the comparable quality of English needles to the average price of 9d. from Japan or 2s. from Germany?
  Dr. Burgin: The comparable price is 4s. 6d. a lb.
  10.15 p.m.
  Mr. Attlee: I think that the House is entitled to complain at the way these matters are brought before us by the Board of Trade. Whether it is the President of the Board of Trade or the Parliamentary Secretary, we get this kind of sloppy statement, a general kind of paralysis. The Ministers do not seem to study them at all. They receive briefs from their Department, and sometimes they can read them and sometimes they cannot, and when any question comes along they are unable to give the relative information. The hon. Member tonight has given the House an entirely false impression. He attempted to cover the higher grade and the lower grade goods, and then compared them for a single instance with the lowest grade, and drew a distinction between 5s. and 9d. He said that they were no doubt the average. The Parliamentary Secretary said that he did not know that he was going to have this kind of question asked. But if he had had the information ready, he ought to have been able to give all relevant figures. Merely to discuss averages like that gives a false impression, and it is no way in which to bring these matters before the House. Where he gives a specific figure, it is given as an example of a low-priced article. He ought to be able to give the comparable

  145
  figures for this country and Germany, not for one month, but for a whole number of months, so that we can obtain a proper view. I complain that this House is being constantly treated in this way by the President and the Parliamentary Secretary serving up a brief without knowing all that is in it.
  Sir S. Cripps: The Parliamentary Secretary will find out that the 5s. he spoke of has no relationship to the 4s. 6d. whatever. The 5s. is arrived at in this way: It was a 20 per cent. duty. Twenty per cent. of 5s. is one shilling and therefore if 20 per cent. of 5s. is one shilling, it is only under 5s. value that the is. applies, because 20 per cent. of a sum under 5s. is less than 1s.
  10.19 p.m.
  Dr. Burgin: I want only to apologise to the House. My own preparation in these cases, and I hope that the House will agree with me, is usually adequate. It was not the lack of study but the failure to appreciate the questions of hon. Members on his particular question, and I am very sorry. There is no desire on the part of the Board of Trade in the least to shirk discussion, but to have to review an entire industry or trade in a speech of 10 minutes is not an easy task, as hon. Members will admit if they attempt to do it. If the roles were reversed there are more questions that I could ask myself than anybody could ask me.
  Resolved,
  "That the Additional Import Duties (No. 2) Order, 1937, dated the seventeenth day of February, nineteen hundred and thirty-seven, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said seventeenth day of February, nineteen hundred and thirty-seven, be approved."

  GAS UNDERTAKINGS ACTS, 1920 TO 1934.
  Resolved,
  "That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 5920 to 1934, on the application of the Provost Magistrates, and Councillors of the burgh of Alloa, which was presented on the 2nd day of February and published, be approved, with the following addition:
  Page 4, after Clause 6, insert:
  (Application of proceeds of sale by Alva town council.)
  All moneys received by the Alva town council under the scheduled agreements and this Order shall, subject to the payment by the Alva town council of all expenses in connection with the transfer of the Alva undertaking to the town council, including the payment by the Alva town council provided for in the section of this Order of which the marginal note is 'Costs of order,' be applied by the Alva town council, with the approval of the Secretary of State, either in repayment of debt or such other purposes as the Alva town council may determine."
  Resolved,
  "That the draft of a Special Order proposed to be made by the Board of Trade under the Gas Undertakings Acts, 1920 to 1934, on the application of the Portsmouth and Gosport Gas Company, which was presented on the 9th day of February and published, be approved."—[Dr. Burgin.]
  The remaining Orders were read, and postponed.

  ADJOURNMENT.
  Resolved, "That this House do now adjourn."—[Sir George Penny.]
  Adjourned accordingly at Twenty-one Minutes after Ten o'Clock.

SHANGHAI (BRITISH SOLDIERS, INCIDENT).
  SHANGHAI (BRITISH SOLDIERS, INCIDENT).
  SHANGHAI (BRITISH SOLDIERS, INCIDENT).
LEAGUE OF NATIONS (RAW MATERIALS).
  LEAGUE OF NATIONS (RAW MATERIALS).
  LEAGUE OF NATIONS (RAW MATERIALS).
SPAIN.
  SPAIN.
  SPAIN.
POST OFFICE (PARCELS).
  POST OFFICE (PARCELS).
  POST OFFICE (PARCELS).
AIR RAID PRECAUTIONS.
  AIR RAID PRECAUTIONS.
  AIR RAID PRECAUTIONS.
SCOTLAND (PHYSICAL TRAINING COURSE).
  SCOTLAND (PHYSICAL TRAINING COURSE).
  SCOTLAND (PHYSICAL TRAINING COURSE).
INDIA (ROAD CONSTRUCTION, WAZIRISTAN).
  INDIA (ROAD CONSTRUCTION, WAZIRISTAN).
  INDIA (ROAD CONSTRUCTION, WAZIRISTAN).
METEOROLOGICAL OFFICE (AIR MINISTRY).
  METEOROLOGICAL OFFICE (AIR MINISTRY).
  METEOROLOGICAL OFFICE (AIR MINISTRY).
ROYAL NAVY (NEW CONSTRUCTION).
  ROYAL NAVY (NEW CONSTRUCTION).
  ROYAL NAVY (NEW CONSTRUCTION).
EXPORT CREDITS.
  EXPORT CREDITS.
  EXPORT CREDITS.
UNEMPLOYMENT.
  EX-SERVICE MEN.
  EX-SERVICE MEN.
  SOUTH-WEST DURHAM.
  SOUTH-WEST DURHAM.
  PUBLIC ASSISTANCE (EX-SERVICEMEN).
  PUBLIC ASSISTANCE (EX-SERVICEMEN).
  TOWN PLANNING (RIBBON DEVELOPMENT).
  TOWN PLANNING (RIBBON DEVELOPMENT).
  HIGH COURT (OFFICIAL SHORTHAND WRITERS).
  HIGH COURT (OFFICIAL SHORTHAND WRITERS).
  INLAND REVENUE (WOMEN TAX OFFICERS).
  INLAND REVENUE (WOMEN TAX OFFICERS).