Sitting of 22 March 1937

Preamble
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
MEMBER SWORN.
A Member took and subscribed the Oath.

PRIVATE BUSINESS.
Great Western Railway Bill,
Third Reading deferred till Wednesday, at Half-past Seven of the Clock.
Rotherham Corporation Bill,
As amended, considered; to be read the Third time.
Folkestone Pier and Lift Bill [Lords],
Wessex Electricity Bill [Lords],
Read a Second time, and committed.
Southampton Corporation Bill (by Order),
As amended, considered; to be read the Third time.

ORAL ANSWERS TO QUESTIONS.

  INDIA (ARRESTS, BENGAL).
  Mr. Prittasked the Under-Secretary of State for India whether he is aware that Ranjit Dutta Gupta and Subodh Kumar Dutta Gupta were arrested in Bengal last November; that they were kept in custody without any charge being framed against them for some two months, although they were brought from time to time before the chief residency magistrate, and that they were then released on bail by order of the High Court against the opposition of the prosecution; and whether he will take steps to procure the abolition of the practice of detaining arrested persons for indefinite periods without making any charge against them?
  The Under-Secretary of State for India (Mr. Butler): I regret that I have no information, but I have made inquiries of the Government of India.

  EGYPT.

    CONFERENCE, MONTREUX.
    Sir John Wardlaw-Milneasked the Secretary of State for Foreign Affairs whether he is now in a position to announce the names of those who will form the delegation from His Majesty's Government to the conference regarding Egypt to be held at Montreux?
    The Secretary of State for Foreign Affairs (Mr. Eden): As the House has already been informed, my right hon. Friend the Secretary to the Department of Overseas Trade will lead the delegation, which will consist of the Counsellor at His Majesty's Embassy in Cairo, the Second Legal Adviser to the Foreign Office, and a secretary.

    BRITISH OFFICIALS, ALEXANDRIA.
    Sir John Mellorasked the Secretary of State for Foreign Affairs whether, and to what extent, the position and prospects of the British officials of the municipality of Alexandria have been affected by the provisions of the Anglo-Egyptian treaty; and what steps he has taken, or proposes to take, to safeguard their interests?
    Mr. Eden: The municipality of Alexandria is an international institution founded with the consent of various Powers and its organisation cannot, in the opinion of His Majesty's Government, be modified except by negotiation with all of them. It follows that the position of the municipality and consequently of its officials was not touched by the Anglo-Egyptian Treaty. The interests of British officials in the municipality will certainly be taken into consideration if, and when, the status of the municipality comes to be modified.
    Sir J. Mellor: Is my right hon. Friend aware that, in view of the implications of Article 13 of the Treaty, it is precisely the absence of any protection in the Treaty for these British officials that is causing anxiety, and will he endeavour at the Montreux Conference to provide some safeguard for their future?
    Mr. Eden: I have stated the actual position. I do not think we can go into hypothetical positions.

  TRADE AND COMMERCE.

    EXPORT CREDITS.
    Miss Wardasked the Secretary of State for Foreign Affairs whether his Department is in contact with the Export Credits Department with a view to helping friendly countries to develop their varied resources; and whether financial assistance of this kind is recognised as a means of promoting international friendship?
    Mr. Eden: My department is in close touch with the Export Credits Guarantee Department and the two Departments keep each other fully informed. The work of the Export Credits Guarantee Department, however, is based on commercial and financial, and not on political, considerations.

    SHIPBUILDING INDUSTRY.
    Miss Wardasked the Secretary to the Overseas Trade Department whether in view of the desirability of attracting foreign shipbuilding orders to this country, he will reconsider the position with regard to the granting of export credits to the shipbuilding industry?
    Captain Euan Wallace (Secretary, Overseas Trade Department): In 1931 His Majesty's Government decided, in view of all the circumstances, and especially the surplus of world tonnage, that the machinery of the Export Credits Guarantee Department should not be used in connection with the export of ocean-going vessels. No such restriction has been applied to smaller vessels and vessels used for special purposes. I am not aware that the position has so materially altered as to call for reconsideration of this policy. Naval craft are excluded by Statute from the operation of the Export Credits Scheme.
    Miss Ward: Has the attention of my right hon. Friend been directed to a recent speech by the chairman of a leading shipbuilding company in this country and will he consider ascertaining the views of shipbuilders in this matter?
    Captain Wallace: My attention has often been directed to speeches by prominent leaders in the shipbuilding industry, and I do not know to which one the hon. Lady is referring?
    Miss Ward: While agreeing with the general principle, why, when there is a shortage of steel, is it possible to have export credits, but when there is a surplus tonnage of shipping it is not?
    Captain Wallace: I think I had better see that question on the Paper.

    IRON AND STEEL TRADES FEDERATION.
    Mr. R. Aclandasked the President of the Board of Trade whether he can state, in relation to the dealings of the British Iron and Steel Federation in imported iron and steel, other than steel imported under the cartel arrangements, what are the total profits on those transactions which have shown a profit and what are the total losses on those transactions which have shown a loss to the latest available date; and, in relation to steel imported under the cartel arrangements, what are the present office charges or what is the present average office charge made by the federation for handling this steel?
    The Parliamentary Secretary to the Board of Trade (Dr. Burgin): I am informed that, in addition to the material referred to in my reply of 26th January to the hon. Member, the Federation have imported 23,600 tons of iron and steel in addition to the amounts imported under the cartel agreement, and that the profit on this importation amounts to £3,120. The average charge on all imports under the cartel agreement amounts to 9.01d. a ton.

    SPAIN.
    S. Mr. Arthur Hendersonasked the Secretary of State for Foreign Affairs whether he is now in a position to make a statement with regard to the note received from the insurgent authorities referring to the situation on the borders of Spanish Morocco?
    Mr. Eden: Yes, Sir. I have received through His Majesty's Ambassador at Hendaye an informal communication from General Franco's Administration alleging that intrigues are being carried on by the French authorities in the frontier area of the French and Spanish zones of Morocco which are calculated to produce disturbances in Spanish Morocco in violation of existing treaties, and proposing that, by agreement between His Majesty's Government and other Powers

    2539
    parties to the Act of Algeciras, together with the other Powers parties to that Act at the time of its signature, an international commission should be appointed to carry out an investigation in the Spanish zone. I have caused the authorities at Salamanca to be informed that His Majesty's Government do not consider that a situation exists as between the French and Spanish zones of Morocco which justified diplomatic steps being taken by the Powers parties to the Act of Algeciras, and that the question of infringement, if any, of the Franco-Spanish Convention of 27th November, 1912, would be a matter between France and Spain.
    Mr. Henderson: Is it not a fact that there is not a word of truth in the allegations contained in this note, and is it not another example of the mischievous and misleading propaganda for which the Spanish insurgent authorities are responsible?
    Mr. Eden: The hon. Member will appreciate that I would rather not make any comment. I would rather that my answer stood.
    Major-General Sir Alfred Knox: Do not such questions in themselves represent mischievous propaganda?
    Mr. A. Hendersonasked the Secretary of State for Foreign Affairs whether he is now in a position to make a statement on the Note received from the Spanish Government with reference to the four Italian divisions in Spain?
    Miss Rathboneasked the Secretary of State for Foreign Affairs whether full inquiry has been made by the Non-Intervention Committee into the charges of the Spanish Government concerning the invasion of Spain by German troops, and with what result; and what action it is proposed to take in the matter if the charges are found to be true?
    Mr. Eden: I would refer the hon. Members to the reply given on Wednesday last to the hon. Member for Kingswinford (Mr. A. Henderson) to which I have at present nothing to add.
    Mr. Henderson: Will the Foreign Secretary bear in mind that if the delay is too long, the present retreat of the Italian divisions now in Spain may bring them back to their own country before he replies?
    Mr. Dayasked the Secretary of State for Foreign Affairs whether the Council of the League of Nations has received a report from the three delegates of the health organisation of the League who recently visited Spain at the request of the Spanish Government for the purpose of drawing up a report and furnishing necessities for the relief of the Spanish civilian population; and will he give particulars?
    Mr. Eden: Yes, Sir. I am arranging to place a copy of the report in the Library of the House.
    Mr. Day: Can the Minister say whether the Secretary-General of the League has submitted any names of any experts to the Spanish Government?
    Mr. Eden: Yes, I think so.
    Lieut.-Commander Fletcherasked the Secretary of State for Foreign Affairs whether all the countries represented on the Non-Intervention Committee have been formally asked to agree to the withdrawal of all foreign troops and volunteers from Spain; and, if so, which countries have not so far assented to the proposal?
    Mr. Noel-Bakerasked the Secretary of State for Foreign Affairs whether His Majesty's Government have yet laid before the Non-Intervention Committee proposals for the immediate evacuation of foreign troops from Spain and for the organisation of an adequate system of supervision and control over this evacuation?
    Mr. Eden: The question of the withdrawal of foreign combatants from Spain was, as the House is aware, raised by my Noble Friend Lord Plymouth in the Non-Intervention Committee on the basis of suggestions made by the German and Italian Governments in their replies to the notes which were addressed to them by His Majesty's Government regarding the prohibition of the despatch to Spain of foreigners for the purpose of taking part in the civil war. This matter is, I understand, now under discussion in the Committee.
    Mr. Noel-Baker: Are we to understand that the Government have put forward a plan for evacuation and supervision?
    Mr. Eden: No, Sir, not a detailed plan.
    Mr. Noel-Baker: Is it not desirable to have the details as soon as possible, as it is a situation of great urgency?
    Mr. Eden: Yes, but what we are concentrating on is to get the actual machinery of the present scheme going, and I have been kept busy on that during the week-end.
    Mr. Noel-Bakerasked the Secretary of State for Foreign Affairs whether, in the opinion of His Majesty's Government, the landing of Italian troops, with arms and munitions, in Spain for the purpose of making war on the constitutional Government of the country before 20th February, 1937, did or did not constitute a violation of the Non-Intervention Agreement, signed by Italy on 28th August, 1936, of the Briand-Kellogg pact for the renunciation of war as an instrument of national policy and of the Covenant of the League of Nations?
    Mr. Eden: If by Italian troops the hon. Member means units of the Italian army, I have no evidence which establishes the landing of such units in Spain. In any event, the question of a violation of the Non-Intervention Agreement is one for consideration by the Non-Intervention Committee itself. I do not feel called upon to express an opinion with regard to the remaining parts of the question.
    Mr. A. Henderson: May I ask whether, in the view of the right hon. Gentleman, the fact that the Spanish Government have received large supplies of arms from Italy during the past week just outside Madrid constitutes a breach of the Non-Intervention Agreement?
    Captain Ramsayasked the Secretary of State for Foreign Affairs whether he has any information regarding recent landings of Russian aeroplanes in Spain?
    Mr. Eden: I have no official information on this subject.
    Captain Ramsay: May I ask you, Mr. Speaker, whether it is in order to congratulate the French and Russians on the manner in which they manage to keep the landing of men and munitions in Spain out of the news?
    Mr. Henderson: Will the right hon. Gentleman inquire of the Italian Government whether they have any official information?
    Mr. Noel-Bakerasked the First Lord of the Admiralty whether the steamship "Springwear," which was chased into Gibraltar by General Franco's warships and there obliged to unload its cargo of wheat, will now be allowed to deliver this cargo to Alicante and will receive the protection of His Majesty's Navy against any further piratical acts that may be attempted?
    The Civil Lord of the Admiralty (Mr. Kenneth Lindsay): The cargo of the steamship "Springwear" has been examined by the authorities at Gibraltar, acting under the powers conferred by the Merchant Shipping (Carriage of Munitions to Spain) Act, and it has been found to consist entirely of grain. In pursuing her voyage the vessel will be entitled to the protection of His Majesty's Navy in precisely the same way as any other British ship.
    Mr. Noel-Baker: Is it not a fact that the steamer was chased into Gibraltar by General Franco's trawlers, while the whole British Navy looked on, and was it not the purpose of the Merchant Shipping (Carriage of Munitions to Spain) Act to prevent such an occurrence?
    Mr. Lindsay: I do not want to pursue the matter by way of question and answer, but it is not true to say that she was chased.
    Lieut.-Commander Fletcher: Will commanding-officers of His Majesty's ships be informed in accordance with the Minister's answer to-day?
    Mr. Lindsay: I do not think there is any necessity to inform the Navy because no extra information has been given.
    Mr. Noel-Baker: In view of the unhappy experience of several of these ships, would it not be possible to organise convoys as the Dutch Navy do?
    Mr. Lindsay: I do not think it would be possible to provide escorts for every ship without doubling the size of the Navy.
    Sir Archibald Sinclair: Is it clear that commanders of British ships have been informed that interference with British cargo vessels by General Franco's ships is not to be tolerated?
    Mr. Lindsay: That is a separate question, but it is also true that they have been informed.

    CHILE (BRITISH BONDHOLDERS).
    Sir Nicholas Grattan-Doyleasked the Secretary of State for Foreign Affairs whether he will inform the Chilean Government that the unrestricted disposal of sterling exchange credits arising from British purchases of Chilean exports is not regarded with favour by His Majesty's Government, and that these sterling credits should be primarily restricted to the purchase of British goods and to fulfilling contractual obligations on defaulted Chilean Government loans floated in London?
    Mr. Eden: I would refer my hon. Friend to the reply which I gave to my hon. Friend the Member for Lincoln (Mr. Liddall) on 17th March.

    ABYSSINIA.
    Mr. A. Hendersonasked the Secretary of State for Foreign Affairs, whether he is aware that the Emperor of Ethiopia has sent a note to the Secretary-General of the League of Nations asking for League investigators to be sent to Addis Ababa to report on the recent massacres there; and whether His Majesty's Government will support such a request at the next meeting of the League Council?
    Miss Rathboneasked the Secretary of State for Foreign Affairs whether, in view of the fact that the Emperor of Abyssinia has now appealed to the League of Nations for an inquiry into the recent massacre in Addis Ababa, His Majesty's Government will use their influence to secure the holding of such an inquiry?
    Mr. Eden: A copy of the note in question was received this morning at the Foreign Office and is at present under examination.
    Lieut.-Commander Fletcherasked the Secretary of State for Foreign Affairs whether he has now received a report from the British representative at Addis Ababa concerning the reprisals there following the attack upon Marshal Graziani; and whether he will make a statement, especially as to the number killed and their complicity or otherwise in the bomb throwing?
    Mr. Eden: I cannot add to the reply given by my noble Friend to questions asked on this subject on 8th March.
    Lieut.-Commander Fletcher: Is the right hon. Gentleman aware of how closely our action in regard to this matter will be followed by the coloured population in Africa under our government or control?
    Mr. Eden: Yes; that is why we have given the information we have.
    Sir A. Sinclair: Are the Government prepared to support the protest against this massacre which has been made by the Emperor of Ethiopia to the League?
    Mr. Eden: We have said publicly what we have to say on this subject.

    THIRD INTERNATIONAL (PROPAGANDA).
    Captain Ramsayasked the Secretary of State for Foreign Affairs whether he is aware that the Third International is actively engaged in fomenting strikes, disaffection, and sabotage in Great Britain and France, with the ultimate object of bringing about revolution and civil wars similar to that now being waged in Spain; and will he therefore confer with the French Government with a view to taking common action against this menace?
    Mr. Eden: So far as the activities of the Third International in this country are concerned, I would refer my hon. and gallant Friend to the reply which my Noble Friend gave to a similar question asked by him on r5th February. The answer to the second part of the question is in the negative.
    Captain Ramsay: Will my right hon. Friend make representations to our friends across the Channel to the effect that a so-called ally whose chief preoccupation is to stab one in the back is a greater menace than an open enemy?
    Mr. Paling: Do not strikes in this country arise out of the low wages paid?

    NAVAL AND MILITARY PENSIONS AND GRANTS.
    Mr. T. Smithasked the Minister of Pensions whether ex-service men in Ministry of Pensions hospitals are not in future to be allowed leave at Whitsuntide; if so, will he state the reason; whether or

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    not leave is to be granted to these men during Coronation week; and, if not, whether this decision can be reconsidered?
    The Minister of Pensions (Mr. H. Ramsbotham): Leave at Whitsuntide to ex-service men in Ministry of Pensions hospitals will be allowed, as it has been in the past, except so far as such leave has, for medical reasons, to be postponed to the summer for certain classes of patients, chiefly neurological. As to the second part of the question, I am giving instructions to the medical superintendents of Ministry hospitals which will enable them to exercise discretion in suitable cases to allow special leave in Coronation week.

  AGRICULTURE.

    ALLOTMENTS.
    Mr. Lyonsasked the Minister of Agriculture when he expects to be able to make a statement on the matters forming the subject of recent representations by the National Society of Allotment Holders?
    The Minister of Agriculture (Mr. W. S. Morrison): The representations of the society are receiving my careful consideration, but I am afraid that I cannot hold out any hope of early legislation on the subject of allotments.
    Mr. Lyons: In view of the very great importance of allotment cultivation in these times, will my right hon. Friend expedite a decision on the matters which were represented to him by the society?
    Mr. Morrison: There will be no delay in consideration, but this is a question of priority, because I have things more important occupying my attention at the moment.

    STORE CATTLE (IMPORTS).
    Sir Malcolm Barclay-Harveyasked the Minister of Agriculture how many store cattle were imported into England and Wales for the years 1935 and 1936, respectively?
    Mr. W. S. Morrison: The numbers of store cattle landed at ports in England and Wales from the whole of Ireland in the years 1935 and 1936 amounted to 341,000 and 406,000 respectively, of which 284,000 and 353,000 respectively originated in the Irish Free State. In the
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    same years, 907 and 6,334 respectively of the Canadian cattle landed at ports in England and Wales were licensed out to premises other than a slaughterhouse, but I am unable to say what proportion of these comprised store cattle for fattening. I regret that no particulars are available of store cattle landed at ports in Scotland and subsequently moved across the border into England and Wales, or landed at ports in England and Wales and moved into Scotland.

    CATTLE SUBSIDY.
    Sir M. Barclay-Harveyasked the Minister of Agriculture what percentage of cattle which have qualified for subsidy in England and Wales were home-bred?
    Mr. W. S. Morrison: Precise figures are not available. In particular, I have no information as to the number of imported store cattle which are landed in Scotland and subsequently certified for fat cattle subsidy in England and Wales or vice versa. It is estimated, however, that in the years 1935 and 1936 about 75 per cent. of the animals certified for subsidy in England and Wales were bred in the United Kingdom.

    HOME PRODUCTION.
    Mr. De la Bèreasked the Minister of Agriculture what are the reasons for the delay in the expansion of production in all branches of British agriculture, in view of the almost inevitable increase in the cost of living due to the rise in price of all commodities?
    Mr. W. S. Morrison: During recent years there has been a considerable expansion in several branches of home agriculture. Between 1930—31 and 1935—36 the volume of the total agricultural output in England and Wales increased by 14 per cent.

    SUGAR (EXCISE DUTY).
    Mr. T. Williamsasked the Minister of Agriculture the total amount of remission of Excise Duty that has been granted to sugar producers in this country during the last 13 years?
    The Financial Secretary to the Treasury (Lieut.-Colonel Colville): I presume that the hon. Member has in mind the difference between the amount of Excise Duty received on sugar and molasses manufactured in this country from home-grown beet and the amount of duty which would

    2547
    have been received had duty been charged on a similar quantity of British refined sugar and molasses of foreign origin. The approximate amount during the 13 years ended 31st March, 1936, is £15,275,000.

    POULTRY INDUSTRY.
    Mr. Sutcliffeasked the Minister of Agriculture whether he will be able to make any statement with regard to the action to be taken to assist the poultry industry in this country before the House rises for the Easter Recess?
    Mr. W. S. Morrison: No, Sir.
    Mr. Sutcliffe: Can my right hon. Friend give an assurance that the earliest possible opportunity will be taken of improving the present unsatisfactory position?
    Mr. Morrison: Yes, Sir.

    Nature of Works.

    Estimated Cost.

    Giant Approved.

    £

    1. Extension of Training Walls below King's Lynn.

    85,000

    50 per cent, of loan charges.

    2. Improvement of Banks and Channels in South Level.

    105,000

    50 per cent, of loan charges.

    3. Improvement Works on Upper Reaches

    76,200

    65 per cent, of loan charges.

    4. Improvements to River Nar, etc.

    18,200

    75 per cent, of loan charges.

    5. Further Extension of Training Walls below King's Lynn.

    30,000

    75 per cent, of net cost.

    Mr. de Rothschildasked the Minister of Agriculture the total rateable value of land and property and the total acreage of land liable to drainage rate within the Great Ouse catchment area, and the total yield to the catchment board of the maximum precepts on the county councils permissible under the Land Drainage Act, 1930?
    Mr. Morrison: As the reply includes a number of figures, I propose, with the hon. Member's permission, to circulate it in the OFFICIAL REPORT.
    Following is the reply:
    The River Great Ouse Catchment Area contains 2,047,779 acres, and the whole of this is liable to drainage rate in the sense that the appropriate hereditaments therein are liable to contribute, through the various county rates, to the sums which the catchment board are empowered to require the county councils in the catchment area to pay. The total

    GREAT OUSE CATCHMENT BOARD.
    Mr. de Rothschildasked the Minister of Agriculture how many schemes for capital works eligible for grants from the Ministry have been submitted by the Great Ouse Catchment Board since 1930; and what was the estimated capital cost of each such scheme and the amount of the grant made in each case?
    Mr. W. S. Morrison: The River Great Ouse Catchment Board have made application for a grant, under Section 55 of the Land Drainage Act, 1930, in respect of five schemes of capital works, details of which, with the hon. Member's permission, I will circulate in the OFFICIAL REPORT. Most of these schemes form part of a comprehensive scheme estimated to cost £6,500,000 which was under consideration just before the financial crisis in September, 1931.
    Following are the details:
    rateable value at the latest available date was £3,323,106. The maximum sum which the catchment board can normally demand in any one financial year from any county council is the product of a rate of 2d. in the pound on that part of the county within the catchment area, and the total sum which the catchment board can obtain from this source is £27,693 per annum. I must emphasise, however, that the normal maximum just referred to can be exceeded in any year with the consent of the majority of those members of the catchment board who are appointed by the county councils, and can also be exceeded during the currency of a loan, if the said members or a majority thereof so resolve.

    CORONATION STAMP.
    Mr. Lyonsasked the Postmaster-General whether he can now make a further statement upon the issue of any

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    special commemorative Coronation stamps and in what denominations they will be available?
    Mr. Hall Caineasked the Postmaster-General whether he is now in a position to make any statement regarding the issue of coronation postage stamps?
    The Postmaster-General (Major Tryon): I am glad to say that I have been able to arrange for the issue of a special Coronation stamp. This will be a 1½d. stamp, which is the denomination most widely used in the Imperial and inland services.
    Mr. Lyons: Do I gather from my right hon. and gallant Friend that this will be the only denomination issued?
    Major Tryon: Yes, I have thought that it would be better to issue a stamp which is in very general demand rather than some of the higher denominations which would not be so widely circulated.
    Lieut.-Commander Fletcher: Were the Royal Fine Art Commisison consulted about the design of the stamp?
    Major Tryon: They have seen the stamp, and I have had some helpful suggestions from them.

    WIRELESS LICENCES (BEDRIDDEN PERSONS).
    Mr. Dayasked the Postmaster-General whether he will consider asking Parliament to extend to those persons permanently bedridden the same exemption from fees in respect of wireless licences as is at present extended to blind persons under the Wireless Telegraphy (Blind Persons Facilities) Act, 1926?
    Major Tryon: The extension of the concession of free wireless licences to permanently bedridden persons would raise many difficult questions. Similar extensions have been suggested from time to time on behalf of other classes deserving of sympathy; but the Broadcasting Committee of 1935, which reviewed the whole question, reported against any extension.
    Mr. Day: Is it not a fact that the Broadcasting Committee considered that this matter was in its infancy, and will the Minister consider the setting up of a Departmental Committee to investigate it?
    Major Tryon: I do not know the hon. Member's definition of infancy, but they inquired after the first 10 years.

    NATIONAL HEALTH INSURANCE.
    Mr. Rhys Daviesasked the Minister of Health whether he is now in a position to state the personnel and terms of reference of the tribunal to be set up to inquire and report on the capitation fee to panel practitioners under the National Health Insurance scheme?
    The Minister of Health (Sir Kingsley Wood): I am in communication with the British Medical Association on these matters, but I am not yet in a position to give the information desired.
    Mr. Davies: Will the right hon. Gentleman be able to give the information before Easter?
    Sir K. Wood: No, I do not think so, but I will communicate with the hon. Gentleman when I am ready with it.

    TYNESIDE LOCAL GOVERNMENT.
    Mr. W. Joseph Stewartasked the Minister of Health whether it is his intention at an early date to deal with the report of the Royal Commission on Local Government on the Tyneside, which has now been issued?
    Mr. Edeasked the Minister of Health what action, legislative, administrative, or otherwise, he proposes to take on the recommendations of the Royal Commission on Local Government in the Tyneside Area; and when he proposes to afford the House an opportunity of considering the recommendations?
    Mr. David Adamsasked the Minister of Health whether he proposes, before the rising of the House for Easter, to make a statement as to the intentions of the Government upon the report of the Royal Commission on Local Government in the Tyneside Area?
    Sir K. Wood: As the hon. Members know, I have only just received the report of the Royal Commission on the Tyneside, but I can assure them that it is receiving consideration.
    Mr. Stewart: Can the Minister give the approximate date when the report will be discussed in this House?
    Sir Arnold Wilson: And will the right hon. Gentleman consider publishing the evidence?
    Sir K. Wood: I will look into that point.
    Mr. Ede: Has not the right hon. Gentleman the advantage, which other readers of this report have not, of knowing the financial effect of this scheme in the various areas concerned, and, if so, will be also undertake to publish that?
    Sir K. Wood: I will look into that point.

    PALESTINE.
    Mr. David Adamsasked the Secretary of State for the Colonies whether the High Commissioner for Palestine has decided to add to his official staff persons from this country experienced in local administration for the duty of guiding and advising the local governing bodies under his jurisdiction?
    The Secretary of State for the Colonies (Mr. Ormsby-Gore): The desirability of such an appointment has been under examination by the Government of Palestine. I do not think, however, that any further steps can usefully be taken pending consideration of the report of the Royal Commission.

  DEFENCE.

    FOOD SUPPLIES.
    Colonel Sir Edward Ruggles-Briseasked the Prime Minister the policy of His Majesty's Government in regard to the nature and extent of the services to be rendered by the home producer of foodstuffs in time of war; and whether he will indicate the steps to be taken in time of peace to enable the home producer to meet the national needs if called upon in an emergency?
    The Prime Minister (Mr. Baldwin): As I stated in reply to my hon. and gallant Friend the Member for Louth (Lieut.-Colonel Heneage) on 16th March, the Government are considering every aspect of food supply, including home production, in relation to Defence, but I am unable at present to make a statement on the subject.
    Sir E. Ruggles-Brise: Is the right hon. Gentleman aware that home agriculture is not so able as it was in 1914 to respond to demands made upon it?
    Mr. George Griffiths: Is not the right hon. Gentleman also aware that when farmers have made application to the Potato Marketing Board to be allowed to grow more potatoes they have been told that they will he fined £500 if they do?

    LEAD MINES, DURHAM.
    Mr. Sextonasked the Minister for the Co-ordination of Defence whether, in view of the present shortage of lead, he will use his influence to have closed lead mines in the Special Area of Durham opened up?
    The Minister for the Co-ordination of Defence (Sir Thomas Inskip): Whilst I should be very glad to see these mines, which I understand are in the Pennines, reopened, if there was a prospect of continued employment, I am advised that the lead situation is not at present such as to call for any special steps by the Government to that end.

    RAW MATERIALS.
    Mr. David Adamsasked the Minister for the Co-ordination of Defence whether, in view of the fact that the Government are probably the largest single purchaser in the country, employing trained personnel to do their buying for the War Office, the Admiralty, the India Office, the Crown Agents for the Colonies, the Office of Works, etc., without the intervention of intermediaries, he will extend this practice to the purchase and distribution of all raw materials required for the rearmament programme?
    Sir T. Inskip: The system of supply for Government Departments includes main contractors, sub-contractors, sub-subcontractors and even smaller divisions of industry, and few of the firms involved specialise entirely on work in connection with Government orders. It would thus be difficult if not impossible to purchase and distribute raw materials for use by them in connection with Government work without having to introduce complete control of large branches of industry, a step which it is not considered to be either desirable or necessary at this stage.

    LORD WEIR.
    Mr. Simmondsasked the Minister for the Co-ordination of Defence what positions or offices are now held by Lord Weir in connection with the rearmament scheme?
    Sir T. Inskip: As stated in the reply given to the hon. Member for Bassetlaw (Mr. Bellenger) on 11th November, 1936, Lord Weir acts in an advisory capacity to the Air Ministry in regard to questions of policy associated with supply, production and industry, in connection with the scheme of Air Force expansion. In addition, as indicated in paragraph 46 of the Statement relating to Defence issued as Command Paper No. 5107 of 1936, Lord Weir is a member of the Defence Policy and Requirements Committee which advises the Government on the rearmament scheme as a whole.
    Mr. Simmonds: Are we to understand that Lord Weir still holds all those positions?
    Sir T. Inskip: Certainly.
    Mr. A. V. Alexander: Is his position as official adviser a salaried position?
    Sir T. Inskip: No, Sir.

    INCITEMENT TO SABOTAGE.
    Commander Locker-Lampsonasked the Prime Minister whether he will give time for a discussion on the Motion relative to incitement to sabotage standing on the Order Paper in the name of the hon. and gallant Member for the Handsworth Division?
    [That this House is of opinion that speeches such as that delivered by the hon. and learned Member for East Bristol on Sunday, 14th March, at Eastleigh, Hampshire, inciting to revolution and sabotage are an abuse of the privilege of public speech and are to be deprecated.]
    The Prime Minister: In the present state of business it is not possible to provide a special opportunity for the discussion of this Motion.
    Commander Locker-Lampson: Does not the Prime Minister think that the words used by the hon. and learned Member amount to an incitement to revolution far graver than that which involved a young man in a sentence of nearly a year the other day?
    The Prime Minister: It is a little difficult to assess accurately the value of the spoken word. The hon. and gallant Gentleman, perhaps, puts a little too high a value upon it.
    Mr. A. Henderson: Was the speech any worse than speeches made by leaders of the Tory party in the years 1913–14?

    ALBERT HALL (PUBLIC MEETINGS).
    Mr. G. Straussasked the Prime Minister whether he has considered the representations that have been made to him in regard to the political prejudice of the Albert Hall Council in refusing lettings of that building for public meetings; and, if so, will His Majesty's Government introduce legislation to stop this ban on free speech?
    The Prime Minister: The answer to the first part of the question is in the affirmative. I had two communications. I would, however, remind the hon. Member that the Corporation, though incorporated by Royal Charter, is entirely independent of the Government, and there is no power to interfere with its discretion in the matter of letting the building. I do not consider that it would be at all desirable to confer upon a Government Department any such power, and I should not be prepared to suggest that legislation be introduced with that object.
    Mr. Strauss: In view of the unsatisfactory nature of that reply, I beg to give notice that I will raise the matter on the Adjournment.

  UNEMPLOYMENT.

    BUILDING INDUSTRY (WET TIME).
    Mr. Graham Whiteasked the Minister of Labour whether he can make any statement with regard to the efforts being made for the formulation of a scheme for the payment of wet time in the building trade?
    The Minister of Labour (Mr. Ernest Brown): The promotion of a supplementary scheme under the Unemployment Insurance Act, 1935, to cover wet time is primarily a matter for employers and workers in the building industry, and they are in touch with my Department on the subject.
    Mr. Leach: Is the right hon. Gentleman aware that in Bradford the city engineer managed on a certain occasion to guarantee every building worker a full week's work, and also provided them with facilities for working whether the weather was wet or fine?
    Mr. Brown: This is a matter for the whole country, and not only for Bradford.

    STATISTICS.
    Wing-Commander Jamesasked the Minister of Labour whether he would consider publishing the monthly total of registered unemployed in a form that will bring out more clearly than at present the fact that those included in the figures experience spells of unemployment which differ greatly?
    Mr. E. Brown: As my hon. and gallant Friend is no doubt aware, the communiqué on employment and unemployment issued each month already gives the percentages of applicants who have been unemployed for various periods. I will gladly consider whether the form of this statement can be improved so as to bring out the point more clearly.

  EDUCATION.

    SIZE OF CLASSES.
    Mr. Lyonsasked the President of the Board of Education whether he can indicate what progress he anticipates for the present year in the reduction of size of classes where the number of scholars is 5o or more?
    The Parliamentary Secretary to the Board of Education (Mr. Shakespeare): I anticipate a further diminution in the number of classes with over 50 scholars on the roll; but I am not in a position to forecast the rate of progress.
    Mr. Lyons: While thanking the hon. Gentleman for his reply, may I ask whether, in view of the reductions that have been made, he will make expedition in 1937 to bring down the figure to what was intended to be done in this matter?
    Miss Rathbone: Is not the hon. Gentleman aware that there is a considerable number of graduates of good degrees and admirable training who are quite unable to find a job, and will he not consider expediting the reduction of the
    2556
    size of such classes so as to absorb the surplus teachers?
    Mr. Shakespeare: Under the reorganisation scheme the number of classes of this nature will gradually diminish.

    NAVAL CANDIDATES (GRANTS).
    Mr. Edeasked the President of the Board of Education whether expenditure by an education authority in aiding a suitable candidate to enter the Royal Navy through the special entry class will be regarded as ranking for grant?
    Mr. Shakespeare: Any proposal from a local education authority for aiding naval cadets would be considered by the board in consultation with the Admiralty, and any expenditure by the authority would rank for grant if it were made in accordance with arrangements approved by the board for the purpose.
    Mr. Ede: Will the hon. Gentleman see that a circular is sent to all local education authorities informing them of this new provision?
    Mr. Shakespeare: I think that this question and the answer will have a similar effect.

    TERRITORIAL ARMY (POSTAGE).
    Mr. Grant-Ferrisasked the Secretary of State for War whether he will consider the advisability of making arrangements whereby all ranks of the Territorial Army whilst on annual training, Easter training, or away on courses are entitled to send letters and postcards free of charge?
    The Financial Secretary to the War Office (Sir Victor Warrender): No, Sir. I do not consider that such a concession would have any material effect on recruiting for the Territorial Army.

    JUVENILE OFFENDERS (BIRCHING).
    Mr. W. H. Greenasked the Secretary of State for the Home Department whether, in view of the many protests relating to the birching of boys and of the widespread feeling against the continuance of this form of punishment for children, he will consider appointing a Departmental Committee to inquire into the matter?
    The Under-Secretary of State for the Home Department (Mr. Geoffrey Lloyd): I would refer the hon. Member to the reply given by my right hon. Friend to the hon. Members for East Hull (Mr. Muff) and Central Southwark (Mr. Day) on Thursday last.
    Mr. Green: Can the hon. Gentleman say whether it is the Minister's intention to include in the constitution of the committee representatives of women magistrates and others who have had experience of dealing with children; and, further, if there are children awaiting the infliction of this sentence at the time that the committee is sitting, will he afford the committee facilities for seeing the administration of the punishment?
    Mr. Lloyd: My right hon. Friend pointed out, in the reply to which I have referred, that the members of the committee must be selected with a view to their approaching the subject with an open mind.
    Mr. Leach: Would that debar persons who had been birched from being on the committee?
    Mr. Rhys Davies: Are there any regulations governing the birching of boys; and, if so, can a copy of those regulations be placed in the Library of the House?
    Mr. Lloyd: Yes, Sir, there are.
    Mr. Green: Would the Minister agree that the members of the committee would not have their minds biased by seeing the infliction of the punishment?
    Mr. Thorneasked the Home Secretary whether he can give the House any information as to the method adopted in the birching of boys; what amount of clothing is taken off; whether the boy is medically examined before and after punishment; the number of persons present during the birching; the date on which punishment was last administered to a girl; and whether his attention has been drawn to the statement made by the chief constable of Northampton in connection with the case of a boy who received six strokes of the birch?
    Mr. Lloyd: As the Committee of Inquiry which my right hon. Friend is proposing to appoint will no doubt take evidence as to the methods adopted by the police, my right hon. Friend considers that it would be better not to
    2558
    make a statement on this subject, but I am sending to the hon. Member an extract from the Home Officer circular to police on the question of medical advice. The Summary Jurisdiction Act, 1879, provides that the whipping shall be inflicted privately by a constable in the presence of a superior officer and of the parent if he desires to be present. The whipping of women and girls was abolished by an Act of 1820. I have not seen the statement referred to in the last part of the question.
    Mr. Thorne: Will the Home Secretary advise stipendiaries and local justices to refrain from committing any more boys for birching until the Committee has reported?
    Mr. Leach: Does the hon. Gentleman believe that an open mind on this matter is a desirable thing?

    AIR RAID PRECAUTIONS.
    Mr. W. Robertsasked the Home Secretary the objections which have been made by his Department to the experiments carried out by the Cambridge scientists with regard to air raid precautions?
    Mr. Lloyd: I would refer the hon. Member to the reply which I gave to a question by my hon. Friend the Member for Newcastle-upon-Tyne North (Sir N. Grattan-Doyle) on 18th February.
    Mr. Parkerasked the Home Secretary whether he is prepared to submit to an impartial inquiry the air raid precautions schemes suggested by his own Department and the criticisms made of them by the Cambridge scientists?
    Mr. Lloyd: I would refer the hon. Member to the reply which I gave to a question by the hon. Member for Pontypool (Mr. A. Jenkins) on 4th March.
    Mr. Parkerasked the Home Secretary for what period of time the official specification of the respirators supplied by the French Government for the civilian population are required to be effective against chloropicrin and phosgene; and how does this compare with the requirements for the special service grade 2 respirators which are being manufactured in Great Britain for the same concentration of gas?
    Mr. Lloyd: The announcement that the French Government is proposing to provide a respirator for the civilian population has only recently been made, and no specimen, description or specification has been received. It is regretted, therefore, that it is not possible to reply to the second part of the question.

    LICENSING LAWS (PROSECUTIONS).
    Mr. Leckieasked the Home Secretary whether he will instruct the police that prosecutions under Section 91 of the Licensing (Consolidation) Act, which provides penalties for the sale of liquor without a licence much heavier than those permitted by the legislation under which action is usually taken, would be more likely to deter bogus clubs from their frequent breaches of the law?
    Mr. Lloyd: So far as the Metropolitan Police are concerned, charges of selling intoxicating liquor without a licence are always included in proceedings against bogus clubs wherever practicable, and substantial penalties are often obtained. My right hon. Friend has no general information as to the practice in other parts of the country. He has no authority to issue any such instructions to the police as suggested, but the importance of the point which my hon. Friend has raised is appreciated and will be kept in mind.

    SPINSTERS' PENSIONS.
    Mr. Alexanderasked the Chancellor of the Exchequer whether he has now been able to give any further consideration to the question of earlier pensions for spinsters; and whether he has any statement to make on the matter?
    Lieut.-Colonel Colville: I would refer the right hon. Gentleman to the answer which my right hon. Friend gave on 18th February to the hon. Member for Central Bradford (Mr. Leach), to which I have nothing to add.
    Mr. Stephen: Does the Financial Secretary mean that the Government are going to take no action whatsoever in regard to this matter?
    Lieut.-Colonel Colville: If the hon. Member will refer to the answer, he will
    2560
    see that my right hon. Friend indicated he could not hold out any hope of action being taken at an early date.

  TRANSPORT.

    ROAD SURFACES (NON-SKID TREATMENT).
    Mr. Dayasked the Minister of Transport which of the highway authorities have not as yet complied with the suggestions issued to them in the circular forwarded by his Department for the purpose of having all roads treated with an effective method of surface treatment in order to prevent skidding; and whether there has been a noticeable decrease in accidents attributable to this cause?
    The Parliamentary Secretary to the Ministry of Transport (Captain Austin Hudson): I have had no reports from my officers of unwillingness on the part of highway authorities to use skid-resisting materials for surfacing schemes assisted with grants from the Road Fund. In the report on Fatal Road Accidents in 1933, 290 fatal accidents were alleged to have been caused by the skidding of motor vehicles. The corresponding figure for 1935 was 162, showing a reduction of 44 per cent.
    Mr. Day: Has the advice given to the highway authorities by the Minister in the circular been generally followed?
    Captain Hudson: Yes, Sir, it has.

    SCOTTISH OMNIBUS SERVICES (WAGES).
    Mr. Stephenasked the Minister of Transport whether the Traffic Commissioners in Scotland are satisfied with the wages being paid by the transport companies to the omnibus workers, as required by Section 93 of the Road Traffic Act, 1930; and whether, in view of the present dispute and strike of 10,000 workers, he will invite them to reconsider the present scales?
    Captain Hudson: The Traffic Commissioners have no power to approve or review scales of wages.
    Mr. Stephen: Are they not required under the Section to see that fair wages are paid when a licence is granted?
    Captain Hudson: If representations are made to them by an organisation representative of the industry, they may refer

    2561
    the matter to the Industrial Court for settlement, but I understand that no representation has been made.
    Mr. Stephen: Is the Minister aware of the bad conditions which obtain in Scotland, and will he not introduce legislation to deal with such grievances?
    Captain Hudson: That is rather a different question; perhaps the hon. Member will put it down.

    CYCLE TRACKS.
    Mr. Anstruther-Grayasked the Minister of Transport the number of miles of cycle tracks in England and Scotland, respectively?
    Captain Hudson: There are 137 miles in England and Wales constructed or under construction and ¾ mile in Scotland. The Five-years' Programme contemplates the construction of about 500 single track miles in Great Britain, including about seven miles in Scotland.
    Mr. Anstruther-Gray: Will my hon. and gallant Friend take steps to see that Scotland gets a rather fairer share?

    SUDAN (SCHOOL CHILDREN).
    Mr. Watkinsasked the Secretary of State for Foreign Affairs whether he will state, for the Anglo-Egyptian Sudan, the number of children attending schools, not including Arabic or Moslem schools, and the percentage which this constitutes of the total child population?
    Mr. Eden: I assume that by the phrase "Arabic or Moslem schools" the hon. Member refers to schools in receipt of funds from Moslem religious organisations. The number of children who receive education in the Sudan Government schools, or schools subsidised or aided by the Government, is according to the latest reports available, 57,341. The approximate child population of the Sudan is 2,600,000, but, as no machinery for accurate computation exists in the more remote areas, this number must be treated with reserve. On the basis of these figures, the percentage is 2.2.
    Mr. Watkins: Are there any plans in existence for covering the huge number of children who are not now being provided for?
    Mr. Eden: I understand that the attendance at the so-called out-schools is increasing.

    COAL INDUSTRY (LOW-TEMPERATURE CARBONISATION).
    Mr. A. Edwards (for Mr. E. J. Williams)asked the Minister of Labour (1) the colliery or collieries which will restart on the South Crop coalfield to supply the projected coalite plant;
    (2) whether the site has been purchased for the coalite plant in Mid-Glamorgan and the place in which it will be situated;
    (3) whether he is in a position to state the number of persons who will be found employment at the projected coalite works on the South Crop, Mid-Glamorgan?
    The Secretary for Mines (Captain Crookshank): I have been asked to reply. When my right hon. Friend the Minister for Labour made his announcement on 9th March concerning this proposal, he made it clear that the completion of the negotiations was contingent on the passing of the Special Areas Bill. In these circumstances I should not be justified, at this stage, in disclosing information of the kind mentioned in the questions.
    Mr. Edwards: Is the hon. and gallant Gentleman aware that the financial success of a Coalite plant is very largely dependent on the disposal of the byproducts for hydrogenation purposes; and will he consider the advisability of having a hydrogenation plant erected in the district?
    Captain Crookshank: That has nothing to do with the questions on the Paper.

    POLICE WIDOWS' PENSIONS.
    Sir Ronald Ross (for Lieut.-Colonel Sir William Allen)asked the Home Secretary whether he is aware that British police widows, prior to September, 1918, are without pension and are depending on charity for subsistence, while widows after that date are in receipt of pensions; will he introduce legislation to remedy the grievance of those widows who are without pensions; and, if so, when?
    Mr. Lloyd: This matter has often been considered, but my right hon. Friend cannot hold out any hope of legislation to alter the position.

BILL PRESENTED.

  WIDOWS', ORPHANS' AND OLD AGE CONTRIBUTORY PENSIONS (VOLUNTARY CONTRIBUTORS) BILL,
  "to extend the classes of persons who can become insured as voluntary contributors for the purposes of widows', orphans' and old age contributory pensions, and otherwise to amend, in relation to voluntary contributors and women engaged in certain excepted employments, the enactments relating to such pensions and to health insurance, to amend Section thirty of the Widows', Orphans' and Old Age Contributory Pensions Act, 1936, and Section four of the Northern Ireland (Miscellaneous Provisions) Act, 1932, and for purposes connected with the matters aforesaid," presented by Sir Kingsley Wood; supported by Mr. Ramsay MacDonald, The Chancellor of
  the Exchequer, Sir John Simon, Mr. Elliot, and Mr. R. S. Hudson; to be read a Second time To-morrow, and to be printed. [Bill 104.]

BUSINESS OF THE HOUSE.
Motion made, and Question put,
"That this day, notwithstanding anything in Standing Order No. 14, the Report of the Air Supplementary Estimate, 1936, and Business other than the Business of Supply, may be taken before Eleven of the clock, and that the Proceedings on the Reports of Supply of 17th and 15th March may be taken after Eleven of the clock, and 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, 198; Noes, 99.

Division No. 122.]

AYES.

[3.33 p.m.

Albery, Sir Irving

Denman, Hon. R. D.

Lennox-Boyd, A. T. L.

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

Doland, G. F.

Levy, T.

Anstruther-Gray, W. J.

Dorman-Smith, Major R. H.

Lewis, O.

Apsley, Lord

Dugdale, Major T. L.

Liddall, W. S.

Aske, Sir R. W.

Duggan, H. J.

Lindsay, K. M.

Assheton, R.

Duncan, J. A. L.

Llewellin, Lieut.-Col. J. J.

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

Eden, Rt. Hon. A.

Lloyd, G. W.

Baldwin, Rt. Hon. Stanley

Ellis, Sir G.

Locker-Lampson, Comdr. O. S.

Balniel, Lord

Elliston, Capt. G. S.

Lovat-Fraser, J. A.

Barclay-Harvey, Sir C. M.

Elmley, Viscount

Lumley, Capt. L. R.

Baxter, A. Beverley

Fox, Sir G. W. G.

Lyons, A. M.

Beaumont, Hon. R. E. B. (Portsm h)

Fremantle, Sir F. E.

Mabane, W. (Huddersfield)

Bennett, Sir E. N.

Furness, S. N.

MacAndrew, Colonel Sir C. G.

Birchall, Sir J. D.

Gluckstein, L. H.

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

Blair, Sir R.

Glyn, Major Sir R. G. C.

Macdonald, Capt. P. (Isle of Wight)

Blindell, Sir J.

Grant-Ferris, R.

McKie, J. H.

Boulton, W. W.

Granville, E. L.

Maclay, Hon. J. P.

Bowater, Col. Sir T. Vansittart

Grattan-Doyle, Sir N.

Macnamara, Capt. J. R. J.

Bowyer, Capt. Sir G. E. W.

Gridley, Sir A. B.

Maitland, A.

Boyd-Carpenter, Major Sir A. B.

Grimston, R. V.

Makins, Brig.-Gen. E.

Brass, Sir W.

Guest, Hon. 1. (Breoon and Radnor)

Manningham-Buller, Sir M

Brocklebank, C. E. R.

Gunston, Capt, D. W.

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

Brown, Rt. Hon. E. (Leith)

Guy, J. C. M.

Mayhew, Lt.-Col. J.

Bull, B. B.

Hacking, Rt. Hon. D. H.

Meller, Sir R. J. (Mitcham)

Bullock, Capt. M.

Hamilton, Sir G. C.

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

Burgin, Dr. E. L.

Hannah, I. C.

Mills, Sir F. (Leyton, E.)

Burton, Col. H. W.

Hannon, Sir P. J. H.

Mills, Major J. D. (New Forest)

Butler, R, A.

Harbord, A.

Morris, O. T. (Cardiff, E.)

Campbell, Sir E, T.

Harvey, Sir G.

Morris-Jones, Sir Henry

Cartland, J. R. H.

Hoilgers, Captain F. F. A.

Morrison, G. A. (Scottish Univ's.)

Castlareagh, Viscount

Heneage, Lieut.-Colonel A. P.

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

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

Hepworth, J.

Neven-Spence, Major B. H. H.

Cazalet, Thelma (Islington, E.)

Herbert, Major J. A. (Monmouth)

Nicolson, Hon. H. G.

Channon, H.

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

O'Neill, Major Rt. Hon. Sir Hugh

Chapman, Sir S. (Edinburgh, S.)

Holmes, J. S.

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

Churchill, Rt. Hon. Winston S.

Hope, Captain Hon. A. O. J.

Orr-Ewing, I. L.

Cobb, Captain E. C. (Preston)

Hopkinson, A.

Palmer, G. E. H.

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

Horsbrugh, Florence

Patrick, C. M.

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

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

Peake, O.

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

Hulbert, N. J.

Peat, C. U.

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

Hunter, T.

Perkins, W. R. D.

Crooke, J. S.

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

Peters, Dr. S. J.

Crookshank, Capt. H. F. C

James, Wing-Commander A. W. H.

Pickthorn, K. W. M.

Cross, R. H.

Keeling, E. H.

Pilkington, R.

Crossley, A. C.

Kerr, H. W. (Oldham)

Ramsay, Captain A. H. M.

Crowder, J. F. E.

Keyes, Admiral of the Fleet Sir R.

Ramsbotham, H.

Cruddas, Col. B-

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

Rankin, Sir R.

Davies, Major Sir G. F. (Yeovil)

Latham, Sir P.

Rathbone, Eleanor (English Univ's.)

Davison, Sir W. H.

Leckie, J. A.

Reed, A. C. (Exeter)

Dawson, Sir P.

Leech, Dr. J. W.

Raid, Captain A. Cunningham

De la Bère, R.

Leighton, Major B. E. P.

Rickards, G. W. (Skipton)

Ross, Major Sir R. D. (Londonderry)

Spens, W. P.

Warrender, Sir V.

Ruggles-Brise, Colonel Sir E. A.

Stewart, J. Henderson (Fife, E.)

Waterhouse, Captain C.

Russell, A. West (Tynemouth)

Stourton, Major Hon. J. J.

Watt, G. S. H.

Salmon, Sir I.

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

Wayland, Sir W. A

Samuel, M. R. A.

Strickland, Captain W. F.

Wedderburn, H. J. S.

Sandys, E. D.

Sueter, Rear-Admiral Sir M. F.

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

Sassoon, Rt. Hon. Sir P.

Sutcliffe, H.

Williams, C. (Torquay)

Shakespeare, G. H

Tasker, Sir R. I.

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

Shaw, Major P. S. (Wavertree)

Tate, Mavis C.

Withers, Sir J. J.

Simmonds, O. E.

Taylor, C. S. (Eastbourne)

Womersley, Sir W. J.

Simon, Rt. Hon. Sir J. A.

Touche, G. C,

Wood, Rt. Hon. Sir Kingsley

Smiles, Lieut.-Colonel Sir W. D.

Tryon, Major Rt. Hon. G. C.

Wright, Squadron-Leader J. A. C.

Smith, Bracewell (Dulwich)

Tufnell, Lieut.-Commander R. L.

Young, A. S. L. (Partick)

Smithers, Sir W.

Wallace, Capt. Rt. Hon. Euan

Somerville, A. A. (Windsor)

Ward, Irene M. B. (Wallsend)

TELLERS FOR THE AYES.—

Southby, Commander A. R. J.

Wardlaw-Milne, Sir J. S.

Sir George Penny and Lieut.-

Colonel Sir A. Lambert Ward.

NOES.

Acland, Rt. Hon. Sir F. Dyke

Griffiths, J. (Llanelly)

Roberts, W. (Cumberland, N.)

Acland, R. T. D. (Barnstaple)

Hall, G. H. (Aberdare)

Rothschild, J. A. de

Adams, D. (Consett)

Hall, J. H. (Whitechapel)

Rowson, G.

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

Hardie, G. D.

Sanders, W. S.

Anderson, F. (Whitehaven)

Harris, Sir P. A.

Seely, Sir H. M.

Attlee, Rt. Hon. C. R.

Henderson, A. (Kingswinford)

Sexton, T. M.

Banfield, J. W.

Henderson, J. (Ardwick)

Shinwell, E.

Barnes, A. J.

Henderson, T. (Tradeston)

Short, A.

Batey, J.

Hopkin, D.

Simpson, F. B.

Bellenger, F. J.

Jagger, J,

Sinclair, Rt. Hon. Sir A. (C'thn's)

Benn, Rt. Hon. W. W.

Jenkins, A. (Pontypool)

Smith, Ben (Rotherhithe)

Benson, G.

Kelly, W. T.

Smith, E. (Stoke)

Brown, C. (Mansfield)

Lathan, G.

Smith, Rt. Hon. H. B. Lees-(K'ly)

Burke, W. A.

Leach, W.

Smith, T. (Normanton)

Cassells, T.

Lee, F.

Stephen, C.

Charleton, H. C.

Leslie, J. R.

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

Chater, D.

Logan, D. G.

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

Cluse, W. S.

Lunn, W.

Taylor, R. J. (Morpeth)

Daggar, G.

Macdonald, G. (Ince)

Thorne, W.

Dalton, H.

McEntee, V. La T.

Thurtle, E.

Davies, R. J. (Westhoughton)

McGhee, H. G.

Tinker, J. J.

Day, H.

Maxton, J.

Viant, S. P.

Dobbie, W.

Montague, F.

Walker, J.

Dunn, E. (Rother Valley)

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

Watkins, F. C.

Ede, J. C.

Muff, G.

Wedgwood, Rt. Hon. J. C.

Evans, D. O. (Cardigan)

Naylor, T. E.

White, H. Graham

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

Noel-Baker, P. J.

Whiteley, W.

Gallacher, W.

Paling, W.

Williams, D. (Swansea, E.)

Gardner, B. W.

Parker, J.

Williams, T. (Don Valley)

Garro Jones, G. M.

Parkinson, J. A.

Windsor, W. (Hull, C.)

Gibson, R. (Greenock)

Pethick-Lawrence, F. W,

Young, Sir R, (Newton)

Green, W. H. (Deptford)

Potts, J.

Greenwood, Rt. Hon. A.

Pritt, D. N.

TELLERS FOR THE NOES.—

Griffiths, G. A. (Hemsworth)

Ritson, J.

Mr. Mathers and Mr. Craves.

SOUTHERN RAILWAY BILL.
Reported, with Amendments (with Report on the Bill).
Bill, as amended, and Report to lie upon the Table; Report to be printed.

SHEFFIELD CORPORATION BILL.
Reported, with Amendments, from the Committee on Group C of Private Bills (with Report on the Bill).
Bill, as amended, and Report to lie upon the Table; Report to be printed.

SELECTION (STANDING COMMITTEES).

  STANDING COMMITTEE A.
  Colonel Gretton reported from the Committee of Selection; That they had discharged the following Member from
  2566
  Standing Committee A (added in respect of the Inheritance (Family Provision) Bill): Mr. Denville; and had appointed in substitution: Miss Ward.
  Report to lie upon the Table.

ORDERS OF THE DAY.

  SUPPLY.
  [4TH ALLOTTED DAY.]
  REPORT [17TH MARCH].
  Resolution reported,

  SUPPLY.

    AIR ESTIMATES, 1937.
    "That a number of Air Forces, not exceeding 70,000, all ranks, be maintained for the Service of the United Kingdom at Home and abroad, exclusive of those serving in India, during the year ending on the 31st day of March, 1938."
    Resolution read a Second time.
    3.41 p.m.
    Mr. Lees-Smith: May I ask for your Ruling, Mr. Speaker for the guidance of the House on the scope of this Debate? You will recollect that last week Vote A was taken in the Committee stage, by arrangement without any discussion at all. You were good enough to indicate that you would allow a wider discussion than usual on the Report stage today. May I, therefore, take it that the discussion to-day will be comparable with the discussion that might have taken place on the Committee stage?
    Mr. Speaker: The House will realise that it has always been the practice of the House on the Votes for the Defence Forces to give a wide discussion in Committee on Vote A, but occasionally, in exceptional circumstances, a wide discussion has been given on Vote A, on the Report stage, which is usually confined to the subject matter of the Vote. On this occasion, there being exceptional circumstances, I will allow a wide discussion, if the House agrees, on Vote A.
    3.43. p.m.
    Mr. Garro Jones: I beg to move, to leave out "70,000," and to insert instead thereof "69,000."
    I present this Amendment in order to draw attention to certain phases of administration of the Royal Air Force compared with which a strength of 10,000 men more or less would be of small account. I want to begin by saying two or three sentences in support of the plea that has been put forward by hon. Members on this side of the House for what has been called the democratisation of the
    2580
    Royal Air Force and of the other Service Forces. I have never thought that that word is a happy one, because it does not describe precisely what we intend and mean. It enables some hon. Members to draw erroneous conclusions and to imagine that we propose some sort of system, such as the election of officers and the abrogation of discipline. We mean nothing of the kind. All we desire is the removal of those barriers of wealth and class which, although they have been in part removed in some of the Forces, are still an effective barrier against promotion to the higher ranks in the Services. The Government would do well to pay attention to our plea, because the day has gone by when this nation can fight a war on the basis of blind obedience on the part of one class to another class, and, moreover, will never be able to fight another war successfully, at any rate without the support of those elements of the community which are represented on these benches. Not only that, but I am convinced that the Royal Air Force would lose nothing in efficiency, courage and organisation if it removed the barriers of which we complain.
    My hon. Friend the Member for South Shields (Mr. Ede) speaking the other day, cited the example of the greatest army of its time that ever fought in this country or on behalf of this country abroad, and he told us that the colonels who charged by the side of Cromwell at Naseby were not gentlemen in the ordinary accepted sense of the term; they were shoe-makers, shopkeepers, tailors and the like. Similarly, in all our history, the great deeds of heroism and achievement which have been done afloat have been carried out by men who had a robust sense of democracy in their relationships with their men. Remember the great example of the courage and enterprise of Drake, the greatest sailor, who said "Let the gentlemen fall with the mariners." But I do not want to be drawn aside to the other Forces, because we have an even stronger case to make in the Royal Air Force for the destruction of those barriers which still remain. There was Major Edward Mannock, V.C. In all the volumes of air literature which have been published since the War, it has now become increasingly clear that he was the greatest of all the air fighters of any nation, and the total number of

    2581
    enemy aircraft which he destroyed represents but a small part of the contribution which he made by way of the destruction of the enemy morale and so on, to the success of the British Royal Air Force during the War. He was the son of a corporal and, I believe, was born in barracks. The second greatest of these airmen was Major James McCudden, V.C. They are relevant to our plea. He was promoted from the rank of air mechanic, and the pioneer of all those heroic pilots was Captain Albert Ball, who was also promoted from the ranks. Therefore, we say, though discipline there must be, we want it to be founded more and more upon the character and efficiency of those who possess these powers, and natural leadership, which may sometimes crash through in war time, but who find it very difficult to gain recognition in peace time to the immeasurable loss of this country should we ever have to engage in war again.
    I now want to ask the attention of the Minister to a very serious matter affecting promotion in the higher commissioned ranks of the Royal Air Force. Despite the undoubted skill of the pilots which, I believe, is second to none throughout the world, I say with regret, there exists in the higher ranks of the Royal Air Force, from squadron leader upwards, a sense of grave dissatisfaction and discontent with the system of promotion which exists in that Force for the higher ranks at the present time. The system, as the House knows, is one of selection from qualified grades. If officers are not selected, they are passed over. Admittedly, any system of selection must give rise to discontent, and, therefore, I make no apology in stating the case of two or three officers who have been passed over. Where the system of selection is based upon unknown criteria of merit, and when there exists in the Force a feeling that it depends more upon the humour and caprice of senior officers than upon any factors of efficiency, then the system of selection is worse than a hide-bound system of seniority. I ask the Minister whether he will look into that matter? I do not wish to make statements here which would do anything to increase the difficulties of the Minister in this direction. I know he does his best to keep in contact with the officers of the Royal
    2582
    Air Force, but I can assure him that there is grave discontent. If I wished to detain the Committee I could take the Royal Air Force List and show examples of officers with the highest war record and the highest peace record, who passed the Staff College and passed the Imperial Defence College, who have been passed over for no reason whatever that they can understand. Again, there is what is known as feminine influence in the Royal Air Force.
    Mr. Churchill: Only in the Royal Air Force?
    Mr. Garro Jones: It seems a strange place for petticoat influence, but it will interest the right hon. Member for Epping (Mr. Churchill) to know that there is one station in the Royal Air Force where when the commanding officer appears on parade murmurs go round to the effect: "Here comes the commanding officer and her husband." [Laughter.] I, at any rate, do not wish to treat this matter lightly. There have been echoes in the civil courts of discontent based on these grounds. I can assure the Minister that this is a matter which warrants his immediate attention. The regrettable fact is that large numbers of officers who are passed over enjoy no method of appeal, and no reasons are assigned to them. I suggest that there should be a tribunal of appeal set up in order to give these officers confidence, so that they can have reasons assigned to them why they have been passed over. There is no reason why they should not be told. It may be that they would resent any criticism that was made upon them, and if that were so they would be poor officers, but no worse than if they allow themselves to labour under a rankling sense of injustice which may perhaps affect their work. Therefore, without putting forward a cast-iron suggestion, I would ask the right hon. Gentleman to look into this matter. He knows that I am speaking about a state of affairs that exists, and I would urge him to see whether he cannot do something to remedy it. It would be very unfortunate if war came, which heaven forbid, and we found that, with all the speed of our aircraft and the efficiency and strength of our armaments, we failed on account of the lack of resolution or discontent among the leaders of the Royal Air Force.

    2583
    Let me say a few words about the system of purchasing raw materials and contracting for Air Force supplies. There is reason to believe, in spite of all the promises and all the assurances which have been given, and in spite of all the lessons we are supposed to have learned in the last War, the nation is going to pay for its armaments hundreds of millions of pounds more than they ought to cost. Let us look at three raw materials which the Air Ministry are buying. There is copper, the cost of the production of which, I am informed on unimpeachable authority, is about £25 a ton. The price on the market to-day is£75 to £78 a ton. Take tin. The cost of the production of tin is £90 in some tin mines, and up to £150 in other parts of the country. These are costs that one can test and examine. Although they have to bear no high charges such as overhead charges for publicity, tin is selling at £303 to-day.
    There is an even stranger position in the case of steel. Ministers have told us that steel prices are factors of world prices and that it is not possible to interfere, but I noticed the other day from a statement by one Minister that the price of steel is supposed to be controlled and restricted, and in turn controlled by the Import Duties Advisory Committee. If the Minister has been watching the newspapers lately he will have found that the supposed check and control of prices by the combines which is exercised by the Import Duties Advisory Committee is absolutely illusory, because when the duty was reduced by 10 per cent. in order to let in some foreign steel at a lower price, the British Iron and Steel Trades Federation instructed the International Cartel that they were not to be allowed to pass on the diminution in price to consumers in this country. Those of us who read the reports of the Comptroller and Auditor-General to this House have come across some very strange information in regard to the Air Ministry's supplies of steel.
    The right hon. Gentleman's Department invited tenders for £500,000 worth of steel for the construction of hangars. Forty-one firms tendered, and 40 of them tendered precisely the same price. Naturally, the Air Ministry were a little puzzled to know what to do, and they settled it by delicately pointing out to the firms concerned that they would have
    2584
    considerable difficulty in certifying to the Treasury that this was a fair and reasonable price, having regard to the fact that 40 out of 41 firms had tendered the same price. They resolved the difficulty by inspecting the books of two steel construction firms with a reputation for efficiency, and found that in their case the price was fair and reasonable. If it was fair and reasonable for two firms with a reputation for efficiency, how many firms with a reputation for inefficiency were going bankrupt? It is impossible to test the costing of steel on any common ground between the efficient and inefficient firms. Any manufacturer will tell you that the difference between the cost of production in an inefficient and an efficient firm is so wide as to make any fixed test absolutely impossible.
    I have a statement by Sir S. F. Mendl, who was on the War Office Advisory Committee on Army contracts during the War, and therefore has had wide experience of these matters, and, unlike some of those who are now being employed by the Minister, he is in an independent position to-day. He says:
    "My experience in two Government Departments during the War convinces me that no scrutiny of costing can be trusted to prevent large firms benefiting largely from increased turnover when they are allowed a percentage of profits which is only just enough to keep many smaller businesses in existence."
    Therefore, I think we have some grounds for complaint that the Air Ministry is not tackling this question. The Minister told us last week that he was making a careful review into the essential supplies of raw materials. That is two years after the Government had decided on the rearmament programme. The Minister for the Co-ordination of Defence has also made some statements which are worth examining. He has strange ideas. He said that the old law of supply and demand is what governs this question, entirely leaving out the fact that the supply is restricted and controlled in unified hands while the demand is not unified and scattered between the Government and the contractors. The right hon. Gentleman made a speech in which he said very confidently—and we know how confident the right hon. Gentleman can be when he is in the wrong:
    "It has been suggested that the rise in prices has been caused by speculation. Nothing of the sort. It is due to world shortage."

    2585
    On the same page of the newspaper which reported that, I was very interested to read this further statement. It is by the City Editor of that paper, and he presumably knows something about these topics:
    "City gamblers take advantage of the Government's Defence programme to spread rumours of an acute shortage of supplies and of huge pending orders for rearmament, to foreshadow still further price increases. These are the usual methods adopted when rigging a market."
    This was in the "Daily Express." Hon. Members opposite will find similar material in the "Evening Standard." Those are newspapers which hon. Members opposite are very pleased to rely upon during the week before an election. Of all the statements which have been made from the Government Front Bench on the question of raw materials and armaments, I come back to that made by the Chancellor of the Exchequer to my hon. Friend the Member for Kingswinford (Mr. A. Henderson) last week. This is what the Chancellor of the Exchequer said:
    "The position is being carefully watched"—
    Of course we have had that statement daily for weeks from the Front Bench:
    "but the hon. Member attaches an exaggerated importance to the demands of the armaments programme of His Majesty's Government."
    Really I wish the Chancellor would spare us from such nonsense as that. This boom is called on the metal markets "The White Paper boom." That is how it is, described, because that is what gave rise to it. The truth of the matter is that the demand of the Government has drawn in the multiple demand of contractors and speculators all over the world, and that multiple demand applied to a market where supplies are restricted and selling is unified, has sent the price of these raw materials up to wicked heights, which the taxpayer will have to pay eventually. I wonder what would have been said if a great industrialist like Henry Ford or Lord Nuffield—despised at the Air Ministry, I believe—or the Dunlop Rubber Company or the Imperial Tobacco Company, about to embark on a vast programme of expenditure and expansion, were to announce to the world that it was to come out with this programme without first taking care to cover the supplies of raw materials. Yet that
    2586
    is what the Government did. They announced in the White Paper an expenditure which made it compulsory for them to spend unprecedented sums, and yet they had not taken the elementary precaution to go on the market and take options or by other means cover their requirements.
    When the Government say that they are watching the situation, watching events, our answer is that events are rushing fast out of their control. No moment has seemed to them the right moment at which to take action. The kind of watching they have been doing reminds me of the type of watching done by a herd of old cows watching a passing train. That is the effectiveness of the watching they have been doing. In the case of the purchase of manufactured goods the position is no better. The system on which the Air Ministry proceeds is what is known as provisional instructions to proceed. Simply stated, that means that they are deferring the fixing of prices on a rising market. What is the consequence? I know of examples where the Air Ministry has sent out for a tender for aircraft and has been quoted a certain price. Of course what happens is that the firm invited to tender rings up the suppliers and gets quotations for the raw materials, and then it submits a tender. The Air Ministry, under its scheme of provisional instructions to proceed, defers fixing the cost, but by way of a haphazard guess tells the firm that it would be compelled to supply aircraft at a lower figure. Time passed. Prices rose. The time came for fixing a price, and then the Air Ministry had to pay this firm between £1,500 and £12,000 more than the firm offered the machines for about five months previously. That is the effect of the system known as provisional instructions to proceed.
    Of course, the explanation which the Air Ministry offers is that it desires to have some experience in small batches to see what the costs are, but I can assure the Minister that the system of instructions to proceed is not looked upon with respect in commercial circles, and moreover, where manufacturers and financiers are gathered together they wink at it as a safeguard against excessive prices. Of course, the reason is quite obvious—because costs, as every manufacturer knows, are very funny things; they can be changed and shuffled about beyond all

    2587
    ascertainment. I am not going to give the House a lecture on costing. That can be found in all sorts of text books. But we know that there will be long disputations, and in the end no system of costings which the ingenuity of the Government accountants will be able to devise will overcome the ingenuity of the system which the manufacturers are able to devise. The only thing about costings of which we are certain is that in some businesses the expense of costing is proving a very large proportion of the total cost of producing an article, and what it is going to cost the Government to inspect these elaborate costs systems and outmanoeuvre the private enterprise contractors will be a large sum for the British taxpayer to pay, and in the end the Government will have gained nothing by it.
    "But," the Minister says, "We are giving them an incentive, an incentive for saving. We are letting them turn out a small batch first, and then, when we are satisfied with the cost of the small batch, we will fix a basic price and any savings which they later make on the larger quantity will be shared between them and the Government." Surely that is a childish expedient, because the amount of saving must depend on the cost that is originally fixed, and if the cost originally fixed is an unreliable one, it is obviously to the interest of the manufacturer to fix it as high as possible; the principle still remains that the higher the cost, the higher profit made by the manufacturer.
    This is not our first experience of these problems. In our lifetime and memory the people have already had an initiation into the amount of profits which can be made by armament manufacturers. The Government alone seem to have forgotten. I wonder whether the right hon. Gentleman sitting opposite remembers that during the last War, after all the costing, after all the Income Tax and Super-tax, after all the Excess Profits Duty, the Board of Inland Revenue reported to a Select Committee of this House that 360,000 people had enriched themselves by no less than three thousand million pounds during the last War? That accounts for as much as it would have cost to wage that War for 500 days. That shows the value of their system. We were relying then on precisely the same method of checking the cost of manufacture.
    2588
    In certain well-informed quarters it has become a jest, rather a grim joke for the taxpayers, that precisely the same men in the Departments are checking these costs as failed so lamentably on the same job during the War. I asked the right hon. Gentleman last week who was responsible in the Air Ministry, and he told me it was the Hardman Lever Committee. I wish to say nothing against Sir Hardman Lever on the ground of efficiency. I think that everyone who knows his record knows that, whatever may be his faults, inefficiency is not one of them. But he was the man whose ideas of what was right and just were utilised as a costing accountant at the Ministry of Munitions during the Great War. He is 20 years older, but I doubt whether he is 20 years wiser. The Minister concealed from me the fact that the other Member of the Air Ministry Committee which is now going to advise the Air Ministry upon principles, which is going to arbitrate between the Air Ministry and the Society of British Aircraft Constructors—
    The Minister for the Co-ordination of Defence (Sir Thomas Inskip): Is the hon. Gentleman charging me with having concealed something from him?
    Mr. Garro Jones: In point of fact I was charging the right hon. Gentleman with nothing. What I was that the right hon. Gentleman the Under-Secretary of State for Air withheld certain information from me, when I asked him who 'constituted this Committee. He told me that Sir Hardman Lever was the Chairman of the Committee, and he gave me the names of Mr. H. O. Judd and Mr. P. Ashley Cooper, but although he told me that Sir Hardman Lever was at the Ministry of Munitions he did not tell me that Mr. Judd, C.B.E., was Sir Hardman Lever's assistant at the Ministry of Munitions, and therefore, I say he withheld that piece of interesting information from me in his answer I make no charge of dishonesty at all against these particular accountants, but I want to ask whether it is right that men with this record, who hold large directorships of private enterprises, some of them steel-producing companies, should be in this authoritative position at the Air Ministry to advise on costings and arbitrate in disputes between the Air Ministry and private contractors. I would very much

    2589
    like to put before the House solutions which, I believe, would avoid these questions, but I feel that on this occasion I should not be in order in doing so. My right hon. Friend the Member for Gorton (Mr. Benn) will have ample opportunity for that this week. Therefore, I shall say only that all these difficulties have been brought upon the Government, and will remain with them, because they are trying to make the economic machinery of the nineteenth century, machinery which is rusty and rotten, do the modern work required of it to-day.
    Sir T. Inskip: I hope that the hon. Gentleman will not refrain from making any constructive suggestions if he can assist the Government.
    Mr. Garro Jones: The right hon. Gentleman knows very well that our solution of this question would be to bring the whole of this armament manufacture under public ownership, and if we fell short of that we should take 90 per cent. in Excess Profits Duty, or more, and we certainly would not do what the Secretary for War has done, when he got an offer from the firm of Ransome and Rapier, of Ipswich, to make armaments and shells without profit, and refused the offer on account of the embarrassment it would cause to other contractors. It is a poor compliment to the intelligence of the taxpayers, who have to find these vast sums, to say nothing of the hundreds of thousands of workers who for a pittance are breaking their backs to produce these things, to offer them these sham safeguards and then make a great secret of the prices you are paying for shells, aircraft and raw material. We do not intend that the nation's mind should be quieted by these assurances, and I would remind the Government that when all this is over it may not be they who will conduct the inquiry which will follow. Of course we do not expect brilliant administration from the Secretary of State for Air, or let me say quite inoffensively, from the Under-Secretary of State for Air or the Minister for the Coordination of Defence. Those who speak of them most favourably have never, as far as I am aware, ventured to claim for any one rich intellectual gifts, but I hope the House will, without expecting too much from them, support the Amendment, if only as an alarm bell to awaken
    2590
    the Government from their indifference and rebut their smug pretentions.
    Mr. Gordon Macdonald: I beg to second the Amendment.
    4.17 p.m.
    Admiral of the Fleet Sir Roger Keyes: I do not propose to follow the last speaker in the remarks he has addressed to the House on various matters. I envy him his gift of speech, and I think it is a pity that he uses it to foster discontent and class prejudice. I had not intended to intervene in this Debate and, in fact, should not have done so, if my hon. and gallant Friend the Member for Wallasey (Lieut.-Colonel Moore-Brabazon), my hon. and gallant Friend the Member for Wellingborough (Wing - Commander James) and my hon. and gallant Friend the Member for the Isle of Thanet (Captain Balfour) had not raised the question of the Fleet Air Arm, grossly misstated the Navy's case and attacked me personally. I feel impelled to deliver a counter-attack on my hon. and gallant Friends, and also on others who are striving to arrest the development of naval aviation. I consider that they are enemies to the best interests of the country and to the security of our sea communications. I have had to fight for a good many things in a somewhat stormy career against a good deal of opposition. Before the War it was for the development of the Submarine Service, and to try to make the Navy realise their great potentialities and also their definite limitations when countered; during the War it was to attempt to force the Dardanelles in pursuance of a great strategic conception; and, later on, when the German submarines were dangerously threatening our sea communications, it was to stop their unrestricted passage through the Straits of Dover and attack the enemy's bases on the Belgian coasts. But I have never had to fight for anything I consider more vital to naval efficiency and the security of our sea communications than the development of naval aviation.
    My three opponents are distinguished flying men and their statements might be regarded as authoritative if they are not challenged and their ignorance of the naval case exposed. I am sorry they are not all present this afternoon. I have a profound admiration for men who fly,

    2591
    and particularly for those who flew during the War, and, above all, an unbounded admiration for the holder of Pilot Certificate No. the hon. and gallant Member for Wallasey, but I must tell him—I hope he will read my speech—that his views on naval strategy, on battleships and on the use of air power in the exercise of sea power bear no relation to the realities of to-day. It is a pity that he did not confine his remarks to questions of production and technical matters, about which he seems to know a great deal. At the same time I am grateful to him because he produced evidence of inefficiency, which is one of the reasons why the Admiralty are so anxious to control their own air arm. For instance, he told us that no machines came into the Service for six years. Like the hon. Member for Duddeston (Mr. Simmonds), having damned the Air Ministry from A to Z, he hoped that the Air Ministry would continue to resist the demand of the Admiralty for the control of its own air service. That is not very logical. He made the time-honoured jest about the silent service.
    Mr. Simmonds: May I put a point to the hon. and gallant Member which seems to be rather important? He seems to suggest that the Admiralty wanted the Navy to supply for the naval Air Arm. If that is so, it seems to me a new contention.
    Sir R. Keyes: Perhaps the hon. Member will allow me to pursue my argument in my own way. As I was saying, the hon. and gallant Member for Wallasey made the time-honoured joke about the silent service. No one who has heard me speak in this House can doubt that I find it exceedingly difficult to express myself. But speech is the only weapon left to me to fight with for those matters which I know are vital to the security of the country and the Empire, also to fight against the ceaseless, insidious and dangerous propaganda and intrigue which have been going on ever since the War to belittle the Army and Navy, and claim for the Air, powers which it does not possess. Events in China two years ago and in Spain to-day provide abundant proof that decisive military results will never be achieved by air forces independent of the Army and the Navy. The hon. and gallant Member for Wellingborough is a faithful disciple of the
    2592
    high priest of the dangerous school to which I have referred. That school does not include the gallant airmen who fly with the Fleets. When they have learned something about the sea and its ever-changing moods, they realise their difficulties, and like the submariners of another decade realise their limitations and do not subscribe to the boastful claims made on their behalf.
    The hon. and gallant Member for Wellingborough told the Committee that my demand for an impartial inquiry was inspired. Who does he think inspired me? I was a member of the Board of Admiralty when those now in office were occupying junior positions. The case I am making against dual control is the case I made when I was Admiral-of the Dover Patrol in 1918, as I will prove by quoting from a letter I wrote in May, 19 years ago. It is also the case made by the Board of Admiralty when I was a member in 1923. They considered that the findings and recommendations of the Balfour Committee were foolish and dangerous, and that if they were put into force it should be only as an experiment. Further, they said that, in view of their vast responsibilities, they could only carry out the policy if they were allowed to have all the costs of the Fleet Air Arm on the Navy Vote. This Committee was known as the Balfour Committee, but at the time when it met. Lord Balfour was a very sick man and he attended only a few meetings. The evil genius of that committee was Lord Weir, who, under the inspiration of Lord Trenchard, was responsible for so disastrously hampering the development of naval aviation. From all accounts he is trying to influence the Government now and to prevent an impartial inquiry.
    The hon. and gallant Member for Wellingborough objected to my saying that he and his friends had no case. If they have a good case, why do they object to an impartial inquiry? The hon. and gallant Member for Wallasey said that we had had inquiries every two years. That simply is not true. The last so-called inquiry was held nine years ago, when Lord Salisbury was asked to decide on two details on which there was a difference of opinion. He decided one for the Admiralty and one for the Air Ministry. The one he decided against the Admiralty was the claim to be allowed to train lower-deck pilots. There is a

    2593
    deplorable shortage of experienced pilots to-day. Imagine how much better off we should be if we had been allowed for the last nine years to train splendid young lower-deck pilots. However, in announcing his decision Lord Salisbury made it quite clear that in his opinion the time would come when the Navy should be given complete control over its own air service. I submit that that time is long overdue. The hon. and gallant Member for Wellingborough paid a generous tribute to the efficiency and excellent equipment of the Royal Naval Air Service Squadrons under the command of the Admiral of the Dover Patrol and then went on to say that during the great battle of Paschendaele that splendid force remained inactive.
    That was before my time, but from 1st January, 1918, the day on which I took command of that splendid Air Force of 15 squadrons which I inherited, it was used to the full and most offensively. It bombed German submarine bases at Bruges and Ostend day and night, and it also co-operated with the Belgian army and with the Fleet on the Belgian coast, where it directed the gunfire from the ships. When the great German offensive started on 21st March, 1918, on my own authority I sent all my fighting Air force into the battle, which raged for several days, and there they won imperishable glory. Very few of those squadrons came back, for on 1st April, 1918, the Royal Air Force was formed, and although the Royal Naval Air Service remained completely under naval control until the end of the War, the squadrons on the Belgian coast—or rather the few that were left to me—were placed under the control of the General Officer commanding the Royal Air Force in the Field —the title of Air Marshal had not been invented in those days—and they were under my control only for operations.
    I would like to refer to a letter which I wrote in May, 1918, to the Admiralty. After describing the confusion and inefficiency which had resulted from the dual control, I went on to say:
    "Although the Port of Bruges has been closed to traffic since 23rd April, and a very large number of destroyers, torpedo boats and submarines have been locked up either in the harbour of Bruges or in the canal, yet owing to having only a few Handley Page machines and practically no day-bombing machines, until quite recently, the full fruits resulting
    2594
    from these operations have certainly not been gathered, owing to the inadequacy of the bombing force at my disposal. I am very strongly of the opinion that the present situation is thoroughly unsatisfactory and becoming more so from day to day. I submit that their Lordships may be moved to take the strongest possible action without further delay to insist on the Royal Air Force units of the 5th Group being maintained at the required strength without further interference from the General Officer Commanding the Royal Air Force in the field, who does not seem to understand the elements of the Naval requirements on the Belgian coast, nor the great importance of their bearing on the general conduct of the War. The fine force which was built up by the Admiralty for service on the Belgian coast has been thoroughly disorganised and the value of the few remaining units is rapidly decreasing in consequence."
    I would explain, to the House that after the operations which took place on 23rd April aerial reconnaissance had shown that there were a great many destroyers, torpedo boats and submarines lying tied up in threes and fours in the basins at Bruges and the neighbouring canals. They offered a wonderful target for mass bombing. Photographs showed that 23 destroyers and torpedo boats and seven submarines were lying outside the massive concrete shelters which could hold another 12. I ordered attacks to take place day and night, but owing to the small force of aircraft which I had, we did not obtain the full results. In a few days those craft were scattered singly up and down the canals, and thus offered a much more difficult target, and so the opportunity passed. The Handley Pages referred to were the most powerful aircraft in the world at that time, and the Admiralty was entirely responsible for their production, but they were placed under the control of the general officer commanding the Royal Air Force, who had been appointed to command the only independent Air Force which ever operated in the War. These machines were taken away at a time when they ought to have been bombing naval targets to deliver attacks on the civilian population of Cologne, and it is an interesting fact that when the War ended not a single bomb had been dropped on Cologne. I have not referred to this in order to revive an old grievance, although it is a tormenting one, but to try to prove to the House that the Admiralty must be allowed complete control over the aircraft which the Navy needs to carry out its responsibilities. The dual control in-

    2595
    stituted on All Fools' day, 1918, was of great value to the enemy.
    The hon. and gallant Member for Thanet also attacked me and was kind enough to give me advice. He warned me to be careful. I am always careful. He condoled with me for having as an ally my right hon. Friend the Member for Epping (Mr. Churchill), who had changed his mind. He quoted from a speech made by my right hon. Friend in 1919, which had no bearing on the dual control of the Fleet Air Arm. Personally, I think I am much to be congratulated on having as an ally my right hon. Friend the Member for Epping, who is recognised throughout the country as an unrivalled expert on matters of Defence. Both the hon. and gallant Member for Thanet and the hon. and gallant Member for Wallasey attacked the First Lord of the Admiralty for having changed their minds.
    Captain Harold Balfour: Did the hon. and gallant Member say that I attacked the First Lord of the Admiralty?
    Sir R. Keyes: The hon. and gallant Member mentioned the First Lord of the Admiralty.
    Captain Balfour: Certainly I mentioned him, but I made no attack on him.
    Sir R. Keyes: The hon. and gallant Member ridiculed the First Lord of the Admiralty for having changed his mind. All I can say is that my right hon. Friend the Member for Epping and the First Lord of the Admiralty would be blind if they failed to see the dangerous follies of this system of dual control, and they would be failing in their duties to the country if they had not the courage to recommend the termination of this system. Having bombed my three hon. and gallant Friends from the very insecure position which they had taken up, I will now try to explain what the Navy's case is, I am not inspired by the Admiralty, and I only hope that the Admiralty are prepared to go as far as I would in this matter. The case I am making is based on my experience as Commander of a powerful Air Force during the War, both while it was completely under my control and afterwards under my operational control, when dual control was introduced, very much to the detriment of operations
    2596
    against the enemy. It is also based upon my experience as a Member of the Board of Admiralty and as Commander-in-Chief of the principal Fleet, ill equipped with obsolete aircraft.
    I hope the Minister for the Co-ordination of Defence will not think I am trying to put the Naval case to him, for I am sure he knows it from beginning to end, but after listening to the versions of my three hon. and gallant Friends, I think I may be allowed to put before the House my version of the case, so that the House may judge between the two. I may be optimistic, but I believe that a learned and distinguished lawyer, trained to weigh evidence, cannot fail to decide this matter in the only way which will satisfy the Navy and put an end to this 18 years' old controversy. I hope the evidence of those who are responsible for originating this system of dual control and who are so anxious to perpetuate it, but who bear no responsibility for the defence of our sea communications, will be weighed against the evidence of those who bear all the responsibility for the exercise of sea power and the control of our sea communications.
    I ask hon. and gallant Members, Who would have to bear the blame on the day of battle if the Naval air force were overwhelmed and destroyed by a more powerful, more efficient and better equipped air force of an enemy? The Board of Admiralty would be to blame, because they had failed to provide the Fleet with a sufficient Air Force, and the Government, because they had been deaf to the advice of their Naval advisers, who had told them over and over again of the dangers into which Naval aviation was drifting. It would not be the Secretary of State for Air, nor the Noble Lords, Weir and Trenchard, or the Air Marshals at the Air Ministry; they could not be expected to take responsibility for what occurred in a Fleet action. But the aircraft over which they claim complete control—except when actually embarked—might fail and might well decide the issue against us in a Naval action.
    I wish to stress the ever-increasing importance of Naval aviation, which is fully recognised by the Board of Admiralty, which includes two members who have commanded aircraft carriers. The Admiralty and not the Air Ministry are responsible for the safety of our sea com-

    2597
    munications and they, with the Government, will bear all the responsibility on the day of battle, if they fail to provide the Navy with what it requires. Responsibility is an absolute dividing line over which there can be no compromise. The Admiralty is the responsible authority and must have complete control. It cannot be divorced from the complete control of the administration, training, strength and nature of the aircraft, including flying boats, which the Navy needs to carry out its responsibilities; in fact, all aircraft which work with and against ships.
    It is almost incredible that the British Navy should be denied flying boats, and that the Admiralty should have tolerated this handicap so long. Flying boats have immense possibilities as French, American and other seamen have proved; but the Air Ministry has shown no enterprise, no skill and no ability in developing this service, which is of vital importance to the Navy. Indeed, the Air Ministry is incapable of developing it as the Admiralty could. All other maritime nations have flying boats which are vastly superior to those which the Royal Air Force possesses, although our aviation designers have proved that they can produce flying boats for Imperial Airways which are second to none. Does anybody imagine for a moment that if the Admiralty had been free to develop its flying boats since the War, when we had the very best in the world, it would not have kept the lead? The Navy must have flying boats and a flying boat which is not manned by seamen cannot be of value for naval work. Any boy or girl can learn to fly but it takes time to make a seaman, as the Air Ministry have evidently realised, because they are advertising for mercantile marine officers. In fact, they are competing with the Admiralty for officers to man craft which are essentially naval but over which the Admiralty has no control whatever. The hon. Member for Bedford (Mr. Wells) stressed the need for airships. I would remind the House that the Admiralty used airships and kite balloons which co-operated most valuably for the protection of our trade during the War. The Admiralty also built a large airship which flew to America and back just after the War and it was some years before this feat was repeated by a German Zeppelin. But, unfortunately, our airship service was also handed over to the Air Ministry,
    2598
    with disastrous results, and it simply does not exist to-day.
    There can only be one end to this 18year-old controversy. As I have said, responsibility is the dividing line over which there can be no compromise. If war breaks out before the Navy is given time to reorganise and restore its air service, which was the finest air service in the world during the Great War, the Navy will be fighting under a tremendous handicap, and those air protagonists who have been responsible for misleading the Government so long will deserve heavy retribution; but it will be the men of the Fleet who will suffer and who will pay with their lives on the day of battle for the deficiences in the Navy's air service.
    4.48 p.m.
    Rear-Admiral Sir Murray Sueter: I wish, in the first place, to take up a point which was made by the hon. Member for North Aberdeen (Mr. Garro Jones) when he said that his party wanted every industry to be nationalised. I can only say to him that when the War started we had a State factory at Farnborough. Before the War an effort was made to have all aircraft built in that factory. That was opposed by my right hon. Friend the Member for Epping (Mr. Churchill), and it did not "come off." We then managed to keep a few of the private firms going, with the result that in the War we came to the assistance of the Army with naval machines, because the factory machine did not turn out to be a great success.
    I desire also to take up a point made the other day by my right hon. Friend the Member for Epping. He accused me of saying that it was easy to drop bombs down the funnel of a warship. I never said such a thing in this House, and I am the last person in the world to make a statement of that kind. Before the War we had no bomb-dropping sights in the Royal Naval Air Service. I got out the first design for bomb-dropping sights with Commodore Samson. I knew the factors and worked them out, and the right hon. Gentleman himself congratulated me on the accuracy of my sights when Sub-Lieutenant Warneford destroyed a Zeppelin with a bomb and the right hon. Gentleman also congratulated me when the Royal Naval Air Service men dropped their bombs on the Dusseldorf sheds and destroyed a Zeppelin. Therefore, I do

    2599
    not consider that that statement came very well from the ex-First Lord of the Admiralty in view of the fact that I was director of his Air Department when he was First Lord.
    The right hon. Gentleman went on to say that dropping bombs down the funnel of a warship was like putting salt on a bird's tail and indicated that he had employed his youth in trying to do that. Can one imagine a rather precocious boy stealing salt from his father's table and going out to the garden trying to catch sparrows with it? The sparrows must have laughed. The right hon. Gentleman's reminiscences in that respect only bear out what I have been trying to teach this House and the country for the last 26 years, and that is the value of wings.
    I have not had an opportunity previously in these Air Debates of congratulating the Under-Secretary of State for Air on the way in which he has put forward these Air Estimates. I would also like to say that the explanatory statement of the Noble Lord the Secretary of State for Air is the best one that has ever been presented to this House in connection with the Air Estimates. In it he deals with the position in the aircraft industry. I should like to congratulate the industry on the way in which they have faced the demands of this expansion. Criticisms have been made of the aircraft industry to the effect that there is a big lag in the production of machines. It is to be remembered that before the War we had great difficulty, as I have already pointed out, in keeping this industry going. During the War we built up a great industry, but after the War that industry was knifed to the bone. Now we ask them to expand, and expand and expand, and I think they are meeting the situation uncommonly well. I have visited the Short Works, the Bristol Works and the Gloucester Works lately. I think the way in which the Bristol Company are turning out engines is splendid and reflects great credit on the managing director and the other directors of that establishment. The way in which they are giving of their knowledge to the shadow factories sets a very good example.
    There is one point in the White Paper about which I wish to ask a question. Is the balloon barrage proposed in the case of London to be extended to the other great cities? I hope the co-ordinating
    2600
    Minister will give an answer to that question. During the Debates on the Army and Navy Estimates we heard a great deal about welfare work. I wish to ask either the Under-Secretary or the coordinating Minister to say whether anything is being done to help welfare work in connection with the new aerodromes which are being established. Young officers and aircraftmen are being sent to aerodromes many of which are situated long distances from towns. The men have no facilities for getting to towns and have very bad accommodation. I would ask the Under-Secretary to look into this question a little more closely and try to make the conditions better for these young fellows and enable them to enjoy their leisure hours. It is a very important point. The Air Force has set a very high standard and has a very small crime record, but everybody knows that when there is nothing for youngsters to do they may get into trouble. I have had some experience in connection with the building up of the Royal Naval Air Service. We established aerodromes and aeroplane stations at different parts of the country, and I know the necessity of looking after the welfare of these young fellows when they are scattered about places which are often far away from any large towns.
    I now turn to the subject of the Fleet Air Arm. The hon. and gallant Member for North Portsmouth (Sir R. Keyes) would not give way to me on that point, which, I thought, very unkind of him, but I am used to being badly treated by the hon. and gallant Admiral. Fortunately, or unfortunately, he has not got stripes over me in this House. May I take the memory of the House back to the period before the War when the naval and military wings of the Royal Flying Corps were established? Gradually, when the Admiralty was under the right hon. Gentleman the Member for Epping, the naval wing developed into the Royal Naval Air Service, and I think the right hon. Gentleman will agree that when he was First Lord we did very good work in searching for mines and submarines, destroying Zeppelins and so forth. But when the right hon. Gentleman left that office, the Admiralty turned against the Royal Naval Air Service. We had built up that service so that it was of the Admiralty, but a little different from the Admiralty. We had our own contracts

    2601
    branch, our own technicians for going into questions of the stressing of machines and the like, and our own stores branch. After the right hon. Gentleman's departure, the Admiralty in their wisdom adopted another course. The Sea Lords said, "No, we cannot have this going on any longer; we must break it all up," and so each part of the organisation was turned over to the Admiralty. The various departments of the Admiralty each got its bit—contracts department, stores department, and so forth. The consequence was that things did not run very well and the Naval Air Service became a sort of Cinderella.
    The hon. and gallant Member for North Portsmouth referred to the efficiency of the Handley-Page machine at the end of the War. I can tell him that I was sent for at the Admiralty and called the biggest damn fool in it for ordering that machine. They said it would not fly, but it did fly. The Admiralty were not keen on developing the Air Service. There is abundant evidence to show that, given before the Marquess Curzon when he was made President of the first Air Board. The right hon. Gentleman the Member for Gorton (Mr. Benn), whom we are glad to see back in his old place, knows very well that that was so. The Marquess Curzon went into the whole question of the Royal Naval Air Service being retarded in its development by the Admiralty, and he also went into the whole question of friction between the Royal Naval Air Service and the Royal Flying Corps. There was friction about the supply of machines and about inspections of the works. A naval inspector would reject a machine and an Army inspector would take it. It was difficult to prevent them fighting. They fought over engines, they fought over the steel that was required for the engines, they fought over everything that was required. In regard to machines, engines and personnel we had this friction going on all the time, and that was one of the factors which led Marquess Curzon to advise the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) to set up a separate Air Service.
    I ask any Member of this House to say whether the air arm could have been developed as well as it has been developed, if it had remained under the older Services, the Army and the Navy?
    2602
    It would have been perfectly impossible. The hon. and gallant Member for North Portsmouth did not come into contact with these matters as intimately as I did. I knew all about the friction that was going on, and I think if the hon. and gallant Member had been as much in contact with these affairs as I was he would not have made the speech which he has made. There was always difficulty when we had only the two Services, the Navy and the Army, but in that case, fortunately, the line of demarcation was the high-water mark. That had to be recognised and it worked very well, but even then, there was friction between the Services at times and I have read of some dog-fights between them in the past. But if you introduce a third arm and have three lots of people fighting over these matters, I ask hon. Members to consider what the result must be. I ask anybody in this House whether it is desirable to break up the separate Air Force and to have a weak Air Force for the Navy and a weak Air Force for the Army, or to have a separate Air Force to carry out its own mission of protecting these shores from air attack? It is an impossible thing to suggest. You would have competition all along the line, for raw material, engines, personnel, and everything, and with the breaking up into three Air Services you would have worse friction than you had in the War.
    Vice-Admiral Taylor: The hon. and gallant Member has rightly stressed the disastrous competition which took place between the Services in the initiation of the Air Force, due very greatly to the question of the supply of materials and machines. Will he not agree that it would be very much better in that case that, so far as the supply of all the machines was concerned, there should be set up an Aerial Board on exactly similar lines to that of the Ordnance Board which has worked so well for the supply of guns?
    Sir M. Sueter: No, I would leave it exactly where it is, because the air industry is working well with the Air Ministry, and they have turned out some very efficient machines. I hope this House will not allow the Royal Air Force to be broken up, because that is the logical conclusion of the hon. and gallant Member's argument. The hon. and gallant Member for North Portsmouth

    2603
    told this House that the Navy was seething with discontent over this question. I went out to Malta in January, and I mixed with many of the young flying officers and naval men. In fact, most of my month was spent in their company, and they worked uncommonly well together.
    Sir R. Keyes: I have always said so.
    Sir M. Sueter: I went on board the "Glorious" and saw them working together. A Royal Air Force officer explained to me the whole inside of a machine in which I was particularly interested, and there he was, working side by side with the naval airmen, and they all got on very well together indeed. I talked to many of the senior officers, and they never said that the Fleet was seething with discontent about this matter.
    Sir R. Keyes: They were quite satisfied?
    Sir M. Sueter: They said there were difficulties of administration, and that is why we have appointed the Minister for the Co-ordination of Defence, to go into these questions and try to smooth them out with the three Chiefs-of-Staff of the fighting Services. I submit that that is what his appointment is for, to get better co-ordination and to smooth out these little difficulties. Those who try in this House to create friction between the Services are, I submit, doing a great disservice to the State. We want to get these Services to work together and to consider themselves as parts of the armed forces of the Crown and not as working in the watertight compartments in which so many naval men will insist upon working. Surely, the Members of this House should lift this question to a higher plane, and not encourage friction between the fighting Services. The Minister for the Co-ordination of Defence ought to say to the Chiefs-of-Staff, "The House of Commons does not vote money for the emoluments of the officers of the Fleet, the Army, or the Air Force so that they can fight each other." The Minister ought to say to the Chiefs-of-Staff, "You have to see that your people work together." We do not want all this friction. We do not want to see it encouraged by Members of Parliament. We want to get these officers to work together for the highest efficiency of their respective arms.
    5.5 p.m.
    Sir Hugh Seely: As I am not an Admiral, I do not propose to continue this discussion regarding the Fleet Air Arm, but I think it must be clear to the House that the sooner a decision is taken in this matter and, when it is finally taken by the Minister for the Co-ordination of Defence, loyally adhered to by the Services, the better it will be for the defence of this country. There are only one or two points that I want to bring up, and one is the training of the new men under the expansion scheme. There is going to be a great many more pilot officers coming in during the next few years, and there is a feeling that if this expansion is made too quick with the men who are coming in, you will not necessarily get efficiency or safety or the best Air Force that you should, because even to-day, with the expansion that you have had which has been considerable during the last year, you are getting to this, that where before only flight commanders could order a flight, now pilot officers can order a flight, and you are getting people promoted—and you will get more—after only perhaps two years' service, to become flight commanders. It takes much longer than that properly to train people for the high efficiency that you want when you get to the higher grades of command, and it is a matter which I hope will be watched, both for the safety of the men whom you are training and for the efficiency of this expanded arm.
    The hon. and gallant Member for Hertford (Sir M. Sueter) also mentioned a matter about the aerodromes which are being built and the accommodation at them. There is no doubt—I have mentioned it before—that the accommodation at these new aerodromes is not satisfactory and that in many cases the conditions are very similar to what they were during the War. The hutments and the married-quarters arrangements are bad, and unless you get proper accommodation and proper arrangements, even for the hangars, you will not get a really efficient Service. It was, I think, only last November when some seven big machines were very badly injured in a gale because they were not even in hangars, there being none available, and it is a highly important part of this Service to get proper accommodation and not merely to think that by expanding

    2605
    the number of machines you will get efficiency.
    There is only one other point, which was mentioned by the hon. Member who moved the reduction of the Vote, to which I would refer, and that is the question of profits. Of course, it is a fact that there will be large profits made, and there is a feeling of great uneasiness. Take even a minimum. If you are going to spend in four years £1,500,000,000— and I know, being in industry, that you are not going to get less than a 10 per cent. profit allowed—it means a minimum of £150,000,000 going in profits, and there will be a very strong feeling, unless this matter is dealt with now, to see that those profits are cut down. This is a national emergency, and the Government must see that these profits do not grow to a figure even higher than I have mentioned.
    5.10 p.m.
    Mr. Churchill: I should like to assure my hon. and gallant Friend the Member for Hertford (Sir M. Sueter) that in any illustrative badinage which I may have used in debate, I have never had the slightest desire to reflect upon the great services which he rendered to the Navy and to the Air Force in his professional career. No one was more full of enterprise and audacity in the creation and in the implementing of ideas than he, and when I referred to him the other day, it was not in any personal sense, but only with a view to deprecating what I think are the undue claims put forward by the air, claims which really are now pushed to a point far beyond what the interests of this country warrant or indeed could sustain, claims which, taken at their full value, would seem to declare that that great source of our strength, the Navy—the battle fleet, and all the ancillary weapons and vessels in it—was obsolete, as it were brushed aside at a time when this is our main stock-in-trade, at a time when we are defenceless but for the gigantic strength of our naval force. It is against that kind of proposition, deployed not only by him but by many far less competent to speak than he, that I ventured to point out that recent experience, as far as we can measure it, in the Spanish civil war seems to show that navies have still a great deal of life in them.
    2606
    Curiously enough, I came across the other day a letter which was written when I first went to the Admiralty, in 1911, in which I was warned of the folly of building ironclad ships any longer, because in the next war, whenever it came, the lamentable position of Lord Fisher and Lord Charles Beresford, with their fleets, would be shown when they would be lying helplessly on the surface of the water while the deadly bombs descended in a continuous rain from the air. Well, it has not happened yet, and I am sure that one may be a good friend of the air, one may think that indeed it is the most important branch of our defences at the present time, and certainly the one to which the greatest efforts should be directed, without in the slightest degree diminishing the prestige of the Royal Navy, on which me must rely, at any rate, until our Air Force has reached some strength comparable to that of the Air Forces of European countries. Indeed, I may say that I have the greatest sympathy with my hon. and gallant Friend, and I do not think my sympathy has ever been more readily forthcoming than during the recent naval engagement which we have witnessed, when, just as the hon. and gallant Member was making head against the Dreadnought salvoes fired by the gallant Admiral of the Fleet behind me, he was so forcefully attacked in flank by the flotillas of the hon. and gallant Member for South Paddington (Vice-Admiral Taylor).
    I hope that the urgency of a settlement of this question of the Fleet Air Arm is realised both by the Government and by the Minister for the Co-ordination of Defence. It is all very well for the gallant Admiral opposite to say, "You must not raise these matters, because they only make ill will." What he means by that is that only his view must be expressed and that the opposite view must never find expression. But nothing will prevent this controversy going forward. It will go forward steadily until it is settled, and I do not believe that it is at all incapable of settlement. I hope it may be settled by the application of some clear principle and by drawing the necessary line of division in accordance with that principle. I have never thought for a moment that the Fleet Air Arm would be a rival of the Royal Air Force. It is more like divisional cavalry compared to a cavalry

    2607
    division—something like that proportion. You must give to the Fleet an air service over which it has full control, and which is intimately associated with it and with its special uses. I tried to suggest the other day what the line should be.
    Certainly, I am no friend to extravagant claims on the part of the Admiralty. In my view, the Fleet should have only that air service which it requires for operations from ships of war at vessels floating on the blue water, and I would certainly give it the whole of the recruitment and training for that particular limited service. It seems to me that that is absolutely necessary if we are to have satisfaction and proper responsibility. I would urge that just as much on account of the Air Force as on account of the Fleet Air Arm. At the present time an enormous effort of expansion is being made. A great number of squadrons are skeleton squadrons, and above all things they want the leaven of experienced air pilots and air officers, men of several years' standing, men who have had the Cranwell course, the professional element, which is absolutely necessary when an enormous process of dilution and expansion is going forward. Owing to this unhappy controversy, the two Departments are fighting each other so keenly in time of peace —it is the only war that is going on at the present time—that I am informed that the Air Ministry, in their natural desire to placate the Admiralty and to give them satisfaction if they can, are taking an undue proportion of the most experienced officers and sending them to the Fleet Air Arm.
    There is another function for these officers, a function which is most urgently needed. If hon. Members will take the trouble to find out about the condition of the different squadrons, they will see how important it is to have senior men, or men, at any rate, of three or four years' service, with these great numbers of new pilots who have been taken on. It would be an enormous benefit to the Royal Air Force if the Fleet Air Arm were self-supporting and developed from the Navy by itself. We should have a new addition to the air resources of this island and not a diminution. In no way would the authority and prestige of the
    2608
    Air Force suffer from such a division. The principle which should be applied may be called the principle of operational integrity, for want of a better term. You must give the Navy all that it requires and the kind that it requires, but only for its specific and highly specialised functions. The application of a similar principle would naturally be the key to the arrangements which should be made for the defence of fortified naval harbours and the defence of London. Under whomsoever the Air Defence of naval ports may be placed, it cannot be placed under the Navy, because it is seldom there; it moves from one port to the other. Therefore, it must be given to some other authority.
    It would seem to me, therefore, that perhaps the application of this principle in two directions at the same time might afford a means of satisfying both the contending parties. If we could in some way bring to an end this tiresome, long-drawn controversy, in which so much feeling has been insinuated, it would enable a happy and satisfactory solution to he reached. Therefore, I hope that we are going to have this inquiry and that the Minister will come to a conclusion. I do not believe that there will be any difficulty in deciding particular hard cases, certain border-line cases. They will have to be decided. There are ways, in every matter of this kind, certain border-line cases, but in principle, if you simply give to the Navy what it requires for the naval operations that I have spoken of, reserving to the Air Force the whole control of air war in its larger sense, I believe that an arrangement could he come to which would be beneficial to both Services and to the Defence of the country.
    I was a little disturbed to see a statement and to hear it referred to in debate that Lord Weir had threatened to resign, and that in consequence there had been a change in the procedure to be adopted by the Government on which the Government had already decided. We were told that there was to be a Committee and the names of the Committee had become public knowledge. They were Lord Halifax and the Minister of Education under the Presidency of the Minister for the Co-ordination of Defence—a worthy, competent, pious trio who, I should think, could be absolutely relied upon to give a thoroughly righteous verdict upon this

    2609
    technical question. When all this was settled, it was stated that Lord Weir said he would resign unless it was altered. We are told that it was altered and that my right hon. Friend, the Minister for the Coordination of Defence, is to have another one of those conferences with the Chiefs of Staffs of the three Services which, I suppose, have been going on continuously since he took office and which have never moved one inch from the condition of deadlock. I hope that right hon. Friend will clear up the difficulties of this question and will remove from the minds of the public and the House any idea that the Government would be deflected from their course by any threat of resignation. I do not quite understand how a man who has no official position, except that of an adviser, and no official responsibility, has anything in particular to resign, but anyhow, I do not think this matter ought to be settled by threats of resignation on the one hand or the other. I should highly deprecate, and so would the House, any similar threats of resignation from the Lords of the Admiralty. We cannot have that. The matter has to be settled in a reasonable manner by authority after hearing the arguments fully. I have the greatest regard for Lord Weir and well know the value of the services he has rendered, and I hope that we shall hear from the Minister a statement which will show that these newspaper reports are without any foundation.
    That is all I wanted to say upon the subject of the Fleet Air Arm, but I cannot sit down without referring to the general progress which the Air Force is making in its expansion programme. I would be the last to under-rate the enormous difficulties of a scheme of this scale undertaken so late in the day and having necessarily to be pressed forward at extraordinary speed. In addition, it is right to remember the great dislocation which was involved in the movements to the Mediterranean, which took place at the end of 1935. One must, however, take the actual facts from the published figures. In 1935, when this expansion was decided upon, the so-called Metropolitan Air Force—you could hardly select a more misleading new term to describe it—or Home Defence Force, which would be a much better name, consisted of 52 squadrons. It was proposed to raise it by the 31st of this month to 123 squadrons, that is to say,
    2610
    an increase of 71 squadrons was to be made in that period. Actually, we are told, we have now 100, but that is obviously not true, because 22 of them are upon a skeleton basis; they each consist of only a single flight. However, some credit should be given for that force. As there are three flights to a squadron, these skeleton squadrons are equal to seven squadrons. Adding them to the 78, we have a total of 85 altogether. Deducting the 54 which were in existence two years ago, we have an increase of 31 squadrons out of the 71 which were promised should be added. Forty squadrons have not yet even approached the skeleton formation stage.
    Therefore, we are bound to take note of the fact, which has been given to us candidly by the Air Ministry, that the programme of expansion is substantially less than half completed by the date promised—something like 44 per cent. only has been accomplished. I would not attempt to throw any blame on the new Secretary of State, who has worked himself as hard as any man and who has employed his distinguished talents on this question. But still, the fact remains that less than half the programme has been carried out by the date promised. This is the only date about which promises have been made. On all the rest of the vast programmes which have been going forward, the Government have been well advised not to give any dates. They have never said that such and such a stage will be completed at a certain hour. Consequently it is always possible to say that everything is going forward according to schedule. The schedule never having been written in the first instance in any definite sense, it is always capable of modification. In regard to the expansion of the Air Force, it was a decision taken at an earlier period than that of the general expansion of the Defence forces. A definite date was fixed, and we find that less than half of what was hoped for by that time has been accomplished.
    I hope and trust that we must not take such a figure of 44 per cent. as typical of other programmes or hopes which are going forward behind the scenes and about which we have no definite details. If the full programme of the expansion of the Royal Air Force projected in 1935 had been executed by the 31st of this March, and we had 1,500 machines in 123 squadrons, then I assert that it would

    2611
    still not have meant parity with the leading air Power within striking air distance of these shores, nor anything like it. My right hon. Friend and the Prime Minister contradicted me the other day—well, it was in November, six months ago, but time passes so quickly that it makes one feel how remorselessly the months slip away—when I said that the very minimum strength of the German effective fighting air force was 1,500 first-line machines. They said that the real number was substantially below that. I cannot accept that statement; I do not believe it. Of course, I do not challenge the bona fides of those who made that statement, but I cannot believe that it represents the true position; or indeed that 1,500 was in November an excessive figure, because it was probably far below the mark, and the increase which has taken place since must certainly have raised the effective fighting force of Germany to a figure which at the very least is more than 1,700 or 1,800 machines capable of going into action and being continuously maintained in action during the course of a war.
    I contend, therefore, that every effort should be made to catch up this lag, because evidently the conditions which the Government thought two years ago would be necessary for our safety have not been maintained and are not being maintained; but there is one thing which I do hope that my right hon. Friend will enjoin upon the Air Ministry. On no account should they try to make paper squadrons merely to maintain an idea of parity in Parliament or the country. We all know that they are trying their utmost now, and if things are not what they hoped or what we hoped, it is no longer suitable or necessary to use reproaches upon the matter. Let the Air Ministry address themselves solely to the military merits of the problem, and not endeavour to form a single squadron, for the sake of saying they have got so many, before it would be natural to form it in the ordinary course of their departmental duty.
    5.33 p.m.
    Lieut.-Commander Fletcher: The Minister for the Ca-ordination of Defence must sometimes feel very thankful that among his duties is not the task of coordinating the opinions of the professional naval officers in this House—I am afraid
    2612
    that the apostles of the united front would find very few recruits among them; but I should like to congratulate my hon. and gallant Friend the Member for Hertford (Sir M. Sueter) upon his battle practice. I thought he carried out a remarkably fine shoot, and he did a thing which is very rare, he hit the target with his first salvo, right on the water-line or the bulges of the right hon. Member for Epping (Mr. Churchill), and he continued to hit throughout his practice. Before I go on to the matters I wish particularly to deal with I will refer to one raised by my hon. Friend the Member for North Aberdeen (Mr. Garro Jones) relative to a question asked by my hon. Friend the Member for Kingswinford (Mr. A. Henderson) and replied to by the Chancellor of the Exchequer. In his reply the Chancellor of the Exchequer rather discounted the idea that undue profits were going to be made because of our armaments programme. I have here an extract from the leading article in the "Financial Times" of Saturday, 20th March, which says:
    "Armament demand, again, has exerted powerful pressure upon various commodity markets. Yesterday's irregular movements were associated in large part with reactions from the excessive gambling operations which undoubtedly have helped to force the pace of advancing prices."
    I commend that extract from the "Financial Times" to the Chancellor of the Exchequer when he is repudiating the idea that there is gambling and excessive profits. I can only say that I wish the Minister for the Co-ordination of Defence could co-ordinate his various schemes half as well as a small group of industrialists co-ordinate theirs when there is a national emergency. A national emergency means wealth to them. They plundered the country during the War, and they are going to plunder the country again now. In the Debate on this subject last week it almost drew tears to my eyes when I heard the hon. and gallant Member for Wallasey (Lieut.-Colonel Moore-Brabazon) defending the right of firms to make these high profits and telling us harrowing stories about the difficulties they encounter in doing so. Every word that the hon. and gallant Member for Wallasey said on that subject reinforced the arguments of my hon. Friends on these benches for State control of armaments.
    To come to the matters which I really rose to refer to, I should like first to

    2613
    congratulate the right hon. Baronet the Under-Secretary of State for Air upon his recovery from chicken pox, but it is a very curious thing that only a short time ago the Foreign Secretary was suffering from the same complaint. It makes me feel that there is some kindergarten to which members of the Government go in order to learn their policies out of the mouths of babes and sucklings. I suggest that they might look about for a rather less infectious kindergarten. The Minister for the Co-ordination of Defence described himself as a babe the other day, and it may be that he is the carrier of infantile diseases, since, as we know, a carrier is one who conveys the disease but does not contract it himself. It is really getting rather alarming, because if what the newspapers tell us is true an event will take place very shortly which will reveal to the country that in the short space of about two years two Prime Ministers have retired from their office on account of old age. What sort of a Front Bench is this which begins with chicken pox at one end and works up to senile decay at the other?
    I hope that in his reply to-day, the Minister will refer to two questions raised in a very able and valuable speech—if he will allow me to say so—made by the hon. Baronet the Member for Berwick-on-Tweed (Sir H. Seely). He asked whether we have bombing machines of sufficient range to carry out a bombing attack upon Berlin, and also inquired about some unsafe types of machine in service in the Air Force at the present moment. I wish also to refer to two questions which I put recently in this House. I asked the Prime Minister if, in view of the fact that the Air Ministry is now the second spending Department among the Defence Departments, he would consider putting the Air Minister in this House. The Prime Minister made a most extraordinary reply: that because the Air Minister has so much work to do, because his work involves a great deal of strain, therefore it is more suitable for him to sit in another place. I thought it an astonishing thing to say that the more a Minister's Department is spending and the more his work gives rise to inquiry and debate the greater the reason for his not sitting in this House. It is not a reply that I can accept, and I do not think my
    2614
    friends on these benches are prepared to accept it either.
    The head of a huge spending Department should be in the House of Commons to answer to Members, and I also think it is due to the status of the Air Ministry that they should be represented in this House by the head of the Ministry. I assure the right hon. Baronet the Under-Secretary that I wish to make no personal criticism of him. I admired very greatly the speech with which he introduced the Air Estimates last week, but my memory goes back to last year, when the Navy was in a similar position, because the First Lord of the Admiralty was not then sitting in this House. Nobody who took part in the Debates on the Navy Estimates last year and who took part in them this year would fail to agree that the Debate was enormously improved this year by the fact that we had the First Lord on the bench opposite to reply for his Department.
    Now I come to another question which I recently put to the Prime Minister, and to the Minister for the Co-ordination of Defence about the Fleet Air Arm. I had what I consider to be very unsatisfactory replies, unsatisfactory not only to myself but, I think I may fairly say, unsatisfactory to many other Members of this House. I do not wish to complicate this question of the Fleet Air Arm because I realise the delicacy of it and that difficult personal questions are involved. I have no wish to add any fuel to any fire which may be smouldering, but I consider that the present position is unsatisfactory if not discreditable, and that the Government should come to a final decision on the subject. I was told that an inquiry was to be held. The Press indicated that the Lord Privy Seal and the President of the Board of Education would hold the inquiry. I do not know that another inquiry is necessary. I think the facts must be amply on record. What is wanted is not so much an inquiry as a decision, and a decision which will be enforced. But after this announcement the next thing we read in the Press was that Lord Weir had protested against the composition of the inquiry. The Secretary of State for Air had gone on sick leave, and in a very carefully worded statement that Lord Weir issued to the Press he carefully refrained from contradicting the allegations that he had protested about the composition of

    2615
    the inquiry. Now we are told that the committee is not to consist of Cabinet Ministers, but is to consist of the Minister for the Co-ordination of Defence and the Service heads of the three Defence Ministries.
    If all this is true, and I am not assuming that it is but quoting what has been said, then I ask who is Lord Weir to dictate about these matters? I do not think that any man, however eminent, should be allowed to play such a part in a matter like this unless he has some direct political responsibility to this House or to the Government. I do not understand why the Government should be so afraid of what Lord Weir may say about the matter. Let the Government remember that no man is indispensable. Listening to the reply which was given to a question to-day by the Minister for the Co-ordination of Defence, it occurred to me that if Lord Weir is discharging so many responsible duties as he appears to be doing at the moment, and if those duties are so interwoven and inter-locked with the Government's armament programme, then the sooner he occupies a position of political responsibility the better.
    The position about the Fleet Air Arm is discreditable. The Admiralty and some of the commanders-in-chief and admirals are not accepting whole-heartedly and loyally the decision of the Government which at present governs the situation, and they keep up a ceaseless barrage in order to get their own way. I consider that that conduct is very bad for discipline in the Service. It is bad to see the Admiralty and naval officers of high rank obstructing, where a Government decision is concerned. What do the Admiralty want? They already have complete tactical control; do they want their own research department or to run their own air supplies or their own air training establishment? If that is their demand, we should have inevitably waste, overlapping, expense and inefficiency. Are the Admiralty putting in a claim for their own shore-based air squadrons and are they prepared to accept responsibility for safeguarding merchantmen, oil tankers and auxiliaries from aerial attack in time of war?
    Vice-Admiral Taylor: Certainly.
    Sir R. Keyes: Will the Air Ministry do so?
    Lieut.-Commander Fletcher: Perhaps we shall hear an answer to our questions from the Minister for Co-ordination of Defence. I hope somebody will answer them. [An HON. MEMBER: "They do not know!"] They will know still less if we are to have divided air control in these matters. If the Admiralty and the Air Ministry are at variance and if the Service chiefs are to decide this question it means, in effect, giving the casting vote to the War Office. We need not an inquiry but a Cabinet decision, and an intimation that that decision has to be loyally accepted and carried out or something very serious will happen to those who obstruct in the future. I would ask the Minister to tell us whether the committee of inquiry over which he is to preside will have before it the minutes and expressions of opinion of the First Lord of the Admiralty on this subject when he was Secretary of State for Air? I would remind the Minister, with all due respect to the Admiralty and to the admirals, that these are people who hate anything and anybody who is not under their thumb, body and soul and lock, stock and barrel. If he needs proof of that he has only to look at the grudging treatment which has always been accorded to one of the finest bodies of men in the world, the Royal Marines.
    I am fully in sympathy with what was said by my hon. Friend about the democratisation of the Air Force. I agree with him also in objecting to that word, but, like another hybrid abortion "unilateral," it expresses what we mean, in regard to the officering of the Air Force. In speaking on this subject, I make no adverse comment upon the present officers of the Royal Air Force. On the contrary, I can say sincerely that I have the highest admiration for their courage, efficiency, energy and zeal. If this country, however, is being asked to find enormous sums of money for Air Defence to which everybody in the country will have to contribute in some form or another, we have the right to ask that the Force should be democratically officered, and that there should be an end of the pernicious, self-interested theory that the whole of the governing classes must always come from the public schools. The suggestions of snobbery made in the Debate the other day were very much resented. The Minister for the Co-ordination of Defence

    2617
    quoted stories of Dickens and Thackeray on the subject, and was at great pains to assure us that no Royal Air Force officer could possibly qualify for inclusion in Thackeray's "Book of Snobs." I have read of an incident about a presentation at Court which would not bear that out. If the Minister approaches the subject with an impartial mind he will find that there are vestiges and traces of snobbery, and that much might be done in the direction desired by hon. Members.
    In his speech on this subject in the Debate last week, the Minister for Co-ordination of Defence showed all over again that there is a complete lack of understanding about what the duties of such a Minister should be. If hon. Members want a good illustration, there is the fact that, during the diplomatic absence on leave of the Minister for Air, the co-ordinating Minister takes charge of the Air Ministry. Nothing could be more inconsistent with the idea for which the Minister for Co-ordination of Defence was appointed.
    Again the questions which are put every week to the Minister about profits and prices, and so on, clearly show that he is now regarded as the Minister not for the Co-ordination of Defence but for the co-ordination and regulation of production and of supplies. A very typical speech was made in the Debate last week by the Minister. As I listened, I felt that he was the spiritual successor to the late lamented Lord Haldane, of whom it used to be said that nothing was really obscure until Lord Haldane had explained it in two fat volumes. Over and over again, the Debate showed how much we needed a Minister to settle this question of the Fleet Air Arm. I am shy of quoting from speeches made in the country by Cabinet Ministers because the Prime Minister always explains to us that they have been misreported, but I would remind hon. Members that, in a speech made in the country, the Minister for Co-ordination of Defence told us that he was acquiring confidence in the performance of his duties. I interpret that as meaning that he is acquiring what the Americans call "sales resistance" to the various pups which the heads of the Fighting Services no doubt attempt to sell him. It would be very interesting to know how far the Minister has gone in acquiring confidence in the performance of his duties.
    Mr. Deputy-Speaker (Captain Bourne): I would remind the hon. and gallant Gentleman that we are discussing the Air Estimates. I do not quite see what that has to do with the duties of the Minister for Co-ordination of Defence.
    Lieut.-Commander Fletcher: It appears to me that the Minister for Co-ordination of Defence is in charge of the Air Ministry.
    Mr. Deputy-Speaker: That may be so, but we cannot debate the general scope of his duties.
    Lieut.-Commander Fletcher: It would be interesting to know how much time he is giving to the Air Ministry at the present moment, and how much to the other duties which he has to perform. Is it in order, Mr. Deputy-Speaker, to pursue that line of argument?
    Mr. Deputy-Speaker: If the hon. and gallant Member pursues it very far I think that he will get back to where he started.
    Lieut.-Commander Fletcher: If that is the case it is clear that the Minister is not devoting very much time to the Air Ministry. You have assured me that if I pursued that part of his duties I should quickly get back to where I was. If that is so he cannot be doing anything very important at the Air Ministry. I will therefore return to the remarks which the Minister made during the Debate on the Air Estimates last week. I noticed that he said he resented very much that we should name any country as the objective of this vast re-armament programme for the Royal Air Force. That statement divorces a great deal of what the Minister says and does from a sense of reality. There is a saying: "I named no names but she knew what I meant"; it is rather that type of remark.
    After what the Minister said about the possibility of defence against the bomber, it is evident that he is completely at variance with the Prime Minister, who told us that the bomber will always get through. The Minister told us in his speech last week that he did not think that that was at all the case. On this very essential matter the Minister for Co-ordination of Defence is at loggerheads with his own Prime Minister. Co-ordination, like charity, ought to begin at home. We shall have to find somebody to co-ordinate the co-ordinator and

    2619
    to bring his views into line with those of the Prime Minister on this vital subject. Although I quote the Prime Minister, I feel that his obiter dicta on Defence matters will not rank very high in the future. He has told us that the bomber will always get through, but the Minister does not agree. The Prime Minister has told us that our frontier is on the Rhine, whereupon, very naturally, Hitler marched into the Rhineland to defend the Rhine against us. He gave us completely misleading information about the German Air Force not so long ago. The Prime Minister told us also that democracy must always be two years behind dictatorships. If that be so, it is rather a waste of time to spend all this money. These obiter dicta of the Prime Minister are not impressive. The truth is that the Prime Minister in all these matters has been a non-playing captain. Apparently, shortly he will be found in the Lords Pavilion watching members of his team making ducks and getting clean bowled in the good old way, and be able to enjoy the fun without having any responsibility.
    In conclusion I would refer to a matter which was mentioned in the Debate by my right hon. Friend the Member for Keighley (Mr. Lees-Smith), who asked whether the Air Ministry were paying full attention to the views of the scientists in the matter of air Defence. I share his feeling that the views of scientists are probably not always welcome at the Admiralty, the Air Ministry or the War Office. Scientists are rather like gadflies in this matter. Socrates lost his life for being a gadfly on the back of the City of Athens. The Ministries are rather apt to regard scientists inimically and as gadflies, and not to encourage them more than they can help. My right hon. Friend also quoted Lord Haldane as having said that thinking costs nothing. I do not agree with Lord Haldane about that; I think that thinking which costs nothing is probably also worth nothing. Thinking costs much time, a great deal of searching of heart, a great deal of mental strain, and the thinker is worthy of his hire. He ought at least to be worth as much as, say, a Sea Lord. I resent the idea that you should get the product of men's brains, of scientists' brains, for very little indeed. Good thinking ought to cost something if it is to be worth anything.
    2620
    The speech of the right hon. Baronet in introducing the Estimates was remarkable inasmuch as he did not make one single complaint of being stinted for anything in these Estimates. Everything that he wanted—men, money, material, advice, assistance and so on—he admitted at that Box that he was receiving in full measure from everybody concerned. If he is being so well treated about his Estimates and about the work of the Air Ministry, I should like to ask him whether, in return, he could not treat the House with a little greater frankness in replying to questions which are put to him by Members who really have the greatest wish to co-operate in these matters now that we are committed to the expenditure. They only wish to co-operate with him and with the Air Ministry in producing the best and most efficient results for the money that is to be spent. Could not he co-operate a little more fully and frankly in his replies to questions which are put to him? Really, in regard to questions which are put to the Front Bench opposite, I feel that the Government are like "strip-tease" artistes; they keep on giving you a little, but you never arrive at the ultimate satisfaction of the naked truth and nothing but the truth. I wish that the Minister, in return for all that, as he so freely admitted, is being done for him, would in future do a little more, by way of answers to questions, to co-operate with those who are sincerely anxious to co-operate now in the work of producing an efficient Air Force.
    6.4 p.m.
    Mrs. Tate: I cannot say that I agree with very much that the hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher) has said, but I do agree with him whole-heartedly when he says that the Secretary of State for Air should be in this House. It is extraordinarily difficult to have to ask questions of, and to have to attack, a Minister who is not the one that is responsible for his Department. I have spent the week-end reading the speeches which the Under-Secretary of State for Air has made on civil aviation since 1933; and, of course, I am bound, when I quote them to-day, to quote them as his and not as those of the Secretary of State for Air, to whom I should be only too delighted to express my feelings.
    The House, the Press and the country now realise the importance of military aviation, and they also realise that this

    2621
    country is peculiarly vulnerable to attack from the air. They realise, too, that this deadly modern weapon is being developed very efficiently in many capitals of the world to-day. But all of us hope that the war is not coming; we hope that, even though late in the day, sanity may prevail and the armament race be abandoned. Should that be the case, however, and should we avoid a war, this country will still be faced with very difficult problems. When we have to go back to normal naval, military and air production, and when other countries start turning men from armament factories to civil life, there will then be a type of economic warfare and a race to capture world markets, and in that economic warfare one of the most powerful weapons is going to be aviation. When we look at our civil aviation, which is the weapon that we shall then have to use, we cannot but feel intense and profound depression. This country, which has such an enormous Empire and Empire air routes, is lagging behind in a most serious and terrible way where civil aviation is concerned—
    Mr. Deputy-Speaker: I must point out to the hon. Lady that there is another Vote, to be taken later to-night, for civil aviation. If the House is willing that the whole of that Vote for civil aviation should be discussed on this Vote, it must be on the understanding that the matter is not raised again on the other Vote which is to come before the House later.
    Mrs. Tate: It was after consultation with Mr. Speaker and with the Chief Whip that I understood that we were going to discuss civil aviation on this Vote and not at a later stage.
    Mr. Deputy-Speaker: The hon. Lady must understand that that can be done only with the consent of the House, and it is my duty to ascertain whether the House supports that suggestion.
    Mr. Lees-Smith: I have consulted with the Patronage Secretary on the matter, and that method would certainly suit myself and my hon. Friends.
    Mr. Deputy-Speaker: I am much obliged to the right hon. Gentleman.
    Mrs. Tate: As I have said, we are very much behind in our development of civil
    2622
    aviation. Words have been described as the most powerful drug in existence, and nothing proves that more clearly than a perusal of the speeches of the Under-Secretary of State for Air. I am going to quote from a speech which he made on 8th March, 1934—three years ago—three years in which other nations have been extraordinarily active. The right hon. Gentleman then said:
    "Turning from East to West, a new project of considerable interest for which a provision of £10,000 is made in these Estimates is a weekly service between New York and Bermuda which is operated by Imperial Airways co-operating with American interests. Apart from its local importance, this new route is of particular interest in that it may very likely prove to be a first link in a trans-Atlantic service."—[OFFICIAL REPORT, 8th March, 1934; col. 2937, Vol. 286.]
    I think that anyone who read that, or heard it, would be quite justified in thinking that that line was operating. That was in March, 1934. I should like to ask where the New York-Bermuda service is to-day. [Interruption.] The hon. Member is perfectly right; it is in the air. With regard to that service, the right hon. Gentleman, in his speech on the Estimates this year, said:
    "It is expected that the Bermuda-New York service will begin operations this year. It will entail non-stop hops over 80o miles of water."—[OFFICIAL REPORT, 15th March, 1936; col. 1680, Vol. 321.]
    That is four years later. Every year we have had references to this New York-Bermuda service—in 1934, 1935, 1936 and 1937—and still it does not exist. Some of us have beard of a certain "Bellman" who said:
    "I said it twice;
    That alone should encourage the crew.
    Just the place for a snark.
    I have said it thrice.
    When I say a thing three times it's true."
    The Under-Secretary of State for Air is not in the happy position of the Bellman, because he has said it four times and still it is not true. "His words, like so many nimble and airy servitors, trip about at his command," but I very much regret to say that some of them are little more than air.
    I turn now to 20th December, 1934, the date on which we had described to the House the new Empire Air services, which the whole House welcomed, feeling that they were overdue. This is what the right hon. Gentleman said about

    2623
    the new Empire Air services on 20th December, 1934:
    "As regards schedules, the scheme as suggested to the other Governments concerned envisages a schedule of just over two days to India, two-and-a-half days to East Africa, four days to the Cape, four days to Singapore and seven days to Australia."
    He went on to mention frequencies, and then he said:
    "I can as yet give no date for the inauguration of the scheme. The provision of the necessary fleet, ground organisation, etc., will require a period of something like two years before a project of this magnitude, constituting, as it does, the largest step forward which has yet been taken in the development of Empire air communications, could be brought into full operation."—[OFFICIAL REPORT, 20th December, 1934; cols. 13291330, Vol. 296.]
    That was said on 20th December, 1934. We are now in March, 1937, and of the 29 flying boats ordered for the inauguration of that Empire service we have had delivery, I think I am right in saying, of five. We all know that there is not the smallest hope of that service being in operation by the end of 1938. I sincerely hope I am wrong, but I very much doubt whether it will be in operation before the end of 1939. A scheme that sounded satisfactory, progressive, rapid and wonderful when it was outlined in 1934, may prove to be far from rapid, far from progressive and far from satisfactory if it does not come into operation until 1938 or 1939, for other countries believe in action, while we, apparently, believe in words. To-day, for instance, is it not a very serious thing from the point of view of our prestige abroad that we have to read in the Press "that Indian princes and merchants coming to England for the season are flying to London by the Dutch Air Line, K.L.M.? They would prefer to travel British, but cannot spare the time."
    Whenever we criticise Imperial Airways in this House we are told that we are unpatriotic, that we are lowering British prestige abroad; but does the right hon. Gentleman really believe that other countries have no knowledge of the time schedules of our services? Does he think that it is not a by-word throughout the world that our machines are obsolete, that they take many days longer to fly the same route and distance than the Dutch service? Are we going to pretend that this great country, with its vast wealth
    2624
    and its colossal Empire, ought not to be able to do as well as Holland?
    I turn to the Atlantic. Many of us believe that a closer relationship between this country and America is very much to be desired, and certainly, if we look at South America from the financial standpoint alone, we can ill afford to neglect our trade with that country. What did the Under-Secretary of State say about the Trans-Atlantic service? On 17th March, 1936, he said:
    "We have for a long time past been engaged on plans for a Trans-Atlantic Service. Certain long range machines are already on order for this purpose and others are about to be ordered. We aim at making an experimental beginning this year, if possible, or at any rate early in 1937."—[OFFICIAL REPORT, 17th March, 1936; col. 272, Vol. 310.]
    Of course, I do not know what people call "early in 1937." The spring has been mentioned, but I do not know by what people judge spring.
    To me spring is now here—the crocuses are out in St. James's Park—English lambs are shivering in English fields—a few farmers still having the courage and optimism to believe that the Government will one day show some signs of wishing to save the agricultural industry—birds are mating. Those are usually regarded as signs of spring. Yet we know that no attempt to cross the North Atlantic has yet been made, although Germany has not only carried out the experiment but a very successful flight. What of the South Atlantic? The right hon. Baronet said in May, 1936:
    "As an illustration of the way in which Sir Warren Fisher's Committee will normally proceed, when considering the inauguration of a new service, I may say that it has at present under review the possible operation of a service across the South Atlantic. Inquiries have indicated five different interests or undertakings who are interested in this service and who may like to be considered for it. All five have been asked to submit proposals. I take this opportunity of giving the very widest publicity to our intentions in this sphere."
    I should like to call attention to a most moving paragraph in the Monetary Memorandum which accompanies the Air Estimates:
    "The machinery of the Inter-Departmental Committee which was set up in May, 1935, under the chairmanship of Sir Warren Fisher is enabling all Departments of State concerned to deal rapidly and in concert with current questions of international and Imperial air communications."
    Hon. Members may have a different idea as to the meaning of the word "rapid,"

    2625
    but, when those five companies were asked to tender for a South Atlantic service—I know what I am talking about for I was one of the people approached—we were told to submit a scheme which could operate in the spring of 1937. I have since resigned all interest in the company which I was previously concerned with, but the House has not yet, nor has the country, nor have the companies concerned, even been told which company has been selected to run the route. Really, words are indeed a powerful drug—if the House on facts considers our position as compared to other countries satisfactory. The House realises the importance of military aviation. I only wish that hon. Members were more air-minded, and would realise more clearly, as the Germans and French are realising, the vital importance of civil aviation. We are very fond of abusing dictatorships, and I am the last person, either temperamentally or politically, to be suited to be living under a dictatorship. Nevertheless, when we condemn the German policy of guns before butter, are we so very sure that they are not building up in their air lines a very effective means of getting butter later on, whereas we have built up a high standard of living and are not taking means by adequate development of civil aviation of retaining or even of keeping up our export trade, upon which alone our high standard of living and our costly social services are to be maintained?
    Germany and France have been operating a weekly or fortnightly service across the South Atlantic for two or three years, and we, who have £400,000,000 invested there, have not even made an experimental flight. In 1935 we paid them £100,000 for carriage of our mail. If you look at it from a military point of view, it is by our long-range flying boats that to a very large extent we shall keep our trade routes safe in time of war and ensure our food supplies. Much as I admire the work which my hon. and gallant Friend the Member for Hertford (Sir M. Sueter) has done for air in the House, I do not agree with him. I believe the incompetence of the Air Ministry is such that it would be a very great mercy if we could have the Admiralty with its own Fleet Air Arm. On these long-range flying boats will depend our security for food in time of war. The Government is doing very little
    2626
    to ensure that we shall maintain, let alone increase, home production. The farmer to-day is one of the most neglected and hard-hit members of the community. In 1921 you had more than 800,000 people employed in agriculture. To-day you have 600,000, and they are the old people. The young people are not going into agriculture, and no wonder, when you note the Government's present lack of policy, and apparently of interest.
    We are very far behind with civil aviation. I believe we are behindhand in our military programme, but not as seriously as we are with our civil programme. To turn to another subject, usually, when we have the Air Estimates we have wonderful figures of the increase in pilots' licences and in our own internal air lines. We had no word of it this year, but is it not partly because of the scandalous policy pursued by the railway companies in refusing to advertise any other air lines than their own? We have voted a subsidy for British Airways for a Scandinavian service. We all want to see it successful. We welcome the fact that Imperial Airways is not the only civil line to which we have given a subsidy, yet to-day you cannot take a ticket to travel by British Airways nor any British air line other than Imperial Airways at Cook's, because of the line pursued by the railway companies. I hope that whenever any question of facilities for the railways comes up we shall remember the policy that they are pursuing. The Opposition are always wanting to find grounds on which to criticise the Government. It is a very curious thing to me that they have not used this. I do not know what the hon. Member for West Islington (Mr. Montague) is thinking about. He was once Air Minister. I do not understand figures, but my "Financial News" would seem to tell me that this year, if you look at the trading accounts of Imperial Airways without the subsidy, there is a trading loss of £66,000, and yet they paid a 6 per cent. dividend and a 2 per cent. bonus. The taxpayer is paying the dividend.
    Mr. Garro Jones: Is the hon. lady aware that we have been making that point repeatedly for a large number of years, and have pointed out that every penny that Imperial Airways has paid, and not only the dividend this year, has

    2627
    been paid out of the subsidy, but on the occasions when we have invited the hon. Lady and her friends to support us in resisting that subsidy she has not favoured us with her support in the Lobby.
    Mrs. Tate: It is a great pity, before the hon. Member makes these extraordinary statements, that he does not bother to see that they are accurate—not that I expect the Opposition to be accurate. If they were, they would not be able to make speeches in the House defending their policy. If the hon. Member looks up the Air Navigation Bill of last year, when the subsidy to Imperial Airways was decided for another 15 years, he will find that I voted with the Opposition.
    Mr. Garro Jones: I apologise profusely.
    Mrs. Tate: I do not expect an apology from the Opposition for inaccuracy. If we did, we should seldom be able to make speeches on this side of the House because of the time taken up by hon. Members in apology. I believe Imperial Airways should be given a large subsidy. I believe that one of the reasons why they are behind other air lines of the world is that they had to start on the idiotic line once so popular "that civil aviation must be made to fly by itself." I do not believe that to-day they are in a position to pay a dividend, and it certainly should not be allowed to be paid with the taxpayer's money.
    6.27 p.m.
    Mr. Adamson: There are one or two aspects on the productive side of aviation that ought to have some consideration. It may be that there is not great satisfaction at the progress that has been made with the building of the Fleet, but there have been some very unfortunate disputes recently. There was in particular one at Wolverhampton, which might not have arisen if the employers had taken the men into their confidence. More recently there have been other disputes which have very largely arisen through the management of factories not having consultations with the workers. In reply to a question by the Member for Wolverhampton, East (Mr. Mander) the Minister for the Co-ordination of Defence indicated that it would not be advisable for him to consult with trade union leaders or advise
    2628
    them in any way, and I am fully in agreement with him, but I think that either he or the Under-Secretary ought to have gone a little further. New methods are being adopted in the factories and trainees and being instructed. The Under-Secretary or the Minister for Co-ordination might give some advice to the management of those factories to be a little more explicit.
    We have not entirely forgotten what happened in the processes of dilution enforced upon craftsmen and skilled workers from 1914 to 1918, and the effect of that dilution still exists in the factories and workshops to-day. The management of the firms producing aero engines, in their efforts to increase production, should at least have consultation with those engaged in the industry, and not necessarily the officials of trade union organisations. There are representative stewards who can speak on behalf of their organised fellow workers and can negotiate in the direction of making adjustments essential for bringing the best out of the productive elements in factories and workshops. It is for that reason that I ask the Under-Secretary of State for Air, if he is still finding difficulties in regard to the rate of production of aero engines and other equipment, to appeal to the management of the various firms to keep on the best side of the men. The Ministry are demanding an adequate personnel for the flying fleet, and it is, therefore, necessary that superior machines should be built so as to safeguard the lives of the men who fly them. In order to obtain these machines, the men employed in their manufacture should have the necessary skill, and it is from that point of view that I appeal to the Under-Secretary not merely to depend upon the Ministry of Labour, with its conciliation department, when disputes arise, but to take some foresight and consult with the management of the factories engaged in these very necessary services. I trust that that matter will not be overlooked.
    More than 12 months ago I put a question to the Under-Secretary with regard to representations that had been made to him with reference to the establishment of a Royal Air Force aerodrome on Cannock Chase. I am not raising the point merely to elicit information, but because, in another direction, the National Parks Committee have recommended that this

    2629
    should be a playground for the Midlands. I am rather hopeful that, even if it should be that the Air Ministry require it, it will be only temporary in character. It is essential that in this huge industrial area this site should be a playground for the people. But there is also a reminder that from 1914 to 1918 this was actually a military camp. We are not allowed to forget it in the district, because there is what may be termed an international cemetery where the remains of men from Canada, Australia and other Dominions and Colonies lie side by side with the remains of German prisoners, and people from all parts of the country come to see it still. I ask the Under-Secretary to give an indication as to whether they are actually going to reserve that area for the purpose of establishing an aerodrome. There would have to be the linking-up of such an aerodrome with engineering factories and essential services, and it is because of these factors, that I impress upon the Ministry to make up their minds as early as possible. I trust that, on the question of personnel and machinery for the avoidance of disputes in the aircraft factories, both in the interest of the Department and the nation as a whole, they will take into consultation the management and the men, and see that the men get a fair and square deal.
    6.37 p.m.
    Major Hills: I shall not intervene in the quarrel between the Fleet Air Arm and the Air Ministry; in fact, I shall not deal at all in military aviation. I want to say a few words on civil aviation. The hon. Lady the Member for Frome (Mrs. Tate) sees no good in Imperial Airways; it is obsolete, it has no sort of advantage at all. It is very difficult to know from the nature of some of the hon. Lady's charges whether she was attacking the Air Ministry or Imperial Airways. For example, she said that the Empire services were not started to the full amount that the Air Ministry promised. There are two services, at least, running now. The England-India and Australia line is running a two-weekly service. I who, for business reasons, depend on the Australian mail, find that it is extraordinarily regular, and just as up to date as used to be the case by steamship. That service is to the credit of Imperial Airways. The England to South Africa service is running. It is not flying to Cape
    2630
    Town because the South African Airways did not want that section flown, but Imperial Airways are ready to extend from Durban to Cape Town at any time the South African Government wishes. So there are two great services actually in operation. The hon. Lady said that instead of 28 flying boats Imperial Airways had only seven. Until the terms of the subsidy were settled, it was impossible for the company to order these flying boats, and I believe that they took the risk of placing an order before the actual agreement was signed, but that was really a great financial risk.
    Mrs. Tate: If they had not the money with which to order the new boats, how is it they have money with which to pay dividends?
    Major Hills: They had not enough to pay for these new boats, and they could not get the 28 flying boats until they knew that the subsidy was to be paid. This brings me to one point with which I am entirely in agreement with the hon. Lady. The company have been hampered all through by insufficient subsidy. Like her, I want to see an extended Empire and world air service run by this country. I realise its great importance, but this House realises, I am sure, that no substantial air service can carry on by itself. Every aeroplane that goes into the air has to be subsidised, and the Government can have just as big an air service as they choose to pay for. I would also point out to the House that in every country excepting this Imperial Airways are held up as a model.
    Mrs. Tate indicated dissent.
    Major Hills: Indeed it is so. I have flown in every service in Europe, and it is only in this House of Commons that Imperial Airways are so bitterly attacked. Take the case of one great improvement that they have produced—Empire flying boats. There is no doubt at all that flying boats will gradually replace the big land machines, and especially is this so in our Empire. It is clear that the larger land aeroplane will be superseded by flying boats. We are well ahead in this matter, anyhow, and the hon. Lady will not disagree when I say, that we have realised that the flying boat is the carrying aeroplane of the future.

    2631
    Let me give some of the facts of the performances of Imperial Airways. During the last completed year they flew 6,500,000 miles, and during the current year they will fly 8,000,000 miles. When they started, their routes were only 1,760 miles in length; in 1936 they were 19,000 miles, and in 1937 they were 27,000 miles, and the goods and passengers that they have carried have increased proportionately. I do not say that a great company like this enjoying a subsidy should not be criticised. Of course, it should be criticised, but do criticise it fairly, and compare like with like. The average flight of a passenger by Imperial Airways on the Empire service is something like 2,000 miles. Show me a service that can compare with that. You must look at the difficulties with which the Empire service has to contend and, above all, you must recognise that safety is the one thing that matters. A man who books a passage to New York should not have to consider whether the sea is more safe than the air. He should consider convenience. Safety combined with convenience is by far the most important thing in civil aviation. Stunt flights and excessive speeds are all very well as trimmings, but the final thing and the vitally important thing is safety for passengers and safety for the carriage of goods. In both those respects I submit that we are a long way ahead of any other country.
    6.46 p.m.
    Mr. Lees-Smith: There is one question that I should like to raise, and that is the peculiar position in which British Airways have been put by the attitude of the railway companies.
    Major Hills: I agree that the position is a difficult one, but I do not think that it is due to the railway companies. I think it is the Clearing House. I do not think the railway companies are responsible.
    Mr. Simmonds: It is the same thing.
    Mr. Lees-Smith: I am very glad that the right hon. and gallant Gentleman agrees that in any case British Airways are being most unfairly treated. I wish to explain to the House why I am interested in the subject. It happened that last summer I wanted to go to Denmark, and I went in the ordinary way to get
    2632
    a ticket. I found that tickets by all manner of foreign air companies were pushed at me, but I never heard of any British ticket. Not being extremely well versed in these affairs, I did not receive an explanation until I heard the speech of the hon. Member for Stroud (Mr. Perkins), who raised the subject a fortnight ago. The House ought to understand clearly the circumstances which appear to me to be scandalous in the extreme. The circumstances are these that, if you like, the Railway Clearing House has taken this line that it has a hold over Cook's and the other tourists agencies and has said to them, "We forbid you to book any passengers for British Airways."
    Mrs. Tate: Or any other lines.
    Mr. Lees-Smith: What, then, is the position? The first thing that we did when this Parliament met was to pass an Act allowing the railway companies to raise an enormous loan, with a Government guarantee behind it, so that we indirectly gave the railway companies a subsidy far larger than that which is given to British Airways. We have the position now that the railway companies themselves accepting a subsidy from Parliament, are pursuing an anti-national policy, the purpose of which is to stultify and nullify another subsidy which the Government gave to another line. That cannot be permitted to continue. I was not at all satisfied with the line that was taken by the Under-Secretary of State for Air on the subject the other night. The answer of the Air Ministry is that this is no concern of theirs, that it is merely a quarrel between two commercial companies and that they have not the power, although they might have the desire, to intervene. I do not think that that is the case at all.
    The reason that this policy is adopted is because the railway companies are objecting to the possible competition of British Airways along internal routes. That is the sole reason of the policy. They object to competition with the railway air services, and in the railway air services the Government have a responsibility. The railway air service consists of the four railway lines and Imperial Airways. Imperial Airways have two directors nominated by the Government, and I should like to know whether the

    2633
    Government have instructed their directors on Imperial Airways to raise this issue and either to agree with it or protest against it. The Government cannot, as long as they are part of Imperial Airways, take the line that this is merely a matter between two commercial concerns, in neither of which they have any interest. I am sure that now that the House as a whole is coming to understand the situation, such a situation cannot last. I do not believe that the House will accept it. My experience is that in the long run it is impossible to fight the House of Commons. I raise the matter at this stage because I suggest to the Railway Clearing House that it would be very much better for it to deal with this issue and to meet the policy of the Government and the wishes of the House gracefully while it can do so of its own accord.
    I had intended to deal with one or two minor issues which would be specially the concern of the Under-Secretary of State for Air, but I gather that the Minister for the Co-ordination of Defence is to reply, and therefore I will raise issues which are more particularly in his sphere. I shall not make a controversial speech, but I should like to put before slim certain considerations which he might bear in mind in making decisions. A little time ago I raised the question of the ground service for aerial defence, such as searchlights, sound detectors and anti-aircraft guns, which are now in the hands of the War Office instead of the Air Ministry. I stated that that showed a lack of co-ordination which was improper and unscientific, but in his speech last week the right hon. Gentleman in replying to me on that point said that it was a reasonable arrangement because as other ground artillery was in the hands of the War Office so all ground artillery should be in the hands of the War Office. The Secretary of State for War argued on the same principle when he said that men engaged in the same occupation ought to be under the same Department.
    It is a point of considerable importance when the principle of the allocation of functions is being laid down that the Services should be divided up according to the weapon that is used. On the same principle, if artillery is to be in the hands of the War Office, aeroplanes and
    2634
    everything appertaining thereto should be in the hands of the Air Ministry, and so on. I hope that the Minister for the Coordination of Defence will not make up his mind on this matter too early. He has pronounced already on the question of the ground defence of the Air Force and has stated that it should be left to the War Office. There is an alternative which appears to me on general grounds to be a better one, and that is that operations of any sort connected with the air should belong to the Air Ministry, that those connected with the Navy should belong to the Admiralty and those connected with the Army should belong to the War Office. There would be certain exceptions but, broadly, that should be the line of division of different functions between the Services. I would ask my right hon. Friend not to make up his mind too soon, because, obviously, in coming to his decision about the future of the Fleet Air Arm, these considerations will be very important. The fact that he has not come to a decision on that subject means that he has an open mind as to which course he is going to adopt. If he adopts in the case of the Fleet Air Arm the principle that he has laid down in regard to the ground defences against air attacks it will lead him to the decision that all aeroplanes whether they fly from ships or not should be under the Air Ministry.
    I raise this point because I should like the right hon. Gentleman to realise that his decision in regard to the Fleet Air Arm will decide a number of questions. If he follows the advice that has been given to him by the right hon. Member for Epping (Mr. Churchill), who adopts the alternative principle that operations connected with the Navy should belong to the Admiralty, he will adopt the principle that aeroplanes which fly from ships for naval purposes should belong to the Admiralty. Although training, research and supply might still be left to the Air Ministry, for all other purposes the aeroplanes would belong to the service mainly concerned with naval operations. If he adopts that principle, which seems to me on the whole a reasonable one, he will realise that it will lead him to this decision that all weapons which are connected with fighting in the air should belong to the Air Ministry and all searchlights, sound locators and anti-aircraft guns should belong to the Air Ministry.

    2635
    That will also lead to another decision which has not been much discussed lately but will be raised soon. If the right hon. Gentleman comes to the conclusion that aircraft working for the Navy should belong to the Admiralty, it will be difficult to resist the conclusion that aeroplanes working for the Army should belong to the War Office although, again, research supply, etc., would belong to the Air Ministry.
    Major Hills: Supply and training?
    Mr. Lees-Smith: Supply, training and research. This question has been discussed by one who is regarded not only as a great soldier but a very profound thinker, General Sir Edmund Ironside, Commander-in-Chief of the Eastern Command. I will read what he says, because this is a question which will come to the front. This is from "The Study of War," page 133:
    "In my opinion the Army suffers greatly in that some of its essential services, artillery, observation, reconnaissance, are in the hands of another Service. I believe that one might just as well take away the mechanical tractors of the artillery and place them under the Royal Army Service Corps as take away the Army's aircraft and place them under the Air Force."
    The Minister will see that he has a certain doctrine to decide. His decision on that doctrine will determine his decision on the Fleet Air Arm, and on the other two points I have raised. I am not going to enter into the controversy, but I believe that in determining his decision he can make a great contribution merely because he is a politician, and from his knowledge of the working of Departments. It is not only that he is free from all service prepossessions, but anybody who has had experience of Departments realises one fact, that is, the immense influence of the force of Departmental pride and Departmental patriotism on the conduct of Services. It is a force which may become rather one-sided, but it is an immense force and why not use it? The result of that force is that you generally find that a Department works with tremendous concentration on anything connected with its own main purpose, but is apt to be rather indifferent if it is only doing ancillary work in the main sphere of another Department.
    For that reason all the operations connected with one Service should be under
    2636
    the control of the one Department. In point of fact, if the right hon. Gentleman is guided by experience, I think that he will find some valuable lessons in his experience of attempting to allow the control of the ground Services for the Air, of the searchlights and sound detectors which have to find the aeroplane, to be an ancillary service to another Department, the Army. The results of that have been notoriously as bad as they could be. It is never denied. Until this new sense of urgency came along, until a year ago it was notorious that the Army kept all its old searchlights and motors for the Air Force, and that until about a year ago the searchlights, motors and sound-detectors working for the Air Force were known to be the derelict ones which the War Office did not need for its own main purpose. It is true that that has been corrected, but it has been corrected because there is a great sense of urgency, because all the Services have all the money they want for any purpose. But there is no guarantee when this present excitement has passed away that the ordinary departmental temperament will not show itself, and that once again the Army will prefer the interest of its own Service to the interest of the Air Ministry. For that reason I suggest to the right hon. Gentleman that he should not make up his mind yet on the special issue which I have now raised once or twice. Indeed, I think that by examining that issue carefully he may find lessons of great value in connection with the larger investigation in which he is now taking part.
    7.5 p.m.
    Sir T. Inskip: I am very much obliged to the right hon. Gentleman for the helpful manner in which he has approached these questions. I may say quite sincerely that we welcome every such helpful discussion on these matters and the Service Estimates afford an opportunity when we can get the help Of hon. Gentlemen opposite who have their own experience and many of whom give time and thought to these questions. I cannot possibly refrain from comparing the tone and temper and helpfulness of the right hon. Gentleman's speech with what proceeded from his hon. Friend behind him, who chose in a Service Estimate Debate, where I think we are all engaged in trying to find the best solution of these questions, to refer to the

    2637
    absence of any sincerity in the Government, described us as guilty of a smug pretentiousness and made personal suggestions which may have gratified himself but were not helpful to the House.
    Perhaps I may deal with the point which the right hon. Gentleman has been discussing, not with a view to giving a final answer at this stage, because I conceive that it is possible that at a much later stage in the completion of the Government's programme the subject might be considered again. That is the subject of the control of the land part of these anti-aircraft operations. But I want to make it perfectly plain that in this case there is no difference of opinion at all between the two Departments concerned. The Air Ministry not only do not desire that the responsibility for the guns and searchlights and detectors should be transferred to them, but they are at this present time very much opposed to any such suggestion being adopted. The reasons are not quite what the right hon. Gentleman suggested I had indicated last time. He has rather put upon me an argument which indeed I did not use but which I suggested to him as a counter-argument to a suggestion he made, because his case last time was that it is surely logical that you should put under one Ministry everything that has to do with it. You should put under the Air Ministry everything that has to do with the Air Ministry. He illustrated his argument by saying that you put everything to do with health under the Health Ministry and everything to do with transport under the Transport Ministry.
    My answer to that was that the right hon. Gentleman was in danger of a little too much logic, because he might find, when he had put the ground part of the air defences under the Air Ministry because it had to do with the air, that he had produced a state of duality of control in respect of the gunnery, part of which would now be under the Air Ministry and part left to the War Office. But I do not go so far as to say that those who deal with the same weapons must be under the same Ministry. I put it upon the practical utilitarian grounds, that the War Office are responsible for producing the guns, searchlights, and so on which are necessary for anti-aircraft Defence in connection with precisely the same operations for the field force, and that inasmuch as the War Office has to
    2638
    equip the field force with these weapons and instruments it would seem rather absurd at first sight that the Air Ministry should be duplicating these supplies, because that is what it would amount to.
    I gave another reason, for we are in the stage of reorganisation and re-equipment. I said that the organisation is in existence and the effect of a changeover at this very moment would be to cause a certain amount of confusion and delay, and then I pointed out that the War Office, who have their own regular personnel, training staff, instructors, and training schools, would have to hand over part of that organisation to the Air Ministry at a time when there is a great deal of confusion or unsettlement owing to the necessity for reorganisation. My argument was rather of a practical than a logical character, and, having discussed it with the Chiefs of the Staff responsible, I have their authority for saying that they agree with me, or that they advise me that at this present juncture it is better and perfectly satisfactory, from the point of view of efficiency, that the War Office should be responsible for providing and training the men and for providing the ground equipment.
    The right hon. Gentleman may feel assured that, although it is not likely that the decision will be changed for some considerable time while all this reorganisation is continuing, the Chiefs of the Staff and the Departments will always, I am sure, be prepared to consider this question on its merits. None of these questions can be considered as final. When the right hon. Gentleman suggests that if we retain the existing system with regard to anti-aircraft defence it will in some way affect my decision on the Fleet Air Arm inquiry, again I think he is in danger of forcing me into too logical a position. In this country we are never in the habit of applying things as logically as our Latin neighbours. They argue from one position to another because logic demands you should get there. We do what is best and let logic take care of itself.
    I will pass on and say a word about the Fleet Air Arm. I repeat what I said last time, that my hon. and gallant Friends who are protagonists in this question make speeches to which I listen with respect, but I am bound to go a little deeper than merely the rather first-sight views that are expressed on this

    2639
    question. There really is a great deal that is difficult, not merely because two great Departments are at issue, but you have to try to decide certain strategical principles before you can arrive at a sound decision. When the Balfour Inquiry took place some years ago, of course the Air Force was not what it is to-day. Mr. Balfour, Lord Weir, and the other members of the committee found it necessary to engage in a great deal of very detailed examination of what were then the principles governing the operation of the Air Force. I do not think it is at all unuseful or unnecessary that I, with the help of the Chiefs of the Staff, should investigate some of those basic principles which underlie the use and the control of the Fleet Air Arm. I am aware of the urgency.
    I entirely agree with what has been said by the right hon. Member for Epping (Mr. Churchill) and the hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher) that it is desirable that a decision should be given and that once given, it should be understood by everybody that it must be applied in the letter and the spirit and with good will, even by those who may not altogether agree with the decision. Although I say that I can assure the House that there will be no delay, I must not be pressed for a decision next week or immediately after Easter. Indeed, when I have obtained, as I shall obtain, some sort of a statement which may be satisfactory as to basic principles, I hope that I shall be able to proceed with the practical questions on which I am sure I shall have the assistance of hon. Members. The right hon. Member for Epping asked me what was the position with regard to Lord Weir and the report which had appeared in the public Press. The right hon. Gentleman rather suggested that I had announced a committee to the House. The only announcement that has been made to the House is that which I made on firth March:
    "As a result of my consideration of this question, I have decided with the aid of the Chiefs of Staff Sub-Committee, and the other responsible authorities concerned, to conduct a systematic investigation of the important factors involved in this matter, including the allied and wider considerations."—[OFFICIAL REPORT, 11th March, 1937; col. 133r, Vol. 321.]
    I announced no committee, and the statement that appeared in the Press that
    2640
    Lord Weir had resigned, or had threatened to resign, on file day following that announcement, is quite untrue. It is, however, true, and I want the House to understand quite clearly the facts, that Lord Weir was consulted. There is no reason at all why the Government should not discuss a matter of this sort with anybody, especially with someone who has had Lord Weir's wide experience in connection with the Air Force and the administration of the Air Ministry. Having said that, I must not be asked to give other and further information as to the discussions which took place or what passed before I made the announcement in the House of Commons. No Government could ever be called to account for steps which may be preparatory to a certain decision it announces to the House and to the country. What is important is that when the Government have made a decision and announced it to the House of Commons it should not be deterred from carrying it into effect by any threats of resignation, from whatever direction they may come. To that position I adhere fully this afternoon. Having made that announcement on 11th March the Government intend to carry it out, and I am already engaged in investigating, and I have every hope, however optimistic that may seem, that if we proceed in a thorough way and without taking too facile and shallow views about the issues involved, we may, with the help of the two Services, arrive at a settlement which will make it unnecessary in further Service Estimates to discuss this old contentious issue.
    I pass from that to some other matters which have been discussed. The first in point of interest is the question of costs. The House has no doubt been informed or has informed itself concerning the report of the Select Committee on Estimates. In the White Paper issued a year ago a statement was made as to the steps which would be taken to prevent undue profiteering. I have repeated those assurances in other words several times in this House, and I am gratified to find that the efforts which the Government have made to prevent profiteering in very difficult circumstances have been thought successful, so far, by the Estimates Committee. Let me quote one sentence:
    "They are satisfied that the methods followed are soundly conceived and are fair both to the taxpayers and the contractors,

    2641
    and they are of opinion, so far as an estimate can be formed, that they have been effective up to date in preventing profiteering at the taxpayers' expense."
    That report does not conclude the matter. As the Committee themselves point out, it is most necessary that perpetual vigilance shall be exercised and they suggest special steps which may be taken to make it still more probable that no undue profits shall be made out of the country's necessities. I will not, however, content myself with quoting the opinion of the Estimates Committee. Let me remind the House of the steps which have been taken, and then I will say a word about the criticisms made by the hon. Member for North Aberdeen (Mr. Garro Jones). As soon as the Government entered upon this large and expensive programme a Treasury standing committee was set up, about a year ago, and to that committee is submitted every contract of an abnormal character. It has laid down certain rules or principles with the assent of the Government, and I think that all of them will commend themselves to hon. Members. Let me mention one or two. The old time-and-line contracts were prohibited, ruled out. A time-and-line contract is a most unsatisfactory way of allowing people to get undue profits; we shall be all agreed upon that; and it was also decided that there should be in each case, arrived at by different methods, a fair profit but not a particular percentage of profit. That immediately diminishes the possibility that people will get more than they ought to get out of a particular job because it happens to be an expensive one. It was also decided that there should be an incentive to economy by giving the contractor who exercised economy and reduced contract prices some reward or share in the saving which he had effected. These and other principles were laid down by this committee.
    What has been done to put them into effect? In every case where possible a competitive tender has been called for. In a great many cases a competitive tender is not possible because the equipment is specialised in one particular firm, but in cases where competitive tenders are obtained they can be checked in many cases as to costs by the experience of the Royal Ordnance Factory. But in cases where competitive tenders are not possible there is a most elaborate examination by competent accountants, by the costings
    2642
    staffs of the Services, and really I did not understand the criticism of the hon. Member for North Aberdeen. He was good enough to say that he made no charge against Sir Hardman Lever, Mr. Judd or Mr. Ashley Cooper. I am sure those gentlemen will be glad indeed to hear what the hon. Member has said, but he suggested that because they had been concerned with the examination of accounts in the last War they were not a competent body to advise the Government on matters of costings.
    Sir Hardman Lever was Assistant Financial Secretary in charge of contracts and finance in the Ministry of Munitions, Financial Secretary to the Treasury in 1917 for two years, and Treasury representative at the Ministry of Transport for several years after the War. His reputation and ability need no words from me. Mr. Ashley Cooper was a member of the May Committee on National Expenditure in 1931 and I do not suppose that any hon. Member opposite has any prejudice against him so far as his technical ability is concerned because he happened to be a member of that committee. He is a member of the London Passenger Transport Board and a director of the Bank of England. Mr. Judd was the Director of Contract Finance, and Deputy Controller of Contracts at the Ministry of Munitions, and he is a very well known member of an eminent firm of chartered accountants carrying on the profession in many commercial centres of this country. There must be many accountants who would do equally well in this position, but I doubt very much whether any hon. Member would say that the Government made a bad selection when they asked these three gentlemen to undertake the task of advising the Government on all questions of principle and in holding themselves ready to arbitrate on any disputes which might arise between a firm and the Government as to the ultimate price which should be fixed for the exact costs, plus a fair profit.
    Mr. Cerro Jones: The right hon. Gentleman has missed my point of criticism. These three men, about whom I was perfectly frank in spite of his sarcastic remark, are closely connected as directors with firms engaged in private enterprise—one of them is a director of steel producing companies—and their records with

    2643
    the Ministry of Munitions during the War show that their idea of what are excessive profits is not a sound one and that, therefore, it would be foolish to expect them to save the nation from excessive profits at the Air Ministry.
    Sir T. Inskip: The hon. Member, besides charging them with dishonesty which he disclaims, is now charging them with incompetence for their task, and I ask the House to say that neither charge has any foundation. The hon. Member is going back 20 years and says that because during the last War at the Ministry of Munitions unhappily there were cases in which people made undue profits, these three gentlemen are not fit to be entrusted with this task. I do not believe that line of reasoning will appeal to any unprejudiced person. [Interruption.] Hon. Members opposite must form their own opinion as to who is unprejudiced. In spite of what the hon. Member for North Aberdeen said, I think that is the best system that could be applied in circumstances where competitive tenders are not possible. A batch of deliveries is taken, and there is then an examination of the books of the manufacturers by persons who are very competent accountants and who are precisely the same class of persons who would be engaged in these costings examinations even if the armaments firms were taken under the charge of the Government. They are civil servants. When the hon. Member for North Aberdeen demands that all armaments production shall be taken over by the Government, he cannot suggest that our accountancy staff is not competent to perform its duties. The Government accountants have been trained for this very purpose. The hon. Member and his party are the last people in the world who ought to say that these accountants are not fitted for their duties, because their theory is that as soon as one becomes a Government servant, one can do everything properly. The hon. Member asked whether there was not any profiteering during the War. We did not have during the War the same system as the Government have now imposed, and it is idle to go back to the War.
    Mr. George Griffiths: You are using the same machinery.
    An Hon. Member: Shut up, buttercup!
    Sir T. Inskip: Apart from the suggestion that the Government should take over the whole of the armaments-producing firms in this country, the hon. Member for North Aberdeen did not make a single suggestion as to how we should prevent profiteering. As hon. Members know, that question was considered by the Royal Commission on the private manufacture of and trade in arms, and their third recommendation was that:
    "The abolition of the private industry in the United Kingdom and the substitution for it of a system of State monopoly may be practicable; but it is undesirable."
    They gave a number of reasons, which hon. Members can judge for themselves, to justify that opinion.
    Sir Percy Harris: Do the Government accept the recommendations of the Royal Commission?
    Sir T. Inskip: I felt sure the hon. Baronet would take the opportunity of asking that question. The Government are in accord with a great many of the recommendations and no doubt very shortly a full statement will be made; but whether the Government are in agreement with the other recommendations or not, one cannot escape the finality of that particular recommendation, which was really a decision on the main question submitted to the Royal Commission. I think all hon. Members on both sides of the House are most anxious that there shall be no undue profiteering, and if any hon. Member has any suggestions to make—ruling out for the moment the one about the transferring of private firms to Government control, because I do not regard that as even practicable at the present juncture—they will be welcomed by the Government.
    Mr. Walker: During the War the Government created a national shell factory for the purpose of ascertaining the costs of making shells. Those costs were fixed as the basis for the prices of private firms.
    Sir T. Inskip: My experience of the War is that the prices of shells were not always fixed at as low a level as subsequent experience showed would have been the right one. No doubt all that information is available to the Government costings departments.
    Mr. Shinwell: The right hon. Gentleman asked for suggestions.
    Sir T. Inskip: I am not complaining. The hon. Member is very difficult to please.
    Mr. Shinwell: The right hon. Gentleman asks for suggestions, and when one is made, he simply sweeps it aside.
    Sir T. Inskip: I do not sweep it aside.
    Mr. Walker: I will take it back.
    Sir T. Inskip: No doubt it has its value and will be taken advantage of by the costings staff that is responsible for this particular task.
    Mr. Noel-Baker: As the right hon. Gentleman has quoted from the Report of the Royal Commission, do the Government accept the proposal of the Royal Commission that the Royal Arsenals should be greatly extended in order to produce all kinds of armaments which they do not now produce? Do they also accept the recommendation that something better than machinery for controlling the prices of individual contracts shall be adopted and that there shall be a general machinery for controlling all prices and profits as a whole?
    Sir T. Inskip: I do not know whether the hon. Member was here a few minutes ago when I said that the Government will shortly announce their conclusions on the recommendations of the Royal Commission. I am sure he will find then that a complete answer is given.
    Sir P. Harris: Will that be before Easter?
    Sir T. Inskip: Questions can be addressed to the Prime Minister as to when the announcement will be made. It would cause a great deal of anxiety in the country if it were thought that the Government were not doing everything that is practicable. I venture to think that in very difficult circumstances the Government have taken every step possible, and I repeat that, as far as we have gone, the Estimates Committee of this House has justified the confidence that we have shown all along in the steps that we are taking.
    Mr. Garro Jones: Will the right hon. Gentleman deal with the prices of raw materials?
    Sir T. Inskip: I can deal with only one thing at a time, and I was about to come to that question. It was suggested that the Government have been in some way neglectful in controlling or regulating the prices of raw materials. I believe I was right when I said a short time ago that the effect of the Government's programme on the prices of these materials is insignificant. Speaking not in this House but in the country, I said that taking, for instance, the case of copper, the Government requirements were less than 10 per cent. of the whole demand for copper at the present time, and that the argument that had been made was not capable of supporting the contention that we have been responsible for increasing the price of copper.
    Mr. Walkden: Surely a 10 per cent. increase in demand has an effect?
    Sir T. Inskip: That is not what I was told. I believe it is right to say that the world demand, including the revival of prosperity in the United States, is responsible for a world shortage in many of these materials. The hon. Member for North Aberdeen said that the world shortage is partly due to the arrangements that have been made for the limitation of production, but that does not alter the fact that at this moment there is a world shortage, and if the Government were to attempt to specify a price which was to be the limit of what they would pay for the raw materials they needed, the only result would be that they would not get the materials for the armaments programme. Nobody likes to see the prices of these materials jumping. [An HON. MEMBER: "Nobody?"] I am speaking of those who are in the House listening to me. The suggestion was made that the Government ought to forestall these rises in prices by making forward contracts. Naturally, the Government make forward contracts to meet their requirements, and it is largely due to the foresight they have exercised that these tremendous rises in prices have so far not affected the cost of the contracts into which the Government have been entering. I hope that will be the case for some little time to come. If anybody suggests that the Government should not make forward contracts to meet the requirements that they can foresee, but should enter into a gamble, that is not a course which the

    2647
    Government, or this House, I am sure, would approve. The Government cannot make forward contracts beyond a certain time, and I do not think hon. Members opposite would expect them to do so. On the other hand, we cannot control these prices. We deprecate the speculation that has taken place, but as I have already said, speculation is not the main reason for the rise in prices. The main reason is that the demand has greatly outgrown the capacity of production.
    I pass now to the question of promotion in the Air Force. I was very sorry to hear made once more the statement that there is class prejudice in the selection of officers for promotion. The hon. Member for North Aberdeen told a story, which I heard when I was a great deal younger than I am now, about a commanding officer and her husband, and he put that ancient story into the form of a statement of fact about a particular air station in this country. We all know the habit into which we fall of giving an old story an appearance of verisimilitude by adding to it dates and names and places. If it be suggested that there is any undue influence exercised over the Air Council or the Secretary of State for Air, the charge is a wholly unjustified one. As far as promotion is concerned, it is a matter of selection within the establishment. The Selection Board is composed of service members of the Air Council. The records and the confidnetial reports are before the Selection Board. I was very sorry to hear the hon. Member for North Aberdeen say that promotion is made upon unknown criteria of merit. The hon. Member must bear in mind that every officer is entitled to see, and does see, his confidential reports. He suggested that there should be a tribunal of appeal which would tell officers who were not selected the reasons they were not promoted. What would happen if the tribunal of appeal did not agree with the Selection Board? Would it be a non-Service or a Service tribunal?
    There is no foundation for the suggestion that the proper regular practice, of which this House would approve, is not followed in the Air Ministry. There are facts which entirely refute charges that there is snobbery in the selection of officers. Of the whole body of officers, a substantial majority come from the
    2648
    secondary schools. Among the permanent officers, well over one-third come from the secondary schools. There are already squadron leaders who were boy-apprentices 15 years ago. Bearing in mind that the system of recruiting at an early age and promoting from the non-commissioned ranks was adopted only after the War, one could not have got very much further than that at the present time. To clinch matters—and I think this will convince the House that the hon. Members charges are ill-founded—of the 2,166 candidates selected by the Interview Board since 1st January, 1935, for training as pilots, 45 per cent. were educated at what we know as the public schools and 55 per cent. came from the secondary and other schools. That is a complete answer to the suggestion that any preference is given to talent merely because it has been educated at the public schools or the old universities.
    Mr. Garro Jones: I have been tempted to intervene several times, and since the right hon. Gentleman says that his statement refutes my suggestion, I must point this out to him. I recognise that in times of stress and emergency these barriers are broken down, and therefore since 1935 there has been a considerable increase in the number let in from the secondary schools. But many of these are of the same class as the others. If the right hon. Gentleman wants to give the House a true test on which to form a judgment on this matter, let him state the number of permanent commissions as squadron-leader or flight-lieutenant which have been given.
    Sir T. Inskip: When the hon. Gentleman seeks to shelter behind the suggestion that he is complaining not of what goes on now, but of what used to go on a few years ago, I need not trouble any further about it. But that, indeed, was not the suggestion underlying his speech. Any hon. Member who heard him will, I am sure, confirm my recollection that he made his charges as charges which could be proved in the circumstances existing to-day. I say that the selection of officers in the Air Force is not based upon the snobbery which he alleged to prevail in the Air Ministry.
    Let me now pass to another matter. The right hon. Gentleman the Member for Epping spoke about the number of

    2649
    aeroplanes available for the squadrons that have been formed. The right hon. Gentleman made a calculation that at present we were very much short of what we had promised in the White Paper last year. He said I think that if the intention had been to bring the number of squadrons up to 123 that we were short by some 44 squadrons. Now the White Paper recently issued stated that there would be, by 1st April, 100 home squadrons and I can tell the House that that expectation has been slightly exceeded and that by 1st April there will be 103 squadrons at home. To-day, 22nd March, 102 have been formed. But I want to qualify that statement, first by saying that the position changes from week to week. For instance there are bombing machines and machines of other types at the aerodromes belonging to the factories which are awaiting full tests. With favourable weather and favourable circumstances they would at once be brought into the squadrons and the figures would be better than those I have stated. Of the 103 squadrons that will be formed by 1st April the whole of the regular squadrons will be at full strength in pilots and mechanics but 10 of them will be under strength in aircraft.
    As I say the position is changing from day to day—but I want to make this statement. If the scheme mentioned as the one which was going to produce 123 squadrons with approximately 1,500 first line aircraft, by 1st April, 1937, had been completed as a subsisting scheme, and if there had been no necessity for imposing upon it another scheme, we should, substantially, have completed what we expected to complete by the date named. I mention one factor which the House will appreciate at once. In consequence of what is known as Scheme F, mentioned in the White Paper, being superimposed upon Scheme C, it has been necessary to keep in existence a larger number of training establishments than Scheme C required. These training establishments have absorbed aircraft and personnel which, otherwise, would have gone to the formation of a number of squadrons and those squadrons would have been included in the figure of 123.
    I am fully conscious of the desirability of maintaining output at the highest possible rate that the ingenuity and energy of the Government and the manu-
    2650
    facturers can achieve. I do not want to compare this figure with the figures which my right hon. Friend gave of the German air force, partly for the reason which I mentioned last time and partly because the best information as to the air force of any other country, as of our own, must be in the possession of the Government. We are satisfied that the information we have is the best that can be obtained. No one would expect the Government to lay these calculations on the Table. I do not pretend that we are yet in the state of equipment which it is the Government's object to attain. If we were in no inferiority to any other air force within striking distance, we would not be spending so much energy and money upon attaining that happy position. It is because we have been behindhand that we have had to make this gigantic effort. All I can say is that, in spite of difficulties and disappointments, the effort is being made and I am not aware that any step which my Noble Friend can take or which the contractors can take to increase the rate at which machines are being produced is being overlooked. It must be recognised that as far as personnel is concerned the position is as satisfactory as anybody could possibly desire. I do not think I need detain the House further with an examination of these numbers. I merely emphasise the assurances I have given that we are conscious of the necessity for producing the machines and we are not sparing any effort in that direction.
    Sir H. Seely: With regard to those squadrons which are under strength, can the right hon. Gentleman say anything as to the number of flights or single machines?
    Sir T. Inskip: I am not prepared to discuss the question of the number of flights in particular squadrons and I hope the hon. Gentleman will not press me to do so. He may take it that the 10 squadrons which I have described as being under strength are not fully equipped with aircraft at the present time. I wanted to make that statement in order to qualify what I said about 103 squadrons being formed. I am fully alive to what the right hon. Gentleman the Member for Epping said as to the undesirability of creating paper squadrons in order that the position should look well and I can give an assurance that that

    2651
    is not the course which is being taken by us. At the same time, according to our method which is not the same as the German method, you may have the pilots and the equipment and the ground personnel in some cases, as in the case of these squadrons, in advance of your provision of aircraft. When we say that squadrons have been formed but are not fully equipped with aircraft what we intend the House to understand is that the process of the formation of the squadrons is only partly completed. It is not a question of the creation of a paper organisation for the sake of appearance. We should never be guilty of such deceit as that.
    As regards the question of hutments raised by the hon. Member for Berwick (Sir H. Seely), I can assure him that we would much rather have provided the men with the kind of quarters which they deserve, but at the same time I must say that these hutments are much better than the hutments of the War period. They are constructed on better lines and are draught-proof to an extent which one does not usually associate with hutments and they will not be used a day longer than is necessary. They represent merely one indication of the speed with which we are being forced to carry out this programme. There is one other subject to which I must refer, and that is civil aviation. My hon. Friend the Member for Frome (Mrs. Tate) made some rather sweeping statements in reference to this matter. I am informed that flying boats on the Empire Air routes are at least equal to, if they are not better than any others. The hon. Lady said they were a laughing stock.
    Mrs. Tate: I said that only five had been completed out of the 28 which were promised.
    Sir T. Inskip: I am told that the number is nine. At any rate, I think the hon. Lady did make some rather sweeping statements in disparagement of British aircraft which were not, I believe, justified. The right hon. and gallant Member for Ripon (Major Hills) made an im-
    portant reference to the question of safety. I think everybody will admit that as far as safety is concerned our British airlines can compare with any others. As regards the railway companies, I am sure the right hon. Gentleman opposite will be glad to know that after the last Debate negotiations were taken up with the railway companies upon this question in the hope of reaching a satisfactory decision. I am speaking perhaps without my book on this question, but I take it upon myself to say that the House would not be content with the state of things described by the right hon. Gentleman, and I believe it would be in accordance with the wishes of Members in all parts of the House that arrangements should be made which would not operate to the prejudice of our British air lines.
    The hon. Lady the Member for Frome also referred to the South Atlantic service. The Government felt unable, after full consideration, to accept any of the proposals submitted for that service, but it was decided to encourage an experimental service to West Africa. The parties concerned have been seen and the financial considerations involved have been thoroughly considered. Sir Warren Fisher's Committee recommended that British Airways should be selected to carry out the progressive development of the service. Subject to satisfactory terms being agreed to, the Government have accepted the selection of British Airways Limited as the company to operate this proposed experimental service with a view to developing ultimately a South American service. I do not think there are any other points on which I need detain the House. I hope that all our discussions upon this vital question, so much affecting not only the pockets of the people but the safety of the country, will be conducted in the same spirit as that shown in the speech of the right hon. Gentleman opposite, whom I most sincerely thank for his contribution.
    Question put, "That mom 'stand part of the Resolution."
    The House divided: Ayes, 202; Noes, 106.
    Ordered, That the Resolutions which upon the 18th day of March were reported from the Committee of Supply, and which were then agreed to by the House, be now read:
    "That 112,000 Officers, Seamen, Boys, and Royal Marines be employed for the Sea Service, together with 895 for the Royal Marine Police, borne on the books of His Majesty's Ships, at the Royal Marine Divisions, and at Royal Air Force Establishments for the year ending on the 31st day of March, 1938."
    "That a number of Land Forces, not exceeding 168,900, all ranks, be maintained for the Service of the United Kingdom at Home and abroad, exclusive of India and Burma, during the year ending on the 31st day of March, 1938."
    Ordered, That leave be given to bring in a Bill to provide, during twelve months, for the Discipline and Regulation of the Army and Air Force; and that Mr. Duff Cooper, Sir Samuel Hoare, Sir Philip Sassoon and Sir Victor Warrender do prepare and bring it in.

    ARMY AND AIR FORCE (ANNUAL) BILL,
    "to provide, during 12 months, for the Discipline and Regulation of the Army and Air Force," presented accordingly, and read the First time; to be read a Second time upon Wednesday next, and to be printed.—[Bill 105.]
    SUPPLY [15TH MARCH].
    Resolutions reported,
    SUPPLY [15TH MARCH].

      AIR ESTIMATES, 1937.
      1. "That a sum, not exceeding £8,466,000, be granted to His Majesty, to defray the Ex-
      2656
      pense of the Pay, etc., of the Royal Air Force at Home and abroad, exclusive of those serving in India, which will come in course of payment during the year ending on the 31st day of March, 1938."
      2. "That a sum, not exceeding £4,000,000, be granted to His Majesty, to defray the Expense of Works, Buildings and Lands, including Civilian Staff and other Charges connected therewith, which will come in course of payment during the year ending on the 31st day of March, 1938."
      3. "That a sum, not exceeding £31,542,000, be granted to His Majesty, to defray the Expense of Technical and Warlike Stores (including Experimental and Research Services), which will come in course of payment during the year ending on the 31st day of March, 1938."
      4. "That a sum, not exceeding £2,315,000, be granted to His Majesty, to defray the Expense of Civil Aviation, which will come in course of payment during the year ending on the 31st day of March, 1938."

      AIR SUPPLEMENTARY ESTIMATE, 1936.
      5. "That a Supplementary sum, not exceeding £100, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1937, for expenditure not provided for in the Air Estimates for the year."

IMPORT DUTIES (IMPORT DUTIES ACT, 1932).
Order read for resuming Debate on Question [19th March],
"That the Additional Import Duties (No. 4) Order, 1937, dated the third day of March, 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 third day of March, nineteen hundred and thirty-seven, be approved."
Question again proposed.
11.44 p.m.
Mr. A. V. Alexander: I was speaking on this matter on Friday last when the time expired, and I pressed upon the Government that we ought to have reasonable time for debating the Order, which is of especial importance to working-class users of this commodity. It seems to be very inappropriate that during this excessively wet season we should be putting a special tax on one of these small articles left to the working-class people in order to protect themselves in inclement weather. As the previous Debate has occupied so long and the hour is late, I suggest to the Minister, and to my hon. Friends, if they will agree, that, instead of repeating the arguments that could be repeated on this question, we should agree to oppose and divide on this Order as early as possible, and I shall ask my hon. Friends to vote against it.
Question put.
The House divided: Ayes, 128; Noes, 74.

Division No. 123.]

AYES.

[8.0 p.m.

Acland, Rt. Hon. Sir F. Dyke

Anstruther-Gray, W. J.

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

Acland, R. T. D. (Barnstaple)

Apsley, Lord

Barclay-Harvey, Sir C. M.

Adams, S. V. T. (Leeds, W.)

Aske, Sir R. W.

Beaumont, Hon. R. E. B. (Portsm'h)

Agnew, Lieut.-Comdr. P. G.

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

Birchall, Sir J. O.

Albery, Sir Irving

Atholl, Duchess of

Boulton, W. W.

Bowater, Col. Sir T. Vansittart

Herbert, Major J. A. (Monmouth)

Procter, Major H. A.

Bower, Comdr. R. T.

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

Ramsbotham, H.

Bowyer, Capt. Sir G. E. W.

Holmes, J. S.

Rankin, Sir R.

Bracken, B.

Hope, Captain Hon. A. O. J.

Reed, A. C. (Exeter)

Brass, Sir W.

Hopkinson, A.

Reid, Sir D. D. (Down)

Briscoe, Capt. R. G.

Horsbrugh, Florence

Reid, W. Allan (Derby)

Brooklebank, C. E. R.

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

Remer, J. R.

Brown, Col. D. C. (Hexham)

Hulbert, N. J.

Rickards, G. W. (Skipton)

Brown, Rt. Hon. E. (Leith)

Hume, Sir G. H.

Roberts, W. (Cumberland, N.)

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

Hunter, T.

Robinson, J. R. (Blackpool)

Bull, B. B.

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

Ropner, Colonel L.

Burgin, Dr. E. L.

James, Wing-Commander A. W. H.

Ross Taylor, W. (Woodbridge)

Campbell, Sir E. T.

Jones, L. (Swansea W.)

Rowlands, G.

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

Kerr, Colonel C. I. (Montrose)

Ruggles-Brise, Colonel Sir E. A.

Cazalet, Thelma (Islington, E.)

Kerr, H. W. (Oldham)

Runciman, Rt. Hon. W.

Channon, H.

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

Russell, A. West (Tynemouth)

Chapman, Sir S. (Edinburgh, S.)

Lamb, Sir J. Q.

Salt, E. W.

Clarke, F. E. (Dartford)

Latham, Sir P.

Samuel, M. R. A.

Clarry, Sir Reginald

Law, Sir A. J. (High Peak)

Sanderson, Sir F. B.

Cobb, Captain E. C. (Preston)

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

Sassoon, Rt. Hon. Sir P.

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

Leckie, J. A.

Seely, Sir H. M.

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

Leech, Dr. J. W.

Shakespeare, G. H.

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

Leighton, Major B. E. P.

Shaw, Captain W. T. (Forfar)

Croft, Brig.-Gen. Sir H. Page

Lennox-Boyd, A. T. L.

Shepperson, Sir E. W.

Crooke, J. S.

Levy, T.

Simmonds, O. E.

Croom-Johnson, R. P.

Liddall, W. S.

Smiles, Lieut.-Colonel Sir W. D.

Crossley, A. C.

Lovat-Fraser, J. A.

Somervell. Sir D. B. (Crewe)

Crowder, J. F. E.

Lyons, A. M.

Somerville, A. A. (Windsor)

Cruddas, Col. B.

Mabane, W. (Huddersfield)

Southby, Commander A. R. J.

Davies, C. (Montgomery)

McCorquodale, M. S.

Spears, Brigadier-General E. L.

Davies, Major Sir G. F. (Yeovil)

MacDonald, Rt. Hon. M. (Ross)

Stewart, J. Henderson (Fife, E.)

Dawson, Sir P.

MacDonald, Sir Murdoch (Inverness)

Stourton, Major Hon. J. J.

Denman, Hon. R. D.

Macdonald, Capt. P. (Isle of Wight)

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

Doland, G. F.

McKie, J. H.

Strauss, H. G. (Norwich)

Duckworth, Arthur (Shrewsbury)

Maclay, Hon. J. P.

Stuart, Hon. J. (Moray and Nairn)

Dugdale, Major T. L.

Magnay, T.

Sueter, Rear-Admiral Sir M. F.

Duggan, H. J.

Makins, Brig.-Gen. E.

Sutcliffe, H.

Eastwood, J. F.

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

Tasker, Sir R. I.

Ellis, Sir G.

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

Tate, Mavis C.

Elliston, Capt. G. S.

Mayhew, Lt.-Col. J.

Train, Sir J.

Emmott, C. E. G. C.

Meller, Sir R. J. (Mitcham)

Tryon, Major Rt. Hon. G. C.

Entwistle, Sir C. F.

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

Tufnell, Lieut.-Commander R. L.

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

Mills, Sir F. (Leyton, E.)

Wallace, Capt. Rt. Hon. Euan

Evans, D. O. (Cardigan)

Mills, Major J. D. (New Forest)

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

Everard, W. L.

Mitcheson, Sir G. G.

Ward, Irene M. B. (Wallsend)

Fleming, E. L.

Morrie, O. T. (Cardiff, E.)

Wardlaw-Milne, Sir J. S.

Foot, D. M.

Morris-Jones, Sir Henry

Warrender, Sir V.

Fox, Sir G. W. G.

Morrison, G. A. (Soottish Univ's.)

Waterhouse, Captain C.

Furness, S. N.

Neven-Spence, Major B. H. H.

Wedderburn, H. J. S.

Gluckstein, L. H.

O'Connor, Sir Terenee J.

White, H. Graham

Glyn, Major Sir R. G. C.

O'Neill, Major Rt. Hon. Sir Hugh

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

Grattan-Doyle, Sir N.

Orr-Ewing, I. L.

Williams, C. (Torquay)

Gretton, Cel. Rt. Hon. J.

Owen, Major G.

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

Gridley, Sir A. B.

Palmer, G. E. H.

Withers, Sir J. J.

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

Patrick, C. M.

Womersley, Sir W. J.

Gritten, W. G. Howard

Peake, O.

Wood, Rt. Hon. Sir Kingsley

Gunston, Capt. D. W.

Peat, C. U.

Wragg, H.

Guy, J. C. M.

Penny, Sir G.

Wright, Squadron-Leader J. A. C.

Harbord, A.

Percy, Rt. Hon. Lord E.

Young, A. S. L. (Partick)

Harris, Sir P. A.

Perkins, W. R. D.

Heilgers, Captain F. F. A.

Petherick, M.

TELLERS FOR THE AYES.—

Heneage, Lieut.-Colonel A. P.

Pickthorn, K. W. M.

Lieut.-Colonel Llewellin and

Hepburn, P. G. T. Buchan-

Pilkington, R.

Mr. Cross.

Hepworth, J.

Ponsonby, Col. C. E.

NOES.

Adams, D. (Consett)

Charleton, H. C.

Griffiths, J. (Llanelly)

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

Chater, D.

Groves, T. E.

Adamson, W. M.

Cluse, W. S.

Hall, G. H. (Aberdare)

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

Dagger G.

Hall, J. H. (Whitechapel)

Anderson, F. (Whitehaven)

Davies, R. J. (Westhoughton)

Hardie, G. D.

Banfield, J. W.

Davies, S. O. (Merthyr)

Henderson, J. (Ardwick)

Barnes, A. J.

Day, H.

Henderson, T. (Tradeston)

Barr, J.

Dobbie, W.

Hollins, A.

Batey, J.

Dunn, E. (Rother Valley)

Johnston, Rt. Hon. T.

Bellenger, F. J.

Ede, J. C.

Jones, J. J. (Silvertown)

Benson, G.

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

Kelly, W. T.

Benn, Rt. Hon. W. W.

Gardner, B. W.

Lathan, G.

Bromfield, W.

Garro Jones, G. M.

Lawson, J. J.

Brown, C. (Mansfield)

Gibson, R. (Greenock)

Leach, W.

Burke, W. A.

Green, W. H. (Deptford)

Lee, F.

Cape, T.

Grenfell, D. R.

Leonard, W.

Cassells, T.

Griffiths, G. A. (Hemsworth)

Leslie, J. R.

2654

2655

Logan, D. G.

Pathick-Lawrence, F. W.

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

Lunn, W.

Potts, J.

Taylor, R. J. (Morpeth)

Macdonald, G. (Ince)

Ridley, G.

Thorne, W.

McGhee, H. G.

Riley, B.

Thurtle, E.

Maclean, N.

Ritson, J.

Tinker, J. J.

Marshall, F.

Robinson, W. A. (St. Helens)

Viant, S. P.

Mathers, G.

Rowson, G.

Walkden, A. G.

Maxtor, J.

Salter, Dr. A. (Bermondsey)

Walker, J.

Messer, F.

Sanders, W. S.

Watkins, F. C.

Milner, Major J.

Sexton, T. M.

Watson, W. McL.

Montague, F.

Shinwell, E.

Welsh, J. C.

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

Short, A.

Wilkinson, Ellen

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

Silverman, S. S.

Williams, D. (Swansea, E.)

Muff, G.

Simpson, F. B.

Williams, E. J. (Ogmore)

Noel-Baker, P. J.

Smith, Ben (Rotherhithe)

Williams, T. (Don Valley)

Oliver, G. H.

Smith, E. (Stoke)

Windsor, W. (Hull, C.)

Paling, W.

Smith, Rt. Hon. H. B. Lees- (K'ly)

Young, Sir R. (Newton)

Parker, J.

Smith, T. (Normanton)

Parkinson, J. A.

Stephen, C.

TELLERS FOR THE NOES.—

Mr. Whiteley and Mr. John.

Question put, and agreed to.

Division No. 124.]

AYES.

[11.45 p.m.

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

Emmott, C. E. G. C.

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

Agnew, Lieut.-Comdr. P. G.

Entwistle, Sir C. F.

Neven-Spence, Major B. H. H.

Albery, Sir Irving

Everard, W. L.

O'Connor, Sir Terence J.

Aske, Sir R. W.

Fleming, E. L.

Orr-Ewing, I. L.

Assheton, R.

Fox, Sir G. W. G.

Peake, O.

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

Fremantle, Sir F. E.

Peat, C. U.

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

Fyfe, D. P. M.

Penny, Sir G.

Barclay-Harvey, Sir C. M.

Grant-Ferris, R.

Perkins, W. R. D.

Beaumont, Hon. R. E. B. (Portsm'h)

Gretton, Col. Rt. Hon. J.

Procter, Major H. A.

Bennett, Sir E. N.

Gridley, Sir A. B.

Ramsbotham, H.

Bernays, R. H.

Grimston, R. V.

Ramsden, Sir E.

Boulton, W. W.

Gritten, W. G. Howard

Rankin, Sir R.

Bower, Comdr. R. T.

Guest, Hon. I. (Brecon and Radnor)

Reid, W. Allan (Derby)

Bowyer, Capt. Sir G. E. W.

Guest, Maj. Hon. O. (C'mb'rw'll, N.W.)

Remer, J. R.

Brass, Sir W.

Guy, J. C. M.

Rickards, G. W. (Skipton)

Briscoe, Capt. R. G.

Hanbury, Sir C.

Ropner, Colonel L.

Brocklebank, C. E. R.

Harbord, A.

Ross Taylor, W. (Woodbridge)

Bull, B. B.

Heneage, Lieut.-Colonel A. P.

Rowlands, G.

Burgin, Dr. E. L.

Hepburn, P. G. T. Buchan

Salmon, Sir I.

Butler, R. A.

Hepworth, J.

Salt, E. W.

Campbell, Sir E. T.

Holmes, J. S.

Samuel, M. R. A.

Castlereagh, Viscount

Hope, Captain Hon. A. O. J.

Shepperson, Sir E. W.

Channon, H.

Horsbrugh, Florence

Somervell, Sir D. B. (Crewe)

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

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

Southby, Commander A. R. J.

Clarry, Sir Reginald

Hunter, T.

Stewart, J. Henderson (Fife, E.)

Cobb, Captain E. C. (Preston)

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

Strauss, H. G. (Norwich)

Colman, N. C. D.

Jones, L. (Swansea W.)

Train, Sir J.

Crooke, J. S.

Kerr, Colonel C. I. (Montrose)

Tufnell, Lieut.-Commander R. L.

Crookshank, Capt. H. F. C.

Leckie, J. A.

Wallace, Capt. Rt. Hon. Euan

Cross, R. H.

Leech, Dr. J. W.

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

Crowder, J. F. E.

Leighton, Major B. E. P.

Ward, Irene M. B. (Wallsend)

Cruddas, Col. B.

Levy, T.

Warrender, Sir V.

Culverwell, C. T.

Liddall, W. S.

Waterhouse, Captain C.

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

Llewellin, Lieut.-Col. J. J.

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

Davies, Major Sir G. F. (Yeovil)

Lyons, A. M.

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

Dawson, Sir P.

Mabane, W. (Huddersfield)

Winterton, Rt. Hon. Earl

Duckworth, Arthur (Shrewsbury)

MacDonald, Rt. Hon. M. (Ross)

Womersley, Sir W. J.

Dugdale, Major T. L.

Macdonald, Capt. P. (Isle of Wight)

Wood, Rt. Hon. Sir Kingsley

Duggan, H. J.

Magnay, T.

Wragg, H.

Duncan, J. A. L.

Makins, Brig.-Gen. E.

Wright, Squadron-Leader J. A. C.

Ellis, Sir G.

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

Young, A. S. L. (Partick)

Elliston, Capt. G. S.

Mayhew, Lt.-Col. J.

Elmley, Visoount

Mills, Major J. D. (New Forest)

TELLERS FOR THE AYES.—

Emery, J. F.

Morrison, G. A. (Scottish Univ's.)

Mr. James Stuart and Sir Henry

Morris-Jones.

NOES.

Acland, Rt. Hon. Sir F. Dyke

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

Riley, B.

Acland, R. T. D. (Barnstaple)

Griffiths, J. (Llanelly)

Roberts, W. (Cumberland, N.)

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

Hall, G. H. (Aberdare)

Robinson, W. A. (St. Helens)

Adamson, W. M.

Hall, J. H. (Whitechapel)

Seely, Sir H. M.

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

Harris, Sir P. A.

Sexton, T. M.

Anderson, F. (Whitehaven)

Henderson, J. (Ardwick)

Silverman, S. S.

Attlee, Rt. Hon. C. R.

Hollins, A.

Simpson, F. B.

Banfield, J. W.

Jenkins, A. (Pontypool)

Smith, Ben (Rotherhithe)

Barnes, A. J.

Jenkins, Sir W. (Neath)

Smith, E. (Stoke)

Barr, J.

Johnston, Rt. Hon. T.

Smith, T. (Normanton)

Bellenger, F. J.

Jones, J. J. (Silvertown)

Sorensen, R. W.

Benson, G.

Kelly, W. T.

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

Bramfield, W.

Lathan, G.

Taylor, R. J. (Morpeth)

Burke, W. A.

Lawson, J J.

Tinker, J. J.

Cassells, T.

Logan, D. G.

Watson, W. McL.

Charleton, H. C.

McEntee, V. La T.

Welsh, J. C.

Daggar, G.

McGhee, H. G.

Wilkinson, Ellen

Day, H.

Mathers, G.

Williams, E. J. (Ogmore)

Dobbie, W.

Messer, F.

Williams, T. (Don Valley)

Dunn, E. (Rother Valley)

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

Windsor, W. (Hull, C.)

Ede, J. C.

Paling, W.

Woods, G. S. (Finsbury)

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

Potts, J.

Young, Sir R. (Newton)

Foot, D. M.

Price, M. P.

Gardner, B. W.

Pritt, D. N.

TELLERS FOR THE NOES.—

Garro Jones, G. M.

Quibell, D. J. K.

Mr. Whiteley and Mr. John.

Green, W. H. (Deptford)

Ridley, G.

WAYS AND MEANS.
REPORT [17TH MARCH].
Resolutions reported,

1. "That towards making good the Supply granted to His Majesty for the Service of the year ended on the 31st day of March, 1936, the sum of £32,906 4s. 10d. be granted out of the Consolidated Fund of the United Kingdom"

2. "That towards making good the Supply granted to His Majesty for the Service of the year ending on the 31st day of March, 1937, the sum of £4,391,947 be granted out of the Consolidated Fund of the United Kingdom."

3. "That towards making good the Supply granted to His Majesty for the Service of the

2657
year ending on the 31st day of March, 1938, the sum of £284,370,60o be granted out of the Consolidated Fund of the United Kingdom."

Bill ordered to be brought in upon the said Resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, and Lieut.-Colonel Colville.

CONSOLIDATED FUND (No. 2) BILL,
"to apply certain sums out of the Consolidated Fund to the Service of the years ending on the thirty-first day of March, one thousand nine hundred and thirty-six, one thousand nine hundred and thirty-seven, and one thousand nine hundred and thirty-eight," presented accordingly, and read the First time; to be read a Second time To-morrow, and to be printed. [Bill 106.]

IMPORT DUTIES (FINANCE ACT, 1936, AND IMPORT DUTIES ACT, 1932).
8.13 p.m.
The President of the Board of Trade (Mr. Runciman): I beg to move,
"That the Additional Import Duties (No. 3) Order, 1937, dated the second day of March, nineteen hundred and thirty-seven, made by the Treasury under the Finance Act, 1936, and the Import Duties Act, 1932, a copy of which was presented to this House on the said second day of March, nineteen hundred and thirty-seven, be approved."
The subject of the duties imposed on iron and steel is by no means a new subject of discussion in this House. There are few industries except agriculture which have received more attention in this House than iron and steel, and for the good reason that the prosperity of that trade is a matter of vital importance, not only to the industries which are large users, but to the country as a whole. The Order which I am moving now is made under Section 6 of the Finance Act of last year, which makes provision for the licensing of iron and steel imports. Before we were prepared to give Government support to this proposal, we had to be fully satisfied that it was in the interests of industry as a whole and not merely of the iron and steel industry itself. That satisfaction was given to us in June, and the proposal was fully discussed in June of last year. The White Paper which covers the important points of this arrangement is Command Paper No. 5201, and that
2658
paper still remains the document on which our iron and steel legislation is based.
In November last the licensing system was brought into operation. The agreement which had been entered into between the steel producers of this country and the Continental cartel, and which was of great advantage to us abroad as well as at home, could not be preserved unless a licensing system was an integral part of the machinery which we wished to operate. The duty on licensed imports was fixed at 20 per cent. ad valorem, in accordance with the recommendation of the Import Duties Advisory Committee. I think it right to say at this stage that there has been no step taken by us from the first without full examination of the conditions of the industry. The present Order provides for the reduction of the duty from 20 per cent. to 10 per cent. ad valorem, that is to say, these various iron and steel goods are to be charged only with the general ad valorem duty. The reduction, which is to facilitate the import of steel from the Continental cartel, is essential if we are to keep up our necessary supplies, and I am glad to say that it meets with the complete support and cooperation of those who are responsible on the Continent for the operating of the cartel.
During the last six months world demand for steel has been prodigious. No one could have anticipated a year ago that there would have been such a rapid and complete recovery in this industry, and still less could they have prophesied that there would have been such a hot demand for iron and steel goods, as well as for iron and steel raw material within such a very short period of time. The heavy industries are, of course, dependent upon supplies which are produced here and on a large quantity of imported iron and steel. We have never been able to do without those supplies, and in so far as we are able to foresee the requirements of the next few years, we cannot expect to make our iron and steel industry self-supporting independently of the arrangements which are made with the cartel. I know that there are a good many Members who are uncomfortable about any engagements which involve an agreement with the cartel, but I would point out that not only is an agreement an essential part

2659
of the iron and steel organisation in order that in normal times there should not be an undue flow of iron and steel over the frontiers of this country and of those who are in the group, but also that there should be some assurance given to those of our own people who are engaged in foreign trade that a large, steady and stable section of that trade should be constantly at their disposal.
We have, therefore, been only too ready to do what was in our power to provide for complete co-operation, and having observed the progress of events in the iron and steel trade with a critical eye during the last three or four years, I have come firmly to the conclusion that working in co-operation with the cartel was essential for our prosperity, and that without it it would have been impossible for us to have looked forward to the future with any sense of security. The fact is that the time will come when the supply will once more overtake the demand. When that time comes, our foreign trade will certainly be endangered. I have been doing my best in my personal capacity and officially to commend to those who are in control of this great industry the necessity for looking ahead. It is all very well to be taking orders now with great rapidity and finding them profitable, but unless we are able to look forward to a large extension of our foreign trade in the coming years, it means that we shall slip back into the condition of depression which we have experienced in the past. It is with the desire of helping that foreign trade that I have been so glad to commend the agreement entered into with the Continental cartel. We are assured under that agreement of a steady percentage of foreign trade which, when the present boom is over and the present emergency has been swept away, will be the essential backbone of that important industry.
I would like to amplify these general remarks by giving some particulars of the arrears of the importations into this country which are accentuating the shortage. At the end of the year the deliveries of cartel products outstanding under the agreement amounted to no less than 81,000 tons. This is a very remarkable amount, because one can well recognise that ironmasters of the Continent were just as anxious to sell in this country as we were ready to buy. Eighty-one
2660
thousand tons arrears is the very serious drawback under which British industry, the users of iron and steel, are at present labouring. There were also outstanding balances of 48,000 tons under the arrangement made with the Federation for the supply of additional semi-manufactured goods. The total arrears amounted to approximately two months' deliveries. During the current quarter no deliveries have yet been made in respect of the quarter's quota or excess purchases, that is to say, no less than 131,000 tons and 70,000 tons respectively. During January and February the total cartel deliveries were approximately 78,000 tons against the arrears I quoted a moment ago.
Arrears of these dimensions place us under great disabilities, and I have no doubt that we shall be hearing on every hand during the next few months of the shortage of iron and steel which enters into almost every manufacturing process. The output of the establishments that are at present smelting, rolling and forging, is being strained to the uttermost. I hear of the risk of shipbuilding orders being delayed owing to absence of raw material. Again and again there are brought to my notice instances of ships which have come t this country to be repaired and are unable to proceed on their voyages. The lengthened delays are a dead loss to the shipping industry. With these great disadvantages overhanging the heavy industries and with the iron and steel trade suffering as it has been from violent fluctuations, and, at one time in this country, running the risk of being wiped out to a large extent, we had to turn our attention to the means by which we could, by imposing duties, give artificial encouragement to the iron-masters and the iron companies.
Let me point out how rapidly and, if I may venture to say so, how effectively we dealt with the question of import duties on iron and steel goods. The first Order we passed in this House was in 1932; it came into force about April, I think. Under it we imposed a duty of 33⅓ per cent. for three months on the principal semi-manufactured iron and steel products. In addition to this, duties, mostly of 20 per cent. and not specifically temporary, were imposed on iron and steel products of a more highly manufactured kind, like pipes and wire. Two months later we varied the duties imposed under the first Order, and the

2661
principal change was the imposition of a duty of 33⅓ per cent. on pig iron. We did that with the deliberate object of encouraging the production of pig iron in this country. Every encouragement had failed, and we were not prepared to stand still and do nothing, and, therefore, we gave this very considerable assistance. We extended that first Order twice, and then we came to the Order of 1933, which provided for certain concessions which had to be made under the trade agreements with Norway and Sweden. These concessions in no way interfered with the activity and the prosperity of the iron and steel industry.
In order to give time for reorganising the industry it was necessary that the duties should be imposed over a longer period. Reorganisation of the industry we believed to be absolutely essential, and we claimed the right to impose on the industry schemes for reorganisation as long as we gave them the artificial assistance I have just recounted. There was correspondence on this subject between the Board of Trade, the Treasury and the Iron and Steel Trades Federation which led up to the point that we were to remove the time limit upon the duration of the duties which was imposed under the Order of 1932. Early in 1935 we had raised the duty on certain semi-manufactured iron and steel products to an average of about 50 per cent. This was, of course, a stunning blow to some of those who had been enjoying the lower rates of duty and whose memory went back to the days when the iron and steel trade was entirely free from this imposition of reorganisation or artificial assistance. In order to encourage the Continental steel cartel to come to an agreement it was necessary that our iron masters conducting the negotiations should be armed with this very formidable weapon, and I am very glad to say that after prolonged negotiations on the Continent, and, I have no doubt, with the assistance of this weapon, they were able to arrive at an agreement which has been working satisfactorily ever since.
There have been one or two changes of an immaterial character made at various stages, but it was not until August, 1935, that the permanent agreement with the cartel was incorporated in the Orders under which we were working. Thus having gained our object we reduced the duty to 20 per cent. until
2662
7th January, 1936. We continued the reduction of the duty for a further period, and, finally, in November of last year, we set up the two-tier tariff for iron and steel products covered by the agreement. Where such products were accompanied by a valid quota certificate and the certificate of origin a duty of 20 per cent. was imposed; much higher rates of duty were imposed on those who were not in possession of these franking documents.
Mr. T. Williams: What were the higher rates of duty beyond the quota?
Mr. Runciman: On the whole they were on the 50 per cent. scale, and they remain unaffected by the present Order now before the House. If the House will turn to the White Paper which we are now asking the House to endorse, Command Paper 5389, they will see that as regards pig iron the present duty on pig iron is 33⅓ per cent., and that rate has been in force since June, 1932. The present level of world prices makes it unprofitable to import pig iron from foreign sources, and the committee say:
"We are satisfied that the steps being taken by the Federation to ensure that so far as possible supplies are adequate and that prices are not unreasonably increased will be facilitated by the removal of the present duty on pig iron."
That duty has been wiped out and this move will give that for which my hon. Friend below the Gangway has, I know, been yearning for a long time past—it will give him and his friends access to raw materials; otherwise they would be heavily handicapped by the import duties. I hope that my hon. Friend will be as' ready to commend this step as he has been to criticise others in the opposite direction. So much for pig iron. With regard to steel, the committee's earlier recommendation was that consignments of certain iron and steel products, when accompanied by certificates and so on in accordance with the provisions of the Finance Act of 1936, should be charged at a reduced rate of 20 per cent. It is proposed under this Order to wipe out the additional duties altogether, and to leave nothing but the 10 per cent. duty to be imposed upon these imported articles. That, shortly, is the proposal before the House. We have gone from step to step, stage by stage, through these various encouragements given to the industry. The result has been most remarkable,

2663
and when my right hon. Friend the Member for Hillsborough (Mr. Alexander) speaks in the course of this Debate—
Mr. A. V. Alexander indicated dissent.
Mr. Runciman: I should have liked him to do so, because I know of no city which has benefited more from our iron and steel policy than Sheffield. Wherever you inquire about the activity which now prevails everywhere in the country, north, south, east and west, you are bound to come back to the fiscal system under which the manufacturers have been encouraged to conduct their operations during the past two years as the main source of that prosperity. At the same time that we wish to see the iron and steel trade prosperous, we are anxious that no undue burden should be placed upon the users of its important commodities, and it is because we have had this problem carefully scrutinised and examined by the Import Duties Advisory Committee—and in no case have we taken any steps without their advice and their recommendation—that I commend to the House the Order which is now before us. I trust that its results will come up to the expectations we have had in respect not only of the production of these materials, but in the provision of the raw goods for our consuming industries.
8.35 p.m.
Mr. T. Williams: After the speech made by the right hon. Gentleman, any doubt entertained by any hon. Member about the assistance given to the steel industry will certainly have been removed. Throughout his speech the right hon. Gentleman persisted in repeating "artificial assistance." I am not sure that I should characterise as artificial assistance what has been done for the steel industry, in the sense in which artificial assistance has been given to other industries. After all the duties which have been put on between 1932 and 1935, ranging from 10 per cent. to 50 per cent., it would be remarkable if the steel industry had not re-organised itself to some extent and made itself capable of meeting any form of world competition. We ought to express our thanks to my hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence), who moved the Amendment to Section 6 of the Finance Bill of 1936 which made possible this discussion to-day. This comparatively early
2664
review will enable the House to take a retrospect and to examine exactly what has been done during the last few months.
It is only seven months since this new, double-decker tariff edifice was erected, and now we are pulling down a part of it. Wherever a duty is being decreased it is in the proper order of things that we should support the Minister who dares, in a House of this description, to ask for the decrease. I recall the statement made by the Parliamentary Secretary in the Debate in June, 1936, when he commenced his speech on Clause 6 by saying:
"What would be the position of this country … if we had not a healthy iron and steel industry?"—[OFFICIAL REPORT, 30th June, 1936; col. 352, Vol. 354.]
I invite the House to examine the question from that point of view. I clearly recognise the close relationship between steel and coal. With a healthy steel industry, coal cannot fail to enjoy some of the health and prosperity. Our experience during the past few months, and perhaps within the past few years, has prompted a long series of questions to the Board of Trade and a few criticisms, many of which could be revived, but one cannot enter into a full discussion of the subject to-day. Something can be said about the administration of the past few months until, as the right hon. Gentleman has said, the position has been reached where it is no longer profitable to import pig iron into this country.
Since 1932 there has been a duty of 33⅓ per cent. on pig iron. World output has been increasingly enormously since 1931 to the present moment and so has consumption of steel. Taking the seven major steel-producing countries of the world, the output of pig iron last year was up by 45,000,000 tons. Even comparing 1936 with I938 reveals an increase of output of pig iron of at least 15,000,000 tons. As fast as pig iron production has increased, so has its consumption for steel making. That fact is not peculiar to the last four or five months but is a process which has gone on during the last three, four or five years. I cannot understand why the Board of Trade failed to see that the demand for pig iron throughout the world, would, sooner or later, leave this country hopelessly short, if the duty of 33⅓ per cent. remained. I rather feel that there have been faulty calculations by the Board of Trade, the Import Duties Advisory Committee, the

2665
steel trade, or by a combination of those who had it in their hands to lift this duty just at the moment when they felt the need had arisen for cheaper imported raw material, without which, as the President of the Board of Trade said a short time ago, the steel industry in this country would not remain healthy for very long.
The right hon. Gentleman stated that they had been keeping a critical eye upon the steel situation during the past three or four years. The situation confronting us to-day indicates that they have not been very critical in their examination of the situation or this duty of 33⅓ per cent. would not have remained on as long as it has done. After five years of slump there was bound, sooner or later, to be a world recovery. I understand that the Board of Trade are the ears and the eyes of all trade movements in all parts of the world; they should therefore have known exactly what the developments were likely to be. It cannot, in any case, be argued that the Board of Trade are not aware of the Government's rearmament programme. As a result of what has been happening in Germany and Italy, and in all European countries, the consumption of steel has been increasing at an enormous rate for a long period. Why has the removal of this heavy duty been left until this country was beginning to suffer from a shortage of steel? What was the cause of the long delay? If it is unprofitable any longer to import pig iron, the chances are that it was unprofitable many months ago, and that that is why the industry has been faced with a shortage of raw material for a long time.
I am of the opinion that the Board of Trade, or the Import Duties Advisory Committee, or the Iron and Steel Federation, or a combination of them, have tended to let the country down. The right hon. Gentleman now states that the Order is designed to reduce the additional duty on cartel licence quota steel. Therefore, from the date of the operation of the Order, on all the steel imported into this country through the agency of the cartel 10 per cent. will be paid. What will happen to non-cartel steel that may he imported? I understand that the duties to-day vary from 50 per cent. as I he right hon. Gentleman said—
Mr. Runciman: I will answer that question at once. It is a negligible amount.
2666
I cannot remember what the exact figure is, but I should think it is not much more than 10,000 tons.
Mr. Williams: What will be the duty on non-cartel imports, assuming that there is any non-cartel imported steel?
Mr. Runciman: The various classes have, of course, various duties imposed upon them. Within the Empire there is free entry. That is a matter of very considerable moment. The total amount from the non-cartel countries, to which reference has been made, is somewhere in the region of 10,000 tons. It does not matter very much.
Mr. Williams: The point I was about to make was that, as a result of the arrangement embodied in Section 6 of the Finance Act of last year, on cartel steel imported into this country a duty of 20 per cent. would be paid, while non-cartel steel had to bear a duty varying between 33⅓ per cent. and 50 per cent., so that there was an advantage in favour of the cartel of anywhere between 13⅓ per cent. and 30 per cent. in the duty. If the world demand for steel is what we are asked to believe it is, then, obviously, if we put a duty of 50 per cent., or even 33⅓ per cent., on all steel imported except quota steel, the importation will be exceedingly small, because it will be unprofitable to import steel with such a heavy duty. In view of the experience of the past few months, when the quantity of steel imported at this high rate of duty has been so small, I would like to ask the right hon. Gentleman why, now that 10 per cent. is being taken off the quota imports, a similar reduction is not to be made on non-cartel imports, leaving the position exactly as it was under the Finance Act of last year? It seems to me that that is a point with which the Parliamentary Secretary might deal, because, if the shortage of steel is going to continue, and if the output in this country is not going to increase very materially—and I cannot regard that as a likely contingency after the increase that has taken place during the past 12 months—there is bound to be a shortage if demand continues at the present rate plus any excess demand that is likely to be made by the rearmament programme.
Section 6 of the Finance Act of last year made arrangements for a quota import of about 525,000 tons, presumably in 12

2667
months, whereas actually, during 1936, 1,500,000 tons were imported into this country, presumably consisting, with the exception of about 10,000 tons, of quota or cartel steel. If the Parliamentary Secretary has the actual figures, perhaps he will give them to us later, but according to the Board of Trade returns the imports of steel last year were slightly in excess of 1,500,000 tons, whereas the arrangement made in Section 6 of the Finance Act was for 525,000 tons, that being presumably the rock-bottom minimum which could be increased to any quantity. I am assuming, of course, that either these increased imports came in before the licensing system commenced or that the quota has been increased by the international cartel, but the fact that, whereas Section 6 made arrangements for only 525,000 tons, we imported last year 1,500,000 tons, and in 1929 2,800,000 tons, seems to indicate that we have been content to accept, both for purposes of import and export, a quantity considerably less than we really ought to have expected.
The Parliamentary Secretary said on 30th June, during the Debate to which I referred earlier, that not a single consumer should go short, but the President of the Board of Trade has told us that certain people are going short already. He himself told us, in reply to a question on 16th March, that a great many people would like to have more steel than they could get; and so would the Government, said the Parliamentary Secretary. It is no use the hon. Gentleman simply replying that it is due to an increase in world demand, because the world demand has been increasing since 1932, and each year has seen a bigger increase than the previous year. We are, therefore, obliged to conclude that there must have been some very bad calculations at the Board of Trade, or that they had no idea of what the world demand or the demand in this country was likely to be for a considerable time. Recently, the Minister for the Coordination of Defence appealed for a cessation of civil construction, so that the rearmament programme might not be retarded. We know already that several large consuming firms in the country have found during the last 12 or 14 weeks that their stocks were rapidly dwindling, and they have already been warned that they cannot expect the same quantity in 1937
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that they had in 1936. Wherever there happens, therefore, to be an increase in trade in those industries which consume steel, there are bound to be shortages in 1937, which might have been avoided if the calculations at the Board of Trade had been better in 1936 and perhaps in 1935.
I have the figures supplied by the President of the Board of Trade with reference to world output as applied to 17 different countries. While last year it could truly be said that the British steel industry did itself justice, inasmuch as its output reached a record—it has, I believe, increased by 1,800,000 tons over the previous year—for the 17 countries named the increase is no less than 22,000,000 tons, so that this increase in output does not apply only to Britain; it is world-wide; and, as fast as they can increase output, consuming industries, apparently, can consume it. We have been told that the Board of Trade and the Iron and Steel Federation were content to preserve their trade of 1934. It may be that, if we can preserve for this country, in good times and in bad, our 1934 trade, that will be a good stroke of business; I do not doubt it for a moment; but if we compare our trade in 1936, when world demand was at its absolute maximum, with our trade in 1929, it looks as though we were making progress rapidly backwards. In 1936 we exported 2,213,000 tons, but in 1929 we exported 4,379,000 tons.
I agree with the remark of the Parliamentary Secretary, when he was chiding the hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris), that 1929 is not the beginning and the end of the world. There have been very rapid changes backwards and forwards since 1929. But, when the world demand for this vital industrial commodity was reaching its maximum, we might have expected a wee bit more of European or world trade than we appear to be getting at this moment. To what extent this duty on imports of pig-iron or the duties on imported steel are to blame for the reduced import and export of steel products, I leave the President of the Board of Trade to declare. It certainly is the fact that all over the country there are murmurs of a shortage of steel. I would not make the declaration at this Box that an actual shortage has taken place in any particular department, but I am

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convinced that there are fears and doubts in the minds of steel consumers that, as the result of what has happened, the delay in removing these duties in the past, this year will see a shortage in all civil construction, and the shortage will be accelerated to the extent that steel may be required for the rearmament programme.
I am prepared to admit that the steel industry has, to some extent, responded to the call of the Board of Trade. It has been helped tremendously by the Board of Trade and it would have belied every trust reposed in it if it had not responded by increased output and the preservation of reasonable prices. It may be argued that the price has increased to small consumers. I have no figures that I can quote, and I will not make any statement that I shall have to withdraw. I have, however, seen the prices in 1936 as compared with 1935, 1934, 1933, and 1932, and the increase in price has not been really excessive. I would pay the Steel Federation that compliment. But wherever we establish an organisation such as the Iron and Steel Federation with its Continental connections, it seems to me that nothing short of eternal vigilance will safeguard the nation or consumers of steel.
Mr. H. G. Williams: They were not very vigilant last year.
Mr. T. Williams: The hon. Member and his party were in office last year and, if anything happened that was anti-national, he ought to have brought it to the notice of the Government.
Mr. H. G. Williams: I was the only Member who drew attention to this issue and everyone else had forgotten it.
Mr. T. Williams: I am prepared to give the hon. Member credit for having raised the question in Committee on Section 6 of the Finance Act in June but, although this lynx eye descended on this arrangement, he must remember that it was his own Government that established this double-decker tariff, which condoned the arrangement between the Iron and Steel Federation and the Continental cartel. While I recognise that it is a great departure from traditional Tory economics, I am not prepared at any time to declare that no change of any kind must ever take place. I was reared in an industry where individualism brought
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the industry almost to stark ruin. Not only did wages and profits reach vanishing point but even a Conservative Government had to give it £24,000,000 to tide it over a crisis. This scheme has been approved by the Government. It does not necessarily follow that we should oppose tooth and nail anything that they do but, wherever a combine of this magnitude is established, there needs to be some greater safeguard for the consumer and the nation as a whole than the Import Duties Committee, which apparently has full power to regulate prices in this respect.
The Parliamentary Secretary said that in the last analysis the President of the Board of Trade has absolute control. He has absolute control only to the extent that he can vary the duties. He has no control beyond that, as far as I can see. If this scheme is going to work effectively, is not going to exploit consumers and is not going to rob the nation of its legitimate share of world trade, some body other than the Import Duties Advisory Committee ought to be responsible for the fixation of prices. I would go a step further and say that not only do we need eternal vigilance where you have a huge profit-making combine set up—I cannot describe it in any other way. I do not say that any more disrespectfully about steel than I would about coal, agriculture or any industry or service. The people in the steel industry are in it for the purpose of the profit that they can make for themselves. The more profit they can make, the happier will they be. If there is one moment when we turn our eye to the West and they can increase their profit, they are bound to take advantage of the opportunity, and I would not blame them in existing circumstances. That is why I say we not only require eternal vigilance, but we want some permanent body in existence always to safeguard the interest of the consumers. Neither do we want to see, in the absence of any such arrangement as the one now in existence, a huge superfluity of factories such as we had during the War, when the big boom was on, and then a big slump to follow. I should prefer to see these booms and slumps ironed out by any international organisation that could be brought into existence, as far as that is a possibility.
The hon. Member for South Croydon (Mr. H. G. Williams) ought to know by now that the era of individualism is as

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dead as mutton. Competition has completely gone by the board. Steel is one unit—it is only a part of an international or European unit. Therefore, the whole of his theories have gone. So long as we have a great combination set up, such as the iron and steel combination, monopoly if you will, knowing that they are in business for the profit that they can derive therefrom and that service rendered to the nation is more or less secondary, we want always to be careful that it is not going to be a question of minimum output and maximum profit. We should prefer maximum output consistent with reasonable wages and reasonable conditions for all those connected with the industry, no boom and no slump but, so far as possible, stability within the industry and the riddance of these duties in the fluctuating situation which has characterised the industry for the past four or five years.
9.3 p.m.
Mr. Lewis Jones: I am exceedingly sorry that the Debate on this Order comes on late in the evening because, in spite of what the hon. Gentleman has said in his castigation, mixed with praise, of the steel trade, I, with as much knowledge of the steel trade as most people in the House, feel that we have a very good story to tell of the wonderful accomplishment of the trade during the last two or three years. The President of the Board of Trade has reviewed the operation of the various Orders affecting the industry since 1932. The increase in steel output throughout the world has been amazing in the last two or three years, and more amazing still is the increased output in our own country. The year 1936 gave us a record output; in fact, it was prodigious. The year 1929 was the peak year of production. In that year the British iron and steel industry produced an output of about 9,700,000 tons, but in 1932 our steel production had fallen to an output of 5,250,000 tons, and had it not been for the action of the Government by which they changed their national economic policy, I believe, frankly, that the decline in the industry from that day would have been progressive. The hon. Member for Don Valley (Mr. T. Williams) has talked of the lack of foresight of the steel trade and of the Department of the Board of Trade. Had it not been for the policy of the Govern-
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ment, more of our steel plants would have gone out of operation, and more of them would have been dismantled, and the industry itself would have been so reduced as to render the conduct of the industry well nigh impossible. The policy of the Government served two good purposes. In the first place, it reserved to the industry its domestic market, and at the same time provided for co-operation both at home and abroad.
The industry has been able during the last three or four years so to organise itself, both individually and commercially, as to be able to take lull advantage of the recovery which has taken place in all parts of the world. As a result of the reorganisation which the industry has developed in the last two or three years, an amazing change has taken place in its output. The output last year was 2i times the output of 1932, and 1936 showed an increase in steel output of 1,839,000 tons over and above that of 1935. If one takes the figures of the first few months of this year, or even of the month of February, one finds still further improvement. "The Economist" on Saturday said that the output of steel in this country showed a fall in February over January. As a matter of fact, it was bound to show a fall, because February has three fewer clays than January. The amazing thing is that the output for February of this year, or the average daily output, is a record daily output for the steel trade of this country, in spite of all the talk about the shortage of raw material.
I claim that the recovery of the iron and steel industry has only been possible, in spite of what the hon. Member for Don Valley said, by the great care that the people responsible for the direction of the industry have taken in making every possible provision within the limits of their resources during the period of depression to maintain and improve the productive efficiency of the industry generally. This may be gauged if one watches the relative changes that have taken place. In 1936 there was a 21 per cent. increase in output over 1929, and I would remind the hon. Member for Don Valley that this increase in output was experienced in other parts of the world, but no country in the world producing steel, apart from the newer countries of Russia and Japan, showed such an in-

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crease of steel output in 1936 over the peak year of 1929 as did Great Britain. It is true that Russia and Japan, countries which had not an old-established industry, showed a much bigger rate of progress, but of all the countries that had established industries, none of them showed such an improved output in 1936 over the peak year of 1929 as did Great Britain.
Much has been said about the lack of foresight in failing to prepare for the big increase in demand which has taken hold of the steel-producing countries. There has been an increasing demand the world over. Let us realise that it is, after all, a natural consequence of the emergence from a long sustained depression during which maintenance, repairs, and replacements for obsolescence where physically possible were naturally suspended not only in this country, but in all parts of the world. These now provide for the industry a stimulus for a huge and an immediate demand in the volume of production. Superimposed upon this demand is this tragic world race in armaments. I ask the House not to run away with the idea that the demand for armaments has a tremendous influence in volume on the need for steel. Rather is it a demand in urgency than in volume, and the urgency of the demand itself has seriously inconvenienced the steel industry, which, naturally, is more desirous of meeting the normal commercial requirements than of making armaments.
That is true of the nations of the world in general, but, as far as our own country is concerned, let us realise that there is a big improvement in all the steel-consuming industries of this country. In fact, there is a pronounced trade development in all steel-consuming industries. Increased business has developed in the steel industry from the building trade. The big blocks of flats which have been built in London and the other large cities of this country, the big public buildings all over London and in the Provinces, the bridge building, the increased railway developments have all resulted in a big increase in the demand for constructional steel. It is computed that last year alone the increase was over 10 per cent. There is a substantial improvement in the engineering industry in this country, and as a result of the improvement in that industry not only has it meant
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a bigger demand for steel for their own engineering work, but it has resulted in a demand for steel for the extension of their own property. The shipbuilding industry is building more tonnage now than it has for six years. Towards the end of last year the tonnage in the shipbuilding yards was over 1,000,000 tons as compared with less than half that tonnage in the previous 12 months. The motor industry had a record output in 1936 and its development is still progressing at a considerable pace. The Air Ministry has ordered from the steel industry substantial tonnages of constructional steel, and all these are the factors which have contributed to this unprecedented demand for steel in this industry.
In spite of that, there are developments in other directions, the greater use of steel furniture and steel partitions, etc.—new uses in the steel trade—which we shall welcome and be glad to see developed as the demand of the boom period disappears. The hon. Member for Don Valley put some queries about importation, and asked, why this increased importation? There is a substantial increase over and above the tonnage mentioned in Section 6 of the Finance Act, but he will remember that the iron and steel trade in these various years have undertaken to look after the question of the interests of the re-rollers of this country. There has been a definite scheme of co-operation in the industry, and it has been possible to collaborate as between the producers of steel on the one side and the re-rollers on the other. It has been possible to form within the industry a national association for rolled and re-rolled products, and the demand that has come forward from all consuming industries has been such as to increase the pressure not only on those consuming industries, but, as a natural result, on the steel producer himself. It is by arrangement between these two sections of the industry that it has been found possible to increase imports of steel. We know that certain re-rollers are unable to have their entire requirements of steel met, but nobody has been seriously prejudiced, because the normal requirements had been supplied. The trouble has arisen through the shortage of steel, which is world wide, and the result has been that consuming industries have not been able to develop the extent of their industries as they and everybody else would have liked.
Miss Wilkinson: Does the hon. Member not think that that is a serious prejudice of business?
Mr. Jones: Certainly. The hon. Lady asks whether I consider it a serious thing that the consuming industry is not able to develop its business. Certainly it is, but that is not peculiar to this country at the present time. The steel shortage is world wide. Incidentally, I would point out that it was legislation produced by the hon. Lady's own party which has so affected the coal industry that we find, in consequence of the quotas, there is a shortage of coal for the steel industry. The present system of quota in the coal industry has operated to the detriment of the steel industry.
Mr. James Griffiths: Will the hon. Member tell me which district is now producing up to its quota? Is it not true that the shortage, whatever it may be, has been met by increased quotas, and that there should be a shortage nowhere?
Mr. Jones: The hon. Member is not dealing with the point that I raised. I suggested that, as a result of the operation of legislation of the hon Member's own party, the steel industry and other industries have been short of coal. Whether as a result of further quotas or of greater flexibility in the operation of the quota system steps are to be taken to meet the shortage, which is still serious for the steel industry, time will tell, but the fact remains that a great deal of inconvenience has arisen in consequence of the legislation of the party supported by hon. Members opposite. Once the steel trade realised that the increased pressure was taxing the productive capacity of the steel industry of the country it, of its own accord, approached the Import Duties Advisory Committee with a view to the withdrawal of the duty on pig iron and the reduction of the duty on steel.
I hardly expected this Debate, but I did not expect it to pass without some reference being made to prices. The hon. Member for Don Valley took up two different attitudes. In the first place he suggested that the Federation had kept up good iron prices, and at the same time he asked the President of the Board of Trade to keep a watchful eye for fear that the steel people might run away with profits. He was anxious that everything should be done to increase output, that we
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should increase our exports and that we should provide fair conditions and good wages for the workpeople, but he had not one good word for the industry in regard to its right to have a fair return for those who efficiently run their industry. I cannot understand why from hon. Members opposite there is always this criticism of price levels. I have often heard from that side of the House during the last five or six years views expressed in favour of a reasonable level of prices. The Trades Union Congress, in its memorandum issued before the last conference, strongly advocated that the first step that should be taken leading to the resuscitation of world trade was the raising of the level of prices. When the Opposition are concerned about the price level for miners' wages they are always loud in their protestations in favour of a rise in the price of coal, in order to provide the miner with a higher wage.
Mr. T. Williams: The hon. Member must not forget that whether we on these benches are speaking for mine workers, steel workers or any other workers we have to ask for prices that will guarantee wages, and if in so doing we ask for something that increases the profits of the employer, that is unavoidable. The only possible way in which we can plead for better wages for our people is to plead for prices which will pay those wages.
Mr. Jones: The hon. Member has said just what I wanted him to say. I must have been saying the same thing in a much more clumsy way. The hon. Member and his colleagues are always advocating higher prices for coal under the coal control scheme, in order to provide higher wages for the miners. That is perfectly sound, and I have supported it on every possible occasion. In the steel trade we say quite frankly, and I think the House generally agrees, that the essence of confidence in industry is a stable price level. The steel industry all along has definitely set its policy in the direction of maintaining a proper price level for the industry. The steel industry does not exercise the theoretical power which it has to fix its own prices. I notice that the right hon. Member for Hillsborough (Mr. Alexander) shows surprise by a facial expression. It is a fact that while, theoretically, associations of steel makers retain the right to fix their

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own prices, yet before any price is fixed in the industry, an independent audit takes place. The right hon. Member laughs again. We do have our audits clone honestly in our industry, and when these audits take place by a reputable firm, like Peat's, a report is made to an independent chairman. After that report has been submitted to the independent chairman, the industry then has to satisfy the Import Duties Advisory Committee.
To-day many sections of the industry are selling their product below the cost of production. Let us look at the Board of Trade index figures. If we take the Board of Trade Gazette figure of 100 for 1930, we find that the price of steel is 112.6 for February, 1937, while the price of coal is 117.7. If the ascertainment of the price level made by the Board of Trade, in which 37 items are brought in for the purpose of computation, shows that the steel price is 112.6, it cannot be said that the steel trade has run away with the prices. One hon. Member opposite is closely associated with the steel industry, and he knows perfectly well that the wages of the people in the steel trade are based on the ascertained prices. He will, if he has the information with him, supply to his own colleagues information as to the comparatively low level of prices and their incidence on the level of wages. If the House wants to give the industry the credit they deserve, then it must, after a study of the question of prices, come to a realisation that we have not run away with profits. A stringent hold is being kept on the price level, because the steel trade knows that after the next two or three years, after the boom is over, we have to face the slump. The steel trade is organised to control the slump just as it is controlling prices at the present moment. The House will be surprised to know possibly that since 1932 our raw materials have gone up by 50 per cent. The effect of that on a number of the products of the industry is an increase in cost of anything from 20 to 25 per cent. In spite of that we have maintained our price index figure at 12½ per cent.
Not only has the steel trade for the purpose of controlling its own price level exercised its control within its own industry, but it has endeavoured to control the prices of the raw materials it buys and to control the prices of the consumers of its own steel. As a result of its organisation there is at present a com-
2678
plete understanding between the producer of scrap, the producer of pig iron, the producer of coal right to the re-roller. The American and German technical journals which have studied the operation of the tariff system in this country say without exception that the steel industry here has been able to control prices. Even the "Economist," a paper by no means friendly to the steel industry, on Saturday last published this:
"As the demand for steel is increasing there is some danger that the federation, with the best intention in the world, may be unable indefinitely to prevent prices from getting out of hand."
For the moment the federation is keeping its hand on prices, and, whatever the fears of the "Economist" may be, it pays the complimant to the industry of saying that it has up to now stopped prices running away.
The hon. Member for Don Valley referred to the loss of our export trade, and anyone connected with the industry must feel a certain amount of regret that our export figures are so disappointing. For 1936 we exported 107,000 tons less than in 1935. Our exports went down to about half what they were in 1929. He suggested that some organisation should exist to fix prices in order that we might regain our export trade or see that we did not lose any more. At present the United Kingdom is exporting twice as much steel as the United States of America. We are practically fulfilling our quota under the international cartel. Not only has the export trade of Britain fallen, but also that of the principal steel exporting countries of the world. Their export trade has fallen since 1913 by 33 per cent. The export trade of the world in iron and steel is down and ours in particular. There is a good reason for it.
Belgium took from us in 1929 166,000 tons. Last year she took 29,000 tons. France in 1929 took 130,000 tons and last year 22,000 tons. Italy took 91,000 tons in 1929 and last year 20,000. Japan, one of the newest iron and steel countries, bought from us in 1929 157,000 tons and last year 20,615 tons. Even the United States purchased from us in 1929 91,000 tons; in 1935 it was only 20,000 tons. The two outstanding instances of a reduction in purchases from this country are India and Australia. India in 1913 was buying 860,872 tons of steel;

2679
in 1929 the figure was 614,000; last year it was down to 281,000. Australia in 1929 bought 423,000 tons; last year that was down to 158,000.
I do not apologise to the House for repeating these figures. They explain to a considerable extent the fall in our export trade, because that fall is in those countries which have developed considerably their own iron and steel trade in the last few years. Not only have they developed their iron and steel trade to meet their own requirements, but they have a surplus production which competes with us in the export markets of the world. I want to assure the House that the iron and steel trade has during the last few years set up a wonderful system of control of prices. Its weakness is in its strength. The difficulty which the industry is up against is the difficulty of being able to purchase in the world market either pig iron or scrap. In this country there has been a maximum price for scrap in the neighbourhood of 70s. New York is asking for that scrap at a price of something about 100s.
Great Britain has no doubt suffered in the markets of the world in the last few months by the stringent control which it has exercised on its price level. That the position is going to be difficult in the next few years there can be no doubt. The increased demand for armaments is going to put on the industry an additional strain. The steel industry is straining every possible nerve to meet its obligations not only to its own consumers but also to the Government of the day. It would pay the British steel maker much better to meet the export market demands, where available, than to sell his product in this country, because at present Continental and American prices are considerably higher than British prices, and it would be possible to-day for the British steel producer, even with the export market that is available, to get substantially higher prices for his product than he gets in his own market.
9.35 p.m.
Mr. Walker: I welcome this Debate because it gives the House an opportunity of examining a scheme which was put into force by the Government and has been operated by the iron and steel industry. It is a scheme which, up to
2680
the present, in spite of much criticism, has given a tremendous amount of satisfaction. The only thing I would say to the President of the Board of Trade is that when he opens his statement by saying that the iron and steel industry has occupied the time of the House a great deal, he is slightly exaggerating the position. The iron and steel industry was never discussed prior to 1929. If it had been discussed as often as the coal industry, or the agricultural industry, or other industries I could mention, it might have been better for the whole of our industries to-day. At any rate, those of us who are attached to the industry have to admit that the scheme contained in Section 6 of the Finance Act of last year has been of great benefit to the industry. I listened to the hon. Member for Don Valley (Mr. T. Williams) speaking at great length on this question. He reminded me of the old tag:
"I do not love thee, Dr. Fell,
The reason why I cannot tell;
But this I know, an l know full well,
I do not love thee, Dr. Fell."
One of the things for which we on these benches have been asking is organisation in industry, and while I would like to see the iron and steel industry fully and completely organised under State ownership, I am bound to admit that the organisational side of socialism, even under capitalism, can be of benefit to the workers in an industry. One of the great fears has been that the monopoly, so-called, given to the iron and steel industry would mean that prices would rise. I state quite frankly that the workers in the iron and steel industry did expect prices to rise and were looking forward to it, because their wages have always been regulated by the realised price of steel. But since these tariffs went on they have been disappointed, and all that they have obtained in the way of increased wages during that period is a matter of 2½ per cent. If we were expecting and desirous of obtaining increased wages through increased prices and have been disappointed, surely the people who are opposing this scheme on the ground that it will raise prices ought to be delighted. If the side which expected increases did not get them, surely the side that has been bemoaning the fact that increases in prices would take place, ought to be frank and generous enough and say that the scheme has worked better than they thought it would.

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All political economists have been confounded, and the reason is not far to seek. If you can by a system of regulation, even by agreement with a foreign cartel, control and stabilise an industry so that factories and works are running full time, they will be able to produce at a lower cost than if they were working half time. But the unfortunate thing about capitalist individual economics in the past has been that at a time when they could afford to sell their product at the lowest possible prices, because their works were going full, that was the time of the highest prices, and, at the opposite end, when the works were running half time and they needed higher prices because of higher costs, that was the time when under the individualist system, so beloved by many hon. Members opposite, you got the lowest prices. I admit that some of my hon. Friends have never recoevred from the fact that they used to be associated with hon. Members below the Gangway.
If we take the question of prices in this industry in the month of January of this year, when the audit took place—a joint audit, the auditor being paid by workmen and employers—the average realised price for the preceding three months was only 1s. 5d. a ton higher than the three months ending May, 1935. If we go back to the boom year of 1929 and compare the whole of that year with the average for these three months of this year, we find that the increase is 2S. 6d. per ton. What becomes then of all this outcry about regulations? I also know that meetings have taken place at Geneva where the coal industry of this country would only be too delighted if international arrangements could be made to regulate output and prices in that industry. I should be delighted to see it. Last year our output was up to 11,250,000 tons. The hon. Member for Don Valley said that he would like to see maximum outputs and minimum profits. Surely that is a maximum output; I do not know about the profits, as I am not on that side of the business. But that is an increase of over 45 per cent. on pre-War, and it is an increase of over 20 per cent. as compared with 1929.
The burden of my complaint with the iron and steel federation is not the complaint that is being put forward to-night, but a complaint that we have still
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capacity in this country for the production of iron and steel which could be used for the benefit of the steel users of this country and the benefit of the working classes. I look at the West of Scotland—I hope the hon. Member for Jarrow (Miss Wilkinson) will forgive me if I do not mention the case of Jarrow this evening; I hope she will not think I have no interest in Jarrow, but I leave that to her. In the West of Scotland, at a place where in pre-War days and during the War there were 108 blast furnaces in operation and from which they exported pig iron, there are now only about a dozen working, and there is a large number standing idle which, by the expenditure of capital, could be modernised and brought into use for the production of pig iron to help the steel industry of this country. The works at Wishaw is also standing idle; there is a blast furnace there to which is attached a modern cement plant which has never turned a wheel.
I want hon. Members to understand that the problems of the iron and steel industry did not start yesterday, as some people think, or even in 1932. The works I am mentioning were closed down in 1921, they have never reopened since and nothing has been done to assist them. I wish to call the attention of the President of the Board of Trade to the fact that these works are standing idle and that this year there will be imported into the West of Scotland at least 250,000 tons of pig iron from India and other places. That would be unnecessary if there were better organisation. No doubt we shall have from the Minister the reply that the Federation is doing all it can, but I say that it is not doing all it can. The Import Duties Advisory Committee is not pushing it hard enough. There is no need to worry about the question of prices, for prices will take care of themselves under the control machinery that has been set up.
What is needed is the organisation of supply. Let it be remembered that the people who gave the expert advice about the plant that should have been set up in the North East Coast, estimated that the total capacity of this country was 10½ million tons. We have now passed that figure by 1,000,000 tons, so that the experts are out of it. I am not blaming in a wholesale fashion the people who are

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in the industry, for the people who are running the iron and steel industry to-day are just as capable and as efficient as the men who are running any other industry; but I claim that because the Government have not been strong enough in putting down the individualism that is still rampant in the industry, we have not had the best results as far as production is concerned. The same firm of experts declared a few years ago, that the plant, the situation and the layout of Mossend was the best in the country, and that if there was to be any development in the West of Scotland, apart from the development suggested near the docks, Mossend was the best place for it. What happened? The Bank of England which had become the owners through the firm's overdrafts, of the Mossend steel works, sold it at a scrap price to a rival firm, and the works has been pulled down. According to a Press notice which I saw last week, the scrap merchants have bought the works at Wishaw, and two other places in order to pull them down and sell them for scrap.
That is happening in an area which is registered under the Special Areas Act and in which there are thousands of iron and steel workers idle. I want the President of the Board of Trade to take up that matter with the Iron and Steel Federation and with the Committee in order to have the position in Scotland examined, because people who know the position there know that it is well suited for the production of the heavy iron and steel industry, with the shipbuilding and engineering that takes place there. To-day we have the spectacle of coalmasters selling coal because they are doing a little better by selling it as coal than they would by making it into coke. Unless we get the coke, we cannot get a proper output from the blast furnaces. I know of cases where steel-masters who own coalpits and who could produce coke do not do so because it is more to their advantage to sell coal and to buy the coke from other places. The whole position as far as coke is concerned ought to be considered. It has to be allied to the blast furnaces, and the blast furnaces have to be allied to the steel industry. They must not be allowed to continue as they are at the moment. Vertical industries must be built up, for that is the only solution to this problem.
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I do not look forward to the future in any gloomy way, because I have always felt that the world has been starved of steel ever since the War finished. Let it be remembered that during the War we were making steel not for creating productive capacity, but for destroying productive capacity. All over the world it was used for that purpose. Owing to the financial position of the world, when the War ended the iron and steel industry did not meet with any demand for its products, and for years it was in a Slough of Despond in every steel-producing country of the world. There is no doubt that to-day there is a "boom" in steel all over the world.
I have heard it said that it is not tariffs that have helped Britain, but that objection is merely puerile. There is no doubt—and every Free Trader must recognise it—that tariffs enabled the Iron and Steel Trades Federation to make a bargain with the cartel, which was washing it out not only in Britain, but in the Colonies and the neutral markets of the world. If they had washed out the iron and steel industry, do hon. Members imagine that the cartel would have continued to sell steel to us at a low price? Having destroyed our only method of competing with them, they would have charged us any price they wanted. That would have been the result of free and unfettered competition, and we would have suffered for it in the long run. We now have the trade organ. We want greater and more effective control from the Government. [An HON. MEMBER: "We have the united front now."] Yes, we have the united front. We can get a united front on the things that matter to the people of this country. The hon. Member who made that interruption is just as much opposed to Government ownership of the iron and steel industry as hon. Members below the Gangway. They are more united than he and I will ever be. They are united in the defence of private interests and private profit. On every kind of vested interest you will find a united front—more often between the hon. Member and them than between me and them.
I appeal to the President of the Board of Trade to go further into the question of the productive capacity of this country. Those of us who know something about the trade are convinced that the more

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plant can be erected in order to cope with the situation and the more the present plant can be utilised and extended, the more it will be to the benefit of the working people not only in the iron and steel industry, but in the coal industry and many ancillary industries. It will be to their advantage if better organisation is attained, and it can only be attained if the Government take the matter more firmly in hand.
9.57 p.m.
Sir P. Harris: We have heard some very interesting speeches during the last three-quarters of an hour and, undoubtedly, a similarity of outlook was indicated in the speeches of the hon. Member for West Swansea (Mr. L. Jones) and the hon. Member for Motherwell (Mr. Walker). They both, naturally, stood up for the iron and steel industry, and one notices the fact, more and more, that in this House now we have Members speaking not so much for towns or districts or divisions, as for particular interests. That is the inevitable result of a tariff policy. It may be good or it may be bad, but it is not surprising.
Mr. L. Jones: I am sure the hon. Baronet does not want to be unkind. He does not suggest that the hob. Member opposite and I were speaking on behalf of any interest other than that of the industry generally.
Sir P. Harris: I certainly do not want to be unkind, and I was only stating the fact that the hon. Members to whom I referred were speaking in the interests of the industry with which they are associated. I think the hon. Member for West Swansea is a very worthy and capable representative of that particular industry. But, after all, the main job of the House of Commons is to deal with these economic problems as they come before us in the widest sense. We are the jury of the nation, and we have to weigh up the various considerations presented to us as they affect the general interest.
I think that many hon. Members will agree with me that the policy of the Government in regard to this industry has combined the worst evils of Protection and Free Trade. I have heard hon. Members during the last six years making closely-reasoned speeches on the advantages of a secure market and self-
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sufficiency and independence of the foreigner, on the benefit of giving security to the workpeople in the industry and on the importance, especially in case of war, of making this country independent of foreign supplies. On the other hand, a policy of Free Trade would, at any rate, have the advantage of enabling industries to supply a world market. The policy followed by the right hon. Gentleman the President of the Board of Trade in this case is not surprising, because I think he himself would admit that he was at one time a convinced Free Trader. On the other hand, he is now a practising Protectionist, and perhaps it is natural that we should find the two policies working at one and the same time under his guidance. Perhaps it is because he is not a convinced Protectionist, that the Protectionist machine has not had sufficiently full play to satisfy the hon. Member for South Croydon (Mr. H. G. Williams). I have looked up a very good and closely-reasoned speech made by the right hon. Gentleman, not in those years gone by when he was a Free Trader, but after he had joined the National Government and had become President of the Board of Trade. Speaking in this House in December, 1931, on this subject, he pointed out:
"In July there were engaged in the heavy trades 188,000 individuals, and in the using trades 1,825,000 individuals…If we did anything blindly or unwisely for the benefit of those who are in the heavy trades and endangered anyone in those various industries, anyone engaged in the using trades the net advantage to this country would be less than nothing. We should actually be harming our country and lowering the total output of our industries."
He added:
"We are discovering that those who are the producers of steel are much more vocal than the users of steel."—-[OFFCIAL, REPORT, 9th December, 1931; cols. 2003–04, Vol. 260.]
I think that applies to-day. The producers of steel are very well organised, are very powerful and have very able representatives to state their case. On the other hand, a hundred and one industries are suffering from a steel shortage, and are faced with great difficulty. They are not as well organised and not nearly as vocal as the producers. I want the House to consider this Order having regard to all sides of industry and as it affects the community as a whole. I am constantly getting letters from all parts of the country about the shortage

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of steel, and in the various trade papers there are frequent complaints about the difficulty of obtaining supplies. Take the case of constructional steel for building. I am informed by constructional engineers that many important contracts are, at the moment, held up because of the shortage of supplies. The shipbuilding industry is in difficulties from the same cause. Manufacturers of motor cars are finding it difficult to obtain their requirements. Reference has already been made to the fact that the Sheffield cutlery trade is finding great difficulty in carrying out contracts and there are hundreds of other industries throughout the length and breadth of the land which are dependent, not only for their export but for their home trade, on abundant supplies of steel at reasonable prices.
The right hon. Gentleman may probably ask why should I object to the Order, since it is a proposal to reduce the duty. It is something after six years to see a downward instead of an upward trend in one of these duties, and one ought to be thankful for small mercies. It may be said that I should not attack this Order when, at long last, we find a step being taken in our direction. This is a reduction, but this lower duty is only to go to a privileged few. I want to press that if the Government are satisfied that a duty of 33⅓ per cent. is not justifiable, they should take it off, or reduce it to 10 per cent. automatically, without consideration for this interest or that. We admit that we did not see concealed in this complicated and skilfully drafted Section of the Finance Act the hidden hand to give what, after all, is quite new in our Parliamentary procedure, a privilege to a private organisation. I was surprised at the hon. Gentleman above the Gangway, who has now left the Chamber and who claims to be a Socialist, rejoicing that this privileged position should be given to a combination of privileged private companies. They are allowed under the Act of Parliament to import iron and steel from abroad at a lower rate than I am or than is any hon. Member on this side or that side of the House. If we wanted iron and steel with which to start an industry, we should have to pay, not 20 per cent., but 33⅓ per cent. and in some cases a very much higher rate still.
That is what we dislike about this particular Order. It continues and per-
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petuates a vicious principle which is apparently going to be part of our permanent legislation. Who are these people who are to decide, not only the price, but how much steel is to be allowed to come in to meet the requirements of our industry? There are four countries concerned—France, Belgium, Luxemburg, and Germany. It is described in the White Paper as an Entente Internationale. It is a combination of industries spread quite over Western Europe. I will not read the names of the French group; they might puzzle the reporters in the Gallery, because they are very difficult to pronounce, but I will read the name in the German Group—the "Stahlwerks-Verband Aktiengesellschaft." Does the right hon. Gentleman think it desirable, at a time like this, when there is a steel shortage and when there is this competition for steel for armament purposes, that this country should have to go, hat in hand, to Germany, under the Nazi Commission, for supplies to meet our requirements? Is it to be supposed, when the right hon. Gentleman told us, with his usual frankness, that we are two months behind in our supplies, Germany being short of supplies herself, that she should be anxious to let us have our requirements for our industries, shipbuilding and the various other trades that are running short of steel?
The right hon. Gentleman is a very skilful negotiator of trade agreements, and he has been travelling about. He went over to America, but we have never yet learned the results of his interesting conference with the President of the United States. We have not heard yet what took place in that secret debate, though I am sure the right hon. Gentleman was trying to do a deal in the interests of British industry. Are the United States going to be allowed to come into this deal? Are they to be allowed to send us the goods which we so badly require, at the same rate of duty as Germany, Luxemburg, Belgium and France. The right hon. Gentleman said that the amount coming into this country was almost negligible. Is not that due to the fact that there is a duty of over 33⅓ per cent. on all imports from the United States of America? If this market was open, could not the industries short of supplies make some deal to get them? I think we are entitled, before passing this Order, to have a clear statement why the privilege given to

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these four countries in Western Europe is not given to the friendly countries of the United States and to Sweden, which are able and willing to help us.
I could raise many other problems that come up under the working of this Order. My hon. Friend the Member for Barnstaple (Mr. Acland) has a case, which I hope he will state to the House, in reference to the supply of steel wire for rope making. Here is a case of very unfair working of the interlocking of industry under the organisation and auspices of the various industries linked up with the production of steel. I know that the Parliamentary Secretary to the Board of Trade has been supplied with all the figures and facts connected with this industry, but before we pass this Order, which does admit the need of a reduction of the duty on iron and steel products, we should be satisfied that there is a case for not making it general, and if we are not satisfied that it should not be made general we should press the Government to do away with the whole system of quotas and privileges which Section 6 of the Finance Act provides. As the first step to providing the using industries with the supplies of which they are so seriously short, we should apply that lower rate of duty on imports of iron and steel.
10.15 p.m.
Mr. Peat: This Debate so far must be very gratifying to the steel industry. We have had a review of the operations of the industry in the last two years and the speeches must be regarded as most favourable to it. I am glad that the hon. Member for Motherwell (Mr. Walker) took the line he did. I do not agree with his Socialism, but I like to think that we are in a position in this House, when we are discussing an industry, to forget our smaller attachments and the partisan spirit which sometimes occupy us, and to deal with the subject on a national basis. That is the spirit which has run through the Debate so far. The hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) suggested that by reducing tariffs throughout the world we might cure the present shortage of steel. The answer to his suggestion is partly to be found in the most-favoured-nation clause, which makes it impossible for us to make any distinctions between the nations with whom we have treaties.
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This Debate has proceeded on the assumption that there is an acute world shortage of steel. I do not believe that a reduction in tariffs will materially increase the amount of steel which will come into this country. The hon. Baronet said we were now going to the German Government, a nasty Nazi Government, cap in hand, asking them for steel. What does he expect us to do if we want steel? We have to buy it. There is no question of going cap in hand to anyone. There is a world shortage and a shortage in this country, and we have to try to buy from the markets of the world. I wonder whether hon. Members appreciate that the consumption of steel in this country in 1931 was 4,245,000 tons. In 1936 it was 7,200,000 tons, a tremendous increase which shows the enormous resilience in an industry which in those few years, with a bad start, could manage to increase production to that point. I wonder whether hon. Members appreciate that in 1931, 26.7 per cent. of this consumption represented the importation of semi-finished steel, and that in 1936 the percentage had dropped to 7.2. We had to face not only a steep increase in our production, but a steep increase in our consumption, unaided by what I suggest we should be in a position to look for, namely, a certain help from imported steel.
There is no shortage of steel equipment in this country. In fact, the steel plant is capable of producing another 1,000,000 tons per annum. What we are short of is raw material. We are short of a certain amount of pig iron producing plant. One of the main items in the list of raw materials of which we are short is ore. Our greatest difficulty has arisen from the unexpected curtailment of our supplies of ore from Spain. We have been rather criticised as not being sufficiently all-knowing, but I do not think that the steel industry or the Government or the Board of Trade could have foreseen the trouble which has happened in Spain, and that that would reduce our supplies of iron ore by 1,000,000 tons at one fell swoop. Another raw material of which we are short is coking coal. One is apt to think there is any amount of coking coal in this country, which has only to be put through the coke ovens to be turned into metallurgical coke, but there is definitely a shortage of coking coat, and that is partly due to

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the fact that we have made arrangements for the export of coking coal to foreign countries. That is a matter which the Government and the Board of Trade will have to look into, because if we can have our own supplies of coking coal we can be self-supporting.
With regard to blast furnaces, the hon. Member for Motherwell said there was in this country a great deal of idle plant which should be brought into operation. In my opinion there is not so much idle plant which could be brought into operation without some sort of subsidy; and I know that Members of this House, particularly the Opposition, are not in favour of subsidies. It is all very well to say "Do not worry about prices," but we have to worry about costs and without very serious consideration one cannot patch up old blast furnaces and put them into blast quite regardless of cost, because that would not help the industry, but I can inform the House that by the end of 1937 the pig iron producing capacity of this country will be entirely revived. The steel industry is making great strides in that direction, and I am told on the highest authority that the position will be put completely right.
From considerations of idle plant one turns, naturally, to expansion. The industry is controlling its expansion with the greatest care. The hon. Member for Don Valley (Mr. T. Williams) said he did not want to have a superfluity of factories—it is a picturesque phrase which I was glad to hear from his lips—so that when the slump comes, although I do not admit there is going to be a slump, we shall have superfluous factories on our hands and the men and boys working in them once more in the doldrums of depression and unemployment. The industry, managing its own business, has controlled its expansion, and where it is expanding vigorously, as it has been for some years past, it is expanding in the right way and the economic way.
If we are to go outside that sphere and to think where we can put down steel plant in the distressed areas, that raises a different question. The Members of this House, as they have indicated in Debate, have great sympathy with the distressed areas, and we are anxious to do all we can to help them to start new
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industries and to revive old industries, but if we are going to think of the expansion of the steel industry in terms of dealing with the distressed areas we must expect a great deal of competition from those areas. The hon. Lady the Member for Jarrow (Miss Wilkinson) will certainly not find herself alone in stressing the claims of Jarrow. There are many thousands of men unemployed in Sunderland and many thousands unemployed in Middlesbrough, round the very centre of the steel industry, and I dare say appeals would come from other parts of the country. Do not let us be carried away by the excellent work done by the hon. Lady in making this a political issue, so that the word "Jarrow" stands by itself. If one looks at it from that point of view, there are other distressed towns which require attention, perhaps even more than Jarrow.
May I say one word about prices? I know that this ground has been covered carefully, and that the hon. Member for Don Valley has patted the industry on the back for its price policy. The prices of the main engineering commodities, that is, ship-plates, angles, sections, and joists, and things that are used in heavy engineering, shipbuilding, bridge building, and house building, have increased by only 10 per cent. since 1933. Taking all steel products, there has been an increase of only 14½ per cent., even in the face of the increased cost of steel and of raw materials used in steel making by from 25 per cent. to 30 per cent. On this point I would sound a note of warning. The steel industry is regarded as being very prosperous at the present moment and transactions on the Stock Exchange lend colour to the impression that the shares are very valuable, at the present range of prices. Hon. Members may think that too. The industry, however, has to sell ahead for a considerable period while the prices of its raw material and its cost are going against it. I do not want to stress that point very much, but I would sound the note of warning that the present stringent prices of the steel industry do not leave it in the prosperous condition in which many people think that it is.
Lastly, on the question of prices, let me stress a remark which was made by the hon. Member for Motherwell. The be-all and end-all of the price situation, and of the complaints which are made here to-

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night from consumers of steel are all negatived and made to look insignificant by one glance at the situation which would exist to-day if the steel industry had not had Protection and been put on its feet, and given that revivifying power which it has used so splendidly. Consumers, small or great, would have been powerless in the hands of foreign importers, who would have been in a position to charge them any prices they liked. That is our great fight to-day in the steel industry. We are fighting not only for the prices in this country. It is not much fun for the steel maker to sell his steel at about £2 per ton less than the price at which it could be imported in this country. It requires great self-sacrifice and a considerable amount of self-control, but we are fighting for our prices and, as has been said, the prices of the export trade. We are finding it very difficult to prevent our friends abroad putting on prices to a level which we believe would be disastrous in the long run. That is why we are controlling prices. We believe that if we can control prices and control expansion, we shall be able to maintain the prosperity and to avoid the slump which is always taken for granted.
Some people, and most fairly well-informed people, believe that the present level of steel consumption in the world can not only be maintained, but can be increased, if we can so settle our world affairs that the world is allowed to develop and evolve its trade in peace. Given a peaceful world with some sense of security, I do not think that that is the limit; I think that we have not even nearly reached the saturation point of steel in the national life of this country. Therefore, I think that this control of prices is the most important thing that we can have.
Let me, in conjunction with others who have spoken, congratulate those who are responsible for the reorganisation of the steel trade, and pay my tribute to Sir Andrew Duncan, who is managing and controlling its affairs with extraordinary success. I think that members appreciate the work that he is doing, and also the fact that the iron and steel industry is still maintaining its individualistic character. Whether my hon. Friend the Member for South Croydon (Mr. H. G. Williams) or hon. Gentlemen opposite dispute it or not, I believe it to be a fact
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that the most healthy form of individual competition still exists in the iron and steel industry to-day. The more efficient you are, the better position you are in to earn a profit, and profits, whether you like them or not, are the measure of efficiency in industry. While that condition exists, and it certainly does exist in the steel industry to-day, you may have a fixed price, but the man who can produce his steel at the lowest cost gets the biggest profit on that particular price, and so efficiency and individualism still function in the iron and steel industry.
Obviously, in industries organised as this one is, there must be hard cases, there must be consumers who will say, "I have not had my steel; I have been waiting for my steel; I have had to discharge my men and keep my works idle for a short time or a long time." You cannot start the enormous evolution of an industry which has taken place in the iron and steel industry without having rough and difficult places to which you have to attend, but I can assure the House that difficulties and injustices which may be brought to the attention, not only of hon. Members, but through them to the attention of the iron and steel industry, will receive the most careful and considerate attention, because it is the object of any industry organised like that of iron and steel to have its consumers and customers content, and that, I hope, will be one of the results which will come from this Debate. I have felt that the Debate on this Order, which is not going to be divided against, has been more or less like a sham fight, but I hope that the Debate will assure Members of the House that the iron and steel industry, with its reorganisation, control of prices, and expansion, is doing its duty by the House and fulfilling its obligations to the country.
10.34 p.m.
Miss Wilkinson: I would like to congratulate the previous speaker on the high level to which he has taken the Debate. We have seldom listened to such moderate and courteous arguments. I agree that so far the President of the Board of Trade has had a pretty good defence. Our quarrel is not so much with the actual steelmakers, who have acted according to their nature and the needs of their industry; our quarrel is a quarrel with the Government, with those

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people who represent, or should represent, the people of this country and hold the balance between producers and consumers. The one thing on which we have never had a satisfactory reply from the Government is the question of want. We are faced at this moment with an acute shortage. It is not fair to dismiss it as though it were merely that someone could not get a parcel of steel for an urgent order, or something like that. The trade papers are filled with authoritative statements regarding the shortage of steel. I will quote from the Iron and Steel Exchange:
"In the pig iron market shortage of material is unrelieved. Business in the semi-finished steel departments has been on a small scale since most of the British works are reluctant to accept fresh commitments as their output is earmarked for two or three months. It has proved difficult to relieve the position by increasing imports, and consumers have become alarmed at the prospects of the scarcity becoming accentuated later on."
This is from the "Ironmonger":
"Acute scarcity of steel is still the chief concern of the markets. The whole market is in a state of disorganisation."
There is a similar remark, though more strongly put, in the "Economist" of 13th March. This is from the weekly report of the London Iron and Steel Exchange:
"Most of the producing works have sold their production for the first half of this year, and it is difficult to place new business."
The hon. Member for West Swansea (Mr. L. Jones) tried to evade the question by saying that it was not a question of rearmament and that that was at most a question of 12½ per cent. He said it was the natural consequence of getting out of the depression. If it is 12½ per cent. rearmament now, it is 12½ per cent. increase in payment before the Government have really started spending this £1,500,000,000. What it is going to be like when the demand gets into full swing it is not difficult to imagine.
Previous speakers have pointed out that the depression in the steel trade started in 1921, and that from then down to the last two or three years nothing very much was done by the Government. The industry was allowed to stew in its own juice. Three years ago the Government started to reorganise it, and gave it tariffs to the fantastic amount of 50 per cent. Obviously the Government had in
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mind that rearmament was, at any rate, in the wind. They knew, therefore, that the expansion was going to be pretty large. I, therefore, blame the Government in that, while giving tremendous privileges to the trade, with high tariffs and all the rest of it, they did not say at the same time that it must be willing to expand its production very greatly. It seems to me not playing fair when we raise the question of reorganisation and the putting down of Bessemer steel plants, to say, "If we had known two years ago, we should have seen that it was necessary to have these plants, but we did not know."
Surely, the Government ought to have known. They were the only people who could know because only they knew why they were having the last General Election. It was that they were, in the words of their leader, going to re-arm. They knew that the capacity level of the industry, as it was then, as has been admitted by previous speakers, could not possibly, with the increase in the normal demand for steel that was bound to come with the revival of trade, meet such an extraordinary demand. I really cannot see, nor did the President of the Board of Trade ever attempt to justify in the eyes of this country the fact, why, when he has been saying for two years that it was unnecessary or impossible, and such like negative phrases, to have new steel-producing plant in this country, he now has to take panic measures almost to try to get imports into this country. I never have maintained, I would say in reply to the hon. Gentleman the Member for Darlington (Mr. Peat), that iron and steel plants are a charitable means of relieving distress. That is absurd, but new iron and steel plants are an obvious method of relieving the appalling shortage in that industry and relieving trades, which, at a moment of national emergency, are dependent upon a doubtful foreign supply. I suggest that hon. Gentlemen opposite cannot have the argument both ways. If they want to take, as they have consistently, the theory that as much as possible must be produced in this country irrespective of its effect upon our export trade, and have killed the export trade—and the coal and shipbuilding trades in the northern districts a re the most devastated in this country— then, at least they cannot turn round and say they will do

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nothing to fill that vacuum by providing the works which can make at least some of the things that otherwise they are importing from abroad. They cannot have it both ways. That is the whole of our contention.
I am willing to agree that there has been a certain amount of price limitation, but seeing that we are only at the beginning of this expansion, some of the firms seems to have done pretty well already. Baldwin's, which made £190,000 profit in 1932, made £620,000 profit in 1936; the English Steel Corporation, which made £198,000 in 1932, made £1,059,000 in 1936; the Lancashire Steel Corporation, which made £98,000 in 1932, made £548,000 in 1936; Dorman Long, in Cleveland, who made £166,000 in 1932, made £1,128,000 in 1936, and the South Bank, which made £49,000 in 1932, made £217,000 in 1936. These are an earnest of the joys to come. This is only at the beginning. I doubt also whether the Government realise how much, even on their own showing, there is a feeling that they have managed iron and steel very badly indeed, and that they have been over-influenced by the strong representation of the Iron and Steel Trade Federation that, if they expand largely now, they may be placed in a slump after five years.
I think that the previous speaker contradicted himself in his argument. He first said that he did not believe in a slump, because he did not think there was any necessity for a slump; then he went on to say that a slump was inevitable and, therefore, if they expanded too widely they would be faced later with surplus plant and surplus labour again. If this thing had been rationally done, there would be no necessity for a slump. If there is to be a slump, it will be a general slump, and we see no reason why, in the meantime, the British workers who are now unemployed should not have the advantage of the high wages available in the making of steel, instead of the Government saving that the steel must be brought from abroad. I cannot understand that argument from a Conservative Government, but I can understand it from the party below the Gangway. It is another case of trying to have the argument both ways.
Do the Government see any hope that this cut in duty is going to achieve its
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purpose? It seems to me, and to people much more capable of knowing the details of the industry than I can do, that the cartel is taking advantage of the inability of the British steel makers to meet their home demand to exercise pressure and, as the Minister for the Co-ordination of Defence said, no British consumer is to have the advantage of the cut. We cannot on this side alter the nature of the steel makers or the demand for individualism which they seem to think is a thing of beauty. I do not see where individualism comes in when you are controlling raw material, controlling your markets and controlling your international arrangements. To talk about the beauty of individualism in these circumstances, it seems to me that the use of words means nothing.
Is it too late to do anything to remedy things? In all sorts of ways the Government are letting us down by living from hand to mouth. They do not tell us the truth about things. I have listened to all the armaments debates, and one gets all the time soothing bed-time stories, anything that will do in place of an adequate explanation. Then we read the other side of the question in the trade Press, and we see how risky the whole thing is. We remember the 10 years after the last War, when the people who were responsible for the mistakes which cost millions of lives spent their time in writing their own memoirs or in writing each other's biographies, in order to point out where the mistakes were made. It gives us the horrors to think what is happening now.
I do not know if there is any possibility of appealing to the Government, but I do know about the idle steel works at Jarrow and the idle works at Dowlais. We see all these things dotted up and down the country, and then we hear from the eloquent advocate of the steel industry that everything is really all for the best, and that there are only little things wrong here and there. That is not good enough, and I do not believe that it is going down with any section of the country, not even with the Government's own supporters. They want something more definite. The Government's foreign policy has made iron and steel a matter of life and death. The Government had not the foresight to see that it could control the iron ore supply from Spain, they let

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1,000,000 tons go to Germany. There is nothing this Government seems to get any grip of, except telling soothing tales. I urge the Government to come to the House with some definite plan for bringing the iron and steel industry up to date.
10.51 p.m.
Mr. H. G. Williams: It was interesting to see how much more the hon. Lady appealed to us when she abandoned her notes and really let herself go. One of the dreadful dangers we all suffer from in this House is that of getting overtrained, too much midnight oil, instead of speaking out of a full heart and a full mind. Perhaps my main claim to take some part in this Debate is the fact that I was the one to raise the issue on Clause 6 of the Finance Bill last year. As an ardent protectionist I was perturbed when I saw that the manufacturers and importers were going to be the same persons. As a sequel, we had the White Paper explaining the arrangement. During that Debate I described an imaginary constituent, and two days later I had a letter from a man in Croydon saying, "I am your imaginary constituent," and he described his difficulties in getting supplies of iron and steel. It is only fair to the Iron and Steel Federation to say that all the cases that came to me as a result of the matter I raised last year were looked into, some by direct communication with the federation and some by indirect communication with the Board of Trade, and in every case but one all those concerned expressed themselves as completely satisfied. In the one case I am not satisfied whether the man should have been satisfied or not. I must admit that the consumers have had no substantial ground of grievance since.
I find myself in considerable agreement with the hon. Lady who has just sat down. Why is there a shortage of steel in this country to-day? I go back to 26th April, 1932, when there came into operation the first additional duties made under the Import Duties Act. The Advisory Committee made a stupid recommendation, which the Government have no option but to follow, giving the industry three months protection pending reorganisation. Everybody sat back and did nothing—as though the industry could be reorganised in three months. At the end of two months the Committee dis-
2700
covered they had made a mistake and gave the industry another three months protection, making six months in all. Again everybody sat back and did nothing. We come then to October, 1932, when they began to realise that they had made a mess of the job.
I am sorry to criticise the Committee, because they have no right of speech in this House except indirectly through the Board of Trade or the Chancellor of the Exchequer, but to a large extent they rule our economic policy. I think it much better that it should be done that way than in the way tariffs have developed in America, but that is no reason why we should regard everything the Import Duties Advisory Committee says as inspired. The Advisory Committee then gave the industry two years protection. The real truth of the matter is that for two-and-a-half years the iron and steel industry has never had any certainty in regard to industrial protection, and I am going to say that if they had been given straight forward Protection without any qualifications in April, 1932, the productive capacity of the industry would be substantially greater than it is to-day. There is a shortage of iron ore. Hon. Members opposite will not contradict that
Mr. J. Griffiths: Why should we contradict you?
Mr. Williams: You have been contradicting other things this evening.
Mr. Ede: We try to be polite to you.
Mr. Williams: It does not matter whether hon. Members opposite are polite or not; it makes no difference. I think it is tragic that at this moment the output of the industry is held up not primarily for the reasons mentioned by the hon. Member for Motherwell (Mr. Walker), whose speech I thoroughly enjoyed. He suggested that the reasons were a shortage of coke, a shortage of pig iron or alternately a shortage of scrap. There is also a shortage of iron ore. It is true that there is a civil war going on in Spain and hon. Members opposite are backing the party which are not in control of the iron ore deposits, which, apparently, are going to Germany instead of coming here.
Mr. J. Griffiths: They are in the control of the side you are backing.
Mr. Williams: I am taking no sides because it is not my war. My occupation is to keep out of other people's wars. It may be the occupation of hon. Members opposite to stick their noses into everybody's war, but, meanwhile, at any rate we are not getting iron ore from Spain. I do not know whether it is the fault of the Government or of the Advisory Committee, but from 1932 to 1934 there has not been any development of coke ovens and blast furnaces and steel works, and our own iron ore fields. People have been leaving places like Cleveland, where there is the possibility for a substantial increase in output. The skill and experience in that area has been scattered during a period of depression. It happens that the branch of the Personal Service League in my constituency three years ago adopted the Cleveland division of Yorkshire, and during that period they have been sending them thousands of garments and pairs of boots to help the unemployed iron ore workers, who gradually have been scattered throughout the country instead of producing iron ore. My criticism relating to the period of 1932 and 1934 is a criticism of His Majesty's Government in this direction. I think they have been far too defeatist. Their vision as to the capacity of this country has been limited. There is no limit to our capacity to consume except our capacity to produce. There is no limit to the home market. There has been the delusive idea that there is a limit. There is no limit.
Mr. Alexander: It is only tariffists who believe that there is a limit.
Mr. Williams: I have never said that, and I am supposed to believe in a tariff. I always thought that it was the Co-operative Society which had false ideas of that sort.
Mr. Alexander: That shows that the hon. Member is wrong again.
Mr. Williams: I think the Government are right in bringing this forward to-night, because it is absurd, at the moment when our productive capacity is insufficient to our needs, to impose a duty on what comes from abroad. The protectionist theory of tariffs, as far as prices are concerned, has always been that if one is capable of producing a sufficient supply inside the tariff wall, prices in general
2702
will not rise, but if one is not in that position, prices will rise. The circumstances are such that we cannot supply our own needs by our own productive capacity, and in those circumstances obviously the sensible thing to do is to suspend the duty for the time being. I think there is some point in the criticism made by one hon. Member that we have the curious anomaly that supplies coming from some sources are to be subject to a duty at the full rate, whereas those coming from other sources will be dutiable at the rate of 10 per cent.
I do not see how that can be justified. The only thing to do is entirely to suspend the duty in respect of the classes of steel concerned. I do not think it would make any practical difference at the moment, but constitutionally it would make a good deal of difference. It ought not to be the case that because supplies may happen to come from some part of the world which is outside the cartel system, those supplies should be subject to a duty of 33⅓, whereas if the steel goods come from a part of the world which is controlled by the cartel, they should be dutiable at the rate of 10 per cent. only. The plain logic of the circumstances of the moment demands that the additional duty should be suspended in respect of all those classes of steel, irrespective of their origin.
It was on those grounds that I raised the issue on the Finance Bill last year. It is a dangerous principle to discriminate, in respect of the duty that is imposed, between the persons who happen to be the importers in this country. I say that without the slightest disrespect to the British Iron and Steel Federation, which I think has done its difficult job exceedingly well. I am not criticising the Federation, but I am challenging the political principle that it might be right for me, for example, to import certain goods at a duty of 10 per cent. and for the hon. and gallant Member in front of me to import the same articles at a duty of 33⅓ per cent. That introduces into the tariff system a dangerous principle, and, while thinking that the Government are entirely right in doing what they are doing as far as existing circumstances are concerned, I urge them to be very careful to see that what they are doing is not regarded as establishing a new differentiation principle in our protective policy.
11.4 p.m.
Mr. R. Acland: I support the suggestions contained in the last part of the speech of the hon. Member for South Croydon (Mr. H. G. Williams). I feel that in this connection there is a real danger of the public and the Government being exploited. It is very difficult for private Members to obtain any reliable information about the steel trade in its many ramifications, but I wish to offer some information to the House, and I hope it will not be treated with contempt, because I offered certain information in the Debate last November which was, I think, rather summarily dismissed by the Parliamentary Secretary. Referring to steel, other than cartel agreement steel, which was imported, I suggested that it was bought outright at the Continental price and was then resold by the Federation at the British price, and that as a result of those transactions the Federation was making a profit of some 10s. a ton. The Parliamentary Secretary, in reply, said:
"There is no truth in the suggestion that the British Steel Federation make a profit of 10s. or any other figure. The idea that an intermediate profit is gained by the federation … is a myth of the hon. Gentleman's own creation. … The specific point put … was that steel was bought at a Continental price and resold in this country at an English price. I have made inquiries … and the suggestion is completely not in accordance with the facts."—[OFFKIAL REPORT, 24th November, 1936; cols. 373 and 374, Vol. 318.]
So vigorous was the Parliamentary Secretary's denunciation that an hon. Member in front of me turned round to me and said "Another mare's nest." It was not long however before the hon. Gentleman, with proper courtesy—and I should like to pay my tribute to him for it—gave me private information on which I asked him a question and in reply to that question he said he was glad to modify and amplify the information previously given, and that 300 tons of semi-manufactured steel had been bought by the federation at fixed prices to meeet actual or anticipated shortages. I should have thought that "fixed prices" would be the Continental price which I suggested. All this material we were told, had been sold to members of the federation sometimes at a loss, sometimes at a profit. Up to the present the transaction, he said, had resulted in a profit of 2s. 5½d. I was wrong as to the amount of the profit when I said
2704
it was 10s. but the Minister, with all his resources of information, was wrong as to the fact and I was right.
My fear is that this 10 per cent. is simply to be added to the profits which the federation will be able to make on these transactions. The House should know how complete is the federation's control of this trade. We have heard about the wonderful work of reorganisation which they have done. I would ask the Minister whether any reorganisation has taken place outside of price-fixing? Has much been done to reduce and coordinate transport costs? I put a question to the Minister a little while ago asking whether anything had been done in that direction and no answer could then be given except that this was one of the matters into which the Import Duties Advisory Committee was inquiring. I would emphasise how complete is the price control in the hands of the federation or rather in the hands of the many lesser federations which control the different branches into which the industry is divided. There was a guarantee in a letter written by the Federation that supplies of this cheap steel, imported at the 20 per cent., which will now be 10 per cent., would be freely available to members outside the Federation on equal terms. I suggest that there are no outsiders to-day. Nobody can maintain his position outside the Federation which controls that branch of the industry. All members of any branch are asked to sign an undertaking not to buy raw material abroad. They must buy their raw material according to a price list. The price list is subject to a rebate of 25 per cent. which is forfeited for the breach of any rule by anybody in the association. Throughout the industry the larger manufacturers are bound together by interlocking directorates and other devices so as to control the whole production from billets to rods, to wire, and to wire rope, by one organisation. If you do not toe the line, you very quickly find your supplies of wire, if you are a rope manufacturer, cut off. Throughout this branch of the industry those who produce in excess of their quota shall pay a fine of 15 per cent. and those who produce less than their quota shall receive a compensation of 10 per cent., and what happens to the other 5 per cent. nobody seems to know.

2705
But this is the most amazing thing of all, and I would ask the hon. Member for Darlington (Mr. Peat) whether he really contends that in this branch of the industry there is still to-day real competition. We have heard so often from the Minister for the Co-ordination of Defence about tenders received by the Government, how they go through them and accept the lowest, and all the rest of it. On 2nd February, 1937, the Federation of Wire Rope Manufacturers sent this circular to all its members:
"We have to notify you of the following decision to which we shall be glad if you will give effect forthwith: … (b) Air Ministry, Admiralty, and War Office: That in future all tenders to the above Government Departments should be forwarded unsealed to this office so that we may check the prices. … "
Is that the healthy competition which is said to be going on in the industry?
"The fine for failing to act in accordance herewith shall be such as the Executive Committee shall decide.
16th February, 1937. It has been arranged for interested members to quote 9s. 9d. per 100 feet. Will you kindly quote accordingly and send your completed tender to us in an unsealed envelope."
Is that the healthy competition? On 11th March, 1937, it was discovered that a member of the Rope Manufacturers' Federation had accepted at £15 6s. 5d. an order which on the Federation basis worked out at £18 10s. 10d., so he was fined £5 5s.
Mr. Peat: The hon. Member accepts, I presume, that these associations work under a fixed price. Does he believe that prices should not be fixed for Admiralty contracts in the same way as they are for ordinary consumers?
Mr. Acland: Healthy competition must have an entirely new meaning in the last two years. I always understood that it meant that manufacturers made themselves as efficient as possible, that the one most efficient tendered the lowest price, and got the most of the orders. That was the idea behind it all, but now we all tender the same price, and the quotas which we may produce have been decided for us, not by the small men, but have been imposed by the big bullies of the industry. The industries producing 50 per cent. of the output decide the quotas arbitrarily. Anybody who produces more is fined 15 per cent.,
2706
and anybody who produces less is rewarded 10 per cent., and the 5 per cent. goes somewhere.
Mr. Peat: The hon. Member ought not to make statements which are untrue. In the industry with which I am closely connected I have had considerable experience in the fixing of quotas, and they are not fixed in an arbitrary manner. It is a shame that that should go out as a fact. Prices are fixed on a definite, accepted production for years. They have been agreed by the whole industry and in exceptional cases they are brought before a committee for special consideration. If the hon. Member is referring to some particular industry such as the wire rope industry, I have no knowledge of it, but I am speaking on behalf of the heavy steel industry, and I do not want the hon. Member's statement to cover the steel industry as a whole, because it is not true.
Mr. Acland: I accept entirely the last part of the interruption. I do not want my statement to cover the industry as a whole because I am basing my facts on information which applies to one small corner of it. My point is that what is true in one corner may be true of the whole. There is no reason why it should not become true to-morrow. Large firms which have done this successfully in one small corner of the industry have power to do it throughout. We have this to-day in regard to wire rope. On the occasion of the other Debate we had the same information in regard to boiler tubes. The circumstances were the same. Prices were fixed and firms were told they must accept them. The profits, the hon. Member says, depend on efficiency. That is so, but the price is fixed at a figure which will bring in the less efficient firms. We are told we are working now to capacity; therefore, in the more efficient firms the profits must be very handsome. Under the Order now before us the federation can charge what prices they like and their "ceiling" is the foreign price plus 33⅓ per cent. I agree that that is not universal because there is now no source of foreign supply whatever the price. Comparing the figures given by the Minister with the Trade Returns, 35,000 tons of non-cartel steel came into this country under this 33⅓ per cent. tariff. It is difficult to work out the figures and

2707
compare them with the White Paper, but that is how it appears to me. The "ceiling" price is the foreign price plus 33⅓ per cent. over considerable ranges of the industry.
Mr. Peat: The hon. Gentleman makes challenging statements which are not true. If he says that the price fixed by the Steel Association has as its "ceiling" the highest price of Continental material, and that the British price is plus 33⅓ per. cent., it is the most gross misstatement of fact I have ever heard in this House. At the present time the price is lower than the Continental price. The prices which are fixed by the association and agreed to by the federation are maximum prices and they cannot be overstepped.
Mr. Acland: I think the word "ceiling" is a term which means the highest altitude to which an aeroplane can go and not necessarily the height to which it does go. I agree that the Federation may not put the price to the highest to which theoretically it can go. There is a shortage in many cases, but that shortage will not be affected by the Measure we are passing, because the articles of which there is a shortage are outside the cartel agreement. Galvanised steel wire is a case in point, brought to my notice by the information which I have here, in which it is impossible to get quota certificates because galvanised steel wire is outside the cartel agreement. I think one can sum it up in this way: We have a shortage now and we have erected a barrier to prevent the arrival in this country of the things of which we are short. In that barrier we have a locked gate with 33⅓ per cent. marked on it. By the side of the gate there is a stile marked 20 per cent. The proposal before the House is to change the stile from 20 per cent. to 10 per cent. Our suggestion is, Unlock the gate.
11.21 p.m.
The Parliamentary Secretary to the Board of Trade (Dr. Burgin): My right hon. Friend the President of the Board of Trade has no reason to be other than extremely satisfied with the course which this Debate has taken to-day. The Order, presented for the purpose of reducing the duty on iron and steel products from 20 to 10 per cent., is one which under most conditions would command univer-
2708
sal assent, and, with the exception of one or two observations by hon. Members, I find myself very largely in agreement with the general consensus of opinion which has been expressed from all parts of the House. The hon. Member for Barnstaple (Mr. Acland) has made a number of false deductions from some information in his possession relating to one particular association. He spoke of price control. When ton. Members look into the iron and steel industry a little more closely they will find that one of the things for which they have most to be thankful is that the British Iron and Steel Federation have exercised a stringent and rigorous price control. Had there been no cartel arrangement, had this market been a free market, had this country competed with other consuming countries for such supplies as there were, prices would have sky-rocketed and consumers would have been very badly off indeed. As the hon. Member for Darlington (Mr. Peat), who has an almost unrivalled knowledge of the steel industry from within, said, the Continental steel maker is obtaining a pound gold per ton more for his supplies to all countries other than Britain, and the object of reducing the duty from 20 to 10 per cent. is to provide some greater inducement to furnish more to this market than has been available with that duty on.
Something was said about healthy competition. The hon. Member for Barnstaple seemed to think that because a large number of people quoted the same price in tenders that showed that, in fact, there was no competition and that there must be something sinister underneath. I hope hon. Members will turn to the Air Services Appropriation Account, which was ordered by the House to be printed on 29th January, 1937, and is supplied through the Stationery Office. Contracts for the supply and erection of steel work for 38 hangars amounting to over £500,000, were allotted to nine firms. Forty-one firms tendered, of whom 40, including the nine, quoted identical prices, the remaining tenderer quoting a higher price. It was felt that the uniform tendering was the result of a price arrangement, and at an interview with the representatives of the engineering industry the Air Ministry explained the difficulty of certifying that the price was fair and reasonable and asked the industry to disclose their production costs.

2709
The industry offered full liberty to the Ministry, on completion of any contract, to examine the costs of production, and the Ministry availed itself of this offer. Two companies were selected who had a great reputation for efficiency. The examination of the records showed that the prices quoted were fair and reasonable and that this might be taken as true of the other firms.
The Comptroller and Auditor-General says that the whole question of steel prices has been under consideration by the Contracts Co-ordinating Committee, which has been in touch, on the one hand with the representative committee of the steel industry, and on the other with the advisory committee, and they are satisfied that the prices quoted are justified. The House will appreciate what the consuming industries in this country have secured from the cartel arrangement. From the working of Section 6 of the Finance Act, 1936, in a period when prices were hardening throughout the world, the consuming interests in this country have had a knowledgeable Iron and Steel Federation in touch with the industry and maintaining prices considerably below the market prices in other countries. They have kept the supplies of steel within the land available to consumers, instead of allowing our manufacturers to export it, and to secure higher prices from other countries.
Mr. Garro Jones: I apologise for interrupting the hon. Gentleman, but I am very anxious on this point. The Air Ministry say that they chose two firms with a representation for efficiency and that they found that the prices were fair and reasonable. What is happening in those firms which are not efficient? Are they subsisting on their losses, or are the firms who are making an excessive profit making up the losses of the inefficient firms? Can we have some explanation on the point?
Dr. Burgin: Yes, Sir, immediately. The efficient firms are making profits, and the less efficient firms are making less profits. As usual, the hon. Member for Don Valley (Mr. T. Williams) made a most admirable and well-informed speech, with very little of which I have any comment to make. He referred to the figures of imports of steel and suggested that 1,500,000 tons were coming into this
2710
country, and that that meant, presumably, a great deal more than he was aware of came from the cartel countries. In case any hon. Member is under that impression, I would remind him that the figure includes a large number of products such as pig iron, ferro-alloys, ferrules, screws, bolts, nuts and a large number of articles made of iron and steel which come under the broad heading of iron and steel products for the Trade and Navigation Accounts, and which are completely outside any cartel arrangements. Hon. Members will understand that in the first year of the cartel, the permitted imports were 670,000 tons, and 525,000 tons in the second year. Over and above the cartel's permitted imports, there were imported 275,000 tons in the period under review. Of the 1,500,000 tons, something under 900,000 tons was cartel steel, and the remainder was a large miscellaneous collection of different articles many of which are not covered by that arrangement at all.
A point raised by the hon. Member for South-West Bethnal Green (Sir P. Harris) was in regard to the steel that comes from non-cartel countries. The hon. Member for Darlington mentioned the Most-Favoured-Nation Clause. We dealt with that matter when Clause 6 of the Finance Bill of 1936 was before the House. The position is that under the cartel agreement, at the time of the imposition of anything approaching a quota, it was agreed that all countries with which we had Most-Favoured-Nation treaties should be entitled to import, under the Most-Favoured-Nation Clause, goods to the full extent of their imports in the basic year, 1934, and that arrangement applies. The non-cartel countries, after this Order has been approved by the House, will be entitled, under the Most-Favoured-Nation rule, to import at the lower rate of duty, namely, 10 per cent., up to the full extent of their import in 1934; there is no reason, in the present circumstances, to imagine that any of them is in a position to import more. I hope that that disposes of the suggestion that the United States is on some more favourable basis as the hon. Baronet suggested.
Sir P. Harris: I am glad that the position has been made clear, but I think the hon. Gentleman will admit that in 1934 imports were comparatively small, and that, if America were in a position

2711
to supply any amount over the 1934 quota, such imports would pay, not 10 per cent., but 33⅓ per cent.
Dr. Burgin: That is correct; if the basic year is to be so treated as to come outside the Most-Favoured-Nation Clause, the position would be as the hon. Baronet sugggests; but in fact—and I can only deal with the realist basis of facts as we know them—that position does not arise at all.
We were asked by the hon. Member for Barnstaple whether the Federation had done anything with regard to organisation beyond prices. Good gracious me, what a question! The Federation has had to organise the machinery of the cartel agreement, safeguarding the export trade for a period of five years—the period of the agreement; and the regulation and control of the forces inside the industry in the interests of consumers. It has centralised and co-ordinated research; it has taken steps to inaugurate economical transport, and to arrange for the distribution of semi-finished and finished products; it has regulated the schemes for the purchase of scrap in this country and has made international arrangements for the purpose of acquiring scrap from abroad. Even this is only a resumé of some of the more important functions that occur to one at short notice. It would be an entire delusion to imagine that the British Iron and Steel Federation has not done tremendous work within the framework of the industry in bringing about measures of reorganisation. It is literally true to say that the British iron and steel industry is very different from what it was before the formation of the British Iron and Steel Federation.
We listened with great interest to the speech of the hon. Member for Motherwell (Mr. Walker), who spoke with great knowledge of the industry and put many home truths with considerable emphasis and force. Apart from a rhetorical flourish or so as to the devastating character of vested interests, I can subscribe willingly to the whole of his speech.
There is just one point that I shall mention to the House before I ask them to decide on this Order. Reference has been made to an alleged lack of foresight, and to the apparent inconsistency between an admitted shortage of steel and, apparently, some productive capacity not
2712
fully used. The hon. Member for Jarrow (Miss Wilkinson) failed to appreciate the dearth of raw material. Let the House not be under any delusion as to this raw material point. In 1913 the percentage of scrap in weight of ingot steel produced was something like 20 per cent. The tendency of the industry has been to swing over to this process. The 20 per cent. of scrap increased immensely. It went up from 20 in 1913 to 60 in 1922, and 65 per cent. in 1933. The method of making steel from the use of pig iron had changed over largely to the use of scrap, and in 1931 our imports of scrap were something like 96,000 tons. By 1935 they were just on 500,000 tons and in 1936 they were 1,000,000 tons. During the whole of that time that the industry had been using this scrap and had been making steel by this process pig iron had progressively gone down in production, coke had been less made, coke ovens had not been built, blast furnaces had gone out of use and there were difficulties in dealing with coke-oven gas.
When the prices of scrap rose to impossible levels and the industry was thrown back on the use of pig iron again, it found to some extent that its blast furnaces wanted modernising, its coke was not available, its iron ore supplies had been largely stopped through the troubles in Spain and there were difficulties in the take-off of the coke oven gas. It is no one single factor. It is a complete change in the supply of the essential raw material. The whole proof of this shortage comes back not to a failure to plan your productive capacities, but to difficulties caused by a multitude of conditions. The British iron and steel industry had no control over the supply of raw material. The price of steel is now relatively down though the price of the ingredients has gone up. I end as I began by saying that the industry, and consumers, have cause to be thankful that there is price control. I ask the House to give us this Order.
Miss Wilkinson: Before the hon. Gentleman sits down after that poetic ending, will he deal with the question: If the Government knew that they were going to re-arm why did they not prepare by getting raw material, as Germany did?
Dr. Burgin: The hon. Lady is still under the delusion that the re-armament

2713
programme has seriously interfered with the supply of steel. That has only just begun. The shortage of iron and steel would have occurred independently of the rearmament programme.
Mr. E. J. Williams: Why was not action taken by the Government to prevent the coal owners undercutting to drive out of commission batteries of coke ovens?
11.39 p.m.
Mr. Silverman: Will the hon. Gentleman amplify the answer he gave to my hon. and gallant Friend with regard to the costings system? He was asked, if you take two of the most efficient firms and it was then decided that the price that they are getting gives them no more than a reasonable and fair profit, how does that work when it is applied to less efficient firms? The hon. Gentleman's reply was that it was just the same, only the less efficient firms made less profit. One would have thought that if that were so, the less efficient firms that were making on that price sufficient profits to make it pay should continue to go on and work for that less measure of profits. The argument would then seem to run in this way. That firms that were able to produce cheaper and to get that price would be making a larger profit than that made by the less efficient firms. Therefore, it is difficult to see why they are not making more than a reasonable and fair profit, if they are getting it in the same way. I do not know whether the attention of the hon. Gentleman has been called at any time to a letter in the "Times" on the 8th of this month from a gentleman entitled to speak on these matters—Mr. S. F. Mendl, who was a member during the War of the Government's Advisory Committee on contract prices. I would like to know whether the attention of the hon. Gentleman has been drawn to the last sentence of the letter, which says:
"My experience in two Government Departments during the War convinces me that no scrutiny of costings can be trusted to prevent large firms benefiting largely from increased turnover when they are allowed a percentage on profits which is only just enough to keep many small businesses in existence."
That is very much the point that my hon. Friend was making, and I cannot say that the point was sufficiently met in the somewhat curt and perhaps evasive reply that was given.
11.43 p.m.
Mr. F. Anderson: Can the Parliamentary Secretary state what steps the Government have taken to organise the iron-ore supplies, not only the importation of ore, but also the supplies as far as this country is concerned? Has any definite co-ordinated action been taken as far as the iron-ore deposits in this country are concerned?
Resolved,
"That the Additional Import Duties (No. 3) Order, 1937, dated the second day of March, nineteen hundred and thirty-seven, made by the Treasury under the Finance Act, 1936, and the Import Duties Act, 1932, a copy of which was presented to this House on the said second day of March, nineteen hundred and thirty-seven, be approved"

IMPORT DUTIES (IRISH FREE STATE (SPECIAL DUTIES) ACT, 1932).
11.53 p.m.
Captain Euan Wallace (Secretary, Overseas Trade Department): I beg to move,
2716
"That the Irish Free State (Special Duties) (No. 1) Order, 1937, dated the twenty-fifth day of February, nineteen hundred and thirty-seven, made by the Treasury under the Irish Free State (Special Duties) Act, 1932, a copy of which was presented to this House on the said twenty-fifth day of February, nineteen hundred and thirty-seven, be approved."

2717
This Order has to be confirmed by this House within 28 days—that is, before we rise for Easter. It is an Order made with the object of carrying out our part of the bargain in the Irish Free State commercial arrangement of February, 1937. It is a renewal for another year of a similar arrangement in 1936, with a certain number of minor modifications in details. The Irish Free State is allowed to switch over from fat cattle to store. We give the Free State a 5 per cent. increase in their bacon quota; we get in exchange a complete removal of their emergency duties on sugar and sugar products. I do not think that there is anything in the Order to which anybody in any quarter of the House will object. I shall be delighted to answer questions, but I think that at this time of the night this is an Order which will be accepted in every part of the House without a long discussion.
Question put, and agreed to.
Resolved,
"That the Irish Free State (Special Duties) (No. 1) Order, 1937, dated the twenty-fifth day of February, nineteen hundred and thirty-seven, made by the Treasury under the Irish Free State (Special Duties) Act, 1932, a copy of which was presented to this House on the said twenty-fifth day of February, nineteen hundred and thirty-seven, be approved."

NATIONAL HEALTH INSURANCE ACT (AMENDMENT) BILL [Lords].
Order for Second Reading read.
11.55 p.m.
The Minister of Health (Sir Kingsley Wood): I beg to move, "That the Bill be now read a Second time."
This Bill raises no questions of policy or principle. It is virtually a drafting Amendment to a Section of the National Health Insurance Act, 1936, which prescribes the class of persons entitled to undertake the dispensing of medicine under the Act. Section 41 of the Act describes these persons by a reference to their rights under the Pharmacy and Poisons Act to use the title of chemists and druggists. It has been found that these words do not meet the case of corporate bodies, and it is to enable these corporate bodies, employing qualified
2718
chemists, to participate in the insurance scheme that the Bill has been introduced.
Question put, and agreed to.
Bill read a Second time.
Bill committed to a Committee of the Whole House for To-morrow.—[Captain Margesson.]

LOCAL GOVERNMENT (FINANCIAL PROVISIONS) BILL.
Lords Amendments considered, and agreed to.

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, 1920 to 1934, on the application of the Sheffield Gas Company, which was presented on the 13th day of July, 1936, and published, be approved subject to the following modifications:
Clause 1, page 1, line 9, delete '(No. 2).'
Clause 1, page 1, line 10, delete '1936,' and insert '1937.'
Clause 1, page 1, line 11, delete 'This Order shall be deemed to be included amongst the,' and insert 'The Sheffield Gas.'
Clause 1, page 1, line 12, delete 'which,' and insert '1929 to 1936 and this Order.'
Clause 1, page 1, line 13, delete '1936,' and insert '1937.'
Clause 2, page 1, line 16, delete '1936,' and insert '1937.'
Clause 3, page 2, line 17, after 'No.,' insert '772.'
Clause 6, page 4, line 6, delete '1935,' and insert '1936.'
Clause 21, page 8, line 18, delete '1936,' and insert '1937.'
Clause 23, page 9, at end, insert,—
Provided that if and when the company obtain a supply of coke oven gas for distribution throughout the added limits then as from the third meter reading after the date on which that supply is obtained the price charged by the company for gas supplied to consumers within the added limits shall not exceed the price charged to consumers within the existing limits (other than the portions thereof respectively referred to in the Act of 1931 as 'the Dronfield limits' and 'the added part of Wortley' and in the Order of 1932 the Order of 1935 and the Order of 1936 as 'the added limits') by more than two pence per therm.
Clause 25, page 10, line 2, delete '1936,' and insert '1937.'
Clause 25, page 10, line 4, delete 'thirty-six,' and 'insert thirty-seven'."
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 Mayor, Aldermen, and Burgesses of the Borough of Chorley, which was presented on the 1st day of March and published, be approved.—[Dr. Burgin.]
The remaining Orders were read, and postponed.
It being after Half-past Eleven of the Clock, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
Adjourned at One Minute before Twelve o'Clock.

  CHINA (SMUGGLING).
  CHINA (SMUGGLING).
  SPAIN.
  SPAIN.
  MANCHURIA (TRADE).
  MANCHURIA (TRADE).
AGRICULTURE.
  SUGAR (SUBSIDY).
  SUGAR (SUBSIDY).
  MILK SUPPLY, LONDON.
  MILK SUPPLY, LONDON.
  SMALLHOLDINGS, SHROPSHIRE.
  SMALLHOLDINGS, SHROPSHIRE.
  FISHING INDUSTRY.
  FISHING INDUSTRY.
  TONBRIDGE BY-ELECTION (OPEN-AIR MEETINGS).
  TONBRIDGE BY-ELECTION (OPEN-AIR MEETINGS).
  CLUBS (LEGISLATION).
  CLUBS (LEGISLATION).
  AIR RAID PRECAUTIONS.
  AIR RAID PRECAUTIONS.
  PRISON SERVICE.
  PRISON SERVICE.
  POLICE (PEDAL-CYCLE PATROLS).
  POLICE (PEDAL-CYCLE PATROLS).
TRANSPORT.
  ADVISORY COUNCIL.
  ADVISORY COUNCIL.
  MOTOR FATALITIES (LAW OF DEODAND).
  MOTOR FATALITIES (LAW OF DEODAND).
  VACCINATION.
  VACCINATION.
  CIVIL SERVICE (INDUSTRIAL EMPLOYES).
  CIVIL SERVICE (INDUSTRIAL EMPLOYES).
  BLOOD TRANSFUSIONS.
  BLOOD TRANSFUSIONS.
  DIPHTHERIA, HUDDERSFIELD.
  DIPHTHERIA, HUDDERSFIELD.
  TYPHOID, LIVERPOOL.
  TYPHOID, LIVERPOOL.
  NATIONAL HEALTH INSURANCE.
  NATIONAL HEALTH INSURANCE.
  WAR OFFICE (LAND PURCHASE, CORSHAM).
  WAR OFFICE (LAND PURCHASE, CORSHAM).
  ORDNANCE FACTORY, NOTTINGHAM.
  ORDNANCE FACTORY, NOTTINGHAM.
  FENS AREA (FLOODS).
  FENS AREA (FLOODS).
POST OFFICE.
  TELEGRAPH SERVICE (INTERRUPTION).
  TELEGRAPH SERVICE (INTERRUPTION).
  TELEPHONE SERVICE.
  TELEPHONE SERVICE.
  OVERTIME WORKING.
  OVERTIME WORKING.
  PALESTINE (CATTLE RAIDS).
  PALESTINE (CATTLE RAIDS).
  EDUCATION (FREE MEALS SCHEME).
  EDUCATION (FREE MEALS SCHEME).
  INDIA (JUTE INDUSTRY).
  INDIA (JUTE INDUSTRY).