§ Order for Second Reading read.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. William Graham)
I beg to move, "That the Bill be now read a Second time."
A day or two ago we had a Financial Resolution which set forth at considerable length the proposals which are now incorporated in this Bill. I am sure the House will not expect me to go into elaborate details in the discussion which has already covered a large part of the ground, but I ought, in fairness to hon. Members, to summarise the proposals and also reply to certain discussions which took place during the Committee and Report stages of the Financial Resolution. One of the proposals of this Bill is to pay—this is payment and not guarantee—up to a maximum of three-quarters of the interest on any loans raised in this country by a Dominion or Protectorate within the British Empire for the purpose of embarking upon an undertaking of a public utility character. That is one of the recommendations of the Imperial Economic Conference. I think hon. Members will agree that no time has been lost in incorporating that proposal in a Bill and submitting it to this House. The undertakings are confined to business of a public utility character. The payment is not to amount to more than £1,000,000 in any one year, and the limit which is placed upon payment is five years. I need hardly say that the main purpose of this proposal is to stimulate orders for goods which will be supplied from this country and to help to some extent the unemployment from which we are 561 now suffering, and also to expedite work which would not be normally undertaken at the present time in the absence of a provision to pay three-quarters of the interest under the proposal which I now recommend to the House. That, in short form, is one of the suggestions of the Bill, which I think will not meet with opposition, looking to the fact that it is one of the recommendations of the Conference and that our scheme now is on all fours with what the Conference recommended.
In the second place, the Bill provides for an extension of the period within which requests for guarantees under the Export Credits Scheme may be received and also for an extension of the period during which this guarantee may remain in force. We extend the period for the acceptance of requests to 8th September, 1926, and we extend the period during which the guarantee may remain in force to 8th September, 1930. The general argument behind that proposal was to the effect that unless the times were extended, and more particularly the time during which the guarantee might remain in force, this scheme would fail to make that contribution to trade improvement and to the provision of employment that we might reasonably expect from it.
Before I leave the Export Credits part of the scheme, I want to make a very strong appeal to the House in a matter which was brought to our notice to-day by a deputation received by the Prime Minister and others, a request by that deputation that something should be done to stimulate public interest in, and public knowledge of, the Export Credits system. In the late part of 1919 this scheme was introduced, again for the purpose of trying to assist certain countries in Europe and in the Near East which were suffering from depreciated exchanges and adverse financial and economic conditions. Originally the scheme proceeded upon a system of advances, which I think very speedily broke down or proved difficult in operation. It was then changed to a system which was much more closely allied to the general practice of trade, namely, a system of guarantee of bills, and a total sum was available, by way of guarantee, of £26,000,000. At a later date the scheme was modified in other directions, to extend, for example, to the 562 British Empire, to make it a little more elastic in administration and to bring it to the notice of all who were likely to derive benefit from it. But, notwithstanding all that, it remains true to-day that of the total sum of £26,000,000 which was set aside by way of guarantee in the original Measure, only about £8,500,000 has been taken up, and there is, therefore, an ample sum of £17,500,000 now at the disposal of the scheme, if we can bring it to the notice of larger numbers of people. I think hon. Members will agree, in view of that fact, that there is no necessity under this Bill to make any additional provision to the total sum available for guarantees. We have £17,500,000 at our disposal, and until that is used there will be no necessity to take a step beyond that sum.
§ Mr. GRAHAM
I ought to have mentioned that this was a deputation of the National Union of Manufacturers, if I remember the title of the deputation aright, and they pressed that point among others. It so happened, quite apart from the deputation, that we were very anxious to make the Export Credits Scheme a little better known than I am afraid it is at present in order to invite larger numbers of people to take advantage of it, to help the export trade and, in helping the export trade, to help employment at the same time. Those are two of the leading proposals of the Bill.
I pass now to that part of the Bill from which the title of the whole proposal is really derived, namely, the part dealing with trade facilities within this country. Some time ago legislation was introduced which provided for the guarantee by the State of principal and interest, or either principal or interest, on sums which were raised for the purpose of undertaking works involving capital expenditure in Great Britain. The aim was again to stimulate employment in conditions of very great difficulty and to put behind certain firms of healthy and legitimate enterprise in this country such a public guarantee as would enable the enterprise to go on, which very often it could not do but for some assistance of the kind. I am afraid outside there is a good deal of misunderstanding on this 563 part of the proposal. I find many people who still argue as if this were some form of advance or grant. In point of fact, under the system of the Advisory Committee appointed in connection with trade facilities there is of course no advance or grant at all. There is merely the provision of a guarantee. In only one case in all the £38,000,000 of guarantees which have so far been afforded has the State been called upon to make good a loss, in the case of one small brickworks, which I think involved the Exchequer in an expenditure of approximately £4,000. The Act expired about the middle of November last, and it became necessary to renew it in order to carry on this part of the scheme. At the date of expiry, in the middle of November, there remained available by way of guarantee a sum of approximately £11,000,000. We propose to add to that under this Bill £15,000,000, which will cover the period between the middle of November last and 31st March, 1925. That is a period of about 18 months, so that the House will recognise from the broad figures the situation. About £26,000,000 are available in that time. As from this moment, however, looking to the commitments of the Advisory Committee before we could introduce this necessary legislation, the actual sum available until 31st March next will be approximately £21,000,000 or £22,000,000.
Pressure was brought to bear on us in some parts of the House to increase that sum, but I think I satisfied the House on the Financial Resolution that there are substantial reasons against that course. In the first place, we are bound to keep in mind the fact that while this does not involve us in any money expenditure it is, nevertheless, a possible liability for the State, and already it amounts to a total sum, or will with this Bill, of £65,000,000 by way of guarantee. That being so, hon. Members will, I think, agree that a point of that kind must be kept in view when we consider our general credit and other circumstances which are primarily the task or duty of any Chancellor of the Exchequer or Financial Secretary to the Treasury. But there is a second and, it seems to me, much more important reason in some ways, with which again I think the House will agree. If we very largely increase the amount of the guarantee and if we extend the time within which applications can be lodged the undoubted 564 tendency on the part of possible applicants will be to hold their hand, or to delay lodging their applications, and we shall be robbed of what we very specially desire at present, namely, early application, the early undertaking of work of this kind and the provision of employment for large numbers of people with the least possible delay. There are, therefore, very sound reasons for adhering to the course which we recommend in the Bill. I ought, of course, to say quite frankly that if experience proved in the near future that the applications were considerable it would be for this House to take into consideration whether the legislation should be extended, and I personally see no difficulty in that course provided we are getting a return from this experiment, in which for some years now the State has been engaged.
There is other criticism regarding the operation of this part of the Bill. Many hon. Members have come to me and said the conditions which are imposed by the Advisory Committee are altogether too strict. That criticism turned very largely upon misunderstanding. There is an idea in many quarters that we are standing behind expenditure other than capital expenditure. I think that is definitely ruled out by the terms of the legislation. Then, again, I am afraid there is an idea that we can come to the assistance, by way of guarantees, of people who have got into financial difficulty or distress of some kind. That, of course, cannot be any part, I take it, of legislation of this character, because almost certainly that would involve the State in substantial loss without, I am afraid, doing any particular good to those we wish to benefit. I am satisfied that, while every effort is made to make the Regulations and the administration as elastic as we can possibly make them, we cannot entertain requests coming from sources which might fail to put up reasonable security and which, as they themselves might have stated, were in financial difficulties.
The only remaining point which follows upon a rather strenuous discussion during the Committee and Report stages on the Financial Resolution, is in reference to that part of the Bill which proposes to I give a further guarantee, as to principal 565 and interest, of £3,500,000 to the Government of the Sudan in connection with the Gezireh Irrigation Scheme. It may shorten the discussion on the Second Reading of the Bill if I try to give, as briefly as I possibly can, one or two facts, not substantially the facts that I gave on the last occasion but, rather, facts in reply to the criticisms advanced at a late hour on the Report stage of the Resolution. The House will remember that this Sudan guarantee is a comparatively old story. There has been a succession of Acts of Parliament in which we gave guarantees for the irrigation of this area, mainly because we regarded it as an important scheme to develop, and because we wanted to see an extension of the resources in cotton supply for our own country and, I take it, for the world as a whole. Up to the present time, about £9,500,000 have been guaranteed. The scheme has made considerable progress through various stages, and we are now called upon to complete a total guarantee of £13,000,000 by providing the remaining £3,500,000 for which we seek authority in this Measure. That will enable us to reach the end of the contribution we propose to make in this matter.
Hon. Members criticised the proposal very strongly because of the existence of the Sudan Plantation Syndicate, which now for all practical purposes in charge of this development. Let me try, although the matter must be familiar to many hon. Members to indicate the position as it now stands. This is a syndicate formed under a kind of triangular arrangement with the Government of the Sudan on the one hand, and the tenant cultivators on the other, the syndicate itself occupying what I may call a kind of intermediate position. The arrangement is that, when supplies of cotton are available and can be sold, after the deduction of certain expenses of marketing and one or two other expenses, the return will be allocated in the proportion of 25 per cent. to the Sudan Plantation Syndicate, 35 per cent. to the Government of the Sudan, and 40 per cent. to the tenant cultivators. That is the broad arrangement at the present time. It is a principle to which we have succeeded and which, I take it, we could only with very great difficulty change if, indeed, we could change it at all.
566 The criticisms suggested that this was a syndicate which was exploiting the tenant cultivator in the Sudan and enjoying the guarantee at the expense of the British Government. Let me say on that point that, unfortunately, we are not in a position to-night to consider this legislation from its initial stage. We have arrived on the scene, for better or worse, I hope for better, when the scheme is approaching success, and when it is necessary for this guarantee to be given if the irrigation is to be completed and if the British firm to which the contract has been let is to complete its task, as it is bound to do under the terms of the contract, by 1925, in order that, as soon as possible after the middle of 1925, a cotton crop may be planted, and we may have a substantial contribution towards Lancashire's supply. We cannot, for all practical purposes, back out of the guarantee at this stage, but we are bound to try to meet the criticisms of hon. Members in all parts of the House when they suggest that, in fact, this syndicate has enjoyed a very large advantage at our expense.
I have been at great pains to road the whole of the facts in connection with this scheme, and I think it is true to say that if we take the earlier syndicate or company which preceded the Sudan Plantation Syndicate, now in existence, and we take the period of 20 years which is covered by this discussion, we shall find that on the actual capital subscribed by the shareholders in that concern the average return over that period has been a little more than 5 per cent. It is perfectly true, as my hon. Friend the Member for Stirling (Mr. T. Johnston) suggested, that in two years—they were years of a boom period, if I remember rightly—a dividend of 35 per cent. was forthcoming, but there was a period between 1904 and 1911 and again, I think, in 1916, in which no dividend whatever was paid. All these facts ought to be taken into very clear consideration when we are trying to weigh up the precise position which this syndicate holds.
I stated on the Financial Resolution that the original contract for the scheme was on a cost and percentage basis, which I do not think anyone would defend if a better basis could be found. That was, of course, very long before our day. In any event, the practical reply to that criticism 567 at the present time is that the contract is now let upon an economic basis to a British firm, which has been engaged in the task, and which during the last two or three years has expended very large sums of money in this country in the purchase of plant and materials for this undertaking, and has, therefore, afforded a certain amount of employment to British workmen. There is no doubt now about the nature of the contract, and I would remind the House again that they are bound to complete it by 1925 in order that after that time a cotton crop may be forthcoming.
As regards the position of the syndicate with the Government of the Sudan and the tenant cultivators, the House will recollect that there is on the expiry of 10 years after the completion of the irrigation scheme a power to review, and certainly on the expiry of a further four years it would give ample opportunity for full consideration of the political and economic circumstances which were then in force. That provides specifically for a place for the Government of this country in any change or any intervention which is sought to be made.
Therefore, while many of us on this side of the House would not defend this proposal, if we were to consider it to-night as a new proposal, we are committed to trying to carry it out and to bring it to success, in so far as we guarantee to contribute to that end, for a very important and, what appears to me to be, a final and conclusive reason. I am informed, and I have looked at the papers carefully, that if we do not put up this final guarantee of £3,500,000, which will cost us nothing in actual cash, there is great danger that the scheme will be landed in financial or other difficulties. No doubt, the Government of the Sudan would try to find the money in order that the scheme should not fail, but even if we suppose that the Government of the Sudan did try to find the money, it is perfectly plain that they could only find it on terms more onerous or more difficult than so far have been in existence, and to that extent their position, and our position as the guaranteeing party behind the scenes, would be prejudiced. I am not sure that the withdrawal of the guarantee on any other grounds can be justified at this stage, provided that we 568 are perfectly satisfied that until the scheme is completed fair play and justice obtains all round. There is not the least reason to doubt that failure on our part to give this remaining portion of £3,500,000 will lead to difficulties such as might risk the success of the scheme as a whole. In that case, we should be liable not for nothing at all, if I may put it in that way, but we might be liable for the whole or a very large part of the £10,000,000 in guarantees that we have already put up. I do not think that anyone at the Treasury, whatever may be the tendency of his outlook at the present time, would risk that. I put that as the final reason which compels us to recommend this Bill.
One further point remains, and that is what is the influence of this contribution on the cotton supply. Hon. Members on this side have protested that we should try to take steps to regulate the price of the cotton and, secondly, that we should try to take steps to see that this supply of cotton is available for Great Britain. Taking the second point first, the fact is that all the supplies already forthcoming have been sent to Lancashire, but I frankly confess that it will be very difficult to try to compel growers in another part of the world to send their supplies practically exclusively to any one market. There would be very great difficulty in any effort of that kind at the present time. Let me say on that point and other points—a little later my hon. Friend the Under-Secretary of State for Foreign Affairs will make a statement—that we are quite willing to make all possible inquiry and to see what can be done. The other point relates to the price of the cotton. If you regulate or try to regulate the price of cotton for this particular syndicate in the Sudan, the only conclusion which can possibly be reached is that the price will be regulated in such a way as to bring it below the world-price in cotton supply. That is the only meaning which I can put upon the proposal. On that point, if they were compelled to take a price below the world price, it is clear that we should only prejudice the three parties to the transaction, first the Syndicate itself, with its 25 per cent. interest in what is involved, and also the Government of the Sudan, and the tenant cultivators in the proportions which they enjoy under the scheme. Then there 569 would be a certain influence upon the guarantee, given by the Government of this country, which will remain in existence for some time. On all these grounds I think that we have met the criticisms in a fair and candid way, and I am satisfied that, everything considered, we cannot afford, in the interests of Lancashire and the employment of large number of people in this country, to see this scheme impeded in its final stages and perhaps produce a position which may spell complete or partial failure. These thoughts we have had in mind in this part of the Bill, and I trust that we have made it clear to the House that they will produce good results.
§ Mr. GRAHAM
It is estimated that, if this scheme is put into operation, there will be forthcoming to Lancashire about 70,000 bales per annum, but on that point a great deal depends upon the area which is cultivated and upon other considerations, but that is the best figure which I am able to give the House at the present time. I was about to say, in a concluding sentence, that the whole of these proposals are really a first instalment of the legislation which we intend to introduce, dealing with the problem of the unemployed. In the aggregate I hope that they will set a large amount of work in operation which will provide for a considerable number of people, and on that human ground mainly I ask the House now to give a Second Reading to this Bill.
§ Sir ROBERT HORNE
The Financial Secretary to the Treasury has just delivered one of those admirably lucid statements by which he has so often earned the gratitude of the House of Commons. He has outlined, in a brief but most complete fashion, the provision of the Bill for which he is now asking a Second Reading. I confess, as one of the people who are mainly responsible for the introduction of this Bill into our series of legislative enactments, that I feel somewhat flattered that it should be the first matter which the new Government should have taken up in connection with the provisions to meet the very serious problem of unemployment. We were told that the 570 Socialist Government, when they came into power, were the only party in the State with any remedy for unemployment. We were also told that they were completely ready with schemes which they would immediately put before the Legislature. It was suggested in a speech of my right hon. Friend the Member for Miles Platting (Mr. Clynes) that they would not be deterred, even by the minority in which they existed, from putting forward the boldest and most audacious scheme which they had in their portfolio for curing this most distressing position.
Up to now we have heard of nothing except some extra employment on housing schemes—[HON. MEMBERS: "Cruisers!"]—these were not new, they will give rather less employment than had been suggested by the late Government—and a further extension of the Trade Facilities Act. I think that that is very flattering to the Government which has just gone out of power. The speech of the hon. Gentleman dealt with two things which I think are entirely different. The first is the proposal of the Bill with regard to the guaranteeing of an additional loan to the Government of the Sudan for the purpose of carrying out great schemes of irrigation. I think that the House will understand clearly that that really has got no relevance to the question of the trade facilities scheme. It was begun long before any Trade Facilities Act was thought of, and the guarantee of that loan, which was previously given, has been extended and continued to the present time. One regrets that so much money was required for this purpose. The amount of expenditure has exceeded all that any of us anticipated, but at the same time I am glad to see that the Scottish caution of my hon. Friend has managed to appreciate the fact that, if we do not make the guarantee which he is now suggesting, we run great danger of being compelled to pay up on the guarantees which we have already given.
Our only chance of saving the guarantees for £10,000,000, for which we have already arranged, is to give this additional guarantee, in order to complete the scheme. If the scheme remains incomplete it is obvious that no benefit will accrue to the Sudan Government. For that reason alone, I hope that the House will readily support the proposal of my hon. Friend. But there are two 571 other schemes. I remember, when I was at the Treasury, being approached by a very important deputation from Lancashire, which represented to me that the production of cotton in the world was being very seriously endangered, and that the position of the cotton trade in Lancashire would be affected seriously unless we developed, with all the energy in our power, new sources of supply. They were well aware of the situation in the Sudan. These were people who were entirely unconnected with the company to which reference has been made to-day, but they urged, in the interests of Lancashire, and the interests of the cotton trade, and the interests of the hundreds of thousands of operatives in Lancashire who depend for their maintenance upon the cotton trade, that the extension of the loan which was then required by the Sudan Government should be given.
I think that the House of Commons, after the experience of recent months in connection with the cotton trade, will appreciate that the situation to-day is far more critical than it was then. Everyone knows that one of the greatest impediments to employment in Lancashire has been the price of raw cotton sold in this country. The reason why the price has been high is that the world supply is not sufficient, owing to the failure of the cotton crop in America, and accordingly a diminished supply was created, and there was a great rise in price which made it impossible for us to sell the finished cotton goods at a price which our customers in the East could afford to pay for the great exports of cotton goods which we used to send to them. In that very difficult condition of things which exists at the present time, it would be extremely imprudent to do anything which would tend to check the bringing into being of any new sources of supply within, I would not say, the British Empire, but within the purview of these lands over which we exercise authority.
After all, we are responsible for the Government of Sudan. The Prime Minister the other night said that the ambition of his Government was to extend the oasis to cover the whole desert. That is what we have been endeavouring to do in the Sudan. Unless something is done in the administration of the Sudan 572 to increase its possibilities of production, then we are going to leave that country as we found it, a derelict country. Nothing can be done in that country to increase its prosperity unless encouragement is given to the growing of cotton. Unless this dam is put up cotton cannot be grown in that vast area. There must be sufficient irrigation to produce crops. It is our responsibility. Are we going to refuse to recognise our responsibility, and to carry on our good work? If we look at it from no other point of view than its merely sordid aspect, the only way in which the Sudan Government can pay this money is by making the growing of cotton in the Sudan possible. Therefore, from the mere point of view of the Treasury as to meeting our national bills, it seems to me of the utmost importance that we should increase the productivity of that great country, and give the Financial Secretary the authority which is asked for by the Second Reading of this Bill.
So much for the question of the Sudan. I turn now, for a moment, to the general scheme of this Bill. I am glad that the Financial Secretary to the Treasury thinks it important to extend the operation of the export credit scheme. That scheme is not well enough understood in this country, and I support him readily in every means which he proposes to-day to let the community understand what is involved in the provisions of that scheme, because I find that there is great ignorance among the business people of this country as to what can be accomplished under that scheme. The trade facilities scheme is designed to assist employment in this country, and I do not think that any of us will feel that we have accomplished very much as yet in meeting the distress and the hardship which, unfortunately, are so prevalent to-day, owing to the want of employment.
Unfortunately, unemployment grows by what it feeds on. You can very easily take measures to remedy it which only make the disease worse if, for example, you choose the expedience of making great payments out of rates. Unfortunately you must make them at present in order to succour the people who are in destitution, but I think when you go further than that, it can be realised immediately that these schemes become at once a deterrent to employment. 573 They tend to increase the evil which you are trying to diminish. Every addition which you make to the rates of a community puts an added cost on the production of everything that you manufacture. That is obvious to everyone. [HON. MEMBERS: "So would Protection!"] And everything which adds to your cost of manufacture imperils your chance of getting orders in the competitive markets of the world. May I give the House an example which is familiar to many which will give some idea of the extraordinary results which have been produced already by rates. If you take the period before the War and the period now, you will find that the cost of rates in a ton of finished steel was then 2s. 9d., but that to-day that ton of finished steel bears in rates 21s. 4d., on the average, in this country.
§ Mr. HARDIE
I am interested in this subject specially. Does the right hon. Gentleman mean royalties when he speaks of rates?
§ Sir R. HORNE
I am talking of rates and taxes, excluding taxes on income. I am referring to all that class of thing which goes on to the cost of the article that you manufacture.
§ Sir R. HORNE
No. The House will easily imagine, when you are competing, as you are now, against foreign nations which derive very great advantages from the condition of the exchanges of Europe, apart altogether from the longer hours that are worked in several of these countries and the lower cost of wages, that anything which goes to the increase of rates has the necessary result of increasing the very unemployment which you seek to remedy. It is the same thing with regard to the taxation which takes a large portion of the revenue away from the business of this country. If your taxation is high the immediate result is that your reserves are decreased, and all of the sums which business people pile up 574 for the purpose of future development and new enterprise are depleted to that extent and prevent the affording of new employment. Accordingly, I warn the House, if I may be allowed to do so, against schemes—
§ Mr. WALLHEAD
Does the right hon. Gentleman mean to say that taxes are paid out of reserves and do not come through the price of the finished commodity?
§ Sir R. HORNE
All the profits which a business earns, including the profit which it puts to the reserve, but does not distribute amongst the shareholders, is taxed to Income Tax. You say Income Tax is high. To that extent the reserves are depleted, with the consequent result that there is less available for developments and new enterprises. That is perfectly plain to anyone who has considered the problem.
§ Mr. MAXTON
The right hon. Gentleman has raised a question in which we are keenly interested, and it would not be right to have this point concluded without its being probed to the bottom. Does the right hon. Gentleman wish to make us believe that it is only charges made by the State or local authorities that deplete the reserve, and not charges made by private individuals in the form of rent, interest and profits?
§ Sir R. HORNE
Of course, rent and all the ordinary charges are things which are costs of the business and are deducted before arriving at profits. But if you have arrived at your profits, and if taxation takes away a large proportion of the profits which are ordinarily put to reserve, the result is that the business is left with less money to carry on with, with less money for new enterprises and new developments, and with less money to afford new employment.
§ Sir R. HORNE
In commending this Bill to the House I wish to refer to a merit which it has. That is that the Bill does not embark upon expenditure of the kind which involves a loss of opportunities of new employment. What it does is to put the Government's guarantee behind loans which the traders of this country require in order to support enterprises which at the present price of money 575 they would not embark on otherwise. Let me take two instances which are very familiar to myself, because I am in touch with them. Take the new developments of the tube railways in London, upon which something like £14,000,000 has already been lent and is being guaranteed by the Government. I know from my own knowledge that this enterprise would never have been begun now if it had not been for the opportunity afforded of obtaining cheaper money through the Government guarantee. No one imagines that any money is going to be lost on these undertakings. The effect of the Government's action is that you will have no loss of capital, but you have enabled these developments to take place, and employment is afforded to thousands of men by putting the credit of the Government behind this private enterprise.
Accordingly, I commend this scheme. It has worked well till now, though, perhaps, not quite as actively as some of us had hoped. People are only now becoming familiar with this provision. There are some people who have said that it has been administered with too little elasticity. Other criticisms which have been ventured have been to the effect that the Committee have been too rash in giving some of the guarantees. It seems to me that one of these criticisms cancels the other. You will always find people who will look at a matter of this kind from two sides. Some people will think that the Committee has been too cautious, and others that it has been too rash, but, on the whole, anybody who knows how this scheme has been dealt with by the distinguished men who have given their services gratuitously to the State and to whom the State owes a great debt of gratitude, would be ready to express admiration for the skill with which the various propositions have been handled. I think that Sir Robert Kindersley and Sir William Plender, who have been on this Committee from the beginning, deserve the gratitude of the nation for the great work they have already accomplished, and I hope that the Government is in a position to assure us that the Committee will remain with the same personnel as hitherto.
I am glad that the party in power is prepared to support this scheme. Of course, its root idea is entirely contrary 576 to a principle which, I am afraid, the great bulk of hon. Members opposite supported in the course of the last election. I am not surprised at this change of front, for we have seen some very strange changes of front. This change of front is the reverse of the one that we saw yesterday. Last night the Prime Minister surrendered to a series of propositions which the hon. Member for Bow and Bromley (Mr. Lansbury), supported by the great mass of those who sat around him, would never have accepted. Indeed, his speech entirely controverted them. To-day the Labour party, in this Bill, is reverting to something which it has always implicitly believed in. That is to say, that the right thing to do was to buy all the goods you could in your own country and from your own people. The root principle of this Bill, in fact, the stipulation on which it is founded, is that money shall be guaranteed only in the case of orders to be put in Great Britain. That is a principle which I commend. I am very glad to see that members of the Labour party are unanimously supporting it to-day, and I hope they will carry it through. As to hon. Gentlemen of the Liberal party, I cannot understand what action they will take on this matter. If the right hon. Member for Paisley (Mr. Asquith) were here he could never support this Bill.
§ Sir R. HORNE
The right hon. Gentleman also was pretty good at a change of front yesterday, in running away from a Resolution which only a short time before he had put before the House. But this is a matter upon which he has always been consistent, and I cannot imagine a change in his view upon it. This Bill does violence to the whole Free Trade theory that he consistently put before the country at the last election. It says that you must buy, not in the cheapest market, but in Britain. Everyone knows that the great bulk of the material which will be supplied under these contracts may be purchased in Continental countries at a much lower cost than that which will have to be paid in Britain. I see someone shakes his head. I know the class of material which is ordered and I know the prices. This Bill does not propose purchase in the cheapest market.
§ Mr. MAXTON
Still we maintain half of the right hon. Gentleman's principles. While the Bill will stop the buying in the cheapest market it still preserves the right to sell in the dearest.
§ Sir R. HORNE
I am obliged to the hon. Gentleman for that information. Suppose that everyone else in the country were to follow the stipulation laid down by the Government in this Bill, and suppose that everyone decided to buy at home, wherever goods were available to them. You would probably have no unemployment, and in addition you would have a system of voluntary protection. But, whether the Liberal party supports this Bill or not, I have no doubt whatever that it will pass the Second Reading to-day. I hope that it will have all the success which we all desire. I am sure that up to now it is the best scheme that has been devised for the purpose of giving work to men in the trades in which they are accustomed to be employed. After all, that must be the first principle of any attempt to cure the great distress from which we are suffering. I hope that the open-mindedness which the Government have shown in this matter with regard to fiscal theory will accompany them when they begin to consider the question of the safeguarding of industry. There, again, they have an opportunity for the application of a practical mind rather than some theoretic fancy. I am sure that if they do that they will not fail to distinguish themselves in the offices which they hold.
§ 7.0 P.M.
§ Mr. FRANKLIN
I hope the House will extend to me the courtesy that is always extended to new Members, if I try to explain my thoughts in language to which this House is not ordinarily accustomed, and to put my views in a way that perhaps may be a little bit contrary to what the House might expect. I want to appeal to the Financial Secretary to do something more for the small man. We have seen how much is done for a large firm of shipowners in the last few days, when the Bank Line of steamers made an issue of £1,800,000 with a guarantee by the Government. With this guarantee it meets with a great success. But the issue contained no information that should have been given to intending investors. I ask why there was no mention made 578 either of the directorate or the conditions of the guarantee. We were told that because the company was managed by Messrs. Andrew Weir and Company, there was no need to give us information which we had been accustomed to look for in other prospectuses. Again, why was it, among the list of contracts set out there, that no mention was made of the fact that is was guaranteed, principal and interest, by Andrew Weir and Company and their partners? Those were important facts that this country should know. The security was made good by the Government guarantee, but the taxpayers of this country who will have to meet this guarantee were entitled to know absolutely the nature of the risk which they had to run. There is another point to be considered here. Why is it that special facilities should go to the big men and the small man cannot get a look in? Here you have given a sum of practically the total value of the ships. [An HON. MEMBER: "More."] The full amount of these ships was advanced on the Government guarantee plus the guarantee of Andrew Weir and Co. This gives a special privilege to special people which, when favours have got to go round, is hardly fair to others. It is quite possible that having obtained money cheaply, having obtained its fleet at what may be the lowest possible price at which tonnage can be produced, they may be able in a few years to sell this tonnage at a big price and repay the Government loan. They may also, when yon come to consider the conditions, be able to compete successfully with those who bought, whether from them or from other shipowners I do not know, at the time of the shipping boom, ships at considerably over the price.
That is not the only point with regard to these trade facilities. What I am pleading for, and what I would like to see, is those trades that have made the success of this country built up once more I am an individualist, and I believe in the opportunity of individuals to build up their trade with help that they cannot get at the present moment. We had a question yesterday with regard to the banks of this country and the assistance they could give to the small man. Banking has changed very considerably during the time that I have been in business. The private banker has practically gone out of business, and the business man no 579 longer enjoys the consideration that the private banker showed when he was prepared to make advances not merely upon security that was of unimpeachable character, but also partly upon security and partly upon the character of the individual. How many a man now successful, now beyond the needs of special consideration of an advance, has made his money because perhaps the bank or the bank manager said to him, "Look here, old chap, there is an opportunity for you. Buy this or buy that, and we will stand behind you? Cannot the Government in the same way stand behind the small man and give him a chance of keeping up his organisation and of doing something for himself? It is said that the exports credits will do all this. With all due deference to those on the Exports Credits Committee, unfortunately people do not like to disclose the whole of their business to possible rivals. That is no reflection upon anything the hon. Member opposite would do. If it came to a question of myself, I would expose my whole business to him, but there are people who feel that opening their business to people who might thereby know the whole sources of supply would place them in a somewhat difficult position. Therefore, it is no peculiar position that the amounts that are placed at the disposal of the Exports Credits Committee are not entirely used.
The hon. Gentlemen opposite can very well look after the big finances of the trusts; perhaps the gentlemen on the Government Benches look after employment and make employment, even when it places a clog upon our endeavours to enter the temple of peace and keep armaments reduced; but we who call ourselves practical idealists want to do something for the small man. I would like to suggest that in the administration of the Trade Facilities Act something should be done to put more into the hands of the bankers, who are accustomed to have confession made to them by their clients, to coming to a decision extremely rapidly, and to bringing into their business that human soul of finance that means so much. As a banker I shall not in any way benefit one way or the other. It would not come into the 580 purview of my business in any way, or I would not support it. I do not stand for the class of bankers. I do feel, however, that the bankers of this country can help us to solve these questions, support the smaller man, keep the organisation going, and keep—which is more important than anything else—men employed in their own trade, and not turn them either upon the dole to be made useless, or turn them and the only capital that they possess, which is the knowledge of their trade, to waste themselves upon roadmaking in this country. I have seen them as they come back from that roadmaking—men who were printers, men who were skilled mechanics. I sat for a certain time in another capacity, and I remember my old Bar days as poor man's lawyer in St. Pancras. I have had experience of those who were broken upon the roads, who had not the opportunity of obtaining employment in their own trades, and I have felt that, if something could be done to help the bankers to make advances with some form of State guarantee, we could maintain the small man, maintain the organisation, and maintain men in the employment to which they are accustomed—all things to which, I believe, the whole House is pledged up to the hilt.
People will say that if the Government give guarantees, the bankers, terrible and awful people that they are, will try to throw the whole of their bad debts upon the Government. If bankers, who, after all, are merely trustees for their depositors, are bound to look after the interests of those depositors, should they, if they became trustees for Government money as well as for the money of the ordinary depositor, break faith? We want a combination that will work—a banker lending on joint account with the Government, taking half the risk in everything, and then approaching the Advisory Committee with the usual banking sheet showing the loan that has been given. I heard from the opposite side an interesting accusation against us Liberals that we would be breaking away from our faith if we supported this Bill. I support this Bill because I believe that it can very largely help with capital the development of the country, and that capital is needed. The fact that I regret is that certain trades are specially advantaged while other trades are not considered. The hon. Member for Huddersfield (Mr. Hudson) the other day, 581 when he came to the question of the cruisers, said he thought that something might be done for Huddersfield. Something would be done for Huddersfield if we bought in the cheapest market, because we pay for the goods we buy with the goods we produce, and instead of having the benefit to go to certain trades every trade would benefit. I feel that I have trespassed at some length on the time of the House. I do feel very keenly that nothing was done for the smaller man, and I do appeal to the Financial Secretary to the Treasury to see if something cannot be done by using some of this large sum of money that is asked for to help the small man to keep in being his organisation, to keep employed people in their own industry, and so help the general development of the country.
§ Mr. R. C. NESBITT
I also must ask from the House the indulgence requested by the hon. Member for Central Hackney (Mr. Franklin), but I ask it in greater measure because I have been longer in the House than the hon. Member, and my feeling is that the longer one has been a Member without making a speech here, the greater is one's need for indulgence. I should be sorry to sound a jarring note in regard to the maiden speech of the hon. Member, but I cannot accept his statement that we on this side of the House are only concerned with the interest and welfare of the larger industrialists. I think we share equally with hon. Members on the other side a desire that the smaller men in industry and commerce and in every walk of life should have the same consideration as the bigger men.
§ Mr. FRANKLIN
I never intended to say that hon. Members opposite were only concerned with the bigger interests and the trusts, but I said they did take care of the bigger interests and the trusts.
§ Mr. NESBITT
I am much obliged to the hon. Member for that explanation, and I am glad to hear that in attributing that view to him I misunderstood what he said. Coming to the Bill under discussion, I have nothing to say upon the most controversial part of it, namely, that which has reference to the Sudan Loan. The Bill is what may be termed an omnibus Bill, and it is concerned with four separate matters. Three of those 582 matters have already been dealt with in this House and have formed the subject of previous legislation, but the fourth is new. Speaking of the Bill generally, I wish to call attention to the fact that three of the four matters with which the Bill deals are concerned, not with the provision of money, but with the provision of guarantees. With regard to the guarantee of the Sudan Loan for irrigation purposes, I make no observation, except to say that, speaking for myself, after the lucid statement made by the Financial Secretary to the Treasury and amplified by the right hon. Gentleman the Member for the Hillhead Division of Glasgow (Sir R. Horne), I do not think the House will have any doubts about extending and continuing the guarantee.
With regard to the export credits system, I may venture upon a few observations as one who has spent 30 years in the City of London connected with banking and insurance. I am surprised that out of powers to the extent of £26,000,000 which have been provided for this purpose, amounts to the extent of something less than £9,000,000 have been utilised. The Committee which deals with this matter consists almost entirely, as the hon. Member for Central Hackney will be glad to know, of bankers, reinforced by the presence of the hon. Member for Farnham (Mr. A. M. Samuel). No more guarantee powers are being asked for in this Bill; all that is being asked for is an extension of the time in which to exercise the guarantee powers already granted by this House. There should be no difficulty as to that. Subject to what may be the custom of my hon. Friend's bank, I suggest that these are credits of a character not usually undertaken by the bankers of the City of London. These are not short credits; they are longer credits and, in my humble judgment, the whole transaction is in the safest possible hands, and it is a perfectly proper transaction for the Government to undertake. I now pass to the third of the topics dealt with in the Bill. This is an entirely new proposal, and it does not propose to guarantee anything, but it proposes that we should pay something, and that proposal has arisen out of a very interesting situation. It arises out of the Imperial Economic 583 Conference at which the late President of the Board of Trade presided. It was there proposed to offer to the Dominions guarantees for capital and interest, but they, one and all, said they were able to raise their money without having recourse to the aid of this country, and one of them said the matter did not really interest him very much. I was reminded of that by the remark of the hon. Member for Mossley (Mr. Hopkinson) in a recent Debate to the effect that a friend of his had said that he and his fellow manufacturers were not interested in guarantees of this description.
The alternative proposal which finds a place in this Bill arose out of that discussion at the Imperial Conference. It is quite a new proposal, and it is that we should undertake a payment not exceeding £5,000,000 to defray up to three-quarters of the interest on any loan raised for the purposes of undertakings in the Dominions, in so far as the money raised by that loan is spent on the production of articles in this country. From my experience of matters of this kind in the City I was a little disturbed by something which the late President of ths Board of Trade said in this connection. He said we must make arrangements with each Government in each particular case and that each case must be dealt with on its merits; that some undertakings would take longer than others to become revenue-producing, and that these would want more help, while the others which became revenue-producing more quickly would require less help. I wish for an assurance upon this point. Does this statement mean that when an undertaking which is receiving a payment of interest for the period mentioned becomes revenue-produing, then this country is to receive back again any interest which it has meanwhile provided, or is the payment to be regarded as a gift which will never come back? It is a rather dangerous situation if one person to whom you advance money, whether in principal or interest, is to be called upon to pay it back if circumstances enable him to do so, whereas another person whose undertaking has been less prosperous is to be able to make arrangements whereby he need not pay back at all. I may have drawn a wrong conclusion, but I am stating the impression left upon me after reading the very 584 clear speech of the right hon. Gentleman when meeting the Premiers of the Dominions. I think that all should be treated alike in the matter of repayment.
We are all familiar with the payment of interest on capital during a period of construction. That goes; it is part of the capital expenses of the undertaking. It does not come back into the accounts when the undertaking has been constructed and becomes revenue-producing. It may well be that this payment of interest is to be in the nature of the interest which would be paid out of capital during a period of construction. That is one of the matters upon which I should like to hear the Financial Secretary to the Treasury. With reference to this new activity for the purpose of providing work for the unemployed, I should like to know how the Treasury proposes to be satisfied. Without quoting the exact words of the Bill, I understand that the condition is that the Treasury must be "satisfied," that the work will be put in hand, that it will create employment, and that it will be done in this country. But I notice no indication as to how the Treasury is to be satisfied. It will be within the recollection of those who were in the House when the previous Bill was introduced by the right hon. Gentleman the Member for the Hillhead Division that great stress was laid upon the means by which the proposal was to be carried out, and the Act of 1921 contained the words "after consultation with an advisory committee." I should like to pay a tribute to the composition of the advisory committee under the Trades Facilities Act, and, as a humble private Member, to supplement what has been so well said by the right hon. Gentleman the Member for Hillhead. We could not be in better hands than in those of Sir Robert Kindersley and Sir William Plender, who have given their time and their services to this work. It is very important that the question of what undertakings are to have the advantage of having their interest paid during the period of construction should be carefully considered, and that the Treasury should be advised by a committee of high financial standing. I do not find in the Bill any procedure laid down for working the scheme, but I am in favour of the scheme, and I think it a helpful provision, subject to the points to which I have called attention.
585 This brings me to the part of the Bill which deals with trade facilities. I had it in mind to say something on that subject, but, like every new Member, I find it has already been said by somebody else far better than I could say it. The amount provided for at the present time is £50,000,000, and the Bill proposes that it should be increased to £65,000,000, and the Financial Secretary stated that he was being pressed to make the amount more than £65,000,000. I hope he will not yield to that pressure. Only an abnormal state of unemployment justifies the Measure at all, and the House of Commons should keep a close eye upon its administration. On the balance of advantage and disadvantage I cannot help feeling that, even if the hon. Gentleman has to come back again when the £65,000,000 is exhausted, it would be more in the interests of the country that an opportunity should be given to the House of saying whether or not a further sum was to be guaranteed. That suggestion is in the interests of sound finance, and in the language of the lawyers it would give the hon. Gentleman "liberty to apply." I hope the hon. Gentleman will adhere to the present proposal in spite of any pressure. A matter in connection with the trade facilities provision which strikes me as going to the root of the whole question is the composition of the advisory committee. The only justification for the continuance of the proposal is the result which has come from the guarantees already undertaken by the advisory committee. The advisory committee are most unlikely—if the esteem and confidence felt for them in the City of London is justified, and we know it is—to allow the Government to be called upon to meet heavy losses under these guarantees. The loss at present is the small sum of £4,000 which is satisfactory. You will observe that that means that they are only going to give guarantees in respect of undertakings which can perfectly well raise money without any Government guarantee. I think that is the natural corollary, and I cannot help remembering that Mr. Hilton Young, who, I think, was then Financial Secretary to the Treasury, said that he could not say too strongly that these guarantees would not be granted to persons who were able to find the money without them. That was a cardinal 586 part of the scheme. That being so, I think one is entitled to look in order to see how far that has been translated into action.
I find undertakings like those that have been mentioned, great railway and electrical undertakings, and I do not feel much inclined to criticise the guarantees there—these are public utility undertakings almost—but when I come to private businesses which are receiving guarantees, I may call in aid of the criticism which I am venturing to make the words of the then Financial Secretary to the Treasury, because I observe that guarantees have been made very largely to shipping companies. I have not the advantage of being connected with any shipping company, but I observe the name of Messrs. Harland and Wolff, and my hon. Friend opposite, the Member for Central Hackney, has said something about the Bank Line. The number and the amount of the guarantees that have been given to shipping companies, I venture to think, are rather out of proportion to the total amount provided under the Act, and although the Act says we shall have regard to the considerations to which I have referred, I think that outside the considerations found in the Act you must have some consideration for the industry itself. I read with great interest the report of the new President of the Chamber of Shipping, Sir Alan Anderson, at its annual meeting last Friday. There is, of course, no greater authority. He has been a friend of mine for many years, and he is a man on whom we can rely. What he said in his presidential address was this:I notice that in their last days our late Government started lending money to shipowners or shipbuilders on easy terms in order to bring about employment in the shipbuilding centres. We sympathise with the anxieties of shipbuilders, masters, and men, but I feel sure that the best informed among them would agree that it is dangerous to apply this artificial stimulant to the shipbuilding trade in its present condition.I pause, before reading the next sentence, to ask the House to remember that at the present moment there are in the world something like 8,000,000 tons of shipping laid up, and in this country something like 1,000,000 tons of shipping laid up. That is what the President of the Chamber of Shipping means, I think, when he says that it is dangerous to apply this artificial 587 stimulant to the shipbuilding trade in its present condition. He goes on:If shipbuilders and shipowners are left to work out their own salvation according to the economic laws, the orders for ships will gradually increase"—this was last Friday only—beginning with special steamers and extending, as owners gain the impression that the time of lowest prices is going past; but if shipowners who have had such severe lessons of bad trade due to excess of ships in the world gain the impression that their business is to be made a cockpit for non-economic Government activities, it seems probable that every ship that is built before its time by Government action will postpone a dozen or more other orders which would otherwise have been placed.Coming from such a source, and noticing the large amount that is being guaranteed to shipowners—I say nothing more about other private enterprises—in the absence of all the particulars that we in the City of London look to find in a prospectus, I think this is a matter for consideration. I speak with the greatest possible respect to the advisory committee, for I cannot conceive of a more difficult task than to deal with the various schemes put forward, but it seems, perhaps for very good reasons, that they have acceded rather readily to the applications of the shipowners.
I want to say this, finally, that I agree with what the hon. Member for Westhoughton (Mr. Rhys Davies) said, I think, on the Financial Resolution, namely, that he thought there should be more information given to the House. It is not my purpose to analyse this evening the returns which are made to this House, but the information contained in them is meagre in the extreme. I noticed the other day that somebody said of the persons who apply and whose applications are refused," Cannot their names appear, and cannot the reasons for refusal appear?" I think that would be a most unfortunate course of action. I can only say it would be of great disadvantage to those who have applied, and perhaps rightly applied—certainly rightly in their own estimation, or at least, I hope so—that it should be known publicly that their applications have been refused, but with regard to those who have received the guarantees, more particulars should, I think, be supplied. There is no reason why those particulars should not be supplied. I do 588 not observe any dates on which the moneys will be repaid. I do not know whether they are for a long term of years or a short term of years, or whether they are all for the same period. I know that when you make an application to the Advisory Committee you have to say what extent of employment will be created if the loan is guaranteed, but there is no information given to the House, after the guarantee has been given, as to the extent to which employment has benefited. I do not want to go into details, but I do ask the Financial Secretary to the Treasury to see that we are put in possession of adequate material in regard to the conditions under which these guarantees are given. It only remains for me to thank the House for the very patient way in which they have listened to my speech, and to resume my seat with some thankfulness.
§ The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Arthur Ponsonby)
I hope the hon. Member for Chislehurst (Mr. Nesbitt) and the hon. Member for Central Hackney (Mr. Franklin), who preceded him, will forgive me if I do not follow them in their exceedingly able and interesting maiden speeches, but I intervene for a very few moments in this Debate in order to deal with a small point in the part of the Bill which concerns the Foreign Office. In the debate that we had on the Financial Resolution the other night, several points were raised by hon. Friends of mine on this side of the House, and I was impressed by the fact that there seemed to be a lack of the information for which they asked. In consultation with my right hon. Friend the Secretary of State for Foreign Affairs, we have decided to approach the Sudan Government with a view to clearing up some of the points more effectually, and a despatch will be sent, through the British Residency at Cairo, to the Sudan Government asking them if they cannot obtain an undertaking from the Sudan Plantation Syndicate, Ltd., that all cotton produced in the Gezireh district shall be offered for sale in the first instance in Great Britain; then whether, in order to prevent any attempt on the part of the Syndicate or of any other important financial interest to effect a corner in long staple cotton, they could 589 examine the possibility of fixing a maximum price. I foresee a good many difficulties in that, but there is no reason why that question should not be put to them. More especially we want to have full information with regard to the treatment of natives, and we are asking for a report on the present system of taxation, particularly with regard to its incidence in this area, and how it affects the cultivators in the Gezireh. Finally, we are asking for a report as to the exact system under which the tenant cultivators will develop their plots, with particular reference to the security of tenure enjoyed by the tenant cultivators. I think that really covers the points that were raised the other evening, and we are anxious to see that this scheme, for which, as my hon. Friends know, we are not ourselves responsible—it is a legacy—shall anyhow not be subject to adverse criticism which we should feel was justified.
I need not enter further into it, because the Financial Secretary has really covered the ground most fully. I would only make a plea at this stage of the Bill, and ask the House that it will be good enough to allow us to have the Second Reading of the Bill this evening by a quarter past eight o'clock. [HON. MEMBERS: "No!"] There will be other opportunities for discussing it, on the Report stage and on Third Reading. Business is so behindhand just now that I am afraid that not only the Easter Holiday but the Whitsuntide, and the summer holidays are in jeopardy, and if we do not have the weapon of the Closure, it must be the very much more formidable weapon of continual session. I hope, therefore, that hon. Members will allow us to have a Second Reading of the Bill to-night at a quarter past eight. They will have ample opportunity, on further stages, of discussing the Bill.
§ Sir PHILIP DAWSON
The Prime Minister addressed the House on the 12th February, and said:We.… propose to speed up the Trade Facilities Act.… which requires to be reinvigorated. … Such a letter as that addressed to the late Prime Minister by Sir Allan Smith has already been taken into consideration, and will be made the subject of proposals later on."—[OFFICIAL REPORT, 12th February, 1924; col. 760, Vol. 169.]That letter was addressed by Sir Allan Smith, as Chairman of the Industrial 590 Group of the House of Commons at that time, and the memorandum which accompanied it had been prepared with very great care, and expert opinion from outside had been consulted. That document contained a large number of proposals in connection with the Trade Facilities Act, among which there was one to which I propose to devote my attention this evening. It was the one to which the Industrial Group attached the greatest importance, because if carried out it would give a very large amount of employment at once to our engineering industries in this country. It is in dealing with skilled labour that we find the greatest difficulties to-day, and for that reason I propose to deal with that one thing more especially. That scheme was in connection with a proposal to carry out the electrification of a considerable amount of our railways, not only upon the suburban systems, but also portions of the main line systems.
In dealing with the various proposals which have been put before the Advisory Committee, that very able body referred to just now, I do not wish in any form or shape to suggest that they have not done their work in the most admirable manner, and with particular regard to the safety of the country's money, which they have the duty to look after. But I do suggest that the guarantees demanded in most cases have been exceedingly strict, and, perhaps, more complete than would be necessary, and quite as great as those which would be demanded by financial houses under similar conditions. I entirely associate myself with the views expressed last Tuesday by the hon. Member for Central Newcastle (Sir R. Aske), when he suggested that the administration of this Act has been far too cautious and narrow. It seems to me it might be useful, and of great assistance, to the Advisory Committee, if the Government were to give them some indication that absolutely looking after the safety of the money that they are guaranteeing, and nothing else, should, in certain cases, be not quite as strictly observed as it is today. It might be an advantage, too, if in addition to the members who compose that Advisory Committee, and who are most eminent financiers and bankers, a representative of our great industrialists, were added to see that the moneys which are granted give the greatest amount of 591 employment possible, particularly to those classes of labour which, at the present moment, are most lacking employment. Upon this subject, I should like to refer to some remarks which were made on the discussion of the Appropriation Bill, on the 1st August last, by the right hon. Gentleman who is now President of the Board of Trade. Referring to the letter of Sir Allan Smith and the proposal contained therein, the right hon. Member for North-west Camberwell (Dr. Macnamara) said:That sort of work is extremely valuable. It gives employment to skilled men, whereas municipal public utility relief work is broadly pick-and-shovel work, which can be done by unskilled men."—[OFFICIAL REPORT, 1st August, 1923; col. 1581, Vol. 167.]In the same discussion, the right hon. Gentleman who is now President of the Board of Trade said:I would ask whether it is not possible for the Government to make representations to the railway companies to ask that they should put this work in hand with the least possible delay. It is not enough to talk about schemes for electrifying suburban traffic on the southern lines and other lines Surely there are larger schemes for electrification of large stretches of the main line winch have been under the consideration of the companies, which the companies know will be profitable to them, and which might be put in hand if only the Government would exercise the influence which it is entitled to exercise upon the railway companies."—[OFFICIAL REPORT, 1st August. 1923; col. 1589, Vol. 167.]I feel confident that if my right hon. Friend the then President of the Board of Trade had occupied that position to-day, he would have done everything in his power to bring about the desired result. I hope the right hon. Gentleman, who made the remarks which I have just read to the House, will carry out the suggestions he then made, and see what can be done in that direction. The proposals set forth by the Industrial Group are certainly such as must be remunerative. The experience of electrification so far carried out is quite sufficient to justify the statement that in not a single case in this country has it not proved a great financial success. Comprehensive schemes of electrification need to be placed simultaneously, instead of bit by bit, as at present and in the past. By comprehensive schemes, I mean schemes for which plans were completed some time back, and 592 which railway companies could, if they so wished, place in hand at once. In carrying out such railway electrification schemes, there would be a very large amount of other work put in hand for which no Government guarantees at all would be required. Large electrification schemes mean the supply of a large amount of electric power, and the contracts into which the railway companies would enter would immediately bring about the extension of large existing stations, and the creation of new ones, and it would do a great deal to benefit districts which, to-day, not being industrial, cannot possibly expect to get large supplies of electric power at cheap rates, such as could be supplied if large power stations were erected for the purpose of supplying railways. In placing such orders, the railway companies would not only benefit our workpeople and our industries all over the country, but they would bring about a very much better condition of trade, which would react upon themselves, and give them increased traffic.
It has been suggested by some that large expenditure for the electrification of very considerable schemes might involve certain risks to the shareholders, and, more particularly, it has been said by some that the electrification of portions of our main lines would not be remunerative. May I quote the remarks made by Mr. Macrae, who was the chairman of the London, Brighton and South Coast Railway Company, at the annual general meeting on the 15th February, 1922?From the extension of our electric system we anticipate a very considerable increase of traffic. A report has been prepared after many months of careful investigation. It has been submitted to the Minister of Transport, and included the electrification of the whole suburban area, as well as the equipment of the main lines as far as Brighton and Lewes. We have received favourable reports on the commercial and financial results likely to be attained. We have all the plans worked out, and are in a position to place the contracts. We have the advice of experts, supported unanimously by our officers concerned in the working of the railway, that, in order to hold our traffic, it is imperative that this work be undertaken, and that the results will be greatly to the benefit of our proprietors in the way of increased revenue and profits. Is it not our clear duty to you and to the public to get ahead with the work? If we were independent we would do it, and would set about it at once.593 At the same meeting a very eminent authority, and one with great experience of railways and electrification, Sir Robert Perks, stated:What I want to say is this, that I hope the board of this company will go fearlessly forward with a really profitable scheme of electrification, which should include the two most important points, Brighton and Eastbourne. I do not think this company ought to be satisfied with simply an electrification of suburban lines.In his reply to the remarks at that meeting, Mr. Macrae stated:The total estimated cost of the electrification of the whole suburban system and the main line generally to Brighton and Lewes is £10,000,000. So careful were we that we should make no mistake that we determined to check the advice and opinion we had received by some independent authority. We did so. We obtained what we were told was the highest authority available in the world, with the result that we obtained from him a report confirming, in the fullest possible way, the advice, and expressing his own unbounded belief in the results which would be obtained by the electrification of our line. These results were of such a character that personally I am convinced it is only by carrying out such a programme as this that we can hope to maintain dividends on this line.At the next annual general meeting, on the 21st February, 1923, Mr. Gerald Loder, who presided, said:During the year we have pursued our policy of electrification, but progress was checked by the impending amalgamation.In that connection, I would point out that, whatever benefits may have been achieved, or may be anticipated, by the grouping of our railways, it certainly has unfortunately resulted in very considerable electrification schemes that were prepared practically falling to the ground, and not being proceeded with at the present moment. But for that amalgamation, or grouping, we know, from the public statement made at the time, that the Great Eastern Railway Company would have electrified the whole of its suburban system. It had plans prepared, and was ready to carry out the work. The North Eastern Railway Company had complete schemes from York to Newcastle, and that work would, undoubtedly, have been taken in hand but for the grouping. We know, too, from statements I have just read that the Brighton Railway had the intention of carrying out complete electrification of its suburban lines, a portion of its main line. All that work to-day is stopped, and very little electrification 594 is being proceeded with which was not decided upon before the grouping. I think, perhaps, the House has not realised to what extent main-line electrification is in operation to-day, not only in the United States of America, but also on the Continent of Europe, or the great schemes which are now being completed, and the new schemes being taken in hand. In passing, I would refer to the fact that there appears to be rather a misapprehension on the part of many that the only main lines worth electrifying are in countries where there is no coal available, or in very mountainous countries where water power can be secured. That is not in accordance at all with the facts. Some of the most successful main-line electrification schemes are in Germany to-day, some of which have been in operation for 10 years, on 100 or 150 miles of road in places where electricity is generated by steam. In the United States the same thing holds good. Part or the Orleans railway is being electrified and part of the heaviest portion, just outside Paris, is going to be supplied from a big power station in Paris. It appears to me that if anything can be done to accelerate work of this kind, a great deal of good will be done in regard to unemployment. Not only is that so, but large schemes of that kind, if taken in hand in sufficiently large numbers, will enable the work to be distributed among all our different manufacturers, instead of each contract as it comes along being raced for, and one getting it and the other getting nothing. It is work which will take some years to complete. It will enable the manufacturers to work out a programme which will allow them to look two or three years ahead and keep down their standing charges, to produce more economically, and put them in a far better position for competing for orders abroad. In conclusion, I should just like to say—
§ 8.0 P.M.
§ Sir P. DAWSON
Well, I hope I know my job. I have no interest in this matter personally. I would like to see this electrification work carried out on the scale suggested in the memorandum presented by the Industrial Group, which the Prime Minister referred to on the 1st January. Work of that kind would bring 595 about, not only a great improvement in employment, but would get skilled people to work, and give them safe work for the next three or four years. It would have another and very beneficial effect, because experience has shown that, when works are full, plenty of people are ready to place orders, and it is always when little work is going on that people are afraid to place orders. If they realised what it was best to do, they would place their orders when there was little going on, because they would get quick delivery and receive their plant on the most reasonable terms. Electrification covers a very much larger ground than appears at first sight. It means rails, it means steel work, it means coaches, locomotives, buildings, piping, boilers and coal conveyers. It will give work in all those things all over the country, to the steel worker, the coal miner and the foundry-man, and by carrying out work of that kind the country would be risking nothing by giving any guarantee that might be necessary to induce the railway companies to proceed. I venture to suggest further that the Government might see its way to overcome difficulties that the railway companies might have in carrying out work of that kind. The railway companies might suggest, and I think quite reasonably, that there might be certain risks in carrying out electrification, that they might not be able to earn the money required to pay interest on their capital, and I think the Government should urge the advisory committee that they should bear any risk of that kind. Wherever electrification has been I carried out, it has been a financial success, and I suggest that it will be a financial success in this as well as in other countries
§ Mr. HARDIE
I am always surprised I that in these Debates on Trade Facilities we go away to Egypt or some far-off place in order to deal with the subject The right hon. Member for Hillhead (Sir R. Horne) made it plain that whenever private enterprise fails because of it being in the clutch of the banker, it has to pick a section of the Socialist programme and get the whole community to guarantee cheap money. The whole fraternity of bankers have said to-night that, wherever private industry rules, where the maws 596 of capitalism cannot be filled, they are ready to adopt that part of Socialism which is to give them cheap money. This is not a trade facilities scheme at all If it had been a trade facilities scheme it would have given to the industries concerned the means of increasing their trade or carrying it on. In the city I represent, three weeks ago, there was an order going for £20,000 of machinery. An application was made for help under the Trade Facilities Act, but the whole thing was turned down. When you ask why a thing like that was turned down, the bankers in this House all say that it is a bad thing to tell the truth about why help under the Trade Facilities Act has not been granted. My opinion is that you cannot go wrong at any time in telling the truth, and I believe it would be a warning to any people who are trying to do shady business, if the truth were to be told. Why should we talk about Egypt and dams in Egypt when ye have in our own country, where not the slightest attention has been given to the re-organisation of industry since the War, a big-import of oil coming in while we send all our own oil out of the country? Britain contains in her strata the most valuable oil in the world, but we are so stupid and so non-technical, that we in this House, night after night, talk about Egypt or India while at our own doorstep there are all these great depths waiting for development and only requiring a little help in the shape of trade facilities.
Here is industry crying out about the cost of living, owing to the higher cost of petrol. Have we not the intelligence in this country to combat such an increase? If we could only see to it, we have the power and the skill to produce fuel in this country from our own raw material that would make it absolutely useless to import a single gallon of petrol from any other country. And what have you got on your railways? Every time you change your train at Crewe you wait till another train is made up to take you somewhere else. This is due to the shortage of stock. But before the War we carried one million tons of pig iron in this country and to-day we do not carry so many pounds. On this subject I would like to ask the right hon. Gentleman the Member for Hillhead a question as to what he said 597 about the increase of rates on steel from 2s. 9d. a ton to 21s. 4d., as it is now. I do not accept those figures, and I would like if the right hon. Gentleman would provide me at his convenience with information as to how these figures are made up. The Member for Hillhead is connected with steel, and he ought to know that, right from the manufacture of the crude pig iron up to the steel, we have got in this country the most inadequate system. He did not say whether the 21s. 4d. was made up in the actual ton of steel, whether it was on railway rates or on the pig iron, or how it was made up.
§ Mr. W. GRAHAM
I am afraid I can only speak again by leave of the House, and I simply rise for the purpose of appealing to hon. Members to give us the Second Reading of this Bill. The House has already had the Second Reading, the Committee stage and the Report stage of the Financial Resolution. The House will have, after the Second Reading tonight, the whole of the Committee stage, the Report stage and the Third Reading of the Bill on the Floor of the House. I would remind the House that the Act has now expired, that a very large amount of employment depends on this Bill, and I believe this view commends itself to my right hon. Friends opposite. It is an agreed Bill, and I earnestly appeal to them to give it a Second Reading.
§ Mr. A. M. SAMUEL
I would point out that there is £61,000,000 at stake here. I am loath to stand in the way of giving work to unemployed men, but we who have studied this Bill know that there is a lot to be said about it. The right hon. Gentleman the Member for Hillhead (Sir R. Horne) ventured to give an opinion upon the working of the Bill which, from my experience, I know is not the fact. As a matter of fact, we get a large number of applications and we grant the facilities, but when the time comes to take them up the firms find that they have not got the orders. I do not see why we ought not have another hour or two in which to debate this Bill. I should like to explain what I think could be done.
§ It being a Quarter past Eight of the Clock, and leave having been given to move the Adjournment of the House under STANDING ORDER NO. 10, further Proceeding was postponed without Question put.