§ Order for Second Reading read.
§ 3.50 p.m.
§ The President of the Board of Trade (Mr. Harold Wilson)
I beg to move, "That the Bill be now read a Second time."
The Government have decided to introduce this Bill at this time because it deals with a problem which is of great importance in both the short term and the long term. In the immediate future we need maximum production from our resources. We cannot afford the restrictive practices that grew up on both sides of industry between the two wars. I had a few remarks to make on that subject in the Debate on the Economic Survey last week, when I commented on those industries which, instead of taking their merchant adventurer spirit into the markets of the world, went in for the apparently easier and safer, but ultimately more disastrous policy, of restriction of supply, price fixing, "feather bedding," and reliance on a safe, protected home market.
However, the problem we are dealing with in this Bill is a long-term question as well. The need for increased production and the need to sell greater quantities of our goods abroad will not pass with 1948 or with 1949. The whole basis of our economic life has been changed by the war with the loss of our foreign investments and the change in the terms of trade against us, and as we solve the problem of production, as we move forward from conditions of general shortage, we shall be faced more and more with the problem of selling what we are able to produce. Whether the nation could or could not afford those restrictive practices, those price fixing arrangements, which existed in the twenties and became much more widespread in the thirties, is not for me to argue now. It is not for me to offer a view either on how far some of those practices were dictated or perhaps condoned, by conditions of permanent deflation and mass unemployment.
What is certain, however, is that in the world as we know it now, as it will be in the next 10 or 20 years, we cannot as a 2019 nation afford restrictive practices if they increase our costs abroad, if they prevent the fullest development of inventions and new techniques, or reduce output, or maintain prices at an excessive level to our consumers at home; or afford practices which deny to the new and more efficient producer a means of entering an industry, or to the inventive or progressive producers a chance of expanding. We cannot afford those things.
The case for this Bill rests on three main facts: first, the great growth of monopolies and restrictive practices during the present century in this country; secondly, the undoubted powers that these monopolies or restrictive arrangements have to inflict damage on the economy of a country or to inflict injustice on some of His Majesty's subjects; thirdly, the clear necessity of finding out all the facts to see whether this power to do harm is, in fact, being used in an antisocial way and, where it is, of taking effective and appropriate steps to curb any of these anti-social practices.
It is common ground that during the past half-century monoply or monopolistic conditions have taken hold of an important section of British industry. It is common ground equally that over a large proportion of the remaining field of industry, even where firms have remained nominally independent and sovereign concerns, there are price fixing arrangements, quota arrangements, boycotts, loyalty rebates, centralised selling, price leadership, retail price maintenance, and black lists cutting off supplies to individual dealers. This trend towards monopoly conditions was no doubt dictated in many cases by an attempt on the part of business concerns to get for themselves what security and stability they could in a period of insufficient demand. And certainly, as industry became equipped with more and more capital plant—which is a healthy tendency in industry—there has been a corresponding desire to preserve some stability of return on that plant. More particularly, those industries who had over-inflated their nominal capital in that orgy of over-capitalisation which followed the last war, were particularly active in forming monopolies or price-fixing arrangements.
Whatever the reason may have been, there has grown up a host of restrictive 2020 arrangements in British industry which have had the effect of frustrating and destroying the operation of that free enterprise which I think some sentimentalists-still fondly imagine characterised British industry before this Government came into power. I do not think anyone in industry or in touch with industry in this country will dispute that there is a general belief in industry that price competition is wasteful, disorderly, to be avoided, if not actually immoral. Many people say that. I do not say that agreement on prices is always contrary to the public interest—no doubt there may be cases where it could be justified—but competition is the public's natural safeguard in any industry which continues on a basis of private enterprise, and the attitude of mind that I have just described is a denial of everything that goes with free enterprise.
There has been no lack of published information about the operation of trusts and cartels, combines and monopolies in British industry, from the 1919 reports of the Committee on Trusts, the 1929 Report of the Balfour Committee on Trade and Industry, to the more recent reports of working parties, and the special inquiries into particular industries such as textile machinery, radio valves, cement, and so on. Then, in addition to public reports, private enterprise—the economists, the lawyers, the journalists—have, within the confines of the libel laws, published a mass of information on this subject.
This Bill appears after 30 years of public and private reports on this subject, but where it breaks new ground is that now, for the first time, something is to be done about it. It is common ground in this House and in the country, as it was common ground among the Ministers of all parties who associated themselves with the White Paper on Employment in June, 1944, that, to quote that White Paper:there has in recent years been a growing tendency towards combines and towards agreements.… Such agreements or combines do not necessarily operate against the public interest; but the power to do so is there.That statement is the starting point for this Bill and, if I understand aright, it is equally the starting point of the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe) who has this week published a most interesting essay on this subject. There is a lot of that essay, perhaps 2021 most of it, with which hon. Members in all parts of the House will be in agreement. Perhaps our main complaint is that the right hon. and learned Gentleman and his party did not do something about these things before when they had power to do it. But I assure him that we welcome their belated conversion and their new found enthusiasm, and we look to them for full support of this Bill, and I am sure from his essay, that we shall get it.
Forms of combination which produce what are called in this Bill "conditions of monopoly or restriction" can and may operate against the public interest. They operate against the public interest, I should say, when they charge excessive prices to the public; when they discriminate against traders, whether manufacturers or distributors, who through somewhat greater efficiency can charge lower prices than their competitors; when they suppress inventions which would improve on existing methods; when they create quite unnecessary duplication of competition in services because they have excluded competition in price. In the international sphere they can do harm, both to this nation and to the trading interests of the world as a whole, when they limit and reduce world trade, and thereby nullify the measures which particular governments are taking to open the markets of other countries to the produce of their countries. And of course, the power of certain international cartels, led or dominated by pre-war German interests, affected not only economic interests but also entered into the political and even into the military sphere.
Many of these cases have been the subject of painstaking inquiry by the National Economic Committee and the Bone Committee on Patents in the United States, and I do not intend to go further into those particular inquiries. A monopoly is neither good nor bad in itself, but it has the power to be either good or bad. A monopoly which involves full integration of the financial and economic structure of an industry—as for instance, Imperial Chemical Industries—may well have great technical advantages within itself which a cartel or a price-fixing association has not, especially in relation to redundant plant and research and the advantages of large-scale operation; but, at the same time, its strong selling power gives it undoubted power to do harm to the public generally and to particular consumers.
2022 One might go to the other extreme and I take the simple price fixing associations and independent firms who may, though of course they do not necessarily represent the worst of both worlds and who have neither the technical advantages of monopoly nor the competitive advantages, such as they are, of free competition.
There is one class of monopoly which I must mention before I come to the details of the Bill. That is the monopoly which springs from the granting of patents. The monopoly which the patent gives can be used, and no doubt is generally used, in the public interest; but there may well be cases where licences are granted under patents containing restrictive conditions which are not in the public interest. Certainly, the Monopoly Commission in its inquiries must not stop short of patents and licences which have been granted under them, and it will give in its findings no doubt express views on restrictive conditions in licences.
I do not think that any action taken to correct such matters should be taken under this Measure. We want to avoid confusion and duplication. Any action regarding patents must, I think, be taken under the Patent Acts. Some very useful suggestions have been made for strengthening the Acts in this particular field. Some of my legal friends may say that the Bill as it now stands does, in fact, give me powers to deal with licences which have been granted under patents. That is a matter I want to look into before the Committee stage. If I find there is any possibility of confusion or duplication I will undertake to put down an Amendment to remove it.
I have referred to the inquiries which have taken place in the past on monopoly or price-fixing arrangements and perhaps I might briefly mention one or two of the conclusions, as illustrations of the type of case which might justify to the House the use of the powers asked for in this Bill. In November, 1945, my predecessor asked the Central Price Regulation Committee to inquire into the prices of radio valves. The Committee found that the prices at that time were on the whole fair in relation to profits, the excess profits which were made on the sale of valves for replacements being offset by the losses on the sale of valves to the makers of radio sets. The report, which has been 2023 published, brought to light a wide variety of restrictive practices carried out by the British Radio Valve Manufacturers' Association. Although there is vigorous and active competition between the members of the Association in their sales to the makers of wireless sets, in their sales of replacement valves to distributors, they fix sale and resale prices, and they limit the numbers in wholesaling and retailing, and prescribe the manufacturers from whom wholesalers may purchase. They operate a black list of persons who have incurred their displeasure. The report concluded:the price policy of the Association is that of a discriminating monopoly.… In view of the limitation of our terms of reference, we have not considered the effect of this policy on the national economy generally.I will take also the report of the Committee on Textile Machinery which was set up by the then Minister of Supply. This Committee also made some forthright comments on the monopoly which exists in that industry as far as spinning machinery is concerned. It widely criticised its unenterprising management, its over-complex financial structure, inadequate research and unsatisfactory costing methods, and it made specific recommendations for action by the monopoly. All these recommendations have been carried out or are being carried out at present.
Hon. Members who have read this report will have seen that the Committee specifically considered that in this case:whatever the objections to monopolies, it is not practicable, even if it were desirable, to put the clock back.It concentrated not on any attempt to oppose monopoly but on removing its bad features and the monopolistic practices which were contrary to the public interest. In this matter the Committee made its own definition of what the public interest was. I think the House will agree that it rightly concluded that the principle of over-riding public interest in this particular field was increasing the production of spinning machinery to the maximum possible figure.
There was the recent inquiry on cement costs which was set up by my right hon. Friend the Minister of Education when he was Minister of Works. This was confined in its terms of reference to the price policy of the Cement Manufacturers Federation. It did not go into questions of output. 2024 Its general comment on the Federation's activities so far as prices were concerned was not critical. The report makes plain the danger to the public interest which lies in what is, I think, a common vice of trade association and monopolies, that is the preservation of high cost plant, over-expensive competition in quality, because the competition in price has been removed, inadequate research and inefficient costing methods. Because of the limitation of its terms of reference the Committee did not go into these questions in any detail.
There is a most important report in the field of distribution, the report of the Committee which was presided over by Lord Simon of Wythenshawe, on the distribution of building materials. I am sorry to say it has not been possible to publish this report in time for the Debate. I hope, however, it will shortly be on sale; meanwhile a copy is available in the Library for the use of hon. Members. I do not wish to prejudge the considerasion of this very important report by commenting on it now in detail. The report has to be considered as a whole, but the Committee has undoubtedly found evidence of monopoly and restrictive practices on a wide scale in the field covered by its terms of reference—practices which, in the view of the Committee, are not in the national interest. It is obviously not appropriate for me to comment now on its findings. This is only one of many conclusions which must suffice until the Report can be seen as a whole and the various organisations concerned can comment on it. I can certainly say that when hon. Members see the report they will agree that the Committee has produced considerable prima facie evidence of a kind which will suggest that within the building materials field there will be a number of cases for early consideration by this Commission.
Besides the monopolies and monopolistic practices which have been the subject of public reports of one kind or another, our productive and distributive system is honeycombed with restrictive practices of one kind or another. Hardly a day passes without those Departments of State which are concerned with the economic life of the country being brought up against this fact in one way or another. I remember particularly my experience when I was in the Ministry of Works, I found it was no uncommon thing if we were purchasing 2025 components required for housing that on putting it out to public tender, the tender prices proposed from a large number of firms in a particular association all gave exactly the same figure. In the case of thermostat immersion heaters for temporary houses, for instance, I well remember 12 tenders all coming back with exactly the same price to the nearest halfpenny.
When I made inquiries about the cost of house building—and the House has expressed its concern at the high cost of house building—I was given a list of several hundreds of components and materials entering into the cost of building a house. I asked for an asterisk to be put against all those which were subject to price fixing by the associations. As I told the House on 23rd January, 1946, the reply was that it would be of far less trouble to asterisk those which were not so controlled. I must add, however, that the degree of price control exercised by the Minister of Works has kept the danger of inflated housing costs arising from this factor within very narrow limits indeed.
I would like to refer to another case which is continually being brought before me—the case of the electric lamp industry. I think it is widely understood that they cost more here than in any other big producing country; that lamp manufacturers are linked in a tight ring based on the pooling of patents.
§ Mr. Oliver Lyttelton (Aldershot)
Did the Minister say it was generally thought that the price of electric lamps in this country was higher than in any other big producing country? Is he not aware that the price here is lower than in any other country on the Continent of Europe?
§ Mr. Wilson
I said I thought that that was widely understood. If the statement is wrong, however, I am sure that the right hon. Gentleman, who may have some evidence, will make his contribution to the Debate. I certainly do not think that he will deny that those producers are linked in a very tight ring and that independent production is virtually made impossible in this field. Evidence has been brought to my attention only recently of an ex-R.A.F. pilot who wanted to develop a new technique for making fluorescent lamps, but was frozen out by the withholding of supplies of glass tubing from factories controlled by ring firms. This 2026 was the evidence which was brought before me but I have not been able to test its accuracy. The public ought to be satisfied that accusations of this kind, which are being made daily, can be thoroughly examined.
§ Mr. Lyttelton
May I ask when it has been the practice of Ministers to place before the House, with all the aura of official authority, evidence which they admit they cannot support?
§ Mr. Wilson
I think it is legitimate, in asking the House to set up a tribunal, to have regard to this kind of evidence.
§ Mr. Wilson
Most people with experience of the trade tell me that this ring is reinforced by a system of tied retailers and that retailers who buy lower-priced products from firms outside the ring are threatened with the cutting off of supplies of all ring products, including, perhaps, types which the non-ring producers may not make. Another thing I am told—and I am only mentioning this as a further case for inquiry—that if I or any other of His Majesty's subjects—
§ Earl Winterton (Horsham)
It would be as well if the right hon. Gentleman were to inquire first of all into serious allegations which are made by Members on his side of the House.
§ Mr. Wilson
I gave way because I thought that the noble Lord wished to make a contribution to the Debate.
§ Mr. Lyttelton
We are trying to deal with this Bill as far as possible in a non-controversial way. What I am asking the right hon. Gentleman is that, when he is setting up a Bill to make an inquiry, he will not attempt to prejudge, on a lot of evidence which he cannot support, what the finding of that Commission will be.
§ Mr. Wilson
I am not attempting to prejudge anything. I am arguing that there should be a tribunal to look into these matters without delay. I do not know whether the noble Lord the Member for Horsham (Earl Winterton) or the right hon. Member for Aldershot (Mr. Lyttelton) is an authority on my next subject—the manufacture of dentures from acrylic resin, which is supplied by a monopoly. I understand—and I can give particulars 2027 if the right hon. Gentleman so desires—that if I wanted to engage in this particular manufacture I could not do so unless I became a Member of the Association of Dental Manufacturers. This Association, in its trade rules—and this is evidence, not hearsay—sets out one of its objects in these terms:To impose such restrictive conditions on the conduct of the business of dental manufacturers and traders (hereinafter called "the trade") as may by the Association or its members be deemed expedient.… The doing of such other things whether in the restraint of trade or otherwise as are incidental or conducive to the attainment of the above objects.I think it will be agreed that, if an association with such objects flourishes, there is a very strong case for public inquiry.
I have given these illustrations, not as conclusive evidence, but as arguments that there are very many cases in this country about which we ought to have the facts and about which, perhaps, something ought to be done. We are not today arguing the case for or against free enterprise in this country; but I would suggest, in the light of some of the cases which I have mentioned, that there is the fullest substantiation that there is an extensive proportion of the economic system of this country in which the suggestion that free enterprise is flourishing or exists is based on either self-delusion or humbug. As I have said, these arrangements are potentially harmful, though in any particular case they may not be operated in an anti-social way. It is vital that we should not only have powers to get at all the facts about them but also that we shall be in a position to act swiftly and effectively protect public interest against any harmful arrangements which have been made purely for private gain.
We have not thought it right to confine ourselves merely to the collection of information. Certainly, to swing the searchlight of public inquiry on to some of the obscurer corners of our industrial life will be of enormous value. I think the publicity, or threat of it, will cause any of those industrialists who may, without realising it, be acting in an anti-social manner, to alter their arrangements, even without any question of sanctions being applied by the Government. I hope that as a result of early cases before the Commission, the hammering out of a system 2028 of case law may have its effect on business practices generally. In any case, in advance of reference to the Commission, the Government and the House may be assured that when industry has had its attention drawn to these matters they will at once start an examination of their practices without waiting for an inquiry. But it is not in our view enough merely to provide powers for getting at the facts. We have had previous experience of getting at the facts at a time when monopolist restrictive arrangements were less widely spread than they are today. Following the Report of the Committee on Trusts, Section 3 of the Profiteering Act, 1919, dealth particularly with trusts and combines. The Board of Trade were directed toobtain from all available sources information as to the nature, extent and development of trusts.A very hard-working Standing Committee on Trusts of which the late Lord Passfield, the late Professor Hilton, and my right hon. Friend the Member for Wakefield (Mr. Arthur Greenwood) were perhaps the most active members, presented some 25 reports, and a further eight reports came from the Standing Committee on Prices. But there were no sanctions, and those reports became a dead letter. The Profiteering Act lapsed in May, 1921, and although the Government of the day said that they had under consideration the question of legislation for dealing with restrictive practices, and got as far as drafting a few Bills, I do not think any were introduced. We cannot rely on the old-time common law practice to protect the public or the ordinary trader against restrictive uses. The force of that concept has been greatly weekened in the past half century. In fact a contract in restraint of trade is not illegal at common law. It is merely void in the sense that no court will enforce an action against a party who breaks it.
We have to introduce specific and new legislation to deal with the problems. That is why this Bill provides us with eyes and ears, and a fairly lengthy nose; but it goes further than that, and provides a pretty effective set of teeth as well. In drafting the Bill we have had to have close regard to the experience of other countries; to that of the United States with the Sherman Act, the Federal Trade Commission and the special exemption 2029 from the operation of the Sherman Act provided by the Webb Pomerene Act; to the Canadian Combines Investigation Acts of 1923 and 1946, the recent fact finding powers taken by the Government of Sweden in 1946; the Bill recently published by the Belgian Government, as well as arrangements made in Norway and Australia. We have considered the lessons we might learn from every one of those countries, but of course we have tried to produce a Bill on lines best suited to the special conditions of this country.
The main purpose of this Bill is the establishment of the Monopoly Commission. In any case where the conditions described in Clauses 3 to 5 of the Bill are found to operate, the Board of Trade have power to refer them to the Commission for investigation and report. The Commission are not given any power for initiating inquiries, and nor has any member of the public the right of direct access to the Commission with any complaint or grievance which he wants investigated. The responsibility of deciding whether a case, large or small, should go to the Commission rests with the Board of Trade. One of the main reasons for that is that we are anxious to protect the Commission from having to waste time of dealing with cranks and cases of relatively small importance.
§ Mr. Wilson
And industry too. It will be for any person or trade with a grievance, including the cranks and the persecuted, to bring grievances to the Board of Trade. As the right hon. Gentleman will agree, this will not be anything new. We hope to refer to the Commission the most important cases from the point of view of public interest, especially those affecting the operation of important industries, and their capacity to maintain and expand export trade. But we do not intend to rule out cases which may appear to be quite small in their initial effect but which may cause harm to small traders. In any case, they will serve as test cases on which the Commission can build up a useful case law. I am in consultation with my colleagues on this question and I am satisfied that there are a number of cases where there is a strong prima facie argument for consideration by the Commission. I can assure the House that 2030 if this Bill is passed it will not be a dead letter and there is no question of the Commission suffering from under-employment.
In Clause 2, Subsection (I), there is a provisothat a reference shall not be made under this Subsection where the prevalence of the conditions in question is expressly authorised by or under any enactment.This proviso, perhaps not unnaturally, has aroused public comment. It has been asked why public monopolies created by statute are excluded from inquiry and control as against private monopolies, and all kinds of sinister and unworthy explanations have been given for this proviso, so I had better explain the reasons for it.
It is true that by various statutes of this Parliament, and of previous Parliaments, monopolies have been established when it seemed to Parliament right that for technical or other reasons the public interest would best be served by the operation of the industry or service by a public monopoly. But when Parliament established that monopoly it laid down in general detail the conditions under which it would operate and the protections which it thought right the consumer or other traders affected should have against the possible abuse by the board or corporation of its monopoly powers. The statutes in question also provide for general powers of direction to be exercised by the appropriate Minister in relation to the board or corporation in question. In other words, the conditions under which these monopolies have been established have already been through the most searching and detailed examination, not by a commission, but by the High Court of Parliament itself, and Parliament has laid down the conditions which are necessary for the full realisation of the public interest.
That is exactly what has not happened in the case of private monopolies or of some of the restrictive practices I have referred to, and in bringing these also before the searchlight of public inquiry and under the possibility of public control, we have put them, to a limited extent, on the same footing. [Laughter.] Well, take for example the fact that the Acts of Parliament providing for the nationalisation of coalmines and the transport of this country have provided—
§ Mr. Lyttelton
Were all the Clauses of the Transport Bill fully discussed before the High Court of Parliament?
§ Mr. Wilson
That has been fully debated here before, and certainly every detail of the Transport Act has been more discussed than, for instance, the operations of the British and Allied Electrical Manufacturers' Association. In this case we have provided that there shall be no undue preference involving discrimination in favour of one trader or group of traders against another. But no trader has any such protection against a private monopoly or a restrictive trade association. This Bill at least provides the prospect that in appropriate cases such protection can be given. As I have said, in addition to the consumer councils and other measures of protection for the consumer provided for under the Coal Industry (Nationalisation) Act, the Board is subject to general direction in the exercise of its powers by the Minister of Fuel and Power, and no price-fixing monopoly is so subject to general direction.
I know that some hon. Members have expressed concern because they cannot debate the detailed day-to-day operations of certain public monopolies, but I would like to ask them when the House has ever been in a position to debate, much less control, not only detailed, but important general questions affecting the operation of private monopolies and private cartels. Indeed, even criticism of private monopolies has been very much prevented in the past by the operation of the laws of libel in relation to public companies—and many of these price-fixing associations are in fact registered as public companies. Or rather, it is not the libel laws themselves—and I make no reflection on them—so much as the fear of costly libel actions—generally on the part of publishers—which has operated to prevent the activities of certain monopolies being brought to light. I have known personally a book containing detailed and authoritative research on the supply and price of a basic consumer's need—a staple foodstuff in fact—where, although the work was passed by high legal authorities as not libellous, the publisher refused to print for fear of possible legal action. Under this Bill the activities of anybody exercising monopoly or partial monopoly 2032 powers can be brought into the light of day.
So this proviso does not discriminate in favour of public monopolies; rather it is based on the fact that where they have themselves been through the Parliamentary process before being allowed to function, it is only right that the public, through its Parliamentary representatives, should similarly have the right to satisfy itself on the operation of privately-owned monopolies. But public monopolies are by no means excluded from the operations of the Bill. If one of them were to engage in activities not directly provided for with prescribed safeguards under the statute—if, for instance, the National Coal Board were to make mining machinery—and if the other conditions of the Act were not fulfilled, it would be possible to have such activities brought before the Commission.
Further, we have provided in Clause 2 (2) that the Government can seek the expert advice of the Commission on the activities of a public board, even though there can be no formal reference under the Act. Circumstances might arise in which the Government would like to have the advice of what will have become a body expert in the operation of monopoly powers on the activities of the board of a nationalised industry, or, of course, a marketing board. In such cases the Board of Trade would act only in consultation with the appropriate Departments of State. Similarly, we should be free to ask for the informal advice of the Commission on a particular case in the field of services which are not covered by the Bill, but on which the Commission in appropriate cases might be consulted.
Clauses 3 to 5 of the Bill describe the conditions under which it is competent for the Board of Trade to refer cases to the Commission. These Clauses are, I am afraid, necessarily complicated, because they have to cover a very wide and varied range of arrangements covering supply and production, processing and export trade. The condition precedent to any reference to the Commission is that at least one-third of the goods in question are supplies by or to a single person or to two or more persons acting together. This proportion of one-third was chosen as the lower limit on what could in future constitute control of the market. In fact, a very high proportion of the cases we should wish to 2033 submit involve a much greater control of the market than one-third. All the cases I have myself examined, for instance, cover more than 50 per cent., generally a very much higher proportion than that. But we rejected the figure of 50 per cent. since some trade association or monopolist could then have attempted to prove themselves outside the scope of the Act by producing figures showing that they covered not more than 49 per cent.
The House will have observed that the figure which is used covers, in addition to the activities of a single seller or a single buyer, the activities of suppliers or traders acting together by formal or informal arrangements. It may well be that activities harmful to the public interest are carried on under some purely informal Agreement. It was Adam Smith who said thatpeople of the same trade seldom meet together, even for merriment and diversion; but the conversation ends in a conspiracy against the public.I would not entirely associate myself with that cynical interpretation of what business men do when they get together for merriment or diversion.
Certainly, the Commission should have power to inquire into informal as well as formal arrangements. Subsection (2) of Clause 3 goes much further than that and covers cases where there may be no arrangement, formal or informal, between the supplying firms. This authorises the Commission to go into conditions usually referred to as "price leadership," where a single firm, without being in monopolist position, and without there being any formal cartel or price fixing association, is in a position to influence price and other conditions of supply; in such cases the price set by the leader is invariably followed, even though there may be no formal arrangement to do so.
Now I come to the form of the investigation, and to the question of sanctions and enforcement. Clauses 6 to 9 deal with the form of references of the Commission and to the procedure and powers, and to the publication of reports of the Commission. In view of what I have said I am sure the House will agree that the Commission should have all the powers required to bring facts to light—full access to documents, powers to cross-examine witnesses and to take evidence on oath. The House will have seen from Clause 6 2034 that references to the Commission might be framed either to limit the investigation and the report to the facts, or to require the Commission to investigate and report on the facts and further to state whether, in their view, the facts which they find involve any harm to the public interest. The more limited kind of inquiry is required particularly for dealing with international cartels.
As the House knows, international cartels are not a new development. Indeed, the records of the Board of Trade include details of an international market sharing arrangement for the control of supplies of alum as far back as 1275. This particular cartel, which started under Genoese Control, had all the most modern features—output quotas, international market sharing, minimum price agreements, payments for not manufacturing goods, under production, overcharging, discriminatory price cuts, allocation of raw materials and struggles as between the members of the cartel. Starting in a small way, in 1275, it was finally developed to its highest standard of effectiveness by Popes Pius II and Pius III. In fact, this cartel controlled the entire world market in conjunction with the King of England and the Emperor of Austria, and was able to use sanctions, which are denied to international cartels at the present time, in the shape of excommunication and the Papal Bull.
In the modern world our view about international cartels must be very similar to what I have, said about national cartels. They have the power to do harm, though they do not necessarily use that power. So in the International Trade Charter which has emerged from the Havana Conference there are international provisions quite similar to what is proposed in this Bill. The International Trade Organisation will first establish whether there is a prima facie case for inquiry into any monopoly or cartel about which complaint has been made by a member nation. If there is it will carry out a full investigation and may then decide whether the arrangements in question are having harmful effects on international trade. If it decides that they have, it may then ask the members concerned to take action and may recommend particular remedies. Subsection (I) of Clause 6 of the Bill enables us to find out the facts, and so to fulfil our obligation under the Charter to 2035 supply the I.T.O. with the facts of an arrangement to which our nationals are parties. The question whether any national action will be required, following the international body's consideration of a particular case, will come at a later stage. At that stage, it would be necessary to make a full reference to the Commission if any question of sanctions arose.
Now I should like to come to the question of sanctions and the procedure which has to be followed before the sanctions can be used. I am quite confident—and I am sure that the House will agree—that publicity itself will operate, in the majority of cases, to cause a monopoly or association, which is acting against the public interest, to change its habits. But we clearly cannot count on this, and the experience of the investigations made under the Profiteering Act to which I have referred, confirms the Government in their view that we should have power not only to expose but also to put an end to practices which are harmful to the public interest.
Where the Commission recommends that a particular monopoly or price fixing arrangement is operating in a manner harmful to the public interest, the appropriate Government Department is empowered under the Bill to make an order, subject to affirmative Resolution of both Houses of Parliament, to prevent people entering into particular agreements, or to make existing agreements illegal; to put an end in particular cases to boycotts, stop lists and discrimination; to deal similarly with loyalty rebates, special discounts and other forms of preferential terms. Finally, powers are given in respect of conditional sales and other forms of conditional supply.
The phrase "the public interest" occurs a number of times in the Bill, and some have suggested—the right hon. and learned Gentleman for one—that we should set out a definition of the public interest in the Bill. The Government have not thought it necessary or desirable to do this. I think every Member of the House knows what he means by the public interest and applies that test to a very wide range of questions that come to him for judgment. But I doubt whether any Member could provide a legal definition of what he means by the 2036 public interest, capable of covering changing national conditions and of being applied to all the cases that might be referred to the Commission. I can sincerely inform the House that we have tried our best to work out such a definition and have failed. This is a matter that can, and should, be safely left to an impartial tribunal—because I can certainly, and most willingly, give this House a pledge that the Commission will be impartial.
If, however, the House asks me what I should mean by public interest in present circumstances, I should say the overriding test of the effect of a restriction on the public interest is this: does it make the job of selling British' goods in world markets easier or more difficult? The second test is, in my view: does it result, in the long run, in the consumer getting more of the goods he wants, more cheaply—in other words, does it increase or lessen the efficiency of the industry? Does it help us to get the best distribution and full employment of our national resources of labour and material? Does it interfere with people's right, subject to legislation, to enter any trade they like? Does it encourage investors to put their money into the development of industry, and does it encourage managements to be more enterprising? Does it prevent the location of industry in the areas where, on social or economic grounds, it ought to be located? The famous case of the "murder" of Jarrow is the one paramount in our minds. In some industries, of course, there will be special criteria: strategic needs, independence of dollar sources and so on. There are some of the questions that have to be put—but the emphasis to be attached to each must vary from time to time, and from one case to another.
§ Sir Arthur Salter (Oxford University)
Does the right hon. Gentleman's interesting definition of "public interest" apply only to this Bill, or to the general character of the Government's economic policy as well?
§ Mr. Collins (Taunton)
Would not the definition which my right hon. Friend has given of "public interest" fit in very well with his definition of Socialism?
§ Mr. Wilson
If I were to go into these interesting subjects I should get very wide of this Bill. I think the right hon. Member for Oxford University (Sir A. Salter) 2037 will find that everyone of the parts of the definition I have used "sticks out a mile" in the whole of the Government's present policy. However, I do not wish to go into that matter now.
This Bill, in Clause 10, deals with the order-making power. If, in spite of such an order, the practice or arrangement were to continue it would, of course, be open to the Government, or to any private citizen injured by the arrangement to apply for an injunction against the party or parties concerned, and if an injunction were granted against any party or agreement any continuance of the practice would make that party answerable to the courts for contempt. The Bill provides powers also, for the Ministers concerned to make such an order—subject to affirmative Resolution of both Houses—even in cases where the Commission has not declared that the practices in question are contrary to the public interest. It may be that the Commission on some occasions will feel unable, in some cases, to interpret the public interest, and will wish to leave the interpretation of the public interest in such cases to Parliament. A Resolution of the House of Commons, therefore, declaring that such arrangements are contrary to the public interest would under Clause 10 enable the competent Minister to make an order.
In public discussion in certain quarters it has been suggested that this brings the whole procedure on to the political plane and that there may often be victimisation of particular interests by a hostile House of Commons. I cannot accept these arguments; they are completely derogatory to the standing and prestige of this House. In the last resort this House is, and must be, the authority which decides whether or not any particular practice is in the public interest. This is not a new principle. The House has, for example, passed the fair wages resolutions—a matter which it considered of public interest, and no one has ever suggested that in doing so it has acted in any way other than that of the elected guardian of the public interest. But, as I have said, even following such a Resolution an order made by the Minister concerned is still subject to affirmative Resolution of both Houses. I do not think I need go into the Clauses dealing with the enforcement of orders of the competent authority, or questions involving investigations and restriction on 2038 the disclosure of information or other Clauses.
I have dealt with what is in this Bill. The House will agree that it is a necessary Bill. I hope it will agree that it is an effective and a just Bill. Before I sit down, however, I feel I should refer to one point which has emerged from public discussion of the Bill in the last two or three weeks, and that is something which is not in the Bill, namely, the power to deal with the restrictive practices of trade unions. I make no apologies for this omission. It does not rank the Bill, as some say, as a class Measure. In fact, I am fortified in this matter by the statement issued by the Conservative Party, and by the right hon. and learned Gentleman in his recently published treatise on this subject. The Conservative statement says—and I cannot express our view of this better—that their legislation wouldexclude agreements dealing with wages, housing, and conditions of employment. These are excluded not because restrictive labour practices are unimportant, but because they cannot be appropriately dealt with by the same methods of legislation as restrictive business practices"—We entirely agree. The statement goes on:The Conservative Party … wish to see both types dealt with together by methods appropriate to each type.This is clearly stated in the right hon. and learned Gentleman's publication on this subject, and that is our approach to this problem.
I think we are all agreed that the country cannot afford restrictive practices on either side of industry, but restrictive practices in the matter of working conditions are a very different thing from restrictions on the supply of goods. We are dealing with men and women, not with chattels. Far too many of our troubles in the past have been caused by people who have treated men and women just as units of labour and not as human beings. It is never possible to get far in dealing with any question of a labour restrictive practice without getting involved in a wages question. An increase in the coalminer's stint, the redeployment in the textile industries which is now being actively pursued in Lancashire and elsewhere—all these things involve changes in piece rates and in earnings, and these, the whole House agrees, are matters for settlement between trade 2039 union representatives and employers. They cannot be dealt with by Act of Parliament or a statutory commission. I want the House to know—I think it already knows—that the Government are in earnest in this matter as well as in the matters dealt with in the Bill, and the Lord President of the Council will have something further to say about it this evening.
As I have said, our paramount need today is more production. Our most vital long-term problem is likely to be a need to reduce our costs of production and distribution, and to achieve this, not by cheap labour and wage cutting, but by maximum efficiency. Restrictive practices on either side of industry are a luxury we cannot afford and I hope we shall never be able to afford them again. In the past, if the miner, or the builder, or the cotton spinner worked harder and agreed to new methods of working or mechanisation, he was working himself or his brother out of a job. Our economic system has to be organised so that every increase in production, every cheapening of production, every new invention or new process, will mean, first, in the next year or two the strengthening of our overseas economic position and secondly, in the years that follow and in the long run, a rising standard of living for our people.
It is in that spirit that we have introduced this Bill, which is aimed at providing effective action for dealing with all those restrictive practices and all the possible abuses of monopoly power which are capable of being dealt with by legislation; and it is in that spirit that I ask this House to give this Bill its Second Reading.
§ 4.47 p.m.
§ Sir David Maxwell Fyfe (Liverpool, West Derby)
It is my duty to express the thanks of the House to the right hon. Gentleman the President of the Board of Trade for his lucid exposition of a difficult Bill. I am afraid that I can only welcome one of the resemblances between the right hon. Gentleman and Job of Biblical fame. He expressed his satisfaction—and for that I thank him—that his enemy had written a book, but when he proceeded, like Job, to go into depths of lamentation, I think he went rather too far with the material at his disposal.
2040 There is one point on which I should like to refresh his memory. He made a not very forcible or bitter party point about myself and my hon. Friends in our attitude to this problem. I would remind him—and I think his researches will bring the matter to his mind very quickly—that in 1929 there was the Balfour Committee on trade and industry, and that Committee reported that there was no cause for immediate action. In 1931 there was a Committee on the Restraint of Trade which dealt with Re-sale Price Maintenance, and here again an impartial committee reported and recommended that no action was required in that field. Therefore, the right hon. Gentleman has not a very long period in which he can complain about the attitude of my party. I would also remind him that in 1944 the Government, in which my party shared, was also a party to the White Paper on employment, which contained the passage dealing with this subject which he has read.
In 1945 the Conservative Party in the election manifesto of that year expressed its wish for an inquiry on the lines that are now suggested. My right hon. Friend the Member for Aldershot (Mr. Lyttelton), my hon. Friends and myself expressed the same view in the Industrial Charter some 18 months later. The President of the Board of Trade has been good enough to mention that several times, and I myself have repeated that view only a short time ago. It is right that it should go on record that on this subject there is a considerable, and I venture to say not at all discreditable, history of the connection of the Conservative Party with the desire that this matter should be the subject of investigation.
§ Mr. C. Smith
Without wishing to delay the right hon. and learned Gentleman unduly, may I ask him to give an indication of the principal steps taken by the Conservative Party to deal with this matter between 1931 and 1939 and will he make particular reference to the action taken on the report presented in 1938 on the Anglo-Argentine meat trade, which was the report of a committee set up jointly by the Governments of this country and the Argentine?
§ Sir D. Maxwell Fyfe
I do not think the hon. Member could have been listening to me. At first, I was not asked whether I would give way and that is why I did not give way at once. If the hon. Member had listened to what I said immediately before his interruption, he would have heard me refer to the two last reports of 1929 and 1931, both of which did not recommend that action should be taken. Therefore, the first words of the hon. Member, "Why was no action taken after 1931?" disclose the fundamental fallacy which underlies both his interruption and its content.
One point on which both sides can unite is one which we support in the Economic Survey for 1947, in which the Government said:Success demands effort and, even more, a constructive and flexible approach by both sides of industry to the problem of production. There is now no place for industrial arrangements which restrict production, prices or employment. Such regulations and traditions grew up as a means of protecting those engaged in industry from the effects of a shortage of work and of empty order hooks. But now there is no such shortage, nor need there ever be under a policy of full employment.It is that statement with which we entirely agree—that this Bill cannot be effective if it be confined to action on one side of industry. That, we think, is a matter of great importance and deserves even more underlining than was given to it by the President of the Board of Trade a short time ago. I agree with the first part of the right hon. Gentleman's approach, that today one cannot confine monopolies to the old idea of a single seller, or its modern equivalent of what is called in America the trust, but one has to include and take into consideration the operation of agreements which are restrictive and in restraint of trade. What we must consider—and this is the mischief which we have in mind—is where a person or group of persons acting together have the power to influence prices in conformity with their own wishes. That is what we have to consider and, as the right hon. Gentleman quoted from the original White Paper on Employment, that may or may not be a disadvantage to public interest. It may be a disadvantage, however, and it is therefore a matter for inquiry.
I think the right hon. Gentleman should have considered the implications of what 2042 are the usual criticisms which are made against these monopoly or restrictive practices. He said, and it is generally accepted, that the most common motive for monopoly has been the desire for security and stability, and I believe it follows from that that the greatest danger of monopoly lies in the direction of inertia and inefficiency rather than profiteering, and that prices which are fixed by agreement in the way that has been described are apt to permit the survival of the less efficient and the only moderately efficient as well as of their efficient rivals. That is one of the points the implications of which we must consider. I also agree with the right hon. Gentleman that we must consider the question whether, during a trade recession, the maintenance of prices might have a bad effect and increase unemployment, but we must consider first and foremost the effect of the inertia and inefficiency which I have mentioned.
In looking at the other side of the picture, the arguments which have been advanced in support of monopoly, one has to give full value to two of them and not to dismiss them as unnecessary. One is that it is right to maintain prices at a remunerative level because at an improperly low level the efficiency of the industry will be attacked through its inability to modernise its plant. The second is that there must be occasions—and I am sure the right hon. Gentleman will agree with this—especially after wars, when industries have accumulated certain stocks for special purposes and when the orderly disposal of those stocks and the maintenance of some regulations as to how they should come on the market are obviously and clearly in the national interest.
I want to welcome the attitude of the Government that when one comes down to it—the right hon. Gentleman came strongly to the water even if he did not drink with any great relish—the argument for monopoly is broadly the argument against competition and the argument against monopoly is broadly the argument in favour of competition. We on this side of the House, who believe strongly that there is no other system than the competitive system, which provides the minimum of waste with the maximum of choice, were very glad today to welcome what we think is a considerable change for the better in the hearts and minds of the right hon. Gentleman and his friends.
2043 The reason we on this side believe there is a case for inquiry is that we are all, irrespective of party, anxious to try to maintain a high and stable level of employment and also, at the present moment, to secure the highest level of production. The right hon. Gentleman suggested, in what I have described as the lamentation portion of his speech, that the field was very extensive. I ask him to take another look at the very useful survey which his Department carried out in 1933 as to the constitution of British industry. He will remember that at that time the Board found that there were some 263,000 manufacturing firms employing some 9 million people. I would not discount, of course, the fact that of these, some 200,000 were firms employing ten or less, but that still leaves some 63,000 firms employing an average of 110. Only six firms employed 25,000 or more and only 135 firms employed 5,000 or more.
§ Mr. H. Wilson
Will the right hon. and learned Gentleman allow me? I think he will agree that dealing with conditions in 1933 does not do justice to the very large number of new restrictive associations that flourished under tariffs introduced at a later date.
§ Sir D. Maxwell Fyfe
The right hon. Gentleman can have that point pro tanto: but he would not say that the picture I have given was falsified up to 1939 before there was any question of concentration, or that British industry, so far as the structure is concerned, does not consist of a very great number of small firms and a comparatively small number of large firms, and that that picture is accordingly true. That aspect of the subject under review does not provide the right hon. Gentleman with any argument on his main thesis. The reason we approach the matter in the way we do is that we find very great differences in the concentration of industries into a small number of hands. We find in the case of the chemical industry that 48 per cent. is in three large firms. On the other hand, we find that in the building industry the three largest firms control only 4 per cent. of the industry. We have this difference, and, therefore, we have a matter which is deserving of inquiry.
The position in which we are left is that there are, in the view of those of us on this side of the House, really three 2044 matters which do demand inquiry on the basis of what I have said is the main criticism, namely, the existence or production of inertia and inefficiency, and inability to get full output at the present time; there is the matter of this Bill; but there is, as the right hon. Gentleman said, the restrictive practice on the part of labour. While I quite agree, and have made the position quite clear, as the right hon. Gentleman said, I do not think that this relieves us of the responsibility of bringing those practices also into the light of day. I remind the right hon. Gentleman that in March of last year and again in July of last year I raised this point. I gave specific examples in the House, and they met, I think I can say with due modesty, with no opposition from the House or any quarter of it. Yet nothing has been done, and the right hon. Gentleman did not give us anything to bite on as to how these practices are to be brought into the light of day, and what is to be done to improve the position, which, according to the Government's own Economic Survey, admittedly exists.
Therefore, I hope that before we leave this Bill, the Lord President, or whoever is to reply to the Debate, will tell us that this relic of the days when collective bargaining was in its infancy, when the trade union movement had not achieved its strength and the Government had not taken powers to deal with the things that come below the lowest common denominator, will be brought into the light. All these practices should be generally known, because I believe, with regard to them also, that if they were generally known their out-of-date character and unnecessary aspect in the life of today would also become known and that they would disappear.
§ Sir D. Maxwell Fyfe
I think that if the hon. Gentleman had listened to what I said earlier he would not have made that interruption. Between the right hon. Gentleman and myself I think we have mentioned most of the committees which have dealt with this matter, and it has been the subject of both inquiry and legislation over, at any rate, the last 30 years, which has been mentioned. If the hon. Gentleman means by that interruption that he and his hon. Friends did not know of the restrictive practices on the labour side of industry before I made my speech in March, 1947, then the hon. Gentleman has attained to a degree of innocence which I should not have hoped to find even in him and his colleagues. He knows very well that what I was doing in March was to put forward and ask for action on the fact that was stated in the Economic Survey as to the continuing existence of these restrictive practices of labour, which were having an adverse effect on the productive capacity of the country.
§ Mr. Cobb rose—
§ Sir D. Maxwell Fyfe
I cannot give way again.
I want to pass to the third aspect of the danger of inertia and inefficiency, one also dealt with very cursorily by the right hon. Gentleman, and that is the question of the nationalised industries. What has happened there is, that the Government have created monopolies so vast, and with so bureaucratic an organisation, that they have reproduced on an enormous scale exactly these dangers which have been complained about in the operation of what the right hon. Gentleman terms "private monopolies," because they have passed beyond the limits of sound and efficient administration. The other point—and this is where the right hon. Gentleman must face the difficulty—is that they have never seriously considered the problem of how the consumer is to be protected. The right hon. Gentleman the Lord President in his palmy days, the days of his freedom from the responsibilities of office, used to put forward most admirable suggestions as to consumers' protection in the case of a public corporation. What we lament is that none of the right hon. Gentleman's admirable suggestions for consumer protection has 2046 been introduced in the form which he suggested, namely, of some independent, quasi-judicial check in the nationalised industries, for which he has been responsible as a Minister.
§ The Lord President of the Council (Mr. Herbert Morrison)
Has the right hon. and learned Gentleman ever heard of the Transport Tribunal?
§ Sir D. Maxwell Fyfe
The right hon. Gentleman is talking of a different stage. The Transport Tribunal deals with the charges scheme, but the consultative committees, which are the only means by which the consumer can get the matter of charges investigated, have no power at all; and the right hon. Gentleman has emasculated the schemes of the public corporations and at the same time has emasculated the powers of Members of this House to put forward the complaints of consumers. Therefore, we have in this exactly that encouragement of inertia and inefficiency which has been complained about—the operation of monopolies and restrictive practices.
I want to say one word about the alternative methods of dealing with this problem. The right hon. Gentleman said that we had borrowed the American procedure to some extent, but having given some study to this matter, I venture to think that this is a live country where we should strike our line; and, if I may in two sentences give my reason for it, that proposition will, I hope, be acceptable to the House. The American method is to issue a prohibition of the practices. Let me take the practical difficulties as I see them. I hope the right hon. Gentleman will agree with me. I believe that it is difficult and almost impossible to list the types of practices which could never be justified, with the emphasis on the "never," and that in the vast majority of cases it is abuse of the practice and not the existence of the practice which brings about the harm. I believe that any attempt to list in that way would cause uncertainty and resentment, that we should have to have a power of licence in the Board of Trade, and the right hon. Gentleman's Department would be immediately overwhelmed, especially in the initial period, by a host of applications for exemptions, which would really bring the matter into administrative chaos. That is the practical objection as I see it, apart from the difficulty of definition.
2047 Another difficulty is that there have been in the Sherman Act and the Clayton Act prohibitions, first, of contracts and combinations in restraint of trade, and, secondly, in regard to price discrimination, subject, as the right hon. Gentleman said, to the saving of the export trade which the Acts introduce. But the effect has been that, when applying these Acts, the court has had to make a distinction between good and bad trusts—if I may shorten the expression—and that it has had to apply, as it is termed in America, the "rule of reason" in deciding whether such agreements should be put an end to or not.
But the difficulty does not arise so much with the rules which the American courts have evolved as the fact that the result has been a series of legal Armageddons, vast pieces of litigation which have been very pleasant to my profession in the United States, but have gone to such a scale as nearly to bring the procedure into, I will not say, disrepute, but into great difficulty in operation. Look at the punishments. The last time I looked there seemed to be a small number of racketeers, a large number of trade unionists, and extremely few other people—at any rate, who had received any personal punishment in the matter. Equally with regard to the Federal Trade Commission. Although it has done excellent work, its form has been so legalistic as to have little general effect, and its cease and desist orders have become obsolescent so quickly that the operation of the Act has not received great public approbation. Therefore, I am sure we are right in going on our own line.
Some people have been attracted by the idea of the registration of restrictive practices as a means of dealing with those practices. Again, I believe the practical difficulties are too great. There is the difficulty of definition; there is the difficulty of excluding trivialities—because one does not want to compel people to register very small matters—and there is the difficulty of the size of staff. I think that in 15 years the Federal Trade Commission in the United States required a staff of 546, with 113 lawyers—which makes even me quake rather in contemplating them all being together. Without machinery of that sort, without a vast increase in the right hon. Gentleman's Department, undoubtedly practices would 2048 be registered and receive, by their registration, the imprimatur of the right hon. Gentleman's Department. Therefore, we have gone in the right direction, and in the very short time for which I shall detain the House further I wish to deal with points in the Bill on which we think the right hon. Gentleman has deviated from that proper path on which he embarked.
I understand from him that he means to have a high-powered Commission; and with that assurance I shall not deal further with that aspect. In view of what I have just said in trying to summarise the American experience, I ask him to consider that the operation of the Commission should not be too legalistic. I see that the persons who come before the Commission must have the right of the best advice; but I hope that the right hon. Gentleman, or whoever puts this into operation, will try in the first place to see that this Commission gets round the table in an attitude of inquiry, rather than in an attitude of prosecution and putting the person who is the subject of the inquiry in a hypothetical dock. I am sure that enormous benefit will be obtained if that approach can be made. I shall not detain the House by discussing the staffing of the tribunal; I leave that simply on the basis that to be successful it must be high-powered.
A matter which has given me and my hon. and right hon. Friends considerable difficulty is the question of the definition. The definition in the Bill falls into two parts. Clause 2 deals with the state of things into which the Board of Trade have to inquire, and says:Where it appears to the Board of Trade that it is or may be the fact that conditions to which this Act applies prevail as respects either—(a) the supply of any goods in the United Kingdom or in any substantial part thereof.I take that as an example. In that event the Board may refer the matter to the Commission. But when we look at the conditions in Clauses 3, 4 and 5, the tests are, first, in Clause 3:any goods in the. United Kingdom or any part thereof if either—(a) at least one-third of all the goods in question which are supplied in the United Kingdom or that part thereof"—that is, any part thereof—as the case may be, are supplied by or to any one person"—2049 or to a group. That means the tests of the conditions are one-third of any part. Now I do suggest that that is getting far too low in the definition for the purpose the right hon. Gentleman has in mind. As far as I can see—I would welcome correction from anyone—there is nothing to control the size of any part, and therefore one is left to one-third, in what may be a very limited locality. I do not believe that was the right hon. Gentleman's intention at all. It certainly is not my view of what is right, and I invite the right hon. Gentleman's consideration of my alternative formula, which is a major part—that is 51 per cent. or more—of a substantial part of the country, leaving the Commission to interpret the substantial part, but having in mind a considerable area where there would be found a big manifestation of either the supply or the process under consideration. I do not believe, either that the right hon. Gentleman wants this to be a niggling Measure, dealing with a supply in one town, or in a small county, or anything of that sort, or that anyone who has approached this problem has ever had that in mind. Therefore, Clause 3—and Clauses 4 and 5 which go with it—wants serious reconsideration on that question, if the Minister is to achieve a commonsense and reasonable result.
Next, I wish to take up with the right hon. Gentleman the question of the directive to the Commission. I appreciate the argument that if there is a good Commission it should be left to them to say what is the public interest. But, after all, "public interest" is a term which varies according to the subject matter. That must be so. Here, we are dealing broadly with the question of industry and its productivity. Also, we are not only speaking to persons likely to be affected, but we want to speak to the general public. I am sure the right hon. Gentleman shares with me the view that one of the reasons for introducing this legislation is to convey to everyone in the country the sense of urgency which we feel as to the necessity for improving production at the present time, and for maintaining a high and stable level of employment for the future. The country can be spoken to far more directly by telling it what is meant by "public interest."
2050 The right hon. Gentleman has challenged us to put forward suggestions. In the past—and it is a perfectly fair form of party debating—he has said that we are negative in our approach. I hope that on this subject, at any rate, he will acquit us of that, even though he may disagree with our suggestions. On the question whether or not there should be a directive, I crave in aid that portion of the right hon. Gentleman's speech in which he himself, just off the reel, produced a number of points which received almost unanimous approval from the House. I give him my suggestions, and invite him to consider them.
In my directive to the tribunal, I would put first the maintenance of a high and stable level of employment. Secondly, I would have one or two directions dealing with prices—the prices charged for the type of goods, and also the prices charged by consuming industries which took the goods supplied. Thirdly, the volume of goods produced. Fourthly, the efficiency in the industries concerned and in the consuming industries—with which I think the right hon. Gentleman agreed—not, of course, in the sense that the Commission should inquire into the efficiency of the industries, but how their efficiency is affected by the restrictive practice alleged. That is the sense of it. Fifthly, I would put the composition of the industry. Sixthly, the United Kingdom export trade.
The right hon. Gentleman quoted strategic considerations; and, of course, certain industries would have to take that into account. But it would not be very difficult to make clear that the Commission should consider all relevant matters, and especially the points I have set out. It would help greatly if the Commission were presented with a directive on the lines I have suggested; and also it would help the people in the country who are trying to understand what we are getting at.
The other broad question in the Bill on which I disagree with the right hon. Gentleman is that of sanctions. With the procedure, so far as it goes, providing for a report from the Commission to have to come before this House, publicity would help enormously. I should think that in 8o per cent. of the cases, the fact that publicity is given would stop the practice. For another class of case I 2051 should have liked to see a slightly different procedure; that is, of report to the Commission and re-examination of the position over a number of years, which would maintain a proper position once there had been a report from the Commission. In my view this other class comprises a very small group of practices which are so clear in their operation, and—as they must be—so clearly bad that they would require legislative action. In that case I believe that the best method on the long-term view, when the Government no longer have the powers which the right hon. Gentleman mentioned, would be legislation against the practice and not against the person.
I have tried to put my suggestions constructively. Now let me put to the right hon. Gentleman my objections to his suggestions, and I hope he will consider them. Under Clause To as drafted there could be a case in which the Commission had said that in their view there was nothing against the public interest; but then the President of the Board of Trade could bring it before the House and ask the House to declare that it was against the public interest. Surely, that is striking at the idea which everyone has welcomed—that the Commission should give an objective and judicial opinion on this matter. But to say, "We do not like the opinion that the Commission give: we shall at once change it into a political matter and take the opinion of the House of Commons," will detract from the position of the Commission and from the fairness and impartiality of the procedure. On that aspect of Clause To the right hon. Gentleman should have second thoughts.
The right hon. Gentleman put forward the argument—I am trying to deal with the arguments which he raised—that in any case this House is the final court on what is the public interest. Of course, it is on a variety of matters; but I appeal to private Members on both sides of the House to consider that today everyone knows that, with the immense breadth of subjects to which we have to try to address our minds the suggestion that the ordinary private Member could take the place of an expert commission, could examine the evidence which had gone to the making of the commissions report, and then decide on the various matters 2052 which the right hon. Gentleman mentioned in his speech, or which I have mentioned—I do not think we differ very largely on the criteria of public interest on this aspect—is really a fantasy and so immodest a view of our ability to cover the ground, that I suggest it is really unreal. I seriously suggest, with the best will towards the working of this proposal, that the right hon. Gentleman should reconsider that matter.
Perhaps I may now have the right hon. Gentleman's attention on the matter of patents. There has been some misapprehension about this, as he has said. No one wishes to suggest that, where patents play a part in a monopoly, they should not be the subject of consideration by the Commission. On the other hand, the exercise of a monopoly granted to a patentee could be dealt with under existing legislation, and should not be the subject of any inquiry in connection with this Bill. That, I think, is what the right hon. Gentleman has in mind. There is machinery, under Section 37 of the Patents Act, which allows us to deal with patents wrongly used, or not used sufficiently. While one must include patents as a constituent of a monopoly practice, the mere exercise of the monopoly granted to a patentee should not, of itself, be enough to form the subject of inquiry I hope that the right hon. Gentleman will try to find words to meet this difficulty, or will give us an assurance in words which will be understood.
In conclusion, I would say this: Improved production is a national task. We agree it is possible there may be hindrances to production through monopoly or restrictive practices, and that therefore they must be inquired into. We agree that the method of inquiry should be used. I believe that if we approach this matter animated by the desire to improve industry and production, we shall be able to find, by common effort, a British method to deal with this subject which will undoubtedly be the best in the world.
§ 5.34 p.m.
§ Mr. Eric Fletcher (Islington, East)
The right hon. and learned Gentleman the Member for West Derby (Sir D. Maxwell Fyfe) speaks with an authority on this subject which few of us can hope to emulate and I am certainly not one of them. I was very glad to hear—I hope 2053 I am summarising his speech correctly—that we have the support of Members opposite for the Second Reading of this Bill, although I detected from certain passages of the right hon. and learned Gentleman's speech, and from the interjection by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) during my right hon. Friend's speech, that we shall not have the same overwhelming, wholehearted and enthusiastic support which this Bill finds in the breasts of Members on this side of the House. I am sure Members on this side of the House are all agreed that a Bill dealing with monopolies is long overdue. We rejoice that the Government have taken the opportunity to deal with this subject, and thereby to fulfil one more of the pledges contained in "Let us Face the Future," which states that the Labour Partycalls for public supervision of monopolies and cartels with the aim of advancing industrial efficiency in the service of the nation. Antisocial restrictive practices will be prohibited.It is now common ground that one of the objects of this Bill is to assist national production. One of the regrettable features of British industry is the extent of the anti-social practices in particular industries, carried out by trade monopolies, rings, cartels, and trade associations of one kind or another. I do not think that the public are fully informed of the extent of the abuses carried on by certain trade associations in particular industries. I want to say a word later on the subject of whether the proposals contained in this Bill are adequate to deal with the power of some monopolies and the menace they produce. I think it is now admitted that abuses do exist, although I gather that doubts may be raised by Members opposite, who may be sensitive in certain directions, when we come to examine particular industries. One owes it to the House and to the country to describe, in a little more detail than it has yet been possible, the precise nature of the evil which this Bill aims at curing.
I choose the facts relating to the Electric Lamp Manufacturers Association because this association happens to have been already mentioned, and according to my information provides one of the most glaring examples of all the vices of a trade monopoly. The House should know exactly how it works, so that we can appreciate the nature of the problem this 2054 Bill is attempting to tackle. This Association commonly known as E.L.M.A., is a trade association. There is nothing wrong with a trade association as such, and no one would wish to attack all trade associations, some of which perform perfectly legitimate and patriotic purposes; but there are many cases of abuse, and when, as in the case of E.L.M.A., the system is notoriously of an anti-social character, the House ought to know about it. The starting-off point, as always, is a resale price maintenance agreement, whereby all members of the ring agree to resell the particular article, in this case an electric lamp, at agreed fixed prices. They also agree, at the second stage, to a fixed scale of discount to be allowed to customers. There would be nothing too serious if the matter rested there, but in this case, as in many others, it does not. The next step is to give a sale's quota to every lamp manufacturer, that is to say, he is given a prescribed figure of the number of lamps he may manufacture and sell in each year.
§ Mr. Lyttelton
If the hon. Member is giving the impression that there is any restriction in regard to the production of lamps, he is not correct. There is no restriction whatever.
§ Mr. Fletcher
I must admit that the right hon. Gentleman knows far more about this than I do, but I think it is fair that I should put forward the facts as given to me and, I believe, as generally understood.
§ Mr. Lyttelton
I want to make my position clear. If I do not interrupt the hon. Member on any inaccuracies he may make, I hope it will not be taken by the House to mean that I have let the matter go by default. He has started rather badly with his opening ball, of the six or seven he is going to throw, by saying something that is not correct. I shall not interrupt him further, if the House understands that I reserve my position.
§ Mr. Fletcher
That is a perfectly fair statement. I do not want to engender feeling in this matter. I want to perform what I think will be a service to the House by explaining, in a little more detail than has yet been possible, how a notorious case of a trade monopoly abusing its powers actually works, and I want to examine whether the machinery contained in this Bill is adequate to deal 2055 with it. In the case of this particular article—the electric lamp: and the same applies in the case of other commodities —I am told that the ring manufacturers are given a quota, and if a member of the ring sells more than his quota, he is fined, and if he sells less than his quota, he is paid compensation. One of the fantastic results is that certain manufacturers—I will not mention any names—have for many years received large annual payments on condition that they abstain from the manufacture of electric-lamp bulbs in Great Britain.
The results of this vice are two-fold. First of all the price to the consumer is inflated perhaps by some 200 or some 300 per cent. and, secondly, it restricts production and thwarts the efforts of would-be entrants into the lamp manufacturing industry to produce for export. It thereby prejudices the attempts of this country to compete effectively with, for example, American lamp manufacturers, who for years have been controlled by the antitrust legislation on the lines of the Sherman and Clayton Acts. It will be appreciated that if a trade association of any kind is to be effective, it is necessary to have machinery to ensure that no new entrants come into the business who are content to take a reasonable profit and sell cheaper than the, ring price.
There are three effective weapons by which competition is prevented by any well-run ring, and most of these rings are organised with great skill. As the President of the Board of Trade has pointed out, it is often difficult for the public to get the facts, owing to our laws of defamation, and to the fact that many associations have expert public relation officers. The three ways in which would-be intruders are kept out of any ring are these: First, there is the well-known device of pooling patents. That is why the qualification in Clause 2 of the Bill is so important. In the case of a trade monopoly or ring the device is for all members of the ring to pool their patents, whether good, bad or of doubtful validity, and to cross-licence each other. In this way we find an imposing edifice of patents protecting all firms dealing in a particular commodity. Any would-be entrant can be frightened with litigation, which in any event must be very expensive, before he can come in. That has taken place in connection with the 2056 E.L.M.A. ring. It is also a well-known weapon in the armoury of other monopolies.
The second practice, which is perfectly legal as matters stand at present, is for a ring to control the use of raw materials, and by that device to prevent any new entrant getting the raw materials necessary to enable him to compete. The right hon. Member for Aldershot laughs, but in fact the E.L.M.A. ring dealing with lamps has pursuaded the glass industry to keep out of the manufacture of electric lamp bulbs and glass tubing for other lamp manufacturers, so that the ring virtually controls the whole production of the country in these materials, as well as other key items of material for lamp manufacture.
I think that the House might be interested if I give a specific case illustrating how this works out. Recently, two young men who had left the Royal Air Force, wanted to place a fluorescent lamp on the market. It had very considerable technical advantages compared with the ring fluorescent lamps. I will not describe the details; but these young men had the necessary skill and enterprise. Unfortunately they could not push ahead with their scheme because they could not get the supplies of glass tubing from the factories in the ring. Supplies were available, but were withheld. They were, therefore, unable to build up a business which would have enabled this country to compete with America. They would have been able to put on the market a new fluorescent lamp, which is now suppressed until the ring choose to introduce it; the firm had to close down. That is one illustration out of many.
The third weapon in the armoury of a trade monopoly—and in some ways the most effective way—is, of course, to control the channels of distribution. What E.L.M.A. do is this: They make all the distributors enter into an E.L.MA agreement whereby the distributor agrees not to stock, purchase or sell, directly or indirectly, the electric lamps of any description except those combines referred to on sheet 1/1 of the current rules of the association. All the big distributors would be penalised if they attempted to sell the lamps of any manufacturer outside the ring. They carry that a stage further, because E.L.M.A. not only bind the wholesale distributors but 2057 also, by a similar agreement, bind the large users of lamps such as Lyons', who no doubt get an appropriate discount, on condition that they do not use any lamps made by anybody outside the ring.
§ Mr. Lyttelton
I am driven to interrupt the hon. Member, in spite of what I have said. He is getting widely off the mark. Every retailer employed by E.L.M.A. is perfectly free to stock the lamp of any producer. If he stocks the E.L.M.A. lamp he gets an extra discount of 6 per cent., which means about three farthings a lamp. The hon. Gentleman is now giving the impression that there is some agreement which prevents the retailer stocking the lamps of other manufacturers.
§ Mr. Fletcher
I need not pursue the matter further, but I have the documents here. That, at any rate, is the experience of a great many people outside the ring. Not only are distributors affected, but large stores, like Selfridges, are affected, with this result: Only the other day, somebody disconnected with the ring put a new fluorescent lamp on the market and persuaded Selfridges to display it as demonstrating a new electrical fitting. Selfridges were demonstrating it, in all innocence, when a representative of one of the ring firms went into the store and saw the display. He called the showroom manager and ordered him to remove the offending lamp, which reluctantly he had to do. Otherwise Selfridges would presumably have been penalised for breaking their agreement with the ring.
Broadly, those are the three methods by which the rings attempt to maintain their monopolies. One frequently finds that they go much further. Sometimes they deliberately allow two or three small firms to remain outside the ring, so that they can always say that there is not a complete monopoly, as there are these few independent firms, which can sell what they like, and which are not controlled by them in any way. All these devices are, under the present law, perfectly legitimate. I think it should be appreciated that restrictions of one kind or another may affect 500 or boo particular trades, thus amounting to a national scandal, calling for immediate attention, because the anti-social effects are obvious. They involve all consumers of articles controlled in this way having 2058 to pay a much higher price than they would have to pay if there were completely free and independent competition.
Secondly, the total production is deliberately restricted as part of the machinery for enabling ring firms to make and maintain their products. Thirdly—and from the national point of view this is one of the most serious aspects of the matter—restriction of production coupled with unreal high prices mitigates against the competitive capacity of this country, as an export country, in trying to compete with other export countries in the markets of the world. That, in my submission, is a matter which calls for this House to do something to remedy it.
The two questions to be dealt with are: First, who is to determine the commodities about which something shall be done? Any ring must be entitled to an opportunity of justifying themselves and saying that what is alleged does not apply to particular commodities in which they deal. Therefore, we must have machinery which will examine all the relevant facts, with a view to finding out which are the commodities about which something shall be done. Secondly, what are we going to do about it? Against that background, I would ask the House to consider whether the Bill goes far enough? It certainly does not go nearly as far as the American anti-trust legislation; it does not contain anything like the sweeping provisions of the legislation which has been in force in the U.S.A. for many years.
The Sherman Act passed in 1890, starts with the emphatic words that every big combine in the form of a trust or otherwise engaged in the restraint of trade or commerce is declared to be illegal. It provides that if there is a breach, it shall be a criminal offence. The Clayton Act, and the various Acts that have followed pursuing the matter, have caused American industrialists who come to this country to be amazed at the possibilities which our legal system permits for the development of these trust associations, rings and combines. We are all interested in increasing production. I believe that if this Bill is implemented in the way in which we all hope it will be implemented once it comes on to the Statute Book, it will mean a very considerable advance in the productive capacity of a great many articles.
I agree that it is too late in this country for us to copy the anti-trust legislation of 2059 the United States. I also agree that, in certain cases, even the kind of monopoly which Imperial Chemical exercises over various chemicals is justified, but even there, there is a latent danger which this House has to watch. I agree that the approach which is made in this Bill is probably the best approach for meeting this problem, but I would remind the House that if the problem is to be dealt with, it depends entirely upon having a competent, expert body of commissioners sitting on the Commission, and I hope that they will all be whole-time appointments, and that the Commission will sit constantly, because there will be an immense amount of work requiring immediate attention. I also hope that the country will be given the benefit of full publicity of the inquiries which the Commission will hold.
When we come to the Committee stage of the Bill, I hope to be able to suggest certain improvements to ensure that the sanctions contemplated are more effective. For instance, I think that we could usefully study the experiences of Sweden and other countries in dealing with this problem. We should not overlook the possibility of introducing a system of compulsory registration of all agreements in restraint of trade. While, therefore, I hope on the Committee stage to make suggestions for considerably strengthening the proposals in the Bill, I welcome this Measure as designed to remove abuses, and restore the competitive power of British industry.
§ 6.0 p.m.
§ Mr. Hopkin Morris (Carmarthen)
Hon. Members in every part of the House welcome at any rate the aims and objects of the Bill. There has been no criticism of the aims and objects in any of the speeches we have heard. Whether the provisions of the Bill achieve the aims and objects which the Government have in view is a totally different matter. The hon. Member for East Islington (Mr. E. Fletcher) spoke of the steps that have been taken in the United States to put an end to restrictive practices, and it is important to turn to that example for a moment to see what the effect has been both in the United States and upon our own economy. After the first world war restrictive practices, were accelerated in this country—
§ Mr. William Shepherd (Bucklow)
On a point of Order. Is it right to proceed with this Debate when no Minister responsible for the Department concerned with the Bill is present in the House?
§ Mr. Deputy-Speaker (Mr. Beaumont)
That is not a point of Order. It is entirely a matter for the Ministers themselves whether they are present or not.
§ Mr. Hopkin Morris
No Government in this country before the war countenanced giving any political endorsement to restrictions of any kind. Big business, practically since 1880, which was 10 years before the passing of the Clayton Act, made application after application to different Governments of both parties. The Labour Party had not then appeared as a political force. At no period did any Liberal or Conservative Government prior to 1914 countenance giving endorsement to those practices. Having failed in the political sphere big business turned to make its own organisation and restrictive practices, and to obtain from industrial and commercial activities those protections which, if it had been successful, it would have obtained from a sympathetic Government. The result has been very interesting to watch in comparison with the effect in this country. I am speaking not only of the restrictions on the side of the employers, but also of those on the side of the employees.
Take the position in this country after the Napoleonic Wars. This country found itself very much in the same position then, relative to its population and its wealth as that in which it found itself after the 1914–1918 war. It was poor, it could not turn for a loan abroad anywhere, it had to rely upon its own efforts to establish itself, and through the early part of the 19th century all it could do was to tell industry—and the main industry was agriculture—to do what it could for itself. It gave it a free run. The result was that if we take the figure r as the standard of living index figure of 1814, up to 188o that standard went up threefold, and was more in the United States, with no restrictive practices in either case. From 188o onwards there has been a reversal of the position of this country. The hon. Member for East Islington said the same tendencies began to operate in the United States. After the war, big business in the 2061 United States was as anxious to get protection as big business was here and the same could be said of labour.
I agree with the President of the Board of Trade when he says that one of the things that lead to restrictive practices is the desire for security and stability on both sides. Let me remind the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe) of a remark made by Lord Bryce, that the most powerful factor in cementing a country and a government together is laziness and inertia. Other factors are sympathy and limitation. Sympathy is a form of inertia, and so is limitation. Stability and security have the same effect. There is a tendency in the human mind to believe that it can stabilise the conditions that it knows and then fix them. It is one of the world's greatest illusions.
§ Mr. Hopkin Morris
Yes, that is so. Earl Bertrand Russell made the observation that every academic philosopher had the same tendency to believe that the world is one. That is a common, fundamental belief with them, but there is nothing more false. Hon. Members will recall Rousseau's famous answer to the question what he would do if he were appointed governor of a province in Central Africa. He replied that the first thing he would do would be to erect a gallows to prevent any stranger coming in and any native going out. In other words, he would stabilise conditions.
What has been the result in the economic position of this country since 1888? The United States declined up to 1914 to stabilise the economy by legislation and the standard of living went up from three to six. In this country the standard of living still improved, but it went up only from three to four. In other words, we were going backwards relative to the United States even as early as 1914. The only difference between us was that we adopted a policy of restrictive practices and it was not adopted in the United States. Labour had kept out of the political field in that country, whereas it had entered the political field in this country. It went beyond the power necessary for trade union purposes.
2062 The position after the first world war—I do not know whether the position is the same after the second world war—was aggravated. The Government became sympathetic to the question of restrictions and it became part of a policy. Every philosopher and economist approached it and made a contribution to it. It is part of the atmosphere of the 20th century. The 19th century is often described as a century of rapacity. If that is so, then the loth century is one of unqualified "ca'canniness" in every sphere. By 1945, the standard of living had gone up in this country roughly four and a half times compared with 1814. In the United States today the figure is eight and a half times. Progressively we have gone back through the century by this policy of restriction.
There can be no denying that it is high time that the Government introduced a Bill to deal with monopolies and restrictive practices. The complete justification is not merely to deal with our standard of living, but to compete effectively with the United States. We shall never regain our position vis-a-vis the United States unless we abolish restrictive practices wherever we find them on both sides of industry. Whether this Bill meets that situation is another matter. I have not the same faith in the Commission as the right hon. and learned Member for West Derby. Expert committees were set up between the two wars. They had too narrow a field, depending as they did upon the matters which were referred to them. The terms of reference in those cases were ad hoc references to ad hoc committees, and were determined by the President of the Board of Trade at the time. Does anyone pretend that they were satisfactory?
The terms of reference here are left at large to the President of the Board of Trade, who can refer whatever he wishes to the Commission. There is no limit on it and there is nothing to suggest a limit except the term "public interest." It is a most ill-defined term. The President of the Board of Trade talked a good deal today, about anti-social activity. That is another great phrase of the 20th century. I have no idea what the phrase means, but it is a phrase that is doing a great deal of damage. Sir Philip Gibbs wrote a book, a little while back, in which he told about a German lady who wrote to an American friend after the Roehm 2063 putsch in 1934. The German lady said to her American friend "Hitler is killing his friends for the sake of Germany. Is he not wonderful?" It all depends upon what test we apply. It is wonderful once it is decided what the social test is. There can be no more menacing test than the line of doctrine about social activity. It is a 10th century government belief.
Clause 10 of this Bill is completely undefined. Once more it is giving exceptional powers to a Minister. The terms of reference are not limited. The President of the Board of Trade can use whatever terms he likes, and he is not the only Minister with power to make an order. There are about half a dozen Ministers or more. When the Commission is set up and an expert report has been made, not one of those Ministers is compelled to follow the recommendations. He can make an order following the recommendations if he pleases, but if he likes he can put the recommendations on one side, and make orders or not just as he pleases. The American plan is very much more satisfactory.
An interjection was made earlier in the Debate to the effect that this was putting into statute form the English common law, but in America there is the advantage that every business man there knows what the law is and what it is aimed at. How is a business man here to know under this system? What is to be referred to the Commission? An order that may affect some business man, because it is dealt with by the Commission, will not necessarily affect every business man. What is lawful in one part of the country may be unlawful in another. This method of allowing Ministers to conduct the affairs of the country by regulation, even if submitted for the approval of the two Houses of Parliament, is a move which gradually is undermining the great principle of this country that there shall be one law in all parts of the land. We welcome the principles of the Bill, but the details require serious consideration when we go into Committee. The Bill needs serious amendment if industry is to prosper and if business is to know what conditions are going to apply, and if those conditions are to apply uniformly in all parts of the country.
§ 6.15 p.m.
§ Mrs. Ganley (Battersea, South)
I should like to say how much I welcome 2064 this Bill and in particular the excellent introduction the President of the Board of Trade gave it this afternoon. The Bill is a means of easing the flow of goods to the public without restrictive practices, which limit supply or unduly increase the price. The 1919 Report of the Committee on trusts revealed an enormous amount of information as to what was happening at that time. We read that in the iron and steel industry 35 associations, having as their purpose the restriction of competition and control of prices, were in operation. I remember soon after that time, when I was a member of a local authority, that we wanted some machinery for the electricity generating station. Eight tenders were received, and there was exactly the same figure on each of the tenders that were put in, with one exception. The last two figures in seven tenders were 98 and in the eighth tender were 89. When the figure in the eighth tender was queried, we were informed that a mistake had been made and that that figure too should have been 98. The contract ran into thousands of pounds, and we were thus given a clear understanding of the way in which control of prices worked to which the Committee on Trusts had called attention in 1919. We saw how very closely the price-fixing association, rings, cartels, agreements and understandings between firms in a group worked, when they controlled materials which were required by that borough council.
The kind of thing which I have illustrated has happened in many instances. In 1919, 500 of those forms of restriction of supplies were found to exist. In 1944 when the matter was considered by another organisation, the number was estimated at 2,50o. The report to which I have referred called attention to the Co-operative movement and said that in the opinion of the Committee, the Co-operative movement was the only body likely to protect the consumer. That movement has grown very much since the days of the 1919 Report, as have other organisations, and objection is still taken by these organisations to supplying Co-operative societies.
Price-fixing associations, cartels and rings and other similar bodies have a long list of people whom they are not prepared to serve. In some instances, they refuse 2065 completely to supply, and in other instances they will do so if conditions of sale which they impose are carried out. Other organisations take a different line. I would like to quote to the House a letter which was received by a Co-operative society which had purchased an existing business. The letter was as follows:Your communication of the 4th instant has been fully considered by our board and we regret to inform you that it will be impossible for us to continue supplying our bicycles to the above, in view of the fact that your society has purchased the business.The result is that that commodity will no longer be supplied because the retailer is a Co-operative society. I have another example of a letter refusing to supply an article. It contains this sentence, referring to a firm which belongs to a manufacturers' and traders' union:They have been told, however, that as they are signatories to the Union Bond they are prohibited from trading with any Co-operative society.Those are instances which occurred during the last two years showing that what was pointed out by the committee in 1919 is still operating at this present time.
Since 1919 the Co-operative movement has grown very considerably, as have other organisations who are producing goods. There have been increases also in the number of restrictions that have been placed upon sales and in the conditions of sale imposed upon the supply of goods. An hon. Member who spoke a moment ago referred to the distribution of a particular commodity, about which many people know quite well. The position with regard to the consumers is, as the 1919 report said, that the Co-operative movement is the consumers' organisation. Some ro million people are now making demands upon the production of a very large number of commodities which ought to go into the hands of those consumers. Take the question of books and stationery. Here again, a definite restriction obtains. Unless a Co-operative society is prepared to accept the conditions imposed by an altogether outside body it is not allowed to deal in books and stationery, or to sell newspapers.
These practices restrict the rights of people who desire to "mind their own business." This is the point which I have to make. A number of people are determined that they will co-operate for the 2066 purpose of distributing goods which they desire to supply to themselves. The Co-operative movement operates today in a number of commodities to the very great benefit of people who are associated with the movement. It justifies the expectation of the 1919 committee. Recommendations were made in the committee's report that the President of the Board of Trade should collect information relating to bodies whose practices restricted the flow of commodities, that he should present a report annually to Parliament and should inquire into complaints. It was further recommended that if the Board of Trade were unable to make the inquiry the complaints should be referred to a tribunal. The committee also made recommendations for State action in remedying any grievances known to exist.
Those recommendations were made nearly 3o years ago. It is very gratifying indeed that at last a Bill is introduced which will meet a number of the recommendations that were made so long ago. We hope that the Bill will bring real relief into the organisation of the distribution of goods which many people need, and that it will remove some of the restrictive practices. I should like to ask whether the Minister would consider setting up a body who could recommend action to the Board of Trade when they considered that restrictive practices were hampering the flow of necessary goods. At the moment, we know that the Minister will have power to make a reference to the Commission which is to be established, but one imagines that that procedure will take a considerable time.
I would further ask, as Clause 2 appears to confine the power of the Board of Trade to making a reference to the Commission, whether my right hon. Friend would make some arrangement whereby there could be some form of general public representation. During the war, price regulation committees had their attention drawn to matters by the general public. Local authorities have a considerable amount of trade to do in commodities which are restricted and controlled. I would ask my right hon. Friend to consider appointing a body charged with the responsibility of looking into matters and of drawing attention to anything which affects the whole of the people. Clause 10 refers to the "competent authority." In view of the fact 2067 that there are a number of competent authorities, may I ask which of those authorities, in the event of an inquiry concerning a number of public authorities, would be the responsible body for making a decision? It is perfectly possible that an inquiry might cover a number of authorities and, because a number of them were involved, none of them might be able to take action and issue an order.
I warmly welcome the Bill. During its consideration a number of suggestions will be made to the Minister, and I hope that he will take notice of them. I thank my right hon. Friend very much for the way in which he introduced the Bill. I would say once again how much we shall value the general protection which it will give to the public, and the information which we hope will result from its working.
§ 6.28 p.m.
§ Mr. Pickthorn (Cambridge University)
I hope that usually I am not worse behaved than the average Member of the House in the matter of attendance at Debates especially when I have spoken. I hope the House will forgive me, therefore, if, as a result of a longstanding engagement. I do not stay for the rest of this Debate.
Everybody is agreed—I am sure everybody was agreed at the beginning—in desiring some kind of legislation to restrict, or if possible to abolish, monopoly and restrictive practice. I do not think there is any disagreement about that. There is some disagreement whether the Bill proposes exactly the best method of doing it. Such disagreement will naturally be in the main the proper business of discussion in Committee, but there is one larger thing which may be mentioned shortly at this stage. It is this: More important even than dealing with monopoly is dealing with the relations between the powers of Government, especially departmental powers, and the liberties and rights of the subject. That is the most important of all topics which this House can discuss. If I draw attention to that and one or two other things in the Bill in the course more of rather scattered remarks than of continuous argument. I hope I may do it by referring to sentences which were used by the right hon. Gentleman in opening the Debate.
2068 The Minister said that perhaps one might argue about sanctions. I am not sure that I understood him. I rather gathered that there was to be the possibility of saying that the Government have the right to direct labour, credit, raw materials and the licences for building, etc., and that power to direct those things was to be the sanction if publicity was not sufficient to effect a cure.
§ Mr. H. Wilson
I would like to deal with that point. I think I said that apart from the powers which we shall have under the Bill to make orders we shall have also a number of powers of which the principal was price control. The others to which the hon. Gentleman has referred certainly exist, but I should have thought that it would be appropriate in the majority of cases to deal with them either by price control powers or by the special powers contained in the Bill.
§ Mr. Pickthorn
I am very grateful. That is roughly what I thought, and really it is not quite maintainable. We are going to get into a hopeless situation in the long run if we allow it to be assumed that it is an axiom at least which has the onus of proof on its side—that any power which a Government has for any purpose may properly be used for any other good purpose. The right hon. Gentleman's speech and, still more, what he has just said, indicate that the Government are apt to fall into that temptation.
We had an instance the other day. This is purely by way of illustration, Mr. Speaker; I know that it is not strictly relevant. There was a complaint about a gentleman of black or yellow colour—I have forgotten which—being refused food in a restaurant. Obviously we should all object to that, but it was almost universally assumed that if the Minister of Food had, as indeed he has, powers of controlling how much of the raw material of its business that restaurant gets, it would be right for him to exercise that power. I think that is an extremely dangerous tendency in this Bill, and we ought to ask for an assurance that there will be no contemplation of using powers for coercive purposes under this Bill unless the Bill makes it clear that that is the intention. The Government ought not to get the Bill with a vague sort of feeling that they may use powers which they have been given for other purposes, and the 2069 House ought not to allow that assumption to go without being cross-examined.
On the public interest question, I should again like to comment a little on what the right hon. Gentleman said. He gave a list of things—of the ingredients of the public interest so to speak—and one of his supporters interrupted him to say that it was a short description of Socialism. That seems to me very neatly to indicate what is the danger of the phrase "public interest." The danger is that people will assume that whatever their prejudices may make them think agreeable phrases, do, when put down in a list, constitute a public or national or Focial interest. I should like to ask for further consideration whether there may not be some possibility of positively indicating what is meant. I quite see the difficulty. I do not say that it is possible, but I ask the Treasury Bench to consider it.
I will put another suggestion which has not yet been made—whether it might be possible to attempt inside the Bill to indicate the nature of the national interest by some sort of list, not necessarily exclusive, to which additions could later be made, of things which shall have the onus of proof against them. For instance, boycott. It should be listed in the Bill that boycott in trade arrangements shall be held to be contrary to the national interest unless it can be shown in any particular case for some odd reason to be the other way round. If it is impossible to define the national interest positively—and we ought to look at that again—then I would ask whether we ought not to consider at least the possibility of, if not defining it, at least bringing down the possible meaning of national interest negatively, by indicating lists of things which are to be taken as against the national interest. I hope that I have made plain what I mean.
There is another question of constitutional importance, the responsibility of deciding whether—I wonder if the right hon. Gentleman could bear to listen to me for a minute. I will do my best to be short, but these important and almost all-powerful gentlemen who sit on the Treasury Bench have immense powers and I think they are not sufficiently conscious of the power they have of making it impossible for the modest back bencher to apply his mind to a subject merely by 2070 ostentatiously withdrawing their attention. If the right hon. Gentleman will 11 give me his attention, I will be as quick as I can—
§ Mr. Wilson
I do rather object to the hon. Gentleman's phrase. I thought that the hon. Member had made a rather important and powerful point and I was discussing it with my hon. Friend to see where it led.
§ Mr. Pickthorn
I was not meaning to be quarrelsome. [Interruption.] If I want to be quarrelsome, I will be. I quite see how it happens. A right hon. Gentleman thinks that a jolly good point or a jolly bad point has been made and says so to the agreeable chap who sits beside him—and he has two to choose from. I see that, but I do not think that some hon. and right hon. Gentlemen opposite, who have not spent 10 or 12 years as back benchers, realise how difficult it is for us to argue. It is with them that we are arguing. We are trying to get things considered in a preliminary way before we come to the Committee stage.
The next point to which I would invite the attention of the Treasury Bench is that, as the Bill is drafted, the responsibility for deciding whether any case is important enough to be referred to the Commission lies with the Board of Trade. Nothing has been said against that; that is right. But what did the right hon. Gentleman say—that the responsibility for considering it was that of the Board of Trade. To whom is the Board of Trade responsible? Presumably, if to anyone, to the House of Commons. But how can that be? Is there to be any list reported to the House of Commons from time to time of cases which have come to the attention of the Board of Trade, indicating those which it had decided were considerable enough to be referred to the Commission and those which the Board of Trade decided were inconsiderable or not so considerable that they need be gone on with at once? If that is not to happen, I invite the Treasury Bench to explain the use of the word "responsible." The Board of Trade will be wholly irresponsible in the matter.
There is another point attached to that. We were told by the right hon. Gentleman that it would be perfectly possible for the Coal Board—not for the Coal Board in its main function but the Coal 2071 Board if the Coal Board also set up as a manufacturer of cutting machinery—to be hauled before the Commission for controlling more than one-third of the coal cutting machinery in Wales and so on. How is that to happen if it is the Board of Trade which has to decide? What are to be the relationships of the Board of Trade with the Ministry of Fuel and Power and with the Coal Board in deciding that this is to happen? The weakest passage in the right hon. Gentleman's speech was his argument that so long as a monopoly is l00 per cent monopoly —State monopoly—we do not need to have the machinery of this Bill against it. In that connection, I think the point to which I have drawn attention is one which really deserves looking into.
There are various other points, but I think most of the rest of the points about which I should like to say something are Committee points. That brings me to another question. I am glad that the Lord President is back again. I quite see the argument for the view that this is a very complicated and technical Bill. It deals with the complicated and technical business of production but, more important, the legal and constitutional questions involved are highly technical and have a very complicated history. Incidentally, I do not think the right hon. Gentleman's history was wholly accurate. He told us that the records of the Board of Trade include all about the alum monopoly of the 13th century, but that is not in the records of the Board of Trade.
§ Mr. Pickthorn
It is no use the right hon. Gentleman shaking his head. He can shake it until it falls off, but the Board of Trade has not got any records going back to the 13th century. It did not in any sense exist until the 17th century. That is a comparatively small point but we might as well get right such facts as are ascertainable. Goodness knows how many facts there are that are not ascertainable.
I want to put this to the Lord President of the Council. I see the argument. It may be said that this Bill should be taken in Standing Committee, but this matter is of great general importance and my argument is all the stronger because 2072 this Bill omits restrictive practices on the part of the working side of industry. I do not say that is wrong. But there is a lot to be said for having this Bill in two parts and having that in Part II. Maybe it is right to leave it out, but once it is left out there is a strong case for the view that it is a matter for the whole House to deal with this, where only one of productive force side is being dealt with, and especially remembering, as the right hon. Gentleman knows very well, the historical background of the great Debates there have been on this subject for 350 years and more. I finish—I hope I have not been very long, but I forget the time I started —by thanking the House for listening to me and apologising if I do what I hardly ever do—run away before anybody has had the chance of hitting back at me.
§ 6.41 p.m.
§ Mr. Fernyhough (Jarrow)
I listened with amused interest to the hon. and learned Member for Cambridge University (Mr. Pickthorn).
§ Mr. Fernyhough
The hon. Gentleman welcomed the Bill but he was very much afraid that someone might get hurt when it was put into operation. His view was that we must have these powers but we must not in any way hurt the people who have wielded the power so unfairly in the past. I welcome this Bill not because it can redress past wrongs but because I hope it will prevent their recurrence. Anyone representing a constituency such as I represent, where a town was murdered because of the selfish and restrictive practices which were imposed on the industry by a certain few people, must feel what a great thing it would have been if hon. Gentlemen opposite could have been converted 18 or 20 years ago to the point of view they hold today.
I listened with great interest to the right hon. and learned Gentleman the Member for West Derby (Sir D. Maxwell Fyfe). He referred to the fact that the 1929 Committee and the 1931 Committee on Restraint said that the existing situation was quite satisfactory and that there was no need for legislation, but I think he will agree that the situation had somewhat changed two or three years later and there were hon. Members on this side of the 2073 House and one or two hon. Members opposite who certainly wanted to do something with the steel industry because of restrictive powers. However, those with the power at that time did not feel that they would be justified in hurting their friends.
What happened in Jarrow? National Shipbuilding Securities were able to close Palmer's shipyard. Almost all the people of Jarrow were dependent upon the shipyard for their living. The town had grown up around the shipyard. Some of the finest ships in the world had sailed from that yard and some of the finest craftsmen in the world worked there. Yet, without any regard to the thousands of men whose lives had been centred in that industry and without any regard to the poverty and unemployment which their action would force upon that community, a mere handful of men took away the right of a community to live.
After the site, which is one of the finest in the world, had been made completely derelict and the equipment sold, a certain gentleman looked at it in 1934 thinking what a grand site it was for the erection of an up-to-date steel works. It is annoying today to find hon. Members opposite paying lip-service to this Bill when they allowed the Steel Federation to prevent a new steelworks from being erected at Jarrow, which would have been technically efficient and up to date, and which would today have been a great blessing to this nation. Furthermore, the restrictive practices of National Shipbuilding Securities were able to prohibit any ships being built in any of the yards they closed for 40 years. I hope that is one of the things the Minister will look into as soon as he has the power which this Bill seeks to give him. What is more, a few months after the shipyard was closed, we gave orders to the Belgians to build tramp ships for us.
This happened at a time when hon. Members opposite knew that Hitler was rearming. We are often criticised by hon. Members opposite because we opposed rearmament, but surely merchant shipping is as essential to the running of a war as are guns. Steel is as essential to the running of a war as are tanks and planes. Yet hon. Members opposite who often criticise hon. Members on this side who, prior to the war, opposed the building up of the nation's fighting forces in the way of providing the necessary equipment, 2074 were themselves responsible for mutilating to some extent the basic industries so vitally necessary when the country is at war.
We can come to a more recent case, that of Grantham Productions, where the motor manufacturers made it perfectly clear to the distributors that if they took any of the "People's Car," which Grantham Productions proposed to produce, supplies would be cut off, they would not get the cars of the other manufacturers; and the motor manufacturers made it perfectly clear to the suppliers of accessories that, if they supplied Grantham Productions with accessories, the motor manufacturers would cancel their orders.
§ Sir Peter Bennett (Birmingham, Edgbaston)
As I happen to represent the largest suppliers of equipment in the motor industry, might I state that that is absolutely incorrect, and that the Grantham company were supplied with the supplies for which they asked? They did not go into big production, but there was no pressure whatever put upon the suppliers of the equipment to Grantham Productions which kept them from getting the car going.
§ Mr. Fernyhough
I will accept the correction, but may I say that the information I have given to the House was given to me by the hon. Member for Grantham (Mr. Kendall) and I am quite as much entitled to take his word as that of the hon. Member, because he was just as closely associated with that venture. Let us take the question of the Co-operative Societies and the supply of wireless sets. The manufacturers told the Cooperative societies some years ago that they would not allow them to sell their radios if they continued to give dividend on them, despite the fact that the profit on radios is such that the Co-operative societies could well afford to give the dividend, without having to take anything off the quality of the service. Again, the Proprietary Articles Association lay down restrictions to prevent the Cooperative societies from selling their products if they give dividends on them. In some of the more isolated mining villages that is a great inconvenience because, in many cases, the Co-operative 2075 society is the sole source of supply for that area. It means that if the Co-operative societies say that they will still continue to give dividends, their supplies are stopped and the people in those communities are compelled to go to the nearest town in order to get that which the "co-op" would gladly supply if it were not for the restrictions which that Association lays clown.
It will be within the memory of every hon. Member what happened with regard to the dry battery trade. We can all remember that one firm making radio dry batteries was outside the ring, and the ring spent thousands of pounds in an attempt to cripple and smash the one competitor who would not bow to their power. Whether they succeeded or not, I do not know, because the war intervened and the newspapers were cut in size, and so we did not get as much information as we used to do. The same thing has happened with regard to many of the contracts to local authorities where, no matter how many tenders may come in, identical prices are submitted by all those concerned. It has meant that many of these cartels, trusts, or combines have become states within a state.
In "Let us Face the Future" we said we would nationalise certain industries and, when we have accomplished that, we shall only have taken over 20 per cent. of the industry of this country, while 8o per cent. will still be left in private hands. It follows, therefore, that if we are to give our people the standard of living they have the right to enjoy, we have to take steps to see that the 8o per cent. are not allowed to use their economic power as ruthlessly in the future as some of it has been used in the past. To me this is a moral issue. I do not believe that it is right that any one man or group of men should have such economic power that they can, as and when it suits their purpose, and profits, impose unemployment upon any section of the community; in other words, they ought not to have the power to say that men shall live or die.
§ Mr. Osborne (Louth)
Does the hon. Member think it is equally morally wrong that a few trade union leaders, through a closed shop policy, shall say to men who do not happen to be in that union, "You shall not earn your living"?
§ Mr. Fernyhough
I accept that, but let this be understood: every trade union restrictive practice in this country today has come about because of the ruthless, cruel treatment to which the workers have been subjected in the past.
§ Mr. Fernyhough
When the restrictive practices, which have kept from the workers much of the fruit of their labour, have been removed from the monopolies, then hon. Members opposite will have the right to say to the trade unions, "Every restrictive practice of which you are guilty ought now to be removed."
§ Mr. Osborne
Does the hon. Member remember that 36 men who had worked for many years in the transport department of the Leeds Corporation were driven out of their employment because they would not join the specified trade union? Is that not a moral evil equal to the one he was putting before the House?
§ Mr. Fernyhough
It may be, but let the hon. Member understand that many of my best friends walked the streets for years because they held a trade union card and because they had courage. Those men, once they became powerful, used their power against those who were against them as ruthlessly as power had been used by the employers against the men. I do not say that is right. It is something we want to overcome if we can, but at least those men are only reacting in the way that most human beings would react who had been treated as the trade unionists have been treated in the past. I hope that will be remembered. In any case, as far as I am concerned, it is a moral issue. It ought not to be within the power of any firm, combine, cartel or trust—[An HON. MEMBER: "Or trade union."]—to determine whether or not men shall have work or not, whether a community shall live or die.
If I may refer to a point made by the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe), it is customary for hon. Members opposite to say that the biggest monopolies are the nationalised industries. But there is a distinct difference. If those who have introduced the nationalisation measures—the people of this country—find that the nationalised industries do not treat their people properly and give them what they 2077 are entitled to, they can turn out the Government responsible for those measures, but the citizens of Jarrow, of South Wales, of Clydeside, never had the power to turn out the people who imposed poverty and death upon their communities. That is the vast difference. The power resides with the people as far as the nationalised industries are concerned, and in as much as this Bill is trying to give the people some power to restrict the power and influence of the monopolies, it will be welcomed by all decent people who want to see the country getting out of its present economic difficulties, and giving the community the standard of life to which it is entitled.
§ 6.57 p.m.
§ Mr. Spearman (Scarborough and Whitby)
The distribution of industry in general and Jarrow in particular is an important and interesting subject, and there are many good arguments for directing industry to go where there are unemployed for the sake of the workers, but there are also many good arguments for it to go where production is cheap, for the sake of raising the standard of living throughout the country. However, I am not convinced that there is anything in this Bill which will influence industry, so I do not propose to follow any further the arguments of the hon. Member for Jarrow (Mr. Fernyhough).
§ Mr. Spearman
I would rather not pursue that subject further because it is not really in Order on this Bill. It has already been said that we can all support the objects of this Bill, and I think the President of the Board of Trade will agree that that does not debar us from criticising its methods. It seems to me reasonable to expect a good Bill to be fair and effective, and I am not convinced that this Bill with pass either of those tests. I suggest that the function of Parliament is to lay down principles as to what constitutes an injury to the public interest. I agreed with the right hon. Gentleman's own definition of what was in the public interest and what was against it, but that ought to be thrashed out in Parliament, and the principles laid down; surely Parliament should not concern itself with passing judgment on particular cases; in fact, it should attack the practice and not the person. For example, in 2078 the case of taxation, Parliament lays down the rules of taxation, the Board of Inland Revenue carry them out, and resort can be had to the judiciary in case of dispute.
Clause 1o reserves the right to lay down the rules, judge the facts, and pronounce the sentence, and those are three functions which I do not think any one body should perform. I did not find this Bill markedly easier to understand than most other Bills that come before us, and for that reason I took the advice of the "Economist," a journal which has achieved a reputation for impartiality between parties by cursing all and praising none. The "Economist" on 10th April says:Clause 10 provides that the relevant Minister may take any action he sees fit with explicit exemption from having to follow in any way the recommendations, if any, of the Commission. He can discriminate between different firms and industries precisely as he pleases.That interpretation of the powers for which the Minister is asking, seems to be more in keping with what we would have expected from a Minister serving Hitler than from a Minister serving the Prime Minister of this country. I would ask the right hon. Gentleman whether, at a later stage of the Bill, he will accept that description of the powers for which he is asking. If so, he will be under considerable pressure from vested interests. Perhaps he has such a reputation for courage and firmness that he can resist all pressure from vested interests. He has not held his present high office long enough for us to be able to judge, but others yet to come are unknown quantities. This Bill, I suggest, is giving most authoritarian powers to a Government Department.
My second point is that the Measure is not altogether effective. The right hon. Gentleman was not quite convincing in his reasons why all nationalised undertakings and marketing boards had been excluded. I feel the more perturbed on that score in view of the statement made yesterday by the Foreign Secretary, in answer to a question from my hon. Friend the Member for Kingston-upon-Thames (Mr. Bovd-Carpenter), when the Foreign Secretary admitted that the developments of Socialism in Britain would inevitably lead to the establishment of further monopolies. That was an alarming admission from a Member of the Cabinet.
2079 I would ask the right hon. Gentleman why he objects to the searchlight of a public inquiry being displayed on nationalised undertakings. If he is confident they will never err, what harm will they suffer? On the other hand, what right have we to assume that they will never err? If he looks at the record of the past he will have no reason to suppose that they have not adopted restrictive practices. I realise hon. Members opposite may say that there is no likelihood of that now because there will be no spur from shareholders to make larger profits; but there will be a spur from workers for higher wages. So far, I do not think we have any proof that nationalised industries will perform their functions with such efficiency that they can avoid making losses even if they do not pay very high wages. For this reason there will be considerable inducement for nationalised industries to shelter under restrictive practices. I cannot see any objection to their being subjected to the glare of public opinion.
My other reason for suggesting that the Measure will not be effective is the powerful sellers' market which now exists. Before the war we had a buyers' market, in which there was a glut of goods; though a demand existed it was not effective; consequently, there were high prices due to restrictive practices and the consumer suffered. As we all know the reverse is now the case. Consumers are suffering because there is such a strong sellers' market that there is no real inducement for producers to be efficient. The making of profits by producers today depends more upon their skill in acquiring the raw material, or in evading some of the obstacles put in their way by Government Departments, than upon their efficiency in production.
That is the danger existing today of consumers being exploited; it outweighs to an enormous extent any suffering there may be from monopolistic practices; it is a responsibility which the Government have abdicated; the ex-Chancellor of the Exchequer entirely neglected that function, and the new Chancellor has not yet demonstrably proved that under his policy we shall get such an equilibrium between demand and supply that an extravagant buyers' or sellers' market does not predominate. In view of the inflationary 2080 conditions of the sellers' market the Government should leave the beam that is in its own eye before searching for the minute mote that may be in the eye of monopolists.
My final point concerns the restrictive practices of workers and I think hon. Members opposite will all agree that these occur. I will give one instance from a recent publication by Courtauld's, who have a fair reputation of good dealing with their employees. They show this alarming fact before the war.The percentage of automatic looms in industry in this country is only 3 per cent., whereas in the United States before the war it was 68.They further go on to show that:In the past to years the trend has gone still further against us. Today only 5 per cent. of British looms are automatic, compared with 95 per cent. in America.They give as a reason the resistance of the worker, who refused to attend more than 14 looms, although in the United States they were attending as many as 40. There is also quoted a typical weaver's objection:'What you have said so far was all very well, 'says the average weaver,' but automatic machines mean that fewer workers will be needed and some day there will be more workers than jobs again. If I agree to labour-saving methods now I might be putting myself out of a job in the future'.I think that hon. Members opposite will agree that restrictive practices of that sort do occur, and that nothing is more likely to bring about that particular kind of example than an idea that mass unemployment is just around the corner. Hon. Members opposite should try to resist the temptation to make party capital by referring to the probability of unemployment in the future, as there was in the past, if a Conservative Government is returned to Parliament.
§ Mr. Fernyhough
The hon. Member for Scarborough (Mr. Spearman) has made a quotation from the "Economist." I could produce quotations in which the "Economist" has said that it is only the memories of unemployment—the fact that a job is something to be desired—which will make the workers of this country realise their responsibility. In view of that, it would seem that one policy should be to have some unemployment in order to produce the effects that we cannot have otherwise.
§ Mr. Spearman
I think the hon. Member for Jarrow would agree that there is a great distinction between temporary unemployment, such as was advocated by Lord Beveridge of 3 per cent.—which is about 500,000—and unemployment of a mass and prolonged order such as we had between the wars. [An HON. MEMBER: "Under the Tories."] Under the Tories, as the hon. Member has truly said. The Socialists are tempted to make use of that; it is a point which appeals to them particularly if they can obscure the fact that the largest unemployment in this country was in the two years of the Labour Government from 1929 to 1931.
§ Mr. Spearman
Yes, I have them here. In 1929 the unemployment rate was 10.3 per cent., in 193o, 15.8 per cent., in 1931, 21.1 per cent. and then it took us three years in Office to bring it down in 1934 to 16.6 per cent.
§ Mr. Spearman
The figure for 1933 was, I think, exactly the same as for 1932. I think it is a fair point that after two years mis-treatment by one doctor the patient can hardly be cured overnight by another doctor. That is not the point I am trying to make. The point I wish to make, if I am allowed to make it, is that I think it very serious to suggest to the people that there would be unemployment again if another party came back. I assume that every hon. Member in this House who is not a Communist realises that another party may come back, because no hon. Member, except a Communist, would take steps to prevent another party doing so.
If hon. Members talk about mass unemployment under a Conservative Government they are alarming people. Is that justifiable? I say it is quite unjustifiable to anyone who has studied the facts, because conditions are totally different. In the old days we—and that stands for Socialists in office and Conservatives in office—believed that if there was a slump, that is, a saturation of demand, money rates would get much cheaper and so 2082 industrialists would be encouraged to spend money on capital equipment, and that would bring about employment again. We all recognise that unemployment from the trade cycle point of view always originates with the capital equipment industries. Since those days we have realised that decisions to save and decisions to invest are made by different people at different times and they do get out of step. There is no automatic mechanism in the capitalist system to remedy this. It is the function of the Government to maintain total expenditure at such a level as will give equilibrium between supply and demand. That is realised by all parties in the House, and was realised in the very important White Paper on Full Employment published in the last Parliament by the Coalition Government.
Although, alas, today we have to face the great menace of acute mass unemployment through shortage of necessary raw materials, there is no occasion ever to anticipate mass unemployment again on the scale we had in the inter-war period through the trade cycle. I think that the sooner hon. Members opposite accept that point of view and stop alarming people and encouraging them to adopt restrictive practices, the sooner we shall have such a production as will get the country through its present crisis.
§ 7.15 p.m.
§ Mr. Charles Smith (Colchester)
I do not wish to go in detail into the arguments raised by the hon. Member for Scarborough and Whitby (Mr. Spearman), but I wish he would address some of them to his noble Friend, Lord Woolton, who is repeatedly warning the people that within a year's time there may be large-scale unemployment. He has been warning them of that for the last 18 months.
§ Mr. Spearman
But I am afraid that warning is also in the Economic Survey, and was in every speech from the Government Front Bench in the Budget Debates, that we are facing mass unemployment unless we can produce more, not unemployment because we do not use enough, which was the cause before, but because of the lack of raw materials which we cannot buy.
§ Mr. Smith
I am fully conscious of the distinction the hon. Member is making, but, since he devoted so much of his 2083 speech to an appeal to hon. Members not to talk of fear about mass unemployment I think it is true to say that these prognostications come also from his own party.
The speech to which we have just listened is not the only remarkable speech which has come from the other side of the House. The unanimity which we have heard so far about the desirability of restricting monopoly has been admirable, but I must make some reference to the speech of the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe). His rewriting of history staggered me to such an extent that I felt obliged to interrupt him in a discourteous manner, for which he very properly rebuked me. He endeavoured to obscure the fact that his party, when it had the power to do so, did virtually nothing in the direction of restriction of monopoly such as we are discussing this afternoon. He endeavoured to suggest that the reason was that the need was nothing like so acute. I will not weary the House by quoting all the evidence which could be adduced, but I will quote one or two random examples which happen to occur to me.
Take, for example, the restrictive practice of cutting off flour supplies from bakers who sold bread below the price nominated by the local association. The Food Council drew attention to this repeatedly in its annual reports in the middle thirties and, as far as I can trace, no action was taken by the Government of the day. The Food Council suggested an independent tribunal to which the baker might appeal, but, so far as I can discover, no such tribunal was set up. The right hon. and learned Member for West Derby is the expert in his party on this subject, and if I am doing any injustice to his party's record in what I am saying I have no doubt he will interrupt me, and I shall be delighted to give way.
In my interjection I asked him to make reference to the report of the Committee which investigated the Anglo-Argentine meat trade, not an unimportant trade from the point of view of the food supplies of the people of this country. I will quote a brief passage from this most interesting report. In its conclusions it was pointed out that what stood out most clearly was: 2084that a trade in an important and necessary article of food, which affects the economic relations between two great countries, and in which the vital interests of large sections of their populations are involved, is in the power of half a dozen private concerns, which are so jealous of their right to conduct their operations with freedom and secrecy that they have refused to co-operate in this inquiry, which was set up for public purposes by the two Governments.Very properly, the Commission went on to express concern at this state of affairs. I do not know of any action which was taken by the overwhelmingly Conservative Government of that day in order to deal with the situation which was revealed. If the right hon. and learned Member knows of any, perhaps he will inform me of it, and I shall be delighted to give way.
The crux of his argument about 1931 to 1939 was the crushing rebuke he administered to me about the Restraint of Trade Committee, 1931. His argument was that this Committee showed that there was no need to deal generally with this problem. He argued that it might well be that in the case of bread and meat, and one or two other commodities, there were monopolistic practices; but, his argument went on, the Restraint of Trade Committee set up by the Labour Government, indicated that there was no need for general measures to deal with this matter. Might I direct his attention to the terms of reference of that Committee? They were very restricted indeed. If the right hon. and learned Gentleman will look at the conclusions at the end of their report, he will find, among them, the statement that the big problem of monopolistic combinations and prices was outside the scope of their reference.
§ Sir D. Maxwell Fyfe
I first dealt with the Balfour Committee on Industry and Trade, and then referred to the Committee on the Restraint of Trade, with reference to re-sale price maintenance. I did not use it as an argument for more than a special part of the subject of resale price maintenance. I should not like the hon. Gentleman to think that I was basing a wider argument upon that; if he reads HANSARD tomorrow he will see what I said.
§ Sir D. Maxwell Fyfe
The hon. Gentleman invited me to interrupt, otherwise I would not do so. My argument was based on the Balfour Committee on Industry and Trade, 1929, which said there was no case for immediate legislation, and the other Committee, dealing with re-sale price maintenance. If I am wrong about the Balfour Committee perhaps the hon. Gentleman will say so.
§ Mr. Smith
I have not had an opportunity of pursuing my inquiries to that extent since the right hon. and learned Gentleman spoke; but really from what I have said and from what has been said by my hon. Friend the Member for Jarrow (Mr. Fernyhough), and others on this side, I suggest that the evidence shows that the party opposite, when they had power, took no effective measures to deal with what was then a very acute and pressing problem. For the Conservative Party's spokesman in this House, or in the country, to present his party as the champions of the people against monopoly is simply a piece of demagogic humbug.
I would like to turn to the Bill. I share the view of my hon. Friends that while we are in close agreement with its objects we believe it can be materially strengthened. It is of the greatest importance that an effective Measure of such a character should be available at present, when the articles which we use, and on which we depend so much every day, are to such a large extent supplied and controlled by industries in which monopolistic and restrictive practices are prevalent. I would like to direct attention to one or two points about the scope of the Commission's work. The evidence we have about the extent of monopoly which is fairly common knowledge—although there may be some dispute about details—suggests that the members of this Commission, when they are appointed by the President, will be very busy men indeed. I hope that my right hon. Friend will ensure that they have an adequate permanent staff which can build up real experience in dealing with this problem. The words of the Measure suggests that the Commission may have available to them a staff on loan from the Board of Trade without that continuity of service which is most essential.
It is also essential that the Commission should have the opportunity, from time 2086 to time, of surveying the whole field. They may come up against problems which are not known to the Board of Trade, and which require further examination beyond the terms of reference of the particular inquiry which they have been directed to undertake. I would like to have some further information about the significance of the proviso to which Members opposite have referred, that there shall be no reference to the Commission of caseswhere the prevalence of the conditions in question is expressly authorised by or under any enactment.That has been interpreted as referring almost exclusively to statutory monopolies. It is my impression that there are a number of private monopolies, or private quasi-monopolies, which, although not erected on particular statutes, have often derived material strength and assistance from statute. I trust that their operations will not be excluded from examination under the Bill.
Publicity, clearly, is of the very greatest significance in this matter, because invariably it has been the case that those indulging in monopolistic and restrictive practices have sought to wrap up their operations in the greatest possible secrecy. I have quoted already what the 1938 Committee said about the meat importing trade. I, personally, look forward to the President referring to the Commission the question of the grain milling industry of this country which, in my view, is very much in need of examination by a body such as this Bill proposes to set up. May I sum up in one sentence? My only fear is that the child with which the President has presented the House today may be a rather puny infant; I want to see it a lusty and a noisy fellow.
§ 7.29 p.m.
§ Mr. William Shepherd (Bucklow)
We have just listened to the attempt of the hon. Member for Colchester (Mr. C. Smith) to extricate himself from the very difficult situation in which he found himself following his clash with my right hon. and learned Friend the Member for West Derby (Sir D. Maxwell Fyfe). The hon. Gentleman endeavoured to prove that when the last Socialist Government were in office two consecutive Commissions showed, rather conclusively, that over the whole field of their investigations there was no urgent need for legislation. That argument destroyed much of what the 2087 hon. Gentleman subsequently sought to prove.
I believe it is difficult to support, in practice, and with conclusive evidence, the rather wild and alarming statements that are made from time to time. We heard the hon. Member for East Islington (Mr. E. Fletcher) working the lamp racket for all he was worth. It is open to any hon. Member to say that the hon. Member for East Islington is vice-chairman of a cinema chain which, by means of its monopolistic power, compels the exhibitor or producer of a documentary film to send that film to the North of Scotland for the handsome remuneration of 7s. 6d. a week. That is a charge which hon. Members on this side might well be able to fling back in reply to these accusations about the lamp racket. I give that example, not because I am saying that is the whole story, but to point out that it is wrong to fling about unfounded and reckless statements. The hon. Member for Jarrow (Mr. Ferny-hough) was particularly guilty in that connection. It is no use making these wild statements and accusations as to what has taken place.
During this Debate there has been a strange absence of any reference to the need to deal with restrictive practices on the part of labour. My right hon. and learned Friend the Member for West Derby (Sir D. Maxwell Fyfe) said this was not a vehicle for that purpose and the right hon. Gentleman the President of the Board of Trade, in a speech as naive as any I have ever heard, especially in its references to restrictions by labour and their relation to monopolies and this Bill, made no attempt to say what action the Government were taking to ensure that restrictions on the part of labour were being dealt with as thoroughly as it is hoped in this Bill to deal with restrictions on the part of employers and trade associations.
Let no one imagine that restrictions on the part of labour are unimportant. In Lancashire we have perhaps only two-thirds of the output we should have with existing machinery, existing labour and existing raw materials. There is a refusal to accept re-deployment. We can turn to the building industry and find a very much lower level of production than in 1938, and can we say of the dock work 2088 in this country that it is equal even to 5o per cent, of what it was in 1938 in terms of output?
§ Mr. Mikardo (Reading)
The hon. Member has talked about accusations which are unfounded. He has said that Lancashire is getting only two-thirds of the possible output because the workers will not accept re-deployment. Is he aware that, so far as the weaving section is concerned, the trade unions in the last few days went on record in favour of the Cotton Commission's proposals for redeployment, whereas the employers are still bitterly opposed to them?
§ Mr. Shepherd
There may be some differences of opinion in the Lancashire cotton industry, but the main difficulty is the refusal of employees—not necessarily trade unions, because there is often a gulf between what the trade union leader wants the men to accept and what they will accept. That is the reason we have a much lower output than is necessary. In the coalmining industry, with increasing mechanisation, there is a fall in productivity. In view of those circumstances, it would have been better if the Government could have introduced some Bill to deal with restrictions on the part of labour at the same time as those relating to employers and trade associations.
I think everybody in this House genuinely welcomes the Bill. As has already been stated, a good deal of thought has been given over a long period of time to the question of restraint of trade and the means by which it can be obviated. When hon. Members opposite talk about the great urgency of this Measure, might I remind them that they had been in office for nearly three years before they decided to bring it forward? If this is as vital as they claim, why has it taken nearly three years for them to bring it forward? Is it because of the Government's example to the nation of putting first things last, or is it because they know themselves that there is not as much behind this as has often been suggested?
I think it is true to say that in this country, monopoly in the anti-social sense is very little indeed. It is true to say that the very development of industry, and indeed the inevitable economic trends of the past 3o years, have driven industry into making certain agreements. The 2089 very search for security and stability has itself tended to thrust manufacturers, groups of manufacturers and trade associations into making some sort of arrangement which would do away with the worst evils of cut-throat competition. A Liberal Party speaker gave the impression that cut-throat competition was the best thing which could exist in this country, but I suggest to the House that we do not necessarily wish to adopt that policy of purely cut-throat competition. Public interest is not necessarily served, even among private manufacturers, by complete and absolute competition. The public interest may well be served by something less than complete and absolute competition.
In support of that, we can turn to almost any of these organisations against whom accusations are made and find that they have an extraordinarily good case to put forward. Big organisations like I.C.I. can turn round and say, "We give extraordinarily good service; we maintain a very high standard of productivity; we accord to our workers most admirable conditions; we charge very reasonable prices. "It is true that that defence exists. Why does it exist? I am not suggesting that it exists because of the altruism of the directors of I.C.I. or because they do not want to make large profits, although the advent of the joint stock company has reduced the desire to make very large profits. These conditions exist because there is potential competition, and the shadow of potential competition can always blight the dreams of monopoly. That is why I object, in a way, that this Bill should have in its title the word "Monopoly." It should refer to "Restraint of Trade," because obviously we are not dealing with monopolies at all, and the only monopoly that exists in reality is the monopoly that is established by statute. Indeed, these organisations to which we have referred, and which have a good strong position in industry, can give good service, and they are driven to good service by fear of potential competition, even if that competition does not exactly exist at the present time.
§ Mr. Edward Porter (Warrington)
The hon. Member has mentioned I.C.I. There is a well-known firm in the country, Magnesium Electron, Ltd., and by a new process they produced caustic soda. The I.C.I. paid this firm a subsidy not to 2090 produce, and they have never produced it since. The subsidy is an amount of money paid annually by I.C.I. to this firm. What is the answer to that?
§ Mr. Shepherd
I am afraid that is the kind of story I have heard relating to different industries at different times, which, on examination, evaporates. Although I am not saying the hon. Member has got this entirely wrong—I shall be happy, perhaps, tomorrow, to investigate the matter—I shall be very surprised indeed if, in attempting to ascertain the facts, I do not find that there is no substance in it.
In making these statements, which may appear to be a defence of monopoly, I want to say straight away that it is quite improper that any restrictions and restraints on trade should exist without the knowledge and connivance of the State. Although the actions of these companies may well be in no way anti-social, it is right and proper—indeed, essential —that the State should know of these activities and be able to judge whether they are or are not in the public interest. There is a great need for such legislation, and it applies even further if we go into the field of international cartels. It is manifestly absurd that a director of any company should have to decide whether it is right or wrong for him to enter into an international agreement which may or may not be in the interests of this country. It is manifest that the Government should accept the responsibility in that field. Therefore, I say it is right that we should have this Bill and have an investigation made.
I am convinced that publicity is, in itself, the greatest deterrent, and that, by and large, we shall have to seek no further action than that of publicity, because the vast majority of firms, particularly the large-scale organisations, are, I think, responsive to the wishes of the public, and wish to co-operate with the Government. The publicity which is given to their activities by the Commission will, I think, be sufficient action on its own. In this connection I do, to some extent, join issue with my right hon. and learned Friend the Member for West Derby and some others of those on this side of the House, in that I believe we ought to have established some system of registration, such as that which operates in Norway. I want registration, if it is 2091 practicable, for the reason that the fact that they had to register would be an automatic deterrent to people doing things which they knew to be against the public interest. It would certainly enable the Commission to amass a good deal of evidence as to whether there were growing up in a particular trade or industry a set of circumstances which demanded inquiry.
I agree that there would be difficulties, particularly in defining the extent of those matters requiring registration. That, perhaps, would be the greatest difficulty. There would be, secondly, the difficulty that people might imagine that, having registered, they had obtained the sanction of the law. However, I feel that, as publicity is the greatest deterrent, some system of registration would achieve the greatest result with the least possible trouble to everybody concerned. I hope that the Government, between now and the Committee stage, will have a look at this possibility.
I want to refer to the question of State monopolies, upon which the naiveté of the President of the Board of Trade must have astounded almost every Member in the House. There is no reference to State monopolies in this Bill, because State monopolies are enshrined in the hearts of all hon. Members opposite. Despite the facts that a State monopoly possesses all the evil attributes of a private monopoly, but to a greater extent and more intensively—[HON. MEMBERS: "Rubbish."]—that it is more secure behind the barriers of State intervention and control, free absolutely from the slightest breath of competition, able to fortify itself in the depths of inefficiency, and compels the poor consumer to pay any price it demands—despite these facts hon. Members opposite still believe in State monopolies, and they do not want anything to come about which would in any way discredit a state of affairs which they themselves know to be quite insupportable.
Where are we going with State monopoly if we proceed, as we have so far, in, for instance, civil aviation. Can we see an end to the present position in the coalmines? Are the Government prepared to say we shall have this type of organisation which removes Parliamentary control on the one hand. and removes 2092 the control of competition and the need to raise share capital, on the other, and allows a vast body of individuals to sink into inefficiency, and to have the power to exact from the consumer any price which their inefficiency demands? I think that the failure of the present Administration to produce any means of making the public corporation efficient, to subject it to regulation and inquiry at least as rigorous as that applicable to private enterprise, is regrettable in the extreme. It is a failure on the part of the present Administration.
In conclusion, I support this legislation because I think that there is an absolute duty on the part of the State to determine whether or not the action of individuals together is or is not in the interests of the community, that there should be no right of individuals to conspire together to exact from anyone else a price higher than they could get in free competition. If we do find that there are malpractices we can, obviously, deal with them. On the other hand, we may yet find that most of these practices are not anti-social. Yet it is still just and necessary that the State should make the necessary inquiry, because in the present century we have a great problem to solve, the problem of how to combine efficiency and progress with stability. That is not an easy problem to solve. Hon. Members opposite have to be much more progressive and tolerant than they are at present if it is to be solved. Possibly, this Bill will do something to solve that great problem, upon the solution of which the future happiness of many people may depend.
§ 7.48 p.m.
§ Mr. Elwyn Jones (Plaistow)
I rise to congratulate the Government upon the introduction of this Bill which deals with a situation that ought to have been dealt with many years ago in this country. The hon. Member for Bucklow (Mr. W. Shepherd) has implied, slightly inconsistently, that this Measure should have been introduced sooner. I say to that, better late than never. It is a remarkable thing that, although other countries have dealt with this problem of the abuse of monopoly power, this country has lagged behind in that field. We know that in America for a great many years there has been anti-trust legislation of varying degrees of effectiveness, and that in the 2093 Empire—in Canada, Australia, New Zealand, South Africa—countries of the Commonwealth have passed anti-trust legislation. However, in this country, despite the fact that monopolies have for many years been an increasingly prevalent phenomenon in the industrial and cornrnercial field, it has needed the Labour Government in this year of grace to do something about it.
The history of the inquiries and commissions to investigate this problem is a long one. It was referred to by the President of the Board of Trade in his speech. After the 1914–18 war there was a committee appointed under the chairmanship of Lord Balfour of Burleigh, and that reported in 1918, suggesting, curiously enough, the very registration which the hon. Member for Bucklow has recommended. It recommended that:it should be a legislative requirement that all international combinations and agreements to which British companies or firms are parties, made for the regulation of the prices of goods or services, or for the delimitation of markets, should be registered at the Board of Trade, with a statement of the parties thereto and of the general nature and object of the agreement.That committee further recommended that the Board of Trade should be given power to call upon combines to furnish such information as it required. However, no action was taken on that. There followed the curious Profiteering Act, 1919, but there was no great energy or enthusiasm about this attack on the problem of profits because, as we have already heard, that potentially useful Act was allowed to lapse in 1921, and the era of profits rushed forward in this country to the inevitable catastrophe of a slump and the terrible situation of 1926.
Perhaps the most interesting of these investigations into the operations of monopolies and trusts was that appointed in 1919. It is interesting to note that my right hon. Friend the Secretary of State for Foreign Affairs was a member of that Committee, which, as I understand it, was non-party. They found that at that time, in 1919, there wasin every important branch of industry in the United Kingdom an increasing tendency to the formation of trade associations and combinations having for their purpose the restriction of competition and the control of prices.That Committee recommended that action should be taken with regard to this problem. It found as a fact—there is no 2094 "wild charge" in this matter—that in many branches of the iron and steel industry price was only partly determined by competition, and was regulated by the manufacturers acting in concert. It found conditions prevailing then which continued during the inter-war years, and which, to some extent, prevail today.
That 1919 committee reported that,the production of chemicals in this country is almost wholly in the hands of two great consolidations. In soap, tobacco, wallpaper, salt, cement and in the textile trades there are powerful combinations or consolidations of one or other kind which are in a position effectively to control output and prices.The committee recommended that it would be desirable to institute in the United Kingdom machinery for the investigation of the operation of monopolies, trusts, and combines. It is significant that my right hon. Friend the Secretary of State for Foreign Affairs, together with Mr. Sidney Webb, the late Lord Passfield, and others, reported that the findings of the committee did not really go far enough, and thought that their recommendations were not sufficient to safeguard the public interest; and in their addendum they made observations about the operation of monopolies which were really an anticipation of the observations about them which the President of the Board of Trade has made today. They found as a fact that free competition no longer governed the business world. That is an illusion which is very commonly expressed on the other side of the House—the illusion that competition between traders maintains prices at a level near the cost of production. That is an illusion because, in fact, prices have, in many cases, been regulated by combinations and monopolies in a way calculated to obtain the maximum disadvantage for the consumer and the maximum profit for the producer.
There was that report and various recommendations from distinguished committees, but no action was taken. In 1924 the Labour Government investigated this matter; but unfortunately they were not in power long enough to take action. In 1925 a Private Members' Bill—the Trusts and Combines Bill—was moved by hon, Members of the Labour Party; but that, of course, was not passed, because there was not sufficient support for it in the House. Those are matters of history; but they do show that the problem of abuse of monopoly has been an 2095 endemic feature of our community for far too long.
Now, happily, since the war, we are in a better position to be informed about the problems with which we are dealing. In America, since the end of the war there have been great State commissions of inquiry into the operations, not only of American Trusts and monopolies, but of international cartels and international trusts. There have been the Senate Committee on Patents, the Senate Committee under the Presidency of Mr. Truman, Senator Kilgore's Committee, and numerous inquiries by the United States Department of Justice. Their disclosures have been remarkable. They have explained, for instance, why Germany, which in 1918 was a defeated, broken Power, was in 20 years in a position to challenge the world. The Kilgore Committee's findings have indicated quite clearly that the clue to that remarkable phenomenon was the power of the German cartels behind Hitler. The German cartels financed Hitler and helped him to power, as the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe) well knows. They continued to use their influence and connections throughout the world in order to promote German economic power for political, economic and, ultimately, military purposes.
The findings of the American committees on the operations of these cartels have indicated that on many occasions the cartels put profit before even patriotism. A member of the staff of Senator Kilgore's Committee, Darel McConkey, has produced a most informative book upon the subject of the operation of international cartels. He has indicated that the American committees found that the evidence proved overwhelmingly that these international cartels kept up prices, made vast profits, impaired the quality of goods, if necessary to make higher profits, made war on independent enterprises and restricted invention and technological changes.
I would like to give some instances from the investigations of these American committees into various important aspects of our international life. There is, for instance, the disclosure of the operation of the aluminium cartel, which I venture to 2096 bring to the attention of the House. In 1931 the aluminium cartel was formed and registered in Switzerland. It is very significant that these international cartels usually have their headquarters in small states. It may well be that this is done partly to free the operation of the cartels from the attention of Governments. When separate companies were formed to administer these cartels it is often found that the companies were registered in Switzerland, Belgium, Luxemburg or Lichtenstein, which happened in the bone glue, linoleum and electrical lamp industries. The Alliance Aluminium Co. was a world aluminium cartel, and aluminium manufacturers in all countries were members of it. On paper, the United States stood out of the aluminium cartel, because the anti-trust laws in the United States forbade cartels. But in practice the Aluminium Company of America adhered to every letter of the cartel agreement without formally being a member. The rules of this international cartel were very simple and characteristic, namely, to restrict production and increase profits. Those were the main objectives of the cartel.
The cartel operated quite satisfactorily and happily until the Nazis came to power, and the German Government decided to re-arm as quickly as they could. For that purpose, Goering needed as much aluminium as he could obtain for his aircraft. In these circumstances, the German members of the aluminium cartel asked to be released from their obligations to restrict production. In 1936, the cartel made a deal with the Nazis, by which they were to purchase their excess needs from the Aluminium Alliance, and in return were to receive as a gift, free of charge, 2,000,000 lb. of aluminium. The Aluminium company of Canada, as its share, gave the Nazis some 700,000 lb. of aluminium. That was at a time when, as we now know, the Nazi Government was deliberately preparing for aggression. After these arrangements, the international aluminium cartel exempted the German branch from observing any quotas, so long as they did not export and spoil the market. The effect of the cartel was seriously to prejudice the power of this and other countries to face Nazi aggression when it was visited upon us, and it resulted in a call some years ago, which we all remember, for our housewives to surrender their aluminium pots and pans.
2097 In the field of synthetic rubber, the agreement between the constituent companies of another international cartel can be shown to have been very prejudicial to the preparedness of democratic countries to face the threat of Nazi aggression. It is a story which may well be familiar to hon. Members, but I venture to give the House an outline of it. In November, 1929, the I.G. Farben Company of Germany, then the biggest chemical combine in the world, signed an agreement with the Standard Oil Company of New Jersey, which came to be known as the "Division of Fields agreement." It was an agreement whereby I.G. Farben agreed to stay out of the oil business so long as Standard Oil stayed out of the chemical business. In 1929, I.G. Farben took out a patent for the manufacture of synthetic rubber by the buna process. Standard Oil were doing their own work on synthetic rubber, and in 1937 they obtained a patent of their own for the butyl process. The tie up between I.G. Farben and Standard Oil resulted, in 1938, in Standard Oil giving the butyl process and the secrets of it to I.G. Farben, in return for a promise from I.G. Farben that Standard Oil would receive the details of the manufacture of buna rubber. Unfortunately, I.G. Farben held on to their secrets, the manufacture of synthetic rubber was not developed outside Germany and the result of this arrangement between these two vast world combines was that, when war ultimately came, the lack of synthetic rubber proved to be a very serious disadvantage to the democratic countries.
It is possible to give illustrations from many other fields of international cartels of the way in which these business arrangements over-rode the interests of patriotism and became a danger to the democratic way of life. These American inquiries have lifted the lid off international cartels, but unfortunately there have been no parallel inquiries in this country to indicate what part British combines and monopolies have played in these international cartels. It may well be that the international agreements of Imperial Chemical Industries are innocent and even helpful to our country, but it may well be, in view of the experience we have had of these inquiries into the activities of Standard Oil, that some of these I.C.I. cartel agreements have been 2098 positively harmful to the interests of this country.
One of the reasons why I welcome this Bill is that we shall now have an opportunity of finding out the facts. We know, for instance, that in 1929 I.C.I. joined the European nitrogen cartel. We know that in 1932 there was an agreement between I. G. Farben, the Royal Dutch Shell, Standard Oil and I.C.I. to form an international hydrogenation patents combine. We know that in 1932 I.C.I. joined the European dyestuffs cartel. Maybe all these agreements were not to the disadvantage of our country, but we should very much like them to be looked into. It is interesting to find that it appears from one of the reports of the American "Bone Committee" that in 1937 Du Pont and Imperial Chemicals merged their South American business and organised the company of Duperial of Brazil. I. G. Farben came into the field of this combine, and bought shares in a Duperial company in Argentina. The war came, and I.C.I. found it necessary to do something about the situation in which they found themselves, being harnessed to a company belonging to the enemy power of Germany.
The reference by the Du Pont Company to the situation was somewhat delicate, namely, that "it was impracticable for Imperial Chemical Industries to be in partnership relations with a German company." This was after the war had started. The answer to this quandary given by these giants of the chemical world was this. Du Pont reported that arrangements had been made for repayment to I. G. Farben of the money advanced. The Du Pont Company informed I. G. Farben that they intended to use their good offices after the war to have I. G. Farben participation restored. This statement was made at a time when the German armies were sweeping over Europe, largely with the armaments and chemicals provided by I. G. Farben.
The American Anti-Trust actions and prosecutions have involved British companies to a certain extent, and it makes one curious as to what would be discovered if we had some thorough investigation in this country. We know that in America in September, 1944, the British firm of Borax Consolidated, Ltd., was 2099 charged with other companies with creating a world-wide monopoly of Borax, with refusing to sell to Allied purchasing agents, with maintaining exhorbitant prices, with restricting output throughout the world, and with maintaining prices substantially in favour of Axis nations. We know that in the prosecution against firms engaged in the production of matches two British companies were involved, the British Match Corporation, and Bryant & Mays, Ltd.
In 1944, the United States Department of Justice filed an anti-trust suit against these two British companies and American and Swedish firms engaged in the production of matches. It is not a very pretty story. We have heard a good deal in this Debate about the encouragement of incentives, but the disincentive nature of these cartels is clearly shown in the history of the match. We know that the match cartel made it a point to buy up patents which might have threatened its monopoly of the match trade if any rival method of lighting cigarettes appeared. In 1931, two Hungarian inventors patented a match capable of striking hundreds of times before it wore out, and this patented match could be produced for 1½d. But it did not take long for the match cartel to get on the track of this dangerous threat to the match monopoly. The Swedish Match Company bought up this invention, and nothing more was heard of it. A similar fate befell the Ringer multi-light match, which would have been an equally useful invention for common humanity. Its suppression is typical of the functions of these cartels to maintain the private interests of its members at the expense of the comfort and well-being of the people of the world. This Bill should have been introduced long before in this country. We need to lift the stone of monopoly so that we can see what lies beneath it.
§ 8.12 p.m.
§ Mr. Osborne (Louth)
I agree with the last sentence of the hon. Member for Plaistow (Mr. Elwyn Jones) that we should lift the stone on all monopolies that do harm, but I do not think that this Bill will produce the result for which some Members opposite hope. I do not deny that in the past there have been a lot of abuses, but it will not help us if, like the Irish, we merely keep thinking of what has happened in the past. The 2100 hon. Member for East Islington (Mr. E. Fletcher) welcomed the Bill because it would assist production. If it does that, there is not an hon. Member anywhere in the House who would not welcome it wholeheartedly, but I doubt whether it will do what he hoped. He also went on to say that it would cure evils and abuses, although it does not say in the Bill that the restrictive practices on the side of labour are to be dealt with now.
I am glad to see that the Leader of the House is present because there are one or two things which I want to say to him. I hope that these restrictive practices will be dealt with in quick time after this Bill has been passed. May I give an example? Joseph Lucas, Ltd., electrical engineer accessories, showed in their last balance sheet that 40 per cent. of their turnover went to wages and 0.8 per cent. went to dividends. If the restrictive practices on both sides were about the same, then the restrictive practices on the side of labour on that showing would in the result be 5o times as bad as those on the side of capital. I ask hon. Members opposite to face that fact. The greatest evil does not come from the desire to get more and more profit.
May I digress for a moment? With taxation as it is at present there is no incentive to try to get more profits. It may be found that the restrictive practices which withhold production today, come more from the labour than the capital side. I think it is a pity that the Leader of the House has not been able to bring in a Bill to include both sides at once, so that we could see the picture as a whole. It has been claimed that there is not sufficient competition. In my home town, the two important trades are hosiery and boots. In the inter-war years, we had not too little competition but far too much. Most of the hosiery companies were unable to pay preference dividends, let alone ordinary dividends, and many of the boot manufacturers were very pleased to sell their boots and shoes to get the money to pay wages at the end of the week. There is not the degree of monopoly in all industries that some hon. Members opposite may imagine. The hon. Member for Jarrow (Mr. Fernyhough) said that this was a moral issue, and he quoted his own town, which, he said, had been murdered because of the selfishness of a few. No one would try to defend that. 2101 But the Jarrow works were closed because they were faced with the problem of efficiency. Like the National Coal Board, they were faced with the problem of closing down old-fashioned redundant pits.
§ Mr. House (St. Pancras, North)
They were not closed down on the ground of inefficiency: they were closed down on the basis of profits.
§ Mr. Osborne
The National Coal Board today are faced with exactly the same problem. The miners employed in the small redundant pits have the same problem to face under the National Coal Board as the men of Jarrow had to face 25 years ago, and we fool ourselves if we do not face the problem of efficiency. The hon. Member alleged that the Grantham factory could not get its spare parts because of the pressure from a monopoly. I understand from the best authority—those who were dealing with those spare parts—that the only condition which they imposed on those running the Grantham factory was the reasonable condition that they should be able to pay for what they received.
The President of the Board of Trade, in his opening remarks, said that the crux of the matter was the question, "what is the public interest?" He said that the nation needs greater production from its industries. We cannot, he said, afford the restrictive practices of the interwar years. All of us agree with that. I doubt whether this Bill will do half the work that he thinks it will, or half what hon. Members opposite hope it will do. We are faced today with economic and not political problems, and we cannot solve economic problems by political methods. That is the most difficult lesson which hon. Members opposite have to learn. No matter whether our industries are run by private individuals or as nationalised industries, our economic problems will be overcome only by economic and not by political means.
The President of the Board of Trade said that his ideas of the public interest were two—increased supplies to the home consumers and that organisations should help to sell our goods abroad. I would not disagree. I ask the Leader of the House whether his supporters agree with that. I believe that today the Chancellor of the Exchequer has been meeting the 2102 leaders at the Trades Union Congress on the question of production, goods and prices, which is the very thing with which we are dealing. The right hon. Gentleman's supporters are objecting to the very measures which the Government have tried to sponsor. All I am trying to say to hon. Members opposite is that this Bill will not produce the results which they hope for, and the results which the country needs, unless it has the wholehearted support of labour as well as capital.
§ Mr. Murray (Spennymoor)
Is the hon. Gentleman aware that the T.U.C. is recommending the very thing which he is saying now does not operate?
§ Mr. Osborne
Sir George Schuster put the point to the T.U.C. leaders, and, as the hon. Gentleman knows, five million voted for the recommendation and two million against it. It is that problem which hon. Members opposite have to face. They will not solve the problems of industry by staring at what happened in the past. I am the last person to talk about what was done in the past. We shall only solve the problems of today by facing them. The greatest responsibility for the labour problems, and the monopolies in connection with them, lies with hon. Members on the benches opposite. I should like to quote what Sir Charles Reid, a director of the National Coal Board, said, according to "The Times," when he was speaking in Scotland on Saturday night. The point I want to make is that we cannot hope to cure our economic problems by mere political methods. He said:The Board ask me to state this is a position we cannot tolerate. It is a serious matter that after you get the industry nationalised, you are not prepared to play the game with the country.I ask hon. Members opposite to face that. It is infinitely more important than the talk about the wickedness of international cartels. Sir Charles also said—and this is the greatest of our economic problems and I ask the Lord President of the Council to say something about it when he replies—We are putting into the pits day by day great masses of machinery, and it does not seem to matter what we do, output a man is not rising.Until that is cured, there is no hope for improvement in our standard of life, no 2103 matter what is done about cartels or trusts. He finished by saying:There is something wrong somewhere. The Scottish figures are not too good; there is a slackening of effort despite all this machinery.I put it to hon. Members opposite that it is not merely by raking over the mistakes and evils of the past that we shall solve the problems with which we are faced. Hon. Members opposite should address themselves to the warning which Sir Charles gave.
I should like to turn to another aspect of the Bill. Clause 1 (6), gives the President of the Board of Trade power to recruit a staff. To hon. Members opposite what I am going to say next may appear to be a small issue, but I consider it to be of importance. I want the Leader of the House to assure us that the staff will not grow like the staffs of some recently organised nationalised undertakings. I believe the Lord President will agree with me when I say that there are too many non-producers in this country. As an example there are the war agricultural executive committees. In 1940 they started with a staff of 1,157, at a cost to the nation in salaries and wages of £330,000 a year. Today, for the same work they are employing over 10,60o people at a cost to the nation of £3,550,000. In some ways the Civil Service seems to breed worse than rabbits. I ask the Lord President of the Council to see to it that this staff is not inflated, and that it does not become a danger to our productive capacity.
There are two other points I should like to make. The first is that I regret that the excellent idea of the Chancellor of the Excheequer of having working parties was not adopted long ago in regard to restrictive practices of the trade unions. As I tried to show in the case of Lucas, restrictive practices by trade unions can be 50 times more dangerous than the restrictive practices of capital, because of their greater influence.
§ Mr. Osborne
I am not in Lucas's at the present time, but I gave that example of the division of turnover between wages 2104 and dividends. The Minister of Labour is here, and he can, if he likes, give us an example of restriction in his own trade union, the compositors'. It is harder to get into than the House of Lords, unless one is born into it.
§ The Minister of Labour (Mr. Isaacs)
Since my name has been mentioned, I should like to tell the hon. Gentleman that I am not in the compositors', and that is not my trade union. Secondly, will he give us some instances of the nonsensical statement which he has just made and which I have heard him make before?
§ Mr. Osborne
I stand by my assertion that entry into the compositors' union is not free. I ask the right hon. Gentleman to deny it. [Interruption.] I would tell hon. Members opposite to go back to the Durham coalfields and tell the miners what Sir Charles Reid said the other day. Hon. Members opposite have quite sufficient to do to make nationalisation work in the coalmines without talking about anything else.
§ Mr. Osborne
This Bill is one-sided. It will not achieve half what hon. Members opposite expect, and I am sorry that we are unable to look at both sides of the picture at once. The nationalised industries are strictly excluded from this inquiry. The President of the Board of Trade said he was doing that because the nationalised industries had gone through the scrutiny of this House. As they live and grow old and get creaky, new abuses may arise. I do not see why they should not be subject to the same searching inquiry as private firms.
I see my time has almost gone. I would say finally that the Lord President knows better than anyone else that this Bill will not meet all the requirements. If this Bill causes our people to believe that, somehow, political Measures will excuse them from making an effort to produce more, and from answering the Prime Minister's appeal for 10 per cent. extra production, it will do harm and not good. It is in the high expectation with which it has been put forward from the other side of the House that the danger lies. Despite that, I should like to support it.
§ 8.30 p.m.
§ Mr. House (St. Pancras, North)
The hon. Member for Louth (Mr. Osborne) 2105 made reference to trade union practices. In regard to that, I would say that if the workers were exposed to unlimited competition by the employers their affairs would be in a sorry state indeed. It is natural that the workers should seek protection from the exploitation of firms and others involved in restrictive practices. The workers, through their trade unions and through the policy of the Labour Party, look after their affairs as a whole. Generally speaking, the trade union movement has a good case for exclusion from this Monopoly Bill. I am bound to recognise that the economic struggle operates to inspire those engaged in trade and industry to safeguard their activities from so-called free competition. That is characteristic of the trade union movement and the trade associations, cartels and price rings. It is obvious that as we proceed further with a planned economy, the plans made by the Government may be interfered with because of the unrestricted freedom of private interests, in ganging up against the Government. We remember the necessity to control, and ultimately to nationalise, the Bank of England, and the way in which the Government Departments during the war used trade associations for the limitation of prices, etc.
Combinations of workpeople as such are not a necessary evil, as old time economists used to state. In recent times employers have stated that trade unions have played a very important part in building up our economic strength for the establishment of new industries, and the exploitation of British genius for invention and discovery may only be possible on a scale and expenditure that calls for a number of previously free enterprises to pool their resources. Combination contains some good and some evil. There is the illustration of the trade union movement. We must welcome the Bill, which clearly recognises the possibility that monopolies may be both good and bad, and which tries to secure the good to the exclusion of the evil.
The proviso to Clause 2 brings into consideration the abuse of monopolies under letters patent. It means that the courts and the judges may be brought in, to examine these matters. It is vitally important therefore that the status of the Monopoly Commission should be of the highest character from many points of 2106 view. In order to create the right atmosphere and to prevent the impression that the Bill is simply a witch hunt or a "trust-busting" expedition, we ought to be careful about the personnel that we appoint to the Commission. A strong case can be made out for the President of the Board of Trade to arrange that the chairman of the Commission should be appointed in consultation with the Lord Chancellor from among our High Court judges and that he should be provided with colleagues of very efficient standard, such as an expert in labour relations, an economist and an accountant, and a scientist. Having regard to the importance of the work which the Monopoly Commission will have to carry through, it should be borne in mind that a person of high judicial character ought properly to focus the work of the Commission. The Bill states that the Commission will have power to investigate factual matters, to call for evidence on oath and the disclosure of books and accounts. Every point of view should therefore be looked at in the appointment of the Commission.
The hon. Member for Louth, who referred to the closing of shipyards at Jarrow, missed the main point of our criticism of that event. In these vitally important matters the interests of the community ought to come first. I would remind him that after the Government of 1931 had introduced tariffs with such damaging effects upon the shipyard industry, Shipbuilding Securities, Limited, went round the country deliberately buying up shipyards in order to restrict shipbuilding. Our main point is not on a question of efficiency or inefficiency, which is obviously an important item, but the public interest. Shipyards were bought up by that organisation only in the interest of profit. Such things ought not to continue. There is also the instance of the great steelworks that were built in Corby by a firm that was established in Scotland. They may have had a case for putting up the works there near the Northamptonshire iron ore fields, but what we say is not fair is that these important decisions, so vital to the welfare of the public, should be decided within the confines of a small directors' room and by half a dozen directors. Another example was the huge steel works in Ebbw Vale, the choosing of the site of 2107 which was decided upon by private enterprise.
These things ought not to be permitted. It is only reasonable that the Bill should give these matters every attention. Therefore, we welcome the Bill. It is true that it has been delayed, as one hon. Member has reminded us, but it has been delayed by Tory Governments as well. Our legislative slate has been completely full in the last three years and any delay has not been because we have not appreciated the importance of the Measure or the desirability of bringing it into operation. Our tasks of socialisation have been so great that, notwithstanding the importance of the Measure, we have not had time to bring it in earlier. Its urgency is accepted. For these reasons, I endorse and support very strongly the terms of the Bill.
§ 8.37 p.m.
§ Mr. Orr-Ewing (Weston-super-Mare)
Some of the remarks which have just been made by the hon. Member for North St. Pancras (Mr. House) might better have been directed against the Measure dealing with the direction of industry than against this Bill. Obviously evils have arisen in the past, whether they have been brought about by monopolies, cartels or other means, and we are not doing any good by starting this Bill off on its passage as a sort of spearhead to justify a punitive attack upon every form of commercial and trade combination in this country.
It is obvious that during difficult times a concentration of industries and of interests is more likely to happen than during easy times. It has often happened that a conjunction of interests has been built up in order to protect an industry from destruction. Unless barriers had been made by way of greater combination, the whole of an industry and the livelihood of those employed in it might have fallen into collapse. We shall not do any good by merely conducting a sort of witch-hunt. I believe that all parties on all sides of the House have been to blame in not having had the courage to face the facts in the past. As we start off this Measure we hope that we shall be able to do something with it. Any other approach to the problem cannot be helpful at all.
I would say a word on the question of definition. The Bill sets out to define such 2108 things as "supply," "produce," "goods," and "competent authority," but the question of defining "public interest" has been completely and absolutely shirked in the Bill. I agreed very largely with the general specification set out by the President of the Board of Trade, although I think it can be shortened and simplified. However, to omit any attempt at a general specification what "public interest" is when the whole object, aim and foundation of this Bill is to guard the public interest seems a very serious default which I hope will be remedied at a later stage.
Zoning was mentioned by my right hon. and learned Friend the Member for Liverpool, West Derby (Sir D. Maxwell Fyfe). I am certain that, as this Bill is drafted, an immense amount of misinterpretation would come about at once within all sorts of very helpful, sound and honest industries. I cannot believe that the President of the Board of Trade would wish those who are carrying on legitimate trades and trades in geographical areas, where, under his definition, they may appear to have a monopoly, should have some threat held over them, and I hope that at the earliest possible moment he will remedy that extremely serious defect in drafting and define what. zoning means. It is difficult to talk of a proportion of goods in a part of a part of the country.
I raise the matter of the nationalised industries but not from the political aspect. Hon. Gentlemen opposite never believe any statement of that kind, but I honestly think that unless Parliament devises some means of putting these nationalised industries through the same filter through which other industries have to pass, whether under this Measure or any other Measure, we are heading straight for trouble. For the first time, 100 per cent, monopoly groups have been created under nationalisation, and not only created as regards the definition of goods, supply, and acquisition of raw materials, but created as regards the monopoly of specialist labour within those industries. From that aspect alone the Government should have taken the most careful steps to protect the situation. If we are to create a monopoly with vested interests as regards production and the labour employed in that production—for what is a gas or electrical technician to do if he has to leave his industry in this 2109 situation?—the Government must face the facts and the nationalised groups must be put through the same filter—and cleaned up, if necessary in the same way —as other industries. This Bill is overdue. I do not like its structure but at the same time, its aim is admirable, and for that reason I feel that I must support it.
§ 8.44 p.m.
§ Mr. Beswick (Uxbridge)
An hon. Member suggested that ministerial departments were the only concerns employing non-productive people, but one of the extraordinary things about the position before the war was the way monopolies employed non-productive people to enforce their restrictive practices and the way pirate traders employed other nonproductive people in order to try to evade the restrictions placed on them by the monopolies. I remember that the "Evening Standard" ran a story in 1938 in which they called attention to the methods used by price cutters, people who were selling goods below the prices fixed by the monopolies. At that time the monopolies had staffs of people going round "snooping," although we did not use that word in those days. In one campaign no fewer than 10,000 purchases were made, and it was interesting to see the action taken by the price cutters to evade the actions of the snoopers. The "Evening Standard" had a very interesting story of a staff of girls employed removing marking codes and cutting off mutilated labels, and in one or two cases even scientific workers with ultra-violet ray equipment, were employed to see if they could detect concealed code markings in order to prevent the "snoopers" discovering their different sources of supply.
Reference was made earlier to the way in which private trade, in its trade associations or different forms of monopoly, endeavours to discriminate against the Co-operative movement which, before this Bill was brought before the House, was one of the most effective weapons open to the public as a protection against the monopolies. I would like to refer to one or two cases out of the very many that I have, in which certain discriminatory practices were followed. There was the case of a Co-operative society which bought an electrical and radio shop in Oxford. When it was taken over, supplies of various articles were immediately 2110 cut off, and the kind of letter which was sent to explain the cutting off of supplies is illustrated by the following, which is from Electrolux Ltd.:We feel that no useful purpose would be served in supplying our goods to you as cooperative societies by their very nature are unable to maintain our list prices.There is no question here of Electrolux saying, "We will not supply you because your conditions of employment are bad, or your rates of pay are below average or you are incapable of giving proper service after sales." The only crime that retail shop committed was that it was able to distribute more efficiently to the people, and therefore it was discriminated against. There are many other examples of the same kind of thing, and I only wish I had time to refer to them.
I would refer briefly to what I consider to be one or two weaknesses of this Bill. The hon. Member for Scarborough and Whitby (Mr. Spearman) said that the Bill gave authoritative powers to the President of the Board of Trade. It does to a certain extent, but the danger is that when a person is in such a powerful position, he may just as easily do nothing as do something, and if at any time the present occupant of the office should be replaced, it is possible that, no matter what representations was made to another Minister under the Bill, no further action will ensue. It is because this Bill is so much an enabling Bill that I feel that I can understand why the Opposition have supported it. If a party brings forward a complaint, upon whom will be the onus and expense of having that complaint heard? Would it be possible for the President to make provision for direct representation to the Commission of reputable and recognised bodies such as the T.U.C., the British Industries Federation or the Co-operative movement?
§ 8.50 p.m.
§ Mr. Oliver Lyttelton (Aldershot)
I sup pose there are few subjects upon which it is easier to raise prejudice by wrong information than monopolies and restrictive practices, and today, with the general decline of learning, words like this acquire easily the smell of obloquy just as others acquire the odour of sanctity. Though I think that most hon. Members who have taken part in this interesting Debate have tried to keep an objective point of view on it, that has not been so all through. Indeed, the President of 2111 the Board of Trade permitted himself a few overdrafts upon his already highly strained imagination and the hon. Member for Plaistow (Mr. Elwyn Jones), who is not in his place any more, made allegations about the suppression of patents. I think the President of the Board of Trade said that this was one of the practices which the Bill would help to suppress. Apparently he has not read the Swan Report, Command 6789, paragraph 24, which uses these words about the suppression of patents:Rumours of this practice are frequent"—All hon. Members opposite will certainly agree that those rumours are frequent because they generally give birth to them—but, in spite of our endeavours to obtain it, no satisfactory evidence of particular examples has been forthcoming. Several persons who had made public statements about the suppression of inventions were invited to give evidence before us but did not accept the invitation. We have formed the opinion that this type of restriction has been much exaggerated …and much more in the same sense.
One of the reasons I welcome this Bill is that I think it will set at rest finally this type of rumour which used to exist about the suppression of patents. I think the Swan Report says what is the general opinion in industry, that this practice, or rumours of this practice, have been grossly exaggerated. They went on to say that the rumours were:generally due to the unfulfilled expectation of over sanguine inventors.I think hon. Members on both sides of the House will know how sanguine inventors usually are. I hope very much that this Bill will put other rumours of the same kind to rest. The President of the Board of Trade also said that the operations of the Lamp Association had had the effect of raising the price of lamps in this country above that of any other large centre of production. Am I right in thinking that that was the sense of his words?
§ Mr. Mikardo
On a point of Order, Mr. Deputy-Speaker, it is generally understood that the right hon. Gentleman has some personal interest in the industry of the 2112 manufacture of electrical components and lamps. If that is so, is it not consistent with the normal practice of this House that he should not discuss it in this House without first declaring his interest in the industry?
§ Mr. Deputy-Speaker (Mr. Hubert Beaumont)
It is purely at the option of the right hon. Gentleman to make such a declaration. The Rule only affects the voting.
§ Mr. Lyttelton
If the entirely unnecessary interruption of the hon. Member means anything at all, it means that some Members of this House do not know that I am Chairman of Associated Electrical Industries, which is concerned in the electrical equipment industry. I thought everybody knew that—perhaps that is just a piece of conceit—but if it gives the hon. Member any satisfaction, I declare that is so, and that three of the firms of that combination are members of the Lamp Association. I think everybody knows that, but I will go on repeating it whenever these things come up.
I quoted the President of the Board of Trade as saying that the Association had raised the price in this country above that in any large centre of production. The figures are these: in Belgium the price of the 60-watt lamp is 1s. 10d.; in Norway, 1s. 9½d.; in Sweden, is. 9½d.—there was an interjection from below the Gangway at one point to the effect that prices in Sweden were lower than they were here —in France, 1s. 9d.; in Holland, 1s. 6d.; and in this country, without Purchase Tax, 1s. 3d. It may be that the hon. Member had added the Purchase Tax, which, of course, cannot be put down to the discredit of the Association.
§ Mr. Lyttelton
No. The prices here are considerably higher than they are in the United States, if that is what the hon. Member wanted to ask, but there are good reasons for that. I want to get on to the broader questions of this Bill as quickly as I can, but the hon. Member for East Islington (Mr. E. Fletcher) made a number of accusations. I think that the right place for them to be dealt with is in the Commission, and I do not want to raise, nor will he, any prejudice against any inquiries which they may like to 2113 make into these industries. However, I should deal with one or two points.
The first is that there is no restriction on output, there is no restriction on entry into the industry, there is no restriction on retailers obliging them to stock only the Association's lamps. As I said earlier, if they stock only the Association's lamps, they get an extra rebate of 6 per cent. on sale price. One hon. Member mentioned exports. If the exports of the lamp industries here are taken, they will be found to have gone up enormously, and last year the exports were 54 million lamps, including those manufactured by factories in the Dominions. The proportion coming from this country was 35 million lamps, out of a total production of some 120 million. So the idea that the industry is inefficient and incapable of exports could not be sustained.
Finally, I can think of very few manufactured articles which, considering the rise in wages and in all raw materials, are now selling at 28 per cent. below he price at which they were selling before the war. Of course, it is easy to say that that merely means that the lamps were sold too expensively before the war. [HON. MEMBERS: "Hear, hear."] Exactly, but then, of course, there is no argument which would ever overcome the preconceived prejudices held by the hon. Member for Reading (Mr. Mikardo). All I can say is that the fall in prices is due to the greatly increased technical efficiency in the industry, and if hon. Members can think of any manufactured article which is now selling at 28 per cent. below its pre-war price, I shall be glad to know of it.
I would like to bring the Debate back to the common ground on which both sides of the House agree. We believe that some restrictive practices on the trades union side owe their origin to the terrible fear of unemployment, and whether that unemployment was due to the bad management of our monetary system, or whether some of it was due to competition which came from abroad, or from both, it is obviously out of place to discuss here. But that those restrictive practices—and they are very wide—in the trades union movement were due to fear of unemployment, nobody would deny, and those restrictive practices—particularly the demarcation between one skilled 2114 trade and another, and attempts to prevent the dilution of skilled, trained worker by unskilled and newly-trained workers—are most natural things. Nobody will find me blaming people for taking protective measures against dangers which they see are imminent.
However, may I say in fairness that many of the restrictive practices—and they are many—undertaken by the employers in order to protect their industry from bankruptcy, which brings with it, unfortunately, unemployment, should at least be excused on the same ground. I think this is the true balance of the case, that both these restrictive practices on the part of labour on the one hand, and on the part of employers on the other, were made against fear of unemployment on the one side and bankruptcy on the other. We are all agreed that, whatever may have been the reasons which gave rise to those practices, in our present economic situation all our efforts must be bent to increasing production, and that restrictive practices, either on the side of labour or on the material side of production are poison to our economic recovery. That is common ground, and I am trying to support the Second Reading of the Bill as far as possible in an atmosphere of good will. I think the Bill can be greatly improved, but with its objectives and general tone I agree.
§ Mr. E. Porter
I am not making this charge against the right hon. Gentleman, but I would like to know whether he is prepared to alter the system by which his own firm employed people on a bonus system and then, without the slightest hesitation, cut down the piece-work price.
§ Mr. Lyttelton
I do not know to what the hon. Member refers. I cannot identify his question in any way. Both these practices are highly injurious to our economic recovery now. Amid present-day scarcities it is easy to say that it is wrong to hold back production, just as the Socialist Party now, in conditions of scarcity, are asking why groundnut schemes were not developed in East Africa before the war. The answer is that the groundnuts produced then, in conditions pf abundance, could not have been produced at a profit, and development of losses is rather a left-handed way of developing the Empire.
2115 I would like the House to agree that, whatever excuse there may have been for the origin of many trade union rules and many price and production arrangements on the employing side, anything which restricts labour, by hand or brain, or imposes artificial restrictions on production on the material side, is poison, that is, always where the market and the need exist.
There is another side to the proposition, which is often lost sight of, and that is that if it is anti-social to restrict production of something, to maintain artificially high prices, artificially high profits, or, for that matter, artificially high wages, there is nothing particularly pro-social in producing things the community do not want. People who do that are engaged in something which I would spell w-a-s-t-e. I would add this rather surprising conclusion, that there is in every scheme of production an element of restriction. There must be, and that element of restriction is inherent in any scheme because it is necessary not to produce very much more than people want. If we do so, we are using up the raw materials, labour, and factory space in producing what is not wanted, and that is waste.
The Government are now engaged, no doubt in a beneficent mood, in very many restrictive practices, such as removing labour and materials, by licensing and restrictions, from this industry to that, to restrict the production of this or that commodity, and to promote the production of something they consider to be of a higher priority, perhaps, in another part of the country. Hon. Members opposite regard this as wholly beneficent and enlightened Socialist planning and doctrine. I am trying to put before the House that it is no good plunging about with a lot of pre-judged notions. The matter covered by the Bill is very difficult and thorny, and it has to be looked at in an objective way. It is not as crystal clear as it might be. We should first of all be very clear of the aims of this Bill. I think we are aiming against a system which tries to restrict production in order that high prices may be maintained and high profits made easy. Perhaps, as one or two hon. Members have said, "easy" profits is one of the most insidious evils of restrictive practices. We are trying to prevent 2116 conditions in which inefficient methods may be highly rewarded merely by keeping the market short of what it requires.
On the other hand, we must recognise that it is highly wasteful to produce things greatly in excess of what is required. It is fairly established, I think, that in these matters we must move with circumspection. I am not denying that trade arrangements, price rings, monopolies, and so forth can be harmful and damaging to the public interest; of course, they can. I have also tried to show that there is another side to the question and I am quite sure that the Government are wise in not aiming too high, at least at first, in dealing with these matters. I think they are right to approach the subject with caution and not to become involved in all the complexities which complete, 100 per cent. anti-trust legislation would involve. Industry today has a massive task in front of it and it has been said that some of the targets which have been fixed appear to be almost unattainable. Although, no doubt, the sellers' market is fading in some commodities and some goods, it is still true to say that the problems of industry are more those of production than of selling, and that industry is unlikely to spend much time in the next few years in restricting production in order to maintain market prices or keep open markets which would otherwise be closed to them.
It is important not to have a fussy Bill at a time when we have these great tasks in front of us. It is most important not to pile a new mountain of vexatious and doctrinaire inquiries on top of an industry which is already almost engulfed in a multitudinous sea—which is generally described as incarnadine—of licences, permits and instructions, to say nothing of the threats and exhortations, the shaking of fists and the preaching of sermons which is the daily lot to which the industrialist is subjected. It would be folly to pile too much paper work on to industry. On the other hand, I think no one should—or, for that matter, will—resist inquiry, and most industries which have price arrangements, or division of markets, or geographical frontiers, will greatly welcome it. Popular misconception, false rumours and, indeed, some Socialist propaganda will be laid quietly to rest when the true facts come out.
2117 I will deal for one moment with price maintenance. The Bill, as I read it, intends to take power to inquire particularly into price maintenance. In fact, the term "monopoly" has really ceased to have any significance in the ordinary sense and I think that later on it would be well worth examining whether the title of the Bill should not be changed to something more comprehensible and more accurate. It is very easy to arouse prejudice about price maintenance, and it must obviously be admitted that the chances of abuse exist in this as in every other human affair.
Price maintenance for certain goods is obviously desirable, provided that the prices are not unduly high and that they assist the comfort and convenience of the people. An example is the selling of popular newspapers at the same price. I do not think that is by arrangement, because it has become a custom. It would be manifestly absurd if every bookstall had to put up the "Daily Mail," the "Daily Herald" and the "Daily Express" to auction when the travelling public wanted to buy them to read on the 8.30 train [Interruption.] It would result in very severe losses to the Labour Party it that system was evolved.
Competition among the Press is competition in quality, and no Press Commission will ever convince me that that competition is not very keen. I think it is. The price of a packet of cigarettes of comparable quality is "price-maintained." On the whole, I think there is a defence for this which public inquiry would justify. I think this price maintenance question requires investigation. It is possible for people other than Socialists to be wrong. That, I admit; I do not stand behind everything done in all the companies with which I am connected, and I should like my judgment reinforced by the opinion of an independent tribunal.
My anxieties about this Bill—and I have not a few—are not concerned with its objective, which is mainly to secure the disclosure of information. They are twofold: first, that vexatious inquiries—and we have had some signs of that today—will be set on foot, perhaps inspired by the competitors of large concerns for malicious reasons, or started for purely political reasons by those who are ill disposed towards private enterprise. My information, drawn from many quarters, 2118 leads me to suppose that there are some people who are ill disposed towards private enterprise. [An HON. MEMBER: "No."] Yes, indeed. The President and his Department are to act as a bulwark against frivolous complaints. They are not an over-strong bulwark; their knowledge of industry, and the knowledge of the President in particular, is at least of very recent acquisition. I would say, in all earnestness, to the President, that he must be entirely convinced that there is a prima facie case of a monopoly, in the sense used in this Bill, before he can consent to an inquiry being made. I think we can rely upon him to look at these matters with Yorkshire caution. If he does so, we shall feel satisfied that no vexatious inquiries are being set on foot. We do not want the time of industry wasted with more paper work upon trivial matters.
My second anxiety, which is shared by the hon. Member for North St. Pancras (Mr. House), concerns the position of the tribunal, or Commission. I think it is most desirable that the chairman should be a judge, or at least a senior counsel, and that its members should be drawn, as far as possible, from outside the political world altogether, from industries or services which are not likely to be affected by the Bill. This is very important. The Government should resist the opportunity of further patronage which this Bill will give them. Impartiality must be the absolute criterion in appointing members of the Commission.
There are a number of absurdities regarding the definitions in the Bill, into which we shall have to probe in the Committee stage, but some are so important that I want to touch on them now. For instance, the definition of "monopoly" seems to have strayed into the Bill from fairyland or from the pages of Walter de la Mare. It means that if in any substantial part of England a firm sells one-third of its product, or subjects one-third of it to a process, it qualifies as a monopoly. There could be three monopolies in a substantial part of England, all competing with one another in the same commodity, which, saving the Parliamentary draftsman or the solicitor to the Board of Trade, appears to be a manifest absurdity. It is worse than an absurdity because it may easily, in certain times, be turned into an instrument of oppression, because it leaves the President of the Board of Trade with 2119 powers to decide what is a substantial part of England and, having done so, to institute inquiries against three monopolies which may be operating there.
Nor do I think that 30 per cent. is a very happy proportion to take of the total amount required to qualify as a monopoly. My right hon. and learned Friend the Member for West Derby (Sir D. Maxwell Fyfe) made some suggestions which I earnestly ask the Government to consider. I think somewhere about 50 per cent. of the production of the commodity over a substantial part of England—to be determined by the Commission—would be a better proportion. I think this is one of the parts of the Bill where we can effect a good deal of improvement in the Committee stages; we will move Amendments and I daresay the Government will also try to improve on this point. I do not like the idea of three companies, each selling ju-jubes in Rutlandshire, qualifying as monopolies and I find that even harder to swallow than the ju-jubes.
According to Clause 10, the House of Commons may itself become the tribunal. It may itself decide, over the heads of the Commission, whether the monopoly exists and whether it is being operated against the public interest. It may overrule the findings of the Commission. When the Government—and this is dangerous—are themselves engaged in business on a large scale and are likely to extend their business, I think it would be particularly vicious for a Parliamentary majority to be used to put an industry out of business or to pour obloquies upon it so that the Government might perhaps acquire it cheap or reduce competition which it might offer to nationalised industries.
I think that is a blemish on the Bill and, reading it, I do not feel quite sure that was the intention of the Government when it was drafted. I perfectly understand that, when the Commission have reported that monopolistic practices exist which are against the public interest, it would be highly disrespectful to the House of Commons to suggest they can take no action at all. What is happening here is different from that. It is that an independent Commission should be set up, but that powers are taken to over-ride the findings of that Commission 2120 by a mere Parliamentary majority—and that as a matter of routine. I think that is very dangerous in these times and it is going to drag many matters into the political arena which it would be far better to keep out.
There are two other points to which. I must refer. The first, again, concerns the restrictive practices of the trade union side. I personally think it is inappropriate to combine a regulation which concerns human beings in a Bill which deals with material affairs or with production and machines. I would have expected, however—especially after the rather trenchant remarks made by the President of the Board of Trade in perhaps an unguarded moment the other day—some statement from the Government that they are either going to make satisfactory and voluntary arrangements for the sweeping away of restrictive practices of the trade unions, or else that they propose, in the absence of such arrangements, to introduce legislation parallel to that being introduced here regarding restrictive practices on the employers' side.
Lastly, I must say—no doubt I shall alter my opinion when the Lord President has spoken—that up to now I remain entirely unconvinced by the arguments put forward for the exclusion of State-owned monopolies from the compass of this Bill. I suppose that legislation connected with monopolies and restrictive practices is designed principally to protect the consumers. I can see no reason why State monopolies should not be subject to the same laws of inquiry as other monopolies. After all, there are two classes of citizen who are affected, the taxpayer and the consumer. All taxpayers are consumers but not all consumers are taxpayers. If the State railway service, for example, is operated, as I think it will be, at a swingeing loss for the benefit of the voting public, then I think the taxpayers should have the right to a protecting instrument of an inquiry as to how the railways are run.
§ Mr. Blackburn (Birmingham, King's Norton)
I want to ask the right hon. Gentleman a question in relation to tin. As the right hon. Gentleman himself played a leading part in relation to this matter of tin, and, I understand, was responsible for obtaining, in effect, a monopoly of tin, would he be good enough 2121 to tell the House what kind of independent inquiry was available Eat that time into the monopoly of tin?
§ Mr. Lyttelton
The answer to that question is that I signed the International Tin Agreement at the request of the Colonial Office on behalf of the Nigerian Government whose representative I was on the international body. If the hon. Gentleman wants to know what inquiries were made into the matter, he should apply to the Colonial Office.
§ Mr. Lyttelton
It was before the war; about 1932. The hon. Member asked me what inquiries were made. I signed on behalf of the Government. What exact relevance that has to what I was saying, I do not know. I was saying that if the State railways are operated at a swingeing loss—as I think they will be—then I think the taxpayer has the right to have an instrument of inquiry. If, on the other hand, as the Parliamentary Secretary apparently thinks, they are going to operate as a means of raising revenue, then I think the poor travelling public—the consumers of rail travel, so to speak —equally have a right to know how the State railways are making so much money at their expense. In either case, whether it is the taxpayer or the traveller who is being exploited, both should have the right to have their State monopoly inquired into. [Interruption.] It is so exhilarating, to find that hon. Members are sometimes able to see these points—most exhilarating.
I have no more time. I sum up the arguments for this side of the House by saying that the Opposition are sympathetic to the objective of this Bill, which is inquiry of a certain character into restrictive practices. We are anxious that great efforts should be made to prevent vexatious inquiries, and the wasting of time in that favourite bloodsport, not included amongst hon. Members' anxieties—witch hunting. We are anxious about the composition of the Commission or tribunal, and we feel that it is extremely important, in a matter of this kind, to divorce members of the Commission from all political interests. In the Explanatory and Financial Memorandum to the Bill, it is said that the Commission are to report 2122 "unequivocally." This is unconscious and totalitarian humour about the institution of an independent Commission; it should be re-enforced by an injunction that they are to report impartially.
We are surprised by the great lengths —indeed, the absurd lengths—to which the definition of "monopoly" has been stretched, and shall seek in the Committee stage to bring the definition out of the clouds of Millbank, back into the realms of practical politics. We think there should be parallel legislation for inquiries into restrictive practices by trade unions, and we shall press that point further. The President of the Board of Trade has given us a preview of what the Government are going to say. If we get no satisfactory reply we shall press the Government to institute some similar methods. If the employer is the goose, the gander is the trade union, and the same sauce ought to apply to both. We deplore, lastly, the exclusion from the inquiry under this Bill of State monopolies. Our regrets on this matter are reinforced, day by day, by the obscurantist attitude adopted by His Majesty's Government towards any and all inquiries which apply to their newly-acquired nationalised toys, for which the taxpayer has to pay the bill, and for which, however we look at it today, in the long run the taxpayers' representatives will be held accountable to public opinion.
§ 9.25 p.m.
§ The Lord President of the Council (Mr. Herbert Morrison)
I have to express the Government's appreciation for the general support which has been given to the Bill. In fact, it is extraordinary how much general support, in all parts of the House, has been forthcoming—though I noticed a certain variation in the degrees of fervour with which the Bill is supported. In fact, although the right hon. Member for Aldershot (Mr. Lyttelton) supported the Bill, I did not gather that there was any particular white heat about the nature of his support, which I think was a little bit cool and frigid. The hon. Member for Louth (Mr. Osborne) said that he felt sure the Bill would do more harm than good, but, nevertheless, he supported it. Apart from these slight variations in emphasis and in the size of the type, we can say that the Bill has had a fairly general welcome from the House.
2123 The right hon. Member for Aldershot has referred to the question of lamps, to which some reference was made by my right hon. Friend the President of the Board of Trade. We also have looked up the facts, as far as we can get them, and there is some difference in the situation between pre-war and post-war. According to a report published in 1939, of the United States Tariff Commission on incandescent electric lamps, of 12 main producing countries the United Kingdom prices for 25-watt lamps were highest, for 40-watt lamps they were the second highest, and for 60-watt lamps, they were the fourth highest. This is according to a United States Tariff Commission. It is said that the United States prices were the lowest, being nearly 30 per cent, lower than those of the United Kingdom. Despite that, according to a statement made by the prosecution in a United States anti-trust case in 1941, United States firms were making profits of 33 per cent. and 47 per cent, on capital.
With regard to the post-war prices, I do not think there is much difference between ourselves and the right hon. Gentleman on the European figures which he quoted. The information of the Board of Trade is much less complete about post-war prices, and it may be that the dislocation of production in Europe has led to considerable increases over pre-war prices. I am advised that for a 60-watt lamp the United Kingdom price, excluding Purchase Tax, is 1s. 3d.; a lamp of similar power would cost 1s. 4d. in Switzerland, is. in Norway, and 1s. 6d. in Denmark.
§ Mr. Lyttelton indicated dissent.
§ Mr. Morrison
I am also advised that the equivalent price in the United States is 6d., which, of course, is a very great difference. I think it is the case that our electric lamp prices have, owing to ring and cartel arrangements, been higher than it was really necessary that they should be—quite apart from the question of allegations of willingness to supply this or that firm, and certain restrictions upon their willingness to supply.
The right hon. Gentleman also denied certain allegations which had been made about restrictive practices in the electric lamp manufacturing industry. This is what I have been told is the situation: that an arrangement—I admit this deals 2124 with patent pools, but it has its relevance —which has attracted much notoriety, especially in the United States during the war, is the patent pool. Such agreements, which are sometimes international in scope, provide for the exchange of patents between different firms. In some cases, they are accompanied by implied agreement not to manufacture in competition with one another. The best known patent pool in this country is the Electric Lamp Manufacturers Association, which provides for the exchange of patents between members, fixes prices and seeks to induce distributors to stock only products of its members. I do not know whether the right hon. Gentleman would dispute the accuracy of that statement.
§ Mr. Lyttelton
I am aware of the document which the right hon. Gentleman has quoted. I am sure the right hon. Gentleman will know I have been long enough here to recognise that line of approach. The inducement referred to in that particular regard is the extra 6 per cent. discount for retailers selling only lamps of the association. Otherwise, the right hon. Gentleman is certainly correct. I think that the right hon. Gentleman would wish, to be fair, to know that, in spite of patents, there are 14 firms in full production on lamps in this country which are outside the association.
§ Mr. Morrison
The right hon. Gentleman knew from what source I was quoting. It is from the pamphlet just published by the right. hon. and learned Gentleman the Member for West Derby (Sir D. Maxwell Fyfe). It is not unnatural that the right hon. Gentleman should not cross swords with his right hon. and learned Friend. I am bound to admit I was hoping that he did not know that, because then I could have set him firmly on his knees; but it did not come off. This kind of allegation forms a prima facie case for inquiry when the Commission is set up.
The right hon. Gentleman said that restrictive practices are bad at this time, whoever commits them. I am not disposed to disagree with him; indeed, that is a principle behind this Bill. He also said that the restriction is inevitable, because it is no good producing more than the public wants. That really was the doctrine behind the economics of restrictionism between the wars, and that is 2125 the economics we are not disposed to follow. We do not agree with this idea on the part of those in industry, and sometimes on the part of labour too, that the community is capable of purchasing so much, and that we must be careful not to make more or we shall get into a slump. Our policy is to make as much as the community are capable to using, so that our standard of living can go on rising. Subconsciously, -the right hon. Gentleman was advocating the economics of scarcity. What we want now are the economics of expansion. This Government have done more work in educating the public on the need for industrial expansion than any other Government.
The right hon. Gentleman said it was important to have a judge or eminent lawyer as chairman of the Commission. I have no doubt that my right hon. Friend will take that point into account and will give it due weight. I am not sure that that is necessarily right. It depends on the legal person who is in the chair, because, in addition to balancing all the evidence, he has to exercise a fair amount of judgment in regard to the public interest and apply commonsense to the situation. It may be there are lawyers with sufficient experience of the right kind, in which case my right hon. Friend will give it consideration. It would be wrong for me to commit myself in regard to appointing a legal gentleman as chairman of the Committee. With regard to the members, he will try to see that they are as fair-minded and impartial as he can possibly arrange.
The right hon. Gentleman quoted what he said was the definition of monopoly in the Bill. He quoted from Clause 3 (1) but this does not pretend to be a definition of monopoly. The Clause opens with the words:Conditions to which this Act applies.…and it does not, therefore, assume that the conditions to which the Clause applies must be conditions of absolute and individual monopoly. It is said that it would be better if the percentage were 50 instead of 30. We have to be careful about this effort to define the quantity. It is a matter of real and genuine difficulty. If we get it too high, we may rule out a whole batch of prima facie monopolies or combinations of one sort 2126 or another. On the other hand, if we make it too low, it may not be a fair definition. My right hon. Friend will be prepared to enter into consideration of these matters as they arise on the Committee stage of the Bill.
There have been references from the right hon. and learned Member for West Derby, the right hon. Member for Aldershot and others to Clause 10. That Clause provides that in an instance where the commissioners may not recommend that the public interest was damaged, or even in an instance where the commissioners recommend that the public interest was not damaged by the operations under investigation, it is possible for the House of Commons by resolution to declare that the public interest is so damaged. Following on that, the ordinary course would ensue, and the President of the Board of Trade would make an order which would be open to Parliamentary challenge. It is a fair point to which attention should be drawn. I do not think that this will be a frequent occurrence; in fact I think it would be very exceptional, and I hope that it will be very exceptional, and so does my right hon. Friend. But we may have a report in which the Commission itself was somewhat doubtful as to whether the public interest was involved or not, and therefore did not make any clear recommendation. Nevertheless, there may be a great deal of legitimate concern and feeling about it, and it may be right that my right hon. Friend should come to Parliament and propose a Resolution declaring that the public interest was concerned. That I think is a clear case.
Where the commissioners come to the conclusion that the public interest is not damaged, it is, of course, less clear; but we might have a case—a very exceptional case—where there was considerable public feeling; where Parliament generally, or the Government generally, felt that the Commission had come to a wrong conclusion, although a genuine one, and they might think it right to have it annulled. This will not be done by the House of Commons suddenly working up indignation and proposing a Resolution. Normally, it will be for the President of the Board of Trade to propose a Resolution. He will have to be fairminded about it. He will have had the advice of his officers and have seen the arguments for or against, and one must assume that he would come to a fair con- 2127 clusion and not encourage the House of Commons to act rather loosely about it for merely passionate, political reasons. That is the reason for this exceptional provision being in the Bill; because, in the end, Parliament must be the judge of what is a bad practice or otherwise.
Much reference has been made by both the right hon. Gentlemen who have spoken from the Front Opposition Bench and by others, to the alleged trade union restrictive practices. I am not going to say that no problem exists in this field. Sometimes there is exaggeration and misrepresentation about it. Nevertheless, there are difficulties here. As in the case of restrictive practices of employers and manufacturers, sometimes they have arisen in a period of slump when the livelihood of men has been imperilled, or sometimes they have arisen to protect a skilled craft or long apprenticeship. One must not assume that these practices are necessarily restrictive, and many of them have very good reasons behind them.
As has been said by the right hon. and learned Gentleman the Member for West Derby, as was quoted in a Liberal publication—Liberal Members are not here at the moment to speak for it— and as has been agreed by a number of speakers, it would be wrong to deal in this statute with the problem of the trade unions, which are concerned with human beings, in the same way as with inanimate and dead materials and with the physical conduct of industry. Those two cannot be dealt with together because they are different. Our experience is that the trade unions are always willing to discuss these matters if the Government think there is a prima facie point for discussion or question.
It was inevitable that a good deal should have been said, especially on the other side of the House, about the restrictive practices of the trade unions, which, as we have seen, are not dealt with in the present Bill. I would remind the House, however, that a few years before the war Professor John Hilton and some others, including the right hon. Gentleman the senior Burgess for Oxford University (Sir A. Salter) made a detailed study of these practices. They came to the conclusion that the restrictions on industrial efficiency and improvement caused by the trade unions were not so serious as was 2128 commonly alleged, and many of those practices complained of could be shown to have good justification. Moreover, they considered that the restrictive practices imposed by trade unions were fewer than had been supposed and of less importance.
Let it be noted, too, that at the outbreak of the war, as a contribution to the war effort the trade unions agreed with the employers to relax the practices which might be found to restrict maximum production and expansion. This was one of the instances where a case was put up to the trade unions and a co-operative and public response was forthcoming. This relaxation on restrictive practices was of the utmost value, and at the end of the war, in order to assist in the task of post-war reconstruction, it has been agreed to defer the restoration of these pre-war trade practices.
Let us keep a sense of proportion about the nature and extent of these restrictive labour practices. While some may need further investigation and examination in the light of present economic conditions, they cannot appropriately be dealt with in the present Bill, because they are so different from the matters with which the Bill deals. They involve agreements reached by joint negotiation between employers and workers and they are open to variation and modification by joint negotiations. In contrast, the practices at which the Bill is aimed, are, in general, established by a group of people with a common interest in order to maintain that interest, and they cannot be effectively examined and dealt with except by legislation empowering the Government to take action. The Bill deals with material things; the restrictive labour practices deal with human beings. In the Industrial Charter and other publications there is general agreement on that point of principle.
We have heard comments in various parts of the House on this point. The Minister of Labour is proposing to bring before the National Joint Advisory Council the general question of restrictive labour practices. Both employers and trade unions are represented on that Council, which affords the best forum for a preliminary discussion of the manner in which restrictive labour practices which are alleged to impede production and industrial expansion should be investigated. I 2129 hope that that intimation will be acceptable to the House and, therefore, that the matter will be freely discussed by both sides of industry, in the presence very frequently no doubt of representatives of the Government.
The Debate has gone very quietly. I would congratulate hon. Members on the contributions which they have made. The senior Burgess for Cambridge University (Mr. Pickthorn) urged that the Bill should be taken on the Floor of the House. I am not sure that I should be in Order in discussing that matter, because a Motion on that matter is not debatable; but I would not regard this Bill as a constitutional or finance Bill such as we have accepted should be taken on the Floor of the House. It was right, proper and appropriate that my hon. Friend the Member for Jarrow (Mr. Fernyhough) should refer to the great troubles which his constituency has had. My hon. Friend the Member for East Islington (Mr. E. Fletcher) dealt with the electric lamp controversy and I understand that he made a very interesting and valuable contribution. The hon. and learned Member for Carmarthen (Mr. Hopkin Morris) supported the Bill, and raised one or two points.
I congratulate my hon. Friend the Member for South Battersea (Mrs. Ganley) upon an exceedingly able contribution to the Debate, especially from the Cooperative angle. The hon. Member for Scarborough and Whitby (Mr. Spearman) dealt with the position of the nationalised industries, to which I shall shortly come. I was glad to have the support of my hon. Friend the Member for Plaistow (Mr. Elwyn Jones) who gave many interesting facts about international cartels.
My hon. Friend the Member for Colchester (Mr. C. Smith) asked for an adequate permanent staff for the Commission. I hope it will be adequate and not excessive. As long as it is big enough to do its job effectively, that is all I want. We must be careful about making it needlessly big, but it should be adequate for the task. My hon. Friend said that the Commission should have power outside the Board of Trade terms of reference to survey the whole field and that there should be reference from the President of the Board of Trade, who is publicly accountable to the House for his actions.
2130 The hon. Member for Bucklow (Mr. W. Shepherd) said that the Bill was generally welcomed by all. He went on to deprecate cut-throat competition and he said that most monopolies have a case. His support was, therefore, a little bit restrained. The hon. Member for Louth made one of his earnest contributions to the Debate to which I listened with pleasure. A great deal of it was devoted to the labour side of industry to which I have already referred. He finished up with not a very great support for the Bill. He said that it would do more harm than good—[HON. MEMBERS: "Might."]—but he was going to support it, for which we are obliged. My hon. Friend the Member for North St. Pancras (Mr. House) also dealt with the question of the chairmanship of the Commission, and my hon. Friend the Member for Uxbridge (Mr. Beswick) dealt with a certain firm in relation to the Co-operative Movement.
I will now say a word about the socialised or nationalised industries. Quite frankly, when we proceeded to the examination of the Bill in conjunction with the President of the Board of Trade I had a bias, and I think it would be fair to say he had a bias, not to leave the nationalised industries outside the scope of the Bill but to bring them in like any-body else. Therefore there was no doctrinaire bias about that consideration in the beginning. However, the more we examined it the more it appeared that it would be duplicating and repeating powers already conferred by Parliament. There is this difference, that in the case of a socialised State undertaking, Parliament has set up -that undertaking. It has deliberately by statute established the monopoly, and in establishing it, it has accompanied that monopoly with directions, instructions, powers of direction, powers of control and elements of public accountability.
That is a totally different operation from that of a private cartel, ring or monopoly which is organised and set up by private individuals for their own profit. Therefore the status of a public monopoly is totally different. We thought on reflection that if Parliament has deliberately set it up, with these checks and directions, it would be repetitive and foolish to subject it to another and additional form of inquiry and report and, possibly, order and direction, because 2131 these monopolies are the creatures and products of Parliament itself. Secondly, we have provided in all appropriate cases for the protection of the consumers' interests in the case of these nationalised industries. In the case of the electricity, gas and mining industries, consumers' councils are being set up—
§ Mr. Morrison
The right hon. Member for Bournemouth (Mr. Bracken) might remember that it is highly probable that if there had been no socialisation the prices would have gone up much more than they have—
§ Mr. Morrison
—judging by the experience we had of a Government of his own colour at the end of the previous war. We believe that these consumers' councils can be and will be effective and useful bodies. The boards themselves will be represented on the consumers' councils, and that is right. It will make them far more effective than the old consumers' councils which existed between the wars and were largely a farce. These will be real. The consumers' can not only complain and make their case, but either together with or independently of the Boards, can make their representations to the appropriate Minister who is then required to take such action as he thinks right in the public interest—
§ Mr. Morrison
Or not—and he is answerable to Parliament for doing it or not doing it. Therefore, we have a high degree of public accountability for these powers, and the consumers' interests are strongly protected. We have not got that in electric lamps. That is a very different situation. We therefore say that this is a great change. Moreover, in the case of the British Transport Commission and its associate undertakings, there is the provision for the transport tribunal, to which complaints about fares and charges can be made. Argument can ensue, expert witnesses can appear and a judicial decision will be reached.
We have therefore done everything we can in these Measures to protect the consumers' interests, and if we were to make 2132 provision whereby they came within the operation of this Bill, it would be repetitive in some ways and confusing in others and, on the whole, inappropriate. As my right hon. Friend said, if they, in the course of manufacturing operations on the fringes of their undertakings, not expressly authorised, become involved in cartels or trade combinations, my right hon. Friend can order the Commission to hold an inquiry in that respect. Moreover, the Commission can be required, if the President of the Board of Trade was satisfied that it was right, under Clause 2 (2), to make a factual investigation and report the factual result to the President of the Board of Trade. Having regard to all those powers, I would only say that I wish the whole field of private industry took care of the consumer as much as these socialised undertakings are doing in all these cases. That is my answer to the right hon. and learned Gentleman on the point he made.
The other point of importance to which I would refer shortly is the definition of "the public interest." It is a term which is exceedingly difficult to define legally. All of us, whatever our political party may be, would say that we stand for the public interest, but we stand for very different things in many respects. I am not arguing as to who stands for the public interest and who does not. That is an assertion made by all parties in this House, although their principles and conceptions of public policy are so different. Therefore, while one can define some material object or some concrete thing in an Act of Parliament, it is not too easy to define a term like the public interest.
I am sure that the right hon. and learned Gentleman will agree with me when I say that I think it has been accepted generally as a sound legal maxim that in this sphere, where opinions count, where judgment has to be introduced, it is somewhat unwise to interpose close definitions, because thereby one can limit the possibility of action precisely because it has been defined. Therefore, on balance, we thought it right that the Commission must be the judge of the public interest. Indeed, the conception of what is the public interest may vary from case to case. It may be possible that in one case of a restrictive practice they would say, "This is not contrary to the public interest," and it may be that in another case they might say that it was. We 2133 want to leave them free to come to a conscientious judgment as to what they conceive the public interest to be. That is the view of my right hon. Friend. There are some other definitions, including the one which was quoted by the right hon. Gentleman the Member for Aldershot and to which I have referred, that have some relationship to it, but to define the public interest would lead only to a legal tangle and would make difficulties for the Commission and the courts in the way of interpretation.
On behalf of my right hon. Friend and on behalf of the Government, we are grateful to the House for the sympathetic reception which has been given to this Bill. My right hon. Friend will be willing to listen to representations and arguments which may be made in Committee, and I hope that the Bill will go through because I feel that it will be a useful addition to our statutory machinery for the protection of the interests of the people of our country.
§ Mr. Osborne
May I ask one question? Will the Minister of Labour report to the House the results of his deliberations with the N. J. A. C. which he has promised will take place?
§ Mr. Morrison
He will take it to the Committee, and no doubt in due course, if questions are asked him, he will give information. He will do all he can in that way.
§ Question put, and agreed to.
§ Bill read a Second time, and committed to a Standing Committee.