§ Order of the Day for the Second Reading read.
§ THE UNDER-SECRETARY OF STATE FOR WAR (VISCOUNT PEEL)
My Lords, the Second Reading of the Dyestuffs 701 (Import Regulation) Bill, which I now move, has the object of safeguarding the dye-making industry of this country. Its effect and purport is to prohibit all import of dyestuffs into this country, except those that may be imported under licence. The materials to which the Bill applies are described in the first clause of the Bill as synthetic organic dyestuffs, colours and colouring matters, and all organic intermediate products used in the manufacture of dyestuffs, colours, or colouring matters. These synthetic organic dyes represent dyes produced from coal tar or compound of carbon, and are called synthetic because they are built up in the factory or laboratory and are not produced by extraction like the natural dyes. As your Lordships are aware, many of the natural dyes have been entirely driven out. of the market by the synthetic dyes, and, of course, a very large range of dyes has been produced by these synthetic processes which were not produced by what I may call the natural system. The second head of prohibition is colours and colouring matters, which are not in the strict sense of the word dyes but are produced by the same processes and require the same knowledge as is required for the production of synthetic organic dyes proper. Then under the third head come what are known as the intermediate products, which more or less explain themselves. They come half-way between the coal tar and the finished product.
Such being the subjects which are to be only imported under licence, what is the system which is to be applied to them? The system is the licensing system, and these licences may be either general or particular—that is to say, there may be a general licence allowing certain classes of dyes to be freely imported, or there may be a particular licence either for some particular dye or even some particular person, if there is urgent necessity for the grant of such a licence. This system of licences is under the control of the Board of Trade, but the Board of Trade will, I understand, very largely act upon the advice of a Committee known as the Licensing Committee. This Committee is really the pivot of the Bill, and I should like to call your Lordships' attention very closely to the composition of the Committee. If you had all the interests which may be said to be affected by the use of dyes represented on the Committee you would have had a very large and unwieldy body, but the number of the Committee 702 is limited to eleven—five representatives of the dye consumers, three of the dye producers, and three neutrals, one of whom is to be chairman. I should like to say at once that this Committee and its composition is not a rigid scheme forced by an inelastic Public Department upon a reluctant trade, but it is, on the contrary, the product of the. consideration and the consultation of the trade itself, and it differs in many respects from the Committee which administered the system of licences when they were prohibited in the year 1919. Of course, the important point about this Committee—and this your Lordships will easily observe—is the great predominance given upon it to the representatives of the dye consumers. They have five out of the eleven members, and this was readily conceded by the representatives of the dye manufacturers, because they felt that unless the dye consumers were satisfied the whole system was bound to break down.
The second note of the scheme, therefore, is that it comes before your Lordships as a scheme very largely agreed to by the trade concerned. Something like 90 per cent. of the trade of colour consumers have, I understand, agreed to this scheme and are prepared to work it. These are mainly representative of what is called the Colour Users' Association. The objection to the Bill comes from the Calico Printers' Association. One reason I believe why they object to it is that they are mostly making use of particular dyes which are not made to any particular extent in this country at the present time, and would have to be imported; therefore naturally they have some fears about their trade. But I shall show later that those fears are groundless, and I might explain that, while they have made vigorous objection, when the matter is passed they are perfectly prepared to co-operate with the Committee, and it seems certain that a prominent calico printer will form one of the members of the Committee. I think that the producers speak for themselves, but as regards the three neutrals, one of these, I understand, will be a distinguished organic chemist, familiar with all these processes but not naturally interested in the dye industry, and there will be a chairman who will be appointed by the President of the Board of Trade himself.
Let me say a word as to how this system of licences will work. I understand that 703 many of those who use dyes generally place contracts for their requirements a good many months ahead. They know, therefore, at any time what their requirements will be. Again, the manufacturers will be able to make a fairly good estimate for some months to come of what their production of dyes is likely to be. The first duty, therefore, of this committee will be to balance the supply against the demand, and if the demand is a good deal larger than the supply, they will then have to examine into it and see that the surplus amount is imported, and imported without difficulty, from other countries. Take any particular class of dyes. If the dye is not produced in this country it is obvious that there will not be the slightest difficulty about the importation of that dye. A licence would then be granted without question. But a more difficult case arises where the dye may be produced, but not in sufficient quantities, in this country. In that case a percentage will have to be imported from abroad. This committee, who really are the trade themselves, will have to decide what the surplus to be imported should be, and what percentage it will be of the amount produced in this country. They will also have to deal probably with the distribution. The arrangement no doubt will be that the trade will very largely ration itself, so that not only will the trade, or this committee, decide on the amounts to be imported into this country, but they will also deal very largely with the distribution, so as to ensure that the distribution is fairly arranged. Suppose it is not so much a question of amount as of price. I think in that case the consumers on this Committee will be perfectly able to take care of themselves, and will ensure that prices for any particular dye are not too high in this country. They will reduce the price, or will import from other countries in order to ensure that prices are reduced. That is a very general account of the way in which this committee will work.
Before I deal a little further with the action of this Committee I must refer to one or two of the minor points in the Bill, so that I may finish with the details. A licence fee for administrative expenses up to £5 may be charged by the Committee, but there is no licence duty, because it is thought that in many ways, as your Lordships will easily see, this might act unfairly on different importers at different periods of the year and in differ- 704 ent states of the market. There is one very important provision that was introduced in another place, I think on the Report stage, and that is that dyes produced in the British Empire will be imported free. There is established here another example of Imperial Preference which I am quite sure will commend itself to your Lordships. There is another provision to avoid any suspicion of unfairness as regards the dealings of the Committee. If any applicant complains that any member of the Committee may be said to be a trade competitor or to have feeling against him, that member. of the Committee will not deal with this applicant's case, nor will he be able to examine any papers or anything connected with his case.
There is another Committee set up in subsection (6) of Clause 2. That is a committee which has nothing whatever to do with the licence. The subsection runs—For the purpose of advising them with respect to the efficient and economical development of the dye-making industry, the Board shall constitute a committee of persons concerned in the trades of dye-maker or dye-user and of such other persons not directly concerned in such trades as the Board may determine.The business of that committee will be, I understand, to keep a sort of watching brief over the general interests of the industry, to examine into such questions as to what dyes are produced in this country and what are not, to make suggestions possibly as to the further course of production, to co-ordinate research both at the Universities and elsewhere, and to further experimentation in the production of some of these organic dyes. The last point on the Bill that I wish to refer to is the period of time for which it operates. It will operate for ten years. Your Lordships will observe words not very usual in Bills of this kind—it will operate "for ten years and no longer."
Let me say a word now as to the particular method of safeguarding the trade which is adopted in this Bill. There will be many who agree with the general principle and who yet dislike the method which is adopted. There are only three main ways in which this trade could be safeguarded. One is by the method of tariff, the other is by subsidies, and the third is by some system of licence such as is embodied in this Bill. I will dismiss the question of subsidies rapidly, because your Lordships realize that public money has to be safe- 705 guarded, and subsidies involve extremely difficult inquiries into both the cost of production and selling prices not only in this country but in other countries, and they also involve an amount of interference and control and the creation of that large number of officials to which your Lordships have always been definitely opposed. I therefore dismiss that system in a few words. Then there is the method of tariff. Tariffs, of course, have rather a disagreeable sound in many people's ears. Moreover, you do not want tariffs, because under the licensing system you desire all these dyes if possible to come in free, and if you were to have a tariff put on, considering the difficulties of the exchange and the relation of the German currency to our own at the present time, these tariffs to be of any value would have to be so large that the system would practically be impossible.
Therefore we come to the licensing system, which I submit to your Lordships is more elastic, because it can be most carefully graded, as times goes on, to the actual requirements of the trade. Moreover, it gives perfect freedom for as many articles as possible. Only those which are being made at a reasonable price in this country will be safeguarded from that crushing competition of Germany upon which I will later say a word. This licensing system is to be worked as far as possible by persons whose interest it is to have these dyes and make use of them at the lowest possible price. Further, the system will be as little official as possible. I understand that the cost to the State of the administration will be quite negligible, something between £2,000 and £3,000, because the experts who will advise this Committee will be paid, I understand, by these interests themselves. The Board of Trade, of course, will rely very largely on the advice which they get from this Committee and will only intervene if the Objects of the Bill are really being set aside. Moreover, so far is this process of freedom and decentralisation carried that this Committee does not meet in London, where it might be subject to all the unholy influences of Whitehall, but in Manchester, and it will be separated, therefore, by the great distance from Whitehall. The only part that will be played by the Board of Trade and by the President will be for the President in London to smile benignantly upon the Committee in Manchester, from the distance between London and Man- 706 chester. Your Lordships will see, therefore, that if there is State control it is State control reduced to the smallest possible proportions. If it is a disagreeable pill, it is a homœopathic pill containing very small quantities of the disagreeable drug.
I understand that my noble friend Lord Emmott has some designs rather adverse to this Bill, largely because of the experience he has had at the Foreign Trade Department during the war. That was worked, of course, very largely by officials, and though no doubt my noble friend had the very greatest success in that particular Department I believe one of his difficulties was that he was hampered by other Government Departments always wanting to have a finger in the pie and to have their say as to whether an article should or should not be dealt with. Here we have not several Departments intervening in the matter—which, I agree, makes action almost impossible; in fact, there is hardly one Department, because there is only one Department which is put in the position of general control.
There is one great advantage, I think, in this Bill which will perhaps make discussion and debate on it more easy; there is nothing in it to arouse the furies of controversy as between Free Trade and Protection, which have fortunately been lulled to sleep—to a long sleep, let us hope—during the war. I should like on this head to quote from Mr. Asquith himself, quite the most impeccable, the most austere, and I believe the most orthodox of Free Traders—I want to impress upon the Government that there is really no question here of what I might call the abstract question of Free Trade and Protection. It does nor arise. The question is, What is the hest method of safeguarding what we agree to be an important national industry?There is, I believe, on the Paper a Motion for the rejection of this Bill.
§ VISCOUNT PEEL
As the noble and learned Lord says, there are three. But let me deal for the moment with the first. The noble Lord, Lord Buckmaster, is to move—That this House declines to proceed with this Bill until time has been afforded for full inquiry into the circumstances that have led to its introduction.
§ LORD BUCKMASTER
With the permission of the House I shall ask leave to withdraw that Motion, and let Lord Emmott's Motion be that on which the debate shall proceed.
§ VISCOUNT PEEL
If I may say so, I think the noble and learned Lord has exercised a very wise discretion, because it relieves me to some extent from a portion of my task.
§ LORD BUCKMASTER
The noble Viscount need not feel relieved, because I shall use the same arguments on Lord Emmott's Motion.
§ VISCOUNT PEEL
They ought to be different if they are relevant, because the noble and learned Lord thinks there has not been sufficient inquiry.
§ VISCOUNT PEEL
If Lord Emmott thinks so, I am going to try to prove to your Lordships that I do not believe that there is hardly any question which has conic before your Lordships in the form of a Bill which has had so continuous, so protracted, and so searching an investigation as the subject-matter upon which this Bill is based.
Now, I must ask your Lordships to go back awhile, and to allow me to call your attention to what happened at the outbreak of and during the war, because the conditions then and the experience we got then are one of the great grounds upon which I am asking your Lordships to pass this Bill. First of all, what was the position as regards these organic dyestuffs in this country and in Germany at the outbreak of the war? Everybody knows the general story of the invention and production of these dyestuffs in this country by the brilliant Englishman, of the brains 708 of that Englishman being stolen by the Teuton, and of the tremendous and highly-organised industry built up in Germany as the result of that man's brains. The result was that the imports into this country and our total consumption before the war came from Germany, and that the small remnant that was produced in this country and the distribution, the agency, and the selling were very largely under the control of the German firms themselves. So that the penetration of that industry and its control in this country by Germany could hardly be surpassed.
Again, as the result of having this highly-organised industry with its very large capital, the Germans had the immense advantage that these great dye-making businesses could without difficulty be converted into industries for the production of materials for explosives and munitions of war. What advantage that gave to the Germans your Lordships may easily conceive. It also had a more malificent advantage to the Germans in that they were able, again very easily, to produce those quantities of poison gas which introduced a new and disagreeable element into the practice of war. But there was a third point upon which I lay very great stress on behalf of the Government, and that was that connected with the immense production of these synthetic dyes there was a cluster of highly-trained chemists, highly skilled in all the problems of the carbon compounds leading up to the production of these dyes. They were always experimenting; they were always in touch with these industries; they were always suggesting new methods and new dyes. The existence within that country of this large number of highly-trained chemists had one tremendous result for the Germans during the war—they were able to produce and to extract their nitrogen from the air to build up nitric acid for the explosives, which made it unnecessary for them to import nitrates from Chili and made them absolutely self-dependent as regards the importation of these most necessary ingredients for their explosives. They had, therefore, those three great advantages over ourselves.
On the other hand, what had we? We found ourselves in the most deplorable position. We had not the trade; we had not the materials; we had not the intermediates. Our trade was controlled by Germany, and we had not that large body 709 of chemists highly trained in organic chemistry who would have been of such incalculable and inestimable advantage to us during the war, a body of chemists who would grow most easily in connection with this organic industry of dyes, and who, unless they got some means of livelihood, cannot live by the contemplation of the fascinating, the formidable, and elaborate system of the carbon compounds. Improvisation on this scale was entirely impossible. I dwell on this because it must emphasise the story to show the desperate efforts that were made by this country to try and remedy the terrible condition into which it had fallen through the neglect of the safeguarding of this key and pivotal industry.
§ VISCOUNT PEEL
I think I dealt with that when speaking of the chemists. What were one or two of the steps that we had to take at the outbreak of the war? First of all we actually had to grant licences in order to import dyestuffs from enemy countries. And I suppose we should have continued to do so only that the Germans were quite alive to that position, and they would not allow their agents in neutral countries to sell dyestuffs to the United Kingdom. except in exchange for rubber, copper, and other commodities of which Germany fell short. The Swiss came most gallantly to our rescue, and we made rather elaborate arrangements with Switzerland, by which certain intermediates were exported to Switzerland, under promise that when they were manufactured into the finished articles the products should come back to this country. We also gave priority to the dye industry in this country, such as it was, in respect of buildings and plant, and we gave them as much as we could of the limited quantities of benzol, toluol, and phenol which could be reserved for them and which was not used for making munitions of war.
But that did not exhaust our activities, because then the Government began, by subsidy, to try to assist companies that were making these dyestuffs. I do not want to deal fully with that point, though I shall be quite ready to answer any question upon it, because the history of that is rather long. But I would remind your Lordships that as early as 1915 the British 710 Dyes Industries was started, and the Government lent it a great deal of money in the form of debentures, although that company was not quite so successful as it might have been in the production of dyes, because its activities were so much required for the production of explosives. The later step was taken when the larger company was formed, called the Dyestuffs Corporation. That was a combination of the old dyestuffs company and of Levinsteins, and of that the Government took a very large share. Indeed, the money was very largely obtained on the face of the understanding deliberately made by the President of the Board of Trade that it would be some safeguard of the interests of dye makers if they subscribed the money. There is therefore no doubt some obligation to the shareholders.
But I want to place this case upon. a far wider basis than that; I want to place it on the general interests of the country, and not merely on an undertaking given to the shareholders. Again, various systems of assisting the trade were set on foot as regards the provision of capital at cheaper rates for undertakings that required money, and for special classes of dyes which required specially heavy outlay at the outset. But all these efforts were improvisation—efforts to meet the terrible difficulty in which the British Government was placed. through not having in this country a properly organised dye industry which might have supplied its needs if it had existed, and which would undoubtedly have shortened the war.
Complaint has been made, and is made on the. Notice Paper, of insufficient inquiry before this Bill was launched upon your Lordships want. to show that not only was there ample and sufficient enquiry, but that this particular policy is not the mere outcome of the brains of the Government at the present time, but is really only the carrying out of a continuous stream of advice and suggestion that has come from the different Governments, Coalition and other, during the last five years, and of men representing every side of politics and industry. The first prominent man, I believe, who sounded the tocsin of danger in this respect was again Mr. Asquith, who, speaking in November, 1914, said—The excessive dependence of this country on a single foreign country for materials of such vital importance to industries in which a million of our workpeople are employed constitutes a permanent danger, which can only be remedied by a 711 combined national effort on a scale which justifies an exceptional method of State encouragement.The next quotation I will give is from April, 1916. Mr. Runciman, at that time, I think, President of the Board of Trade, set up a committee of the textile trades representing entirely colour users. They report in May, 1917, and say—It will always be a matter for wonder that great and powerful trades like the British textile trades should have allowed themselves to sink into a state of complete dependence upon a foreign country in respect of the supply of materials vital to their industry.They also approve of the general prohibition of the importation of foreign dyes for a term of years except under licence, which is exactly the proposal in this Bill; and they call attention to the certainty that the Germans will make a desperate effort to recover after the war that complete control over our industry which they possessed before the war. May I say, though I only give those two illustrations, that the whole of the Report of that Committee is extremely interesting as showing the general position of our dye industry in the opinion of those most competent witnesses.
Then again the matter was taken into other hands. On October 6, 1916, a Committee of the Cabinet, consisting of Mr. Runciman, as Chairman, Mr. McKenna, Mr. Bonar Law, Mr. Chamberlain and Dr. Addison reported unanimously in favour of prohibiting the importation of dyestuffs after the war except under licences granted by the Dyes Commission, and in favour of encouraging the manufacture of the more difficult dyes during the reconstruction period by special measures. There we get a pronouncement of a committee of the Cabinet. And then we get sonic advice from rather a different angle—from an extremely important committee presided over by Lord Balfour of Burleigh. That committee did not, I believe, make a specific recommendation about the dyes industry, but it reported that the industries described as key and pivotal should be maintained in this country at all hazards and at all expense. No ordinary economic rules apply to the situation of these minor but important industries. Again, the Report of Lord Balfour of Burleigh's Committee was very exhaustive and very extensive. There was a further Report on a similar subject on January 8, 1918. It was called the Economic Offensive Committee and the Chairman was Sir Edward Carson. Their Report was approved by the War 712 Cabinet on January 23, 1918. They reasserted the principle of the prohibition of imported dyestuffs after the war except under licence.
I think I have already gone through a pretty extensive list of investigations, and you can hardly say that so far the matter has not been dealt with most exhaustively and most thoroughly. I come to May 5, 1918. Sir Albert Stanley, then President of the Board of Trade, said—In order to safeguard this particular industry against the great efforts which these great German dye-making firms are certain to make after the war to destroy all that we have accomplished through the war and to make this industry again subservient to Germany, the importation of all foreign dyestuffs should be controlled by a system of licences for a period of not less than ten years.Action, indeed, was taken upon that point, and on January 24, 1919, there was a Proclamation prohibiting imports into the United Kingdom except under licence of all derivatives of coal tar capable pf being used as dyestuffs or synthetic colours; and on July 18, 1919, the prospectus of the British Dyestuffs Corporation containing Sir Albert Stanley's statement was issued and was approved by the Government before it was issued. The prohibition of dyestuffs under Section 43 of the Customs Consolidation Act, 1876, continued in operation until Mr. Justice Sankey's judgment, which declared that under that section prohibition of any matters other than those relating to arms and ammunition was ultra vires. Since Mr. Justice Sankey's judgment was given there has been no restriction on the import of dyes, but, as your Lordships know, towards the end of last year and the early months of this year there was practically an atrophy of the import of dyes into this country from Germany because their works had not yet recovered. Their recovery since then has been extremely rapid.
Having shown the immense weight of authority and investigation that there has been behind this Bill, I want now to give your Lordships a few figures to show the actual position of the import of dyes into this country and of production in Germany and our own country in the years before the war. In 1913 the British output was 2,000 tons, while the British import was 18,000 tons, representing a value of something under £2,000,000. The German output at that time was 135,000 tons, that is to say over seventy times the amount of the British output. After the 713 efforts the British Government had made during the war, the British output in 1918 was 17,500 tons, and the British import was 2,000 tons, which is exactly the amount that they had been making in the year before the war. In 1919 the British output was 20,000 tons; that is to say an amount equal to the whole of the amount of import and output in this country in the year before the war.
I do not like to present these figures without one reservation. These figures may be all very well as to quantity, but what about quality? These dyes, I understand, were of the more ordinary sorts and not of the rarer kinds which require far more kill to produce. What is the German position? Owing to the difficulties which Germany encountered in the early portion of this year, the amount imported into this country was negligible; in fact, it did not exist at all in the first two or three months. But since that time the growth of the German imports has been rapidly increasing, and up to September the amount imported from Germany was 3,000 tons. That is all the more significant, because, as I said, in the early months of the year there was no import at all. Moreover, let us examine the figures of the German output. At the present time I understand the German output is 5,500 tons monthly. In a year that would represent something like 66,000 tons, n half the output of Germany in the year before the war. I understand that this recovery is going on very rapidly, and that the enormous German combination is developing its resources and factories. I would remind your Lordships that during the war there was a very large combination of leading German firms, the result of which was that something like £40,000,000 of capital were combined in the one industry.
So much for some of the dangers to which we are exposed from the side of Germany, dangers thoroughly realised by traders in this country. I understand that the German makers have made no secret of their determination to put, their wares on our market at any price and to ensure that there shall be no renascence, or rather that there shall be a decay, of this rising, useful, British industry. Other countries, of course, have taken measures to safeguard their own industries. In the United States they have a system of prohibition of the entry into that country of dyestuffs except under licence. They have not only a system of import under licence but they combine 714 with that a 30 per cent. ad valorem duty on imported dyestuffs.
I submit, therefore, to your Lordships that the policy expressed in this Bill is necessary on several broad grounds. I think I have shown, and I believe your Lordships realise, that for the purpose of making ourselves entirely self-dependent in tune of war it is absolutely essential. We have had too bitter an experience to forget what we have gone through. But I do not put it only on that account. I put it also on the ground of the necessity of establishing in time of peace a highly organised and valuable dye industry, because I am informed that it is mainly in connection with dyestuffs that you have these clusters of organic chemists who are so necessary not only to the dye industry of the country but for the prosecution of further researches in the application of chemistry to industry and for the further advancement and application of fresh processes to so many of our industrial concerns. On those two grounds—the necessity in peace, and the vital necessity in war, of having an organised dyestuff industry—I urge this Bill.
Again, I think I have shown to your Lordships that this safeguarding is really necessary because of the dangers to which we are exposed by this very highly organised, very highly trained, and very competent business which is so rapidly recovering its position in Germany. Much may be forgiven, no doubt, to those who, not having had the experience, have made mistakes, not so much from sloth as from ignorance; but I think your Lordships will agree that no quarter is given either to individuals or to nations who, having once been scorched in the fire of experience, have resolutely averted their eyes from the fierce light of facts, and have made, through mere weakness and poverty of purpose, a grand refusal to face those facts and to take in time the necessary steps to safeguard what I submit to be a most vital industry.
§ Moved, That the Bill be now read 2a.—(Viscount Peel.)
§ LORD EMMOTT had given notice, on the Motion for the Second Reading, to move—
§ That this House declines to proceed at this period of the session and without further enquiry with a Bill which will have injurious effects upon the Textile Industry of the country.715
§ The noble Lord said: By the courtesy of my noble and learned friend Lord Buck-master, it has been arranged that I should move my Motion this afternoon rather than that he should move his, but I am glad to know that it is not likely to prevent his taking part in the debate at a later stage. My noble friend who has just moved the Second Reading of the Bill always pays the House the compliment of getting up any ease which he has to lay before it, and he has explained the purpose and scope of the Bill with his usual lucidity. I must confess that I am not in any way convinced by what he has said, nor do I withdraw in any way my opposition to this Bill.
§ My objection to it is not merely on the ground that I dislike licensing, but on much wider grounds. I do not believe that, the organisation that has been set up is likely to carry out the purpose and objects which the noble Viscount claims that it will carry out. I believe that the method adopted must do serious damage to the cotton trade and other textile trades; and I believe also that in so far as it is successful in keeping out the dyes that we want and are not making satisfactorily here, and improving the dividends of this Dyestuffs Corporation—in so far as it does that it will drive our dyeing trade abroad, so that we shall lose not only the making of the dyes but also the dyeing which hitherto has been done here. There was one great mistake which my noble friend made, naturally enough because his case has been given to him by the Department that he represents so ably in this, House. He has told you that 90 per cent. of the trades interested support this Bill. That is absolutely and entirely incorrect. I shall show in the course of my observations that it is not so.
§ I notice that my noble friend made a good many claims on behalf of this Bill in reference to Amendments which were no part of the original Bill, but were put in during the Committee and Report stages in another place. I noticed also that he passed over in a very perfunctory way the method of subsidy. I think lie forgot that His Majesty's Government has already subsidised this trade to the extent of £1,700,000, and that one reason for the Bill is in order that a reasonable dividend may be earned on that subsidy. They have done that without making any provision that it shall be applied to research, which is an essential point in regard to this matter.716
§ During the nine years in which I have had the honour of a seat in your Lordships' House I have often heard complaints of Bills of a highly controversial or technical character being sent up in the last few days of a dying session. I do not know any more glaring case than is presented by this Bill. It deals with a question of very real difficulty. The difficulty is how to establish the manufacture of dyestuffs here, and how at the same time to provide that those who use the dyestuffs shall have the very best and, as far as possible, the cheapest dyes that can be made anywhere in the wide world. As regards quality and cheapness, quality is an infinitely more important point. If these trades do not get the dyestuffs, they being absolutely vital to the interests of the country, the whole country will suffer. There have been many months of negotiations with the textile trade in regard to this question, and during those months no agreement has been reached. But the President of the Board of Trade during the last few weeks has apparently made a bargain with one small section of the trade called the Dye Users, not with the great bulk of the textile trades at all. He has brought in this Bill in hot haste and given us no time in which to consider it.
§ I am going to plead this afternoon for further time for delay and consideration of this matter. My noble friend Lord Peel has stated what the case was before the war, and how we had become dependent for nearly nine-tenths of our dyes upon Germany. The German success was largely due to subsidised research and to intense application given to this particular subject. We had entirely neglected to take similar steps. Their success was helped by bad Patent Laws in this country, and it is a common rumour that some of the best legal talent of this country was regularly engaged to take care that, as far as possible, the Germans should be saved from competition here. We are sadly behind in regard to this matter. It will take us years to catch up, but there is a general agreement on all sides, I think, that we ought to have a great dye industry in this country. First of all, on military grounds it is desirable that we should have the industry in case we are again plunged into war. In the second place, it is desirable from the point of view of the textile and other trades which use dyes, that they should have command of the dyes if war 717 again breaks out; and in the third place—and not the least important—it is very humiliating for us, a great commercial nation, that we should be so sadly behind in the manufacture of an article of this kind. On all these grounds I speak entirely from the point of view of a desire to see this industry built up in this country.
My noble friend has described the shortage of these dyes early in the war and how British Dyes, Ltd., was formed. Their dividends, by the by, were limited to 6 per cent., and the Government lent them £1,200,000 at 4 per cent. which was only to be paid out of profits and not if profits were not earned. The trade supplied the rest of the money required for that organisation. It was not worked from the point of view of snaking a dividend. It was worked from the point of view of supplying the dyes of which we were so short, and also to take part in research work for future development. My noble friend Lord Cawley, who I understand will follow me in this debate, will explain the promotion of the present organisation, the British Dyestuffs Corporation. He will explain the absorption of the Levin-stein firm, and I hope he will say something of the exceptional favours shown to that firm. My noble friend will also show you how British Dyes, Limited, the early organisation, against the wishes of most of its directors and of all the chief practical directors, had forced upon it a large bonus for which it did not ask, and how the capital of this organisation has been thereby inflated. The result is that there is this huge company with nearly £10,000,000 of capital and a great deal of water in that capital, which needs £700,000 a year in order to pay a dividend at 8 per cent. on the ordinary shares, and that sum is arrived at without any provision, as far as I remember, that anything is to be set aside for research. I have a good deal to say, and I do not want to occupy your Lordships too long, but a majority of the directors of the old British Dyes, Limited, issued a circular explaining their objection to the lines on which the British Dyestuffs Corporation, on whose behalf this Bill is introduced, was promoted. I must read some extracts. They say—
British Dyes, Limited, was formed for a national purpose. In the prospectus it was declared that the primary object of the company was to provide a supply of dyes, and the invitation to subscribe its capital was expressly addressed to 'Users of dyes and colours and others willing to assist in providing a supply thereof,' and all
other subscriptions have been declined. This Company was thus in a position to adopt a policy which was directed more to the production of dyes than to the payment of dividends. and its control was vested in a body of shareholders who are representative of the industries dependent on dyes. The results of an amalgamation on the terms proposed—.
that is, the amalgamation which has now taken place—
would be to establish a practical monopoly of the manufacture of dyes in this country, and to introduce into the amalgamated company a body of shareholder whose interest would be financial. This result is open to serious objection. In the first place, it is not right that the interests of the great industries concerned as regards supply, prices. etc., should be made dependent on a company so controlled. In the second place, the natural tendency of such a company would be to direct its policy mainly towards the payment of dividends and maintaining the value of its shares instead of towards the establishment of a national supply of dyes. For the latter purpose, it will be necessary for many years to pursue a policy of development. requiring heavy expenditure on plant, and also on research, experiment, and education, and any consideration as to dividends and value of shares must be subordinated to this policy.
I say that on these grounds alone enquiry is needed before this Bill should be passed by your Lordships.
§ I appeal for delay also on broader grounds. My noble friend did not make so much of the pledges given by various people as was made of that particular question in another place, but I must meet that point. The pledges given were on three grounds. There was the Report of the Cabinet Committee, to which he has referred, recommending prohibition and licensing. There was Lord Ashfield's statement when he was Sir Albert Stanley and President of the Board of Trade in 1918, that prohibition of the character proposed in this Bill was intended. Finally there were the promises made in the prospectus of the British Dyestuffs Corporation on broad constitutional lines. I object to an attempt to tie the hands of Parliament by pledges of this kind. That prospectus is a striking example of the danger of Government meddling with business and the impropriety of their becoming company promoters.
§ Let me examine these pledges. A Cabinet Committee Report obviously binds nobody except those who make it. In most cases Cabinet Committee Reports are not even issued to the public at all, and this particular Cabinet Committee Report was made in the middle of the war, rather 719 early in the war than late in the war. A great many other pledges were also given at the same time which have not been fulfilled. What has become of the Resolutions of the Paris Conference? They, I think, arc about as dead as Queen Anne. Let me take Lord Ashfield's pledge. If that pledge was an obiter dictum of his own, then in that case it binds nobody but himself—I say that because there is another obiter dictum by a very prominent member of the Government which is certainly not going to be fulfilled by the Government, and that is Mr. Winston Churchill's pledge to his constituents that the railways of the country were going to be nationalised. If one pledge is good, another pledge is good. But if the pledge of Lord Ashfield's was, as I expect it was, a pledge which really represented the opinion of the Government as a whole, it cannot bind anybody but the Government. Quite recently a Bill which contained some pledges given by another Minister—the Health Bill, which was recently before your Lordships' House—was rejected by you, and Dr. Addison is quite unable to carry out pledges which he has given to hospitals in various parts of the country. Such a pledge is not a reason to which your Lordships have attached undue importance.
§ Finally, I come to the prospectus. I maintain that it would be a very good thing to teach this Government, and all future Governments, to avoid stock-jobbing pledges. The very extract from Sir Albert Stanley's speech in the House of Commons which is put in that prospectus is inserted in a way that is misleading. It is clear in any case as a constitutional matter that the Government can do nothing but promise legislation; they cannot bind Parliament to pass that legislation; and if the Government is to be allowed to make pledges and Parliament is to be bound to carry out those pledges, then I say, Do away with Parliament, abolish the Constitution, and face the facts. Parliament is not bound by Government pledges. It is bound to bring the best of its judgment to bear on the problems submitted to it and to decide them according to its view of public interest. These pledges in the prospectus of which I speak mean that the policy of this company is to be directed to paying a dividend on inflated capital, which ought to amount to £700,000 a year at least. Otherwise they mean nothing, because ex hypothesi dyes are dearer in 720 this country and many of them not so good as those which can be imported from abroad. To protect this company, import is to be prohibited under licence and the Board of Trade is to issue licences and the President is to be responsible for them. I do not quite understand my noble friend's arithmetic in regard to this Committee. He represented, I understood, that five out of eleven is a preponderating majority for the five. I did not quite follow that part of his argument.
§ LORD EMMOTT
My noble friend spoke of a preponderating majority, but he has not got it. The three directors whom the President of the Board of Trade is to appoint from independent people will be expected, I presume, to see that as far as possible a dividend is paid on the £1,700,000. The three colour makers have all an interest in getting dear dyes; they have a direct personal interest in dyes being dear. The five colour users are agents for dyeing purposes. They have no responsibility for selling the cloth as a rule, they have not the responsibility of the merchant who really does the business and sells the cloths in all the markets of the world, and their interest, if they can get the business, is really not at all the same interest that the merchant or the manufacturer has in the cheapness and excellence of dyes.
This trade is a trade of vast importance. The exports of cotton, woollen, and silk goods for the first eleven months of the year amounted to £409,000,000, at the rate of £446,000,000 for the whole year. The exports of other textiles and apparel amounted to another £98,000,000, or £107,000,000 for the whole year, and the two taken together represent half the total export trade of the United Kingdom. All these goods are not dyed, but it is calculated, and I think the calculation is quite within the mark, that the export trade dependent on dyes in cotton, silk, woollen, leather, and paper goods amounts to £350,000,000 a year— 721 that is between one-third and one-fourth of our total exports at the present time. These trades employ directly and indirectly 1,500,000 workpeople. Their capital represents many hundred millions. The trade is absolutely vital to the finances and general stability of exchange and to the general prosperity of the country. The cotton and woollen trades are far the most important, and If you are going to handicap them by dear dyes you jeopardise them in competition. If you are going to handicap them by inferior dyes you absolutely ruin them.
I do not know as much about the woollen trade as I do about the cotton trade, but here is a letter that was sent to me from the Scottish Woollen Trade Mark Association, Limited. It says that they represent more than four-fifths of the entire output of the Scottish tweed industry, and they write to inform my friend that—They regard with the gravest apprehension the regulation of imports of dyes and dyestuffs proposed by this Bill. The traditional Scottish tweed industry owes a considerable part of its great reputation as a high-grade industry at home and abroad to the fine colourings, and non-fading qualities of its product, of which about three-fourths finds its market overseas. Since the resumption of civilian trade following upon the Armistice serious difficulty has already been experienced in obtaining satisfactory dyes, and it is clear Vita the British dye industry is at present. far from being in a position to supply requirements. My members gravely fear that the effect of the present Bill will to conserve the interests of the dyeing industry to the serious detriment of the textile industries.I have another letter from one of the largest firms in Scotland, in which they say—We are quite prepared to give British dye-makers a reasonable preference as to price, but not as to quality. … It is obvious that unless British textile manufacturers can get the very best dyestuffs it will be absolutely fatal to the industry in the neutral markets of the world. … Might we suggest that in the first instance the import of dyestuffs should be absolutely without restriction, except in so far as those shades are concerned which the British makers are already producing equal in quality to the Continental makes and in sufficient quantities to meet the requirements of the home trade. … In our opinion the delay involved in procuring licences before any imports could take place would be fatal to the dyeing and textile industries, which are largely seasonal trades.Those are letters from the woollen industry. As regards the cotton industry, Lord Cawley, who has special knowledge of the question, will describe it. But I beg to 722 remind your Lordships that the trade is very highly specialised, by which I mean that spinners, manufacturers, merchants, and dyers are all working in water-tight compartments, and in such a trade the President of the Board of Trade only consulted one small section—namely, the Colour Users' Association. He says that this Association represented 90 per cent. of the trade. Well, my Lords, they were not unanimous. At the meeting when this Bill came before them, two or three weeks ago, which shows the hot haste with which the Bill is being carried through, a show of hands was taken, and I am informed by credible witnesses that if the number of machines represented by the number of hands had been taken instead of the number of hands held up, there would probably have been a majority against the Bill. But of this 90 per cent. of the trade the Calico Printers' Association alone were deadly hostile to the Bill, and they use 20 per cent. of the whole of the colours used in this country.
But even if that part of the trade were unanimous, what is that part of the trade as to capital and the numbers employed compared with the rest of the cotton and woollen trades who have not been consulted? The bulk of the cotton trade, employers and employed, are against this Bill. The President of the Board of Trade seems to think that it is no part of his business to consult the people most affected. If he can make a hole-and-corner agreement with some small section of the trade that is enough for him, and in comes the Bill in hot haste. It is the duty of the Ministry to consult larger sections of the trade. The trade did not expect the Bill to be introduced this session. The President of the Board of Trade used language to that effect in the other House. As soon as the Bill appeared a protest was signed by six large houses, and the rest of the trade was circularised. That protest was signed by 1,100 other traders, and only fifteen objected to the protest. Where is your 90 per cent. now? Far more than 90 per cent. of the great mass of the cotton trade are against the Bill. Only last Friday a meeting was held in Manchester of many hundreds of manufacturers and merchants, and they passed a resolution showing strong hostility to this measure.
The trade feel that the Dyestuffs Corporation is not going to solve their difficulty. In the course of the passage of the 723 Bill through the other House the President of the Board of Trade accepted an Amendment, to which my noble friend alluded, in subsection (6) of Clause 2, that for the purpose of advising the Board with respect to the efficient and economical development of the dye industry the Board shall constitute a Committee of persons concerned, and so on. That is what is wanted. It is research, research, research, the whole time; experiment after experiment. That is what needs to be done if we are to obtain real supremacy in this trade, not trusts and monopolies, safeguarded by licensing, to keep up dividends and make their first aim the payment of dividends on the strength of a Government prospectus.
The cotton trade feel that their trade is being put in jeopardy by this Bill. They never know when they can accept an order which involves dyes hitherto coming from abroad. In the old days they could always get them. Immense stores of dyes of every variety were kept in this country, and so consumers could obtain them if they were obtainable anywhere. Orders will come in for cloth in which both British and foreign dyes are to be used. How can merchants know, except after great delay caused by necessary inquiries, if they are to be allowed to use the foreign dye which is asked for, or if the Committee is going to replace it by a British dye which is not guaranteed? it means loss of business in a case like that.
I must say one word about licensing, for I do know something about it. It is absolutely impossible to be fair in licensing. Think of what it means? It was made clear, I think, in the other House that this must be a question of licences of individuals: that is, a man goes one day for a certain dye, makes out his case, and gets his licence. The next day his competitor goes for a similar dye and is told he cannot have it because the quota for the year is finished. That is not business. It is going to hold up trade in a most objectionable way. Furthermore it is one of the happy little habits of Government Departments to say, "Go to your competitor and get it from him; we have just given him a licence." It is not in human nature that that should be a very agreeable thing to do. Licensing must be unfair. There is always a tendency to corruption in it. It inevitably means delay, uncertainty, and friction for an export trade on which the country is so dependent as it is on 724 this particular trade, and it would be a fatal bar to success and to promptitude.
America and American example are given to us as something that we ought to imitate. The President of the Board of Trade, during the discussion in another place, did not seem to grasp the fact that America was a country chiefly dependent upon her home trade while we are dependent upon our export trade. America can afford to make mistakes in the matter of dyes and we cannot, because our goods go to the neutral markets of the world. There is a real danger of American and German combination in regard to this matter. If we are going to exclude so rigidly what we can make in this country there may be a combination to exclude what we cannot make here. It is said that that is prevented for a time by the Treaty of Versailles, but after the four years there is nothing in the Treaty, so far as I know, to prevent such a combination of trade as would deprive us of the use of some of these dyes which we may not be able to manufacture for ourselves.
I come to my last point. If this Bill is passed in this form I believe that the result will be to drive our dyeing trade abroad. The Bill does nothing to prevent that. It is not a fanciful imagining of mine. Here is an extract read in the other House from a firm—The matter is so important and the losses which will be incurred through using British dyes so great that we are now making arrangements to send raw wool to the Continent to have it dyed in fanciful and delicate colours. Fortunately the Bill has no power over this, and the advocates of protection for dyes in Yorkshire and Lancashire will find a profitable part of their trade disappear to Holland.The cotton firm with which I am connected has, for fifty years or more, made a certain article called "velveteen." It is simply woven out of raw cotton in the loom. It has been sold to British and before the war for most of the fifty years also to German firms who had the cloth cut and dyed and finished. The Germans for many years have been competitors in that trade with Great Britain all over the civilised world. So far there has been no resumption, on the part of British manufacturers, of trade with Germany since the war, but if there is to be any doubt as to that trade being able to obtain the best dyes wherever they are made, then I say it is inevitable that the dyeing part of that trade must drift to the Continent. Surely it is far worse to stimu- 725 late dyeing as well the making of colours on the Continent by legislation than to allow the purchase of dyes in which they are superior and to keep the dyeing in this country. In that case they will get two trades instead of one. It seems to me simply national folly to run such a risk, when a little delay and inquiry, and the putting of this Bill off to next Session may enable some better solution to be found. For these reasons I plead for delay and reconsideration.
The cotton and the woollen trades at the present time, like nearly all other trades, are suffering from great depression, and I beg the House at a time like this not to put new obstructions, new delays, and new uncertainties in the way of manufacturers and merchants. The President of the Board of Trade has only just now, under pressure, agreed to set up a Committee to report on the efficient and economical development of the dye-making industry. That ought to have been done first, and done long ago. When that Committee reports it will be time enough to consider how we are to deal with this part of the question. 1s to the terms of reference to that Committee, it should be asked to consider what form of protection (if any), which will not run the risk of doing serious damage to these industries dependent, as they are, on good and cheap dyes, is to be carried out. It will be able to report on that question, and give some solution better than may he hoped for from this Bill.
I do not ignore the difficulties of the Government, hampered by pledges which ought not to have been given. I quite see their difficulty, but I say that the duty of this House—if I may use that phrase with great respect—not bound by such pledges is to see that the exports of this country, which are vital to her prosperity and finance and the stability of her exchange, are not jeopardised by unwise legislation, passed in a quite unnecessary hurry, which may have the effect of causing us to lose the trade of dyeing the goods, and so never permit of the building up of the trade of manufacturing the dyes which is the ostensible purpose of this Bill. I beg to move.
Leave out all words after "That" and insert "this House declines to proceed at this period of the session and without further inquiry with a Bill which will have injurious effects upon the textile industry of the country.—(Lord Emmott.)
§ LORD CAWLEY
My Lords, I wish to second the Amendment proposed by my noble friend Lord Emmott. I do this because for a great number of years—practically all my life—I have, been a very considerable user of these aniline colours. This Amendment is asking for delay. For myself I do not see why this extreme hurry is necessary. This is only one amongst a number of key industries, and there is no reason that I can see why it should be treated differently from the others. For a long time the President of the Board of Trade resisted all the importunities of people who wanted to hurry on this measure, but at last the scheme of the Bill has been passed through in a very hasty way. I saw in one of the newspapers a paragraph headed "Dyestuff Drive." It said—The Government drove the Dyestuffs Bill through the Report stage in the House of Commons in the same relentless way that they secured its passage in Standing Committee.It was also driven through the Second Reading. Only one night was given to it, and two hours of that were taken for an Irish debate, and although there was a great deal of adverse criticism no answer was given by anyone on the Government Bench to that criticism, and the Closure was resorted to. Therefore this Bill has been relentlessly driven through, and I hope that your Lordships will use the prerogative of this House of delaying hasty legislation. This is legislation which has been very ill-considered.
My noble friend Lord Emmott and the noble Viscount have referred to the history of the dye industry, and I am not going to enter into that further than to say that it is true what Mr. Asquith said, namely—We had the whole trade in our hands, and if our men of business had shown intelligence and foresight there is no reason why these inventions should not have been from the very beginning and continued throughout a British and not a German industry.That no doubt is true, but there is some excuse for our not having kept this industry, because the trade and manufacturers were all very much handicapped by our patent laws. I myself was one of a deputation from the Manchester Chamber of Commerce to three different Presidents of the Board of Trade. The last deputation went in 1896, when the present Prime Minister was President of the Board of Trade. With his quick intelligence he saw the points 727 immediately, and the patent laws were altered. Unfortunately a little while after a judges' decision rather took away the benefit that was derived from the altered law.
These patents laws did certainly handicap our trade, and the late Mr. Levinstein, who was connected with the dyeing trade, told me that in his opinion our non-success in this aniline colour trade was largely, if not wholly, due to our patent laws. Our Patent Office practically gave a patent to anybody who went there, while the German Office investigated thoroughly every application. The result was that the Germans came over here and patented every process. They discovered that there was no obligation on them to work a patent in this country. They made their patents very wide, and obtained the very best legal assistance here to fight all their cases, with the result that it was almost impossible for any small capitalist to start in the aniline colour industry here. In fact, my Lords, even now as all these patents are non-operative—because there are no German patents operative now—the great bulk of this aniline colour trade might be done in this country without a subsidy or anything else. It is a little derogatory to our business acumen and ability to think that when we have all the raw materials here we cannot make as cheaply as Germany the commoner dyes, the great bulk of which have been in existence for perhaps twenty years, without the aid of a subsidy. Now I should like to say a word about the British Dyes Company, which I might almost call the Government Company.
§ LORD CAWLEY
No, not the Corporation; British Dyes, Ltd., the company which was formed by the Government almost at the outbreak of war. When war broke out there were only two firms making aniline colours in this country to any great extent. One was Messrs. Levinstein, who had had a somewhat chequered career, and to whom I have referred. They had been in business I think from about the 'seventies, but they had not paid any dividend on their ordinary shares for a great many years and their preference shares were in arrears for about twelve years. Within a very short time of the opening of the war, I think in about six 728 months, they paid off all the arrears on their preference shares. There was also the firm of Messrs. Read & Holiday, of Huddersfield, who had done a little better than Levinstein. The Government, in conjunction with some of the users of dyes, bought up this firm and established the company which they called British Dyes, Ltd. The Government agreed to lend this company £1,750,000. As a matter of fact, they were only called upon to lend them £1,200,000, the users of dyestuffs finding the remainder of the capital, a sum of about £960,000.
The Company was really very successful. The Government had two directors upon the Board, and they devoted their energies very largely to research and experiment and to putting up plant for manufacturing those intermediate products which had never been manufactured in this country before and are absolutely' essential to the successful production of some of the most important dyestuffs. At their annual meeting the Company was referred to by the Chairman of the Bradford Dyers' Association—one of the largest combinations of colour users in this country—in these terms:I should like first of all to express my very warm appreciation of the work which has been done by your Board. A month ago I had an opportunity of making my first inspection of the great works you have erected, and speaking with a knowledge of the finest works in Germany I am glad to say that in my opinion the general plan of these great, works at Dalton will stand comparison with any in Germany. I congratulate the directors of the Company on their foresight and courage in conceiving and carrying out plans which seem to lay broad and deep the foundations of a successful industry. It is my belief t hat in the scale on which you have embarked on the manufacture of the primary intermediates you have rendered a service of incalculable value to the future production of colour in this country".That opinion was expressed by a man I know very well, and who has a very intimate knowledge of the German works, and I think it is a great testimony to the directors of the Company which the Government set up.
This being the case, it is difficult to understand why the Board of Trade were so very anxious that this Company should be amalmagated with Messrs. Levinstein. I have nothing to say against Messrs. Levinstein. They made huge profits out of the war, and they were not controlled. That is a point I should like to lay stress upon, because the Board of Trade controlled 729 their own concern and left Levinsteins uncontrolled. Levinsteins were a company trading to make profit and they made it, and why the Government should wish to unite the Company they had helped to establish, who were doing good work and carrying on a system of research and experiment so necessary for any future trade, with Levinsteins, who were merely a trailing concern, it is very difficult for anybody to conceive.
British Dyes, Ltd., was established on right lines, and had admittedly made great progress towards establishing a national dye industry. It is easy to see why the shareholders of the company who represented £960,000 of the capital were anxious to join Levinsteins. No doubt they had tins future company put before them, in which for their £960,000 they got £1,500,000 in the Dyestuffs Corporation in which the Government are interested at the moment. It is easy to see how the company was done away with so far as the shareholders are concerned, because their dividends in British Dyes, Ltd.—the Government assisted company—were limited to 6 per cent., whereas in the Dyes Corporation they have got a shareholding of £1,500,000 and are promised by the prospectus from 7 per cent. to 8 per cent. Not only that, but there are promises held out to them that still more profits will be made than those mentioned in the prospectus.
Whether the Board of Trade thought Levinsteins more capable or not I do not know, but they seemed to have a great liking for them. This is amply proved by the fact that when the works or rather the factory that had been established by a German firm, Meister, Lucius and Brüning, at Ellesmere Port, was taken over by the Government almost at the commencment of the war, the directorate of British Dyes, Ltd., approached the Board of Trade with the object of buying it from them. The Board of Trade at that time declined. They said, "No, we are going to work it ourselves." A little while afterwards it came to the knowledge of the directors of British Dyes that the Board of Trade were in negotiation with Messrs. Levinstein, and the British Dyes protested that they ought to be allowed to tender for these works. The Board of Trade refused to allow them to tender. They sold the works to Messrs. Levinstein for £75,000, and shortly afterwards Messrs. 730 I Levinstein sold—not the factory, not the works, but merely the recipe for manufacturing synthetic indigo—to an American firm for £250,000.
Eventually this amalgamation took place, or rather Messrs. Levinstein annexed British Dyes, and floated the Company which really is the genesis of this Bill. There is no doubt. that if this company had not been formed on this capital of £10,000,000, with the Government pledge of a prohibition of colours coming from Germany, we should never have heard of this Bill. The capital of this Company is £10,000,000, and the Government have subscribed, or are subscribing, £1,700,000—not in Debentures, bear in mind, but in Preference and Preferred Ordinary shares—£850,000 of each. So that really the Government are in the business. If the business is not profitable the Government will not get any dividend. The shareholders of British Dyes receive 1,500,000 shares for their 960,000 shares, and those are promised 7 to 8 per cent., in place of the 6 per cent. to winch their former dividend was limited. Messrs. Levinstein also come out of it very well. Before the war they were a company not paying any dividend, in fact the market value of Messrs. Levinstein's concern then was, I think, £30,000. What do they get out of this? Messrs. Levinstein get 950,000 shares. I may say the nominal capital was 90,000 shares and for those 90,000 in their own concern they get 950,000. The public subscribe, no doubt mainly on the Government declaration about the prohibition of licences. but to some extent also because my noble friend Lord Moulton was advertised as the Chairman, and his name has a glamour on account of his well-known scientific attainments. No doubt his name carried some weight in inducing people to subscribe for the £5,000,000 which the public put in.
Our total consumption of these dyes before the war was only £2,000,000, of which about 80 per cent. came from abroad. If we get the whole of the business it is not a big thing, and to handicap our exports, as this licensing system will do, is to me a grossly unsound proposition from the business point of view. But there are other ways of getting at least a good share of the business, without resorting to this worst of all system of protection—because I think that this licensing system is the worst kind of protection of all. if this 731 Bill is delayed—and we are only asking for delay—we think that, if it is considered in connection with other key industries, there might be some other way of getting the result, and that result might be achieved by less objectionable methods.
The noble Viscount who introduced the Bill made a great point of the support from the textile industry. He said the Bill was supported by 90 per cent, of that industry. It nothing of the sort.
§ LORD CAWLEY
It is not supported by 90 per cent. of the colour users, or anything like it. This 90 per cent., I suppose, is got from a meeting of users that was held just before the Bill was introduced, at which on a show of hands there was a majority, but not an overwhelming majority. The Chairman, after the resolution had been passed, said it had been carried by an overwhelming majority, but he was obliged to withdraw it. As a matter of fact, a great part of the support given at that meeting was given under an illusion. The biggest user in that meeting was the representative of the Bradford Dyers' Association. What did he say? He said lie had always been really in favour of subsidy, but still in licensing there was machinery whereby subsidies could be applied, and therefore he was in favour of licensing. Then he went on to say that if he thought it was intended to be final he would not be supporting it. He looked on it as only the first stage of the machinery. Clearly, the support on which this Bill is introduced is purely fictitious. Lord Emmott has informed you that the Calico Printers' Association is also against it. They are bitterly against it because of all the users of aniline dyes they are the only firm who merchant the goods as well as print them.
The cotton trade is a curiously worked trade. The cotton comes in at Liverpool. It goes to the spinner, perhaps at Bolton, or Rochdale, or Oldham. The spinner is not often the manufacturer; he is not often the weaver; he just spins the cotton into yarn. From the spinning mill it goes to the weaver, commonly called the manufacturer, and that is a separate trade again. From the manufacturer it goes to the merchant at Manchester, and the merchant 732 sends the goods to the bleacher or dyer or calico printer as the different markets that he serves requires. It is the merchant who has to bear the brunt of any complaint from foreign countries, and it is the merchant who has to bear the brunt if, on account of the high cost of dyes, he is not able to sell his calico. The dyer is a person who merely works for hire. I know that because I have been a dyer and calico printer myself. The goods do not belong to the dyer at all; he does not own them. Ho simply gets the goods from the merchant, and manipulates them according to the orders of the merchant. The merchant instructs him what shades and what patterns are required. The dyer very seldom knows even the market to which they are going. The merchants, therefore, have to bear the brunt if anything goes wrong with regard to the colour to be used.
Before the war if a South American merchant showed a pattern to a representative of a Manchester merchant and asked whether he could be supplied with such goods he would immediately have got a reply in the affirmative. But if this Bill passes, the representative of the Manchester merchant will now have to say, "I cannot tell you whether we can supply such a pattern, because some of these colours come from Germany. I should therefore have to send the pattern home to see whether the people at home can get a licence to obtain the colours from Germany." The pattern is sent home and comes before the Committee we are speaking of. The Committee consults its experts, the experts disagree, and months may be taken up before the merchant in South America can get an answer from Manchester. My Lords, this is not a fictitious representation; it is what will take place every day. It is impossible that business should be carried on upon those lines. If the merchant from India, or China, or South America, or any part of the world, found out that that was the state of things he would very likely go to the German merchant or to the American merchant from whom he can immediately get an answer and have the certainty that they can supply the order.
I have been a Free Trader all my life, but rather than have this system of licensing I would have a Customs Duty. I would rather have a fair and square tariff of 733 10, or 15, or 20 per cent. put on all colours that come into this country. We should then know where we were. As research is such a very important thing, I think that perhaps the "sting" of Protection might be taken off if the product from the Customs Duty was used for experiment and research. I should infinitely prefer that to a system of licensing. I think it would be better even from a military point of view, because a big sum might be put on one side for the purpose of military research, and the scientific men who conducted that research would be able to produce fresh gases and other poisons by which in the next war we might poison an enemy. A system of licensing leads to all kinds of abuses and backstairs methods, and in my opinion it is the very worst kind of protection.
There is really no reason why this Bill should be rushed through in the way it has been. No doubt the Government is in a dilemma, when it allies itself with a joint stock company and induces the public to subscribe to an inflated capital. No doubt something will have to be done to keep faith with the shareholders, but for my part I am sure it would be a cheaper and much better way if the Government were to pay the shareholders out and cut their losses. If they did that, the cost would be £5,000,000. If they go on with this Bill I am sure the textile trade will be mulcted in millions a year—not simply £5,000,000 in a lump sum. It would he infinitely better if the Government were to do that than to remain parties to what really is the promotion of a company with a lot of watered capital in it, which cannot possibly pay the dividend they promised of £700,000 a year without handicapping to an enormous extent the textile trade and endangering other trades.
This is a matter that can well be considered between now and the re-opening of Parliament when we are promised a Bill dealing with all key industries. I would suggest a Committee of both Houses to inquire into this matter. In the circumstances I hope that your Lordships will exercise your prerogative of delaying this hasty and ill-considered legislation.
§ LORD INCHCAPE
My Lords, this Bill, to which your Lordships' assent is invited, introduces into the conduct of British business and into our body of 734 commercial legislation principles and practices which seem to me not merely questionable but dangerous. The purpose of the Bill as was explained by the noble Viscount is to establish in Great Britain the dye-making industry, and it proposes to effect this purpose by prohibiting for the next ten years the importation of all foreign dyes except under licence from the Board of Trade. The Board of Trade is to be the licensing authority, but it is to be assisted in its deliberations by an Advisory Committee of eleven members, five of whom arc to represent the dye-users, three the dye-makers, while the remaining three may be described as neutrals.
The effect of this measure, if it became law, would be to confer a virtual monopoly of dye-making in this country upon the British Dyestuffs Corporation, Limited, a concern in which the Government have invested £1,700,000 of the taxpayers' money. I know nothing as to how this Corporation came into being, or of its financial history, or its dealings with the Board of Trade. These do not concern me. I have nothing to say against or about the Corporation, and I propose to speak only on the broad question.
There are two reasons why Parliament is urged to protect the British Dyestuffs Corporation, Limited, from foreign competition during the next ten years. One is that the Government, subject to the concurrence of Parliament, is pledged to it, and on the strength of that pledge the public have subscribed money to the Corporation. The other is that a flourishing dye industry is a valuable addition to our domestic enterprise in time of peace, and essential to our security in time of war. In regard to the pledge I am the very last man to urge its repudiation. On the contrary, I think that a Government should be particularly punctilious. But while the Government's pledge must be honoured, there may very well be other and better ways of redeeming it than by this Bill.
Let us redeem the pledge given during a time of excitement and anxiety by a fair annual contribution, by accepting say 2½ per cent. or 3 per cent. on the £1,700,000 which it is proposed to invest, or which has been invested in the company, and leave it to fight its own way free from all Government control. 1t will be infinitely better for the company and for the country. 735 I go further. I believe it would pay the country hands down to make a present to the company of this £1,700,000 on condition that they devoted a certain amount annually to research, rather than to start this campaign of prohibition of imports. All the pledges given during the war, or even after victory had been secured, have not been literally fulfilled. The Kaiser, for instance, has not been hanged. He has not even been tried.
As for the argument that the dye industry is necessary for our strength in war time, what industry is there of which as much cannot be said? Your Lordships will remember that during the war a Commission was appointed by a neutral Government to draw up a list of articles that could by no possibility whatever be considered as of military use. The Commission reported that there was just one substance for which they could not discover a definite military value, and that was human hair. But when the German women took to sacrificing their hair to make the machine bands for which leather was no longer procurable they proved that the one exception detected by the Commission was no exception at all. The plain truth seems to be that there is nothing made or grown which does not help, or the want of which does not hinder, a belligerent in carrying on modern warfare, and if we are to protect and subsidise any industry at all because of its potential military value we shall have to protect and subsidise all industries.
The dye industry is undoubtedly an important industry because it furnishes a process that is necessary to the carrying on of far bigger trades. It employs in this country, or may eventually employ, perhaps 10,000 people. But the industries to which it ministers employ something like 1,500,000 people. Its total production cannot be valued at more than £10,000,000 a year. But the textile, silk, leather and paper trades, which depend on dyes, have an export trade alone of about £350,000,000 a year. I submit to your Lordships that we must be very careful not to sacrifice the greater to the less, and not to imperil the magnificent industries of Yorkshire and Lancashire in order to buttress by artificial means a branch of manufacturing for which we have never shown any natural inclination or aptitude. Undoubtedly, as it seems to me, we shall be imperilling these larger industries if we make it diffi- 736 cult for them to obtain the best dyes that are made anywhere. The moment you limit their choice as to colour, shade and quality, and try to force inferior dyes upon them, or to snake them buy more expensive dyes, merely because they are of British manufacture—at that moment you jeopardise their export trade, which is the breath of their industrial life, and you oblige them to consider the ways and means of sending their products to other countries where they can be dyed and finished without the restrictions which if this Bill were to become law would be imposed in the United Kingdom.
As I read this Bill, any cotton or woollen manufacturer who wanted to use a special dye would first of all have to convince the Advisory Committee to the Board of Trade that it was not manufactured in Great Britain. That naturally would not be a matter that could be settled at a moment's notice. If, after hearing all the evidence, the Advisory Committee supported his contention, it would then, I presume, recommend to the Board of Trade that a licence should be granted for the import of a specific quantity of this particular dye for a specific period. The Board of Trade is no more famous than any other Government Department for acting on such recommendations with any excessive celerity. In due and dignified course, however, I assume it would attend to the matter and issue the licence. If by that time the order for which the manufacturer needed the special dye had not long since been cancelled, he would telegraph to Germany for the allotted amount and the German dye-maker, unless he were a fool, would make him pay for it through the nose, knowing that there could be no competition, that Great Britain had publicly advertised her inability to produce this special dye, and that he thus had the British manufacturer at his mercy. Finally, the dye would arrive in England, and after the Customs House officials had quite satisfied themselves that the transaction was in order, it would be allowed to go on to its destination. I will leave your Lordships to estimate the amount of time that would have elapsed between the manufacturer's discovery of his need and the ultimate receipt of the dye.
Have we not had enough of this sort of thing during the war? Have we not found it an impossible basis on which to do business? You cannot run commerce 737 on a system of coupons. You cannot run any business if at every turn your freedom of action is manacled by bureaucratic red tape, and if you have to interview and argue with Committees and officials in order to get permission to trade. The kind of machinery which this Bill would set up would lead to something more serious than delays and obstructions. It would lead insensibly, but inevitably, to favouritism and discriminations; it would place the man in a large way of business at a very decided advantage over his smaller competitor; it would tend to crate an atmosphere of suspicion even if it did not actually result in those illicit deals and unwholesome log-rolling agreements which are rarely absent when Government Once begins to interfere with the daily operations of business.
This Bill, I greatly fear, if passed, would be but the prelude to other measures of the same stamp. It is well known to your Lordships that there are other industries not less convinced than the dye-makers that they are "key" industries, which are only waiting for the passage of this Bill to press their claims. They can make out just as good or just as bad a case for preferential treatment and they can urge the same excuses of trade depression, their "pivotal" character, foreign competition, the collapse of the Continental exchanges, and so on. But I am sure it will occur to many of your Lordships that if we do not allow and encourage Germany to export we can never expect her either to rectify the exchange situation or to pay the Allies a single mark by way of indemnity.
Germany's position in that respect is very like our own vis-à-vis the United States. We owe America large sums, and a fall in sterling facilitates our export to that country. If America were to legislate against our exports on the ground that they are underselling her own manufacturers and producers would she not be doing a very foolish thing? Would she not be postponing the day when we can discharge our indebtedness and prolonging the unsettlement and instability of the dollar-sterling exchange, which hurts her as much as, or more than, it hurts us? It is just the same with Germany and ourselves. The mark can only regain its old value if Germany is permitted to trade as widely as possible. If we hinder her from trading, as this Bill is meant to hinder her, we perpetuate that depreciation of the mark 738 which enables her to compete effectively with us in neutral markets, and we retard, against our own interests, the period of her return and of the return of all Europe to normal conditions.
My Lords, I believe this country owes her commercial greatness and her financial pre-eminence of the past to her open markets. Industry- after industry has found its home in these Islands though the raw materials on which they are based have had to be transported here for many thousands of miles. We have been the chief carriers of the world, the greatest exporters of manufactured goods, the financial centre of the universe and the possessors of an unrivalled entrepôt and distributing trade. In nay judgment we achieved this great position partly because of our geographical situation, partly because of the character, skill, and experience of our people, and partly because of our wise policy of free and unrestricted imports. The geographical situation and the skill of our people remain, but the commercial policy which has alone enabled them to turn their natural advantages to account is in danger of being undermined by the proposals in this Bill. So long as we are free to import what we need without let or hindrance from all quarters of the globe I am confident that we can win back all the ground, and perhaps something more than we had to yield during the war. But if we begin to restrict commerce, as this Bill would restrict it, and to imagine that bureaucratic coddling would assist our restoration to industrial health, we would be striking, I verily believe, a more fatal blow at our own prosperity than it is in the power of any of our competitors to deliver.
§ LORD MOULTON
My Lords, I do not intend in my contribution to the debate to pay the slightest attention to what I might almost call the gossipy talk as to particular firms. Statements have been made with regard to them which, so far as I could hear them, distinctly astound me. All I know is that there was an amalgamation which simply went according to the valuation of an accepted valuer, and two firms became one. Whether the directors of one firm issued circulars or not, and what the dividend of the other firm had been, seem to me to be utterly apart from the very serious question that we have to consider. I am going to speak only of the Bill itself. 739 My Lords, people have short memories. I remember at the beginning of the war when the textile industry, rightly pronounced so important as to be at least one third if not more of our total exports, were face to face with this: that they had trusted entirely to get their dyes, essential to their existence, from a nation that was now an alien enemy. The terror that they were in made them feel, what I still feel, having a somewhat better memory than many, that the only salvation for England is that it should give up merely sticking to its traditional trades, in which I admit with the last speaker it has made such large profits especially through its possession of the carrying trade. It made them feel that England should learn the greatest of all trades in its promise for the future and almost in its performance at the present—the chemical trade. They thought then, under the realisation of the danger in which they were, that they could not be safe unless they had a dye trade of their own which would put their textiles beyond the reach of their enemies.
Various ways were tried. The British Dyestuffs Company was formed very much on the lines that I then advised—that all the shareholders should be dye users, that the dividends should be limited, and that what was over should be for development and research. It did its work apparently, even by the admission of the foes of this Bill, well. The dye industry, in order to satisfy the needs of a nation, must be on a big scale. It is not like an industry that makes one or two products; it makes hundreds, widely distinct in their nature, and in order to satisfy the need of the textile industry and the demands of the country the scale on which it works must be a huge one. That, I think, was the reason which led to the amalgamation of the two firms in order to make one very big one. I am not, however, going to be led into talking about that.
What I want your Lordships to consider is this. In the future is England to be destitute of a chemical industry, as it was in the past? You, perhaps, do not feel it as I do. I remember at the beginning of the war, when the question of providing the necessary explosives for our troops came before me and I looked around, I found that we had neither the plant nor the industries which could be turned to the work. We barely had the chemists to guide it. Not that we do not turn out 740 admirable chemists, but there was then, and unless care is taken in the future there will be again, no opening for a chemist in industrial life, and as sure as that is the case, in spite of all the money that may be spent by the Education Office on training, in spite of all the efforts of our Universities, chemistry will wither in England and be a plant that never takes root. I think that the future of England depends on whether it does acquire a great chemical industry. To do so it must begin with the dyes. Dyes are the great purely organic chemical industry—the others cluster round, but the trunk from which the growth comes must necessarily be the organic chemistry of dye-making. You have only to look to Germany and you see that that has been the way there. You have only, to look at America and you see the same thing has occurred there, and also in Switzerland. Therefore, if we cannot establish a dye industry on a wide scale in England we must reconcile ourselves to the chemical industry never appearing, and that means that we are absolutely dependent on nations not our friends necessarily, and nations separated from us at a time when warfare has shown that carriage from one country to another can no longer be relied upon as safe.
For my own part I think that that is the greatest question in front of those who turn their attention either to education or to England's industries. When I look back upon the first few months of my experience of making explosives I feel that it is wonderful that we ever got through. As I have said, we had neither the plant nor the men nor the industries. England never showed itself more full of innate vigour than it did when, in spite of that, it grew to a point that it absolutely snowed under our foes, who had taken such long preparation for the Great War. It must not be thought that I ask for dye works for the purpose of explosives if a war should come, although the very first thing that I had to do with regard to British Dyestuffs, Limited, which was formed at the beginning of the war, was to throw upon it a huge proportion of my production, until I could build specialised factories. But what I do look to the dye industry for is that they should in peace satisfy the needs of the industrial community, and that when war comes they should have nothing more to fear in the way of being cut off from what is absolutely essential to the existence of the textile industries. I defy your Lordships 741 to find any solution for that except the creation of a big dye industry.
I have heard to-night all sorts of objections to the system of licensing—all sorts of ways in which it can go wrong. I daresay it can, and if the people who have to carry it out do not bring their good will to it no. doubt there will be difficulties, but if they appreciate the need, and the way it is going to fulfil the need, I have not much fear of my countrymen in that respect. But I want your Lordships to consider what alternative there is to a licensing system. I have thought over it long, and used all the ingenuity that I possess to think of some other way. I feel scorn of those who in questions that are critical to a nation find comfort in applying the ordinary formulae that they would apply in their business, and feel that that is sufficient justification for their action. What have we here? We have a combination of the whole of the German chemical industry at Mannheim, who pool their profits, divide the total profits proportionately to the various firms, so that they are independent to almost a complete extent of the way in which the profit is made. Such a combination can ruin any infant industry. Just think of it yourselves. I do not wish to argue this forensically, but I want your Lordships to think how a combination so big, so independent of any particular market, can be met by any such thing as a subsidy or an import duty. It could afford to sell for years not making a penny. What you have to consider is not whether the persons who actually bought the dyes would have in those particular years better balance sheets than they would if they got their dyes from the home market; you have to consider whether the burden of the home market is likely to do permanent good to any industry in England. You are called upon here to devise a scheme to defend it. You can do so by means of this licensing.
With regard to quality, I am sure that nobody who has followed any utterances of mine, whether in direct connection with the industry or otherwise, has heard anything but the precept that quality stands first of all, and that the one thing that the English dyes must win is a reputation for absolutely unblemished purity. That they can do if you have chemists of the best class, and chemists with a national love of honesty. You can, therefore, put aside the question of quality. That can be 742 secured. But how in the world are you to meet a foe like this combine if you allow them to get their goods in, whatever be the price, in the teeth of home production which is equal in quality? Not only must it be equal in quality, but it is assumed that it will be reasonable in price. Only in that way can you keep for the home product a home market, and you cannot build up an industry into vigour and make it grow till it becomes adult and capable of beating its enemies in the field unless it has a home market for its best goods at a reasonable price.
I am not calling for too much from the rest of the nation to say that if it will grant a home market in this way to goods equal to those of the Germans and sold at reasonable prices, we shall then get a permanent industry which ought to be ultimately as strong and ultimately quite fearless of German competition. That is the idea before me. I can see no way of getting it as good as this scheme if it is worked with goodwill, as I believe it will be. Remember that you cannot shut your eyes to the fact that, irregular or not, the Government pledged this protection to the industry, and allowed millions to be subscribed on the face of that pledge. It was put in the prospectus with the direct consent and approbation of the Government itself. You cannot shut your eyes to this, that if you are going to say that the Government is not bound under these circumstances to give it that protection you have given a blow to the trust of the English people in the good faith, not only of the Government but of the nation, from which they will never recover.
§ LORD BUCKMASTER
My Lords, at this stage of the session those who sit on the Front Bench opposite are accustomed to hear complaints from those who sit on the Bench that it is My privilege to occupy as to the scanty opportunities that are afforded to us for examining important measures that are pressed upon our notice. The complaints do not depend upon the individuals; they depend upon the benches, and they are made from time to time by people who under altered circumstances have to do their best to repel them. None the less, at the bottom of those complaints there is a strong and just feeling that if this House is adequately to discharge its duties as one of the Houses of Parliament, it is not right that im- 743 portant measures should be, forced upon it at a time when we cannot give them that leisured consideration and discussion that is essential if legislation is to be sound. That is a true general proposition from which I believe no one will differ. But I think it is but rarely that it has had an application so strong as with regard to the Bill which is before your Lordships this evening.
Both the noble Lord whose Motion is now before the House, and the noble Lord who spoke in succession to him, have expressed their anxiety and willingness to see what are the best steps that can be taken for the purpose of securing some protection to the dye industry in this country. The noble Lord, Lord Inchcape, of course took quite a different view. But they, have pointed out—and I submit that their arguments are very powerful—that there has not been proper time even for the trades and those concerned in this Bill to discuss and consider what is the best means, and they regard this Bill it is plain with undisguised aversion and fear, and they do it not speaking for themselves but speaking for one of the most powerful and most prosperous industries in this country. I wish—and I shall be as brief as I can—to say a few words in support of their position. The noble Viscount, Lord Peel, who moved the Second Reading of this Bill began his history of events by saying that Germany had stolen our secret for making dyes. I do not quite know what he means. Was there any dishonest behaviour connected with it?
§ VISCOUNT PEEL
I was using the word "stolen" in a picturesque sense. They took our ideas and used them, and they were quite entitled to do so.
§ LORD BUCKMASTER
If that were so it is a little unfortunate that the noble Viscount should have used the phrase both in the manner and in the tone in which he did. The suggestion was—I think it was what he meant—that there has been some dishonest action on the part of the German nation in acquiring information which the genius of this country had discovered.
§ LORD BUCKMASTER
To steal is hardly a metaphor; it implies dishonest 744 conduct, and I am not acquainted with any metaphor connected with thieving and stealing. But it is enough for the noble Viscount to say that he did not mean what the words imported. It is quite enough for me. It is perfectly true that owing to the genius of an Englishman there was discovered the germ of the idea which the Germans elaborated. The Germans then, entirely to their credit, spent very large sums of money—in doing what? Not in perfecting an industry at all but in training brains, in encouraging education, in doing all they could to promote scientific learning. That is the way they began their industry.
§ LORD BUCKMASTER
And it was by collecting and organising the whole of that carefully trained and skilled intelligence and bringing it to bear upon industrial methods that they were able to build up this great dye industry from which, until the outbreak of the war, this country had certainly drawn considerable profit. It is that which we are seeking to combat, and, if we are seeking to combat it, it is obvious that we ought to combat it by the same means. We ought to train the scientific men. We ought to encourage scientific education. We ought to try to collect together, not in one trading company but from all the laboratories, all the workshops, and all the Universities of the kingdom all the skill and science that we can gain for the purpose of bringing it to bear upon the development of our chemical trade. That is a conclusion with which I believe no one will quarrel.
Now I ask your Lordships to see what it is that this Bill asks us to do. I think I can show your Lordships that it asks us to do nothing whatever of the kind, and although I agree, as I fortunately so often do, with what Lord Moulton said as to the importance of our chemical industry, I think he cannot really have given the attention of his great mind to the circumstances in which this Bill has been introduced. It is, of course, impossible to ignore the position which this Bill is intended to safeguard. It depends upon the formation of the company to which reference has more than once been made. Your Lordships must know how that company was formed, why it was formed, and further—and this is the most important thing of all—what it was formed to accomplish. I will show your Lordships that 745 from the beginning to the end of the prospectus upon which the money of the public has been advanced there is not one word about scientific education or scientific research. The shareholder might protest if you spent his money in scientific research. He might say: "It was not for the purpose of encouraging education. I am a person engaged in commerce and in the proper investment of my money, and I do not want any of your wild-cat schemes of investigation and research. I want you to work this company so as to make dividends for me. That is why I invested my money, and that is what your prospectus led me to believe I should get."
The important point about that is that if this company were one of many companies, if there were other companies—you may say that there are groups of competing industries and that you will be able by their competition to afford the magnet by which you can draw upon this reservoir of scientific attainment which we are slowly filling by Government assistance in our schools and Universities—then I think there would be something to be said for it. There is nothing of the kind, and this company so far as I know is tin only one.
§ LORD BUCKMASTER
It may be so. I should like to know them, because no one will dispute that the Government pledge to which reference was made was given with regard to this company, and that the Government money that was invested was invested in this company.
§ LORD MOULTON
The pledge was given with regard to no company at all. It was simply given to the industry.
§ LORD BUCKMASTER
I think the noble and learned Lord has forgotten the 746 prospectus. This pledge was not in form a pledge at all, but was stated as a proposal of the Government by the then President of the Board of Trade, who being a member of this House I much regret not to see here to-day. I refer to Lord Ashfield, who was President of the Board of Trade at the moment when this statement was made. He is ill, and that is sufficient reason for his not being here. It was stated why it was proposed that there should be this protection, and when I am told that it was given to the industry at large I say it is set. out in full in the face of this prospectus which I assume was approved by the Government, because otherwise a most improper use was wade of Government authority—
§ LORD MOULTON
If my noble and learned friend will read it, the pledge was in order to safeguard the dye industry from aggression. No one has ever thought of it being confined to any company at all, and none of the machinery of the Bill refers to that.
§ LORD BUCKMASTER
Does any one suppose for a moment that a Bill of this kind has any special reference to a particular company? I am only pointing out that the pledge which we, among others, are asked to implement is a pledge which is set out on the face of the prospectus of a company which was formed to invite a subscription of £5,000,000, from the British public. That pledge never was given in the first instance as a pledge at all. It was stated as a proposal and nothing more, though in the prospectus the statement that it was a proposal has been passed by and it is used as a pledge.
But that is not all. If you come to the pledges there was another statement made. On July 25, Sir Albert Stanley made this statement—The companies will be put under an obligation—a deadly obligation—to manufacture a range of dyes which perhaps at the present moment cannot be produced upon a commercial basis, but a range of cutouts which it is essential in the national interest should be produced.In this prospectus there is no obligation upon them to do anything of the kind—nothing whatever. This is a prospectus 747 which simply incorporates a dye company to make dyes and to make what dyes they please, and the Government control as set out upon the prospectus—I imagine, as the Government saw it, they would have put in other provisions that the Government desired to insist upon, if there were such provisions—is confined to this, that the company shall supply its products at reasonable prices, due regard being given to the cost of manufacture, a reasonable profit to the company, and other relevant circumstances, and also that it shall distribute its products amongst customers in an equitable manner and not otherwise. Where is this "deadly obligation to manufacture a range of dyes which perhaps at this moment cannot be produced upon a commercial basis?" What are the dyes that a company so formed, a trading commercial concern, will produce? They will, of course, produce the dyes that are most wanted. Which are those? Those are the commoner forms of dyes. Those are the dyes about which I suppose everybody knows already. Those are the dyes which a few companies, carrying on I admit a very precarious existence, did in fact manufacture before the war.
What is there here to enable us to satisfy the wish that all of us share, that there shall be a grand development of scientific education built up in this country in order that we may beat Germany in the way that is the most honourable—by the rivalry of intelligence, not by State subsidies? I can find nothing whatever about it. There may be other things behind. There has surely been enough said about this matter to show that to ask us now to accept this Bill without further question and to pass it at this stage of the session is an unreasonable proposal for the Government to make.
And surely, if you go on to consider what is going to happen in the trade, it must be plain that some further consideration is really needed. This Bill does not merely restrict the importation of dyestuffs. Not at all. It restricts all organic intermediate products used in the manufacture of such dyestuffs. And I have a list of some of these organic products, furnished me by a chemist, which are startling in their number and extent, and they include among other things such objects of common daily use in every household as carbolic acid. It is easy to say, "Oh, but you cannot think that the 748 Government would be so foolish as to restrict the importation of that." Why not? It cannot come in except under licence. If, in fact, it is an intermediate product you cannot bring it in. And I should like to know very much from the noble Viscount who introduced this Bill (whom I regret not to see in his place) and who said "You want no officials," who are the people you are going to have at the docks to prevent the importation of formaldehyde, formic acid, acetic acid, acetic anhydride, acetyl chloride, acetanilide, methyl alcohol, and twenty-five more products the very nomenclature of which is unfamiliar to anybody who has not got an expert education. And all of these, I am sure, are products which would be readily recognised by an expert as being organic intermediate products used in the manufacture of dyestuffs. Surely a Bill of such wide-reaching and sweeping powers as this cannot be needed for the only purpose by which its introduction is to be justified—namely, the purpose of protecting an industry in its infancy and the encouragement of scientific education in this country, in order that we may build up and renew the power that for a moment is lost.
I wish to say something about the necessary effect of the Bill as it stands upon the textile trades. I have pointed out, what I believe to be indisputable, the necessary result of working under this company, which, whether or not it be the only company, is admittedly the favoured company and the biggest company, because there is no other company that I am aware of in which the Government have embarked £1,700,000. We may hear of some later on, but for the moment it is the only one we know, though I do know that there are some five or six other undertakings in which the Government has also invested money.
§ LORD BUCKMASTER
Yes, for the dyestuffs, but there is quite a lot of others. There is a White Paper in which you will find quite an interesting list of companies in which Government money has been embarked—and so far as I know without Parliament's sanction having been obtained before it was embarked. But that is a comparatively small matter. This is the 749 company to which we have to look. This is the big company, which is going to work behind the scenes. The textile industries depend absolutely for their existence on being able to dye their products and accept the orders for their products from all the neutral markets of the world. If an order is sent to one of our big firms of manufacturers for a particular coloured cloth or web of any description he has got to see if he can get it from this dye company. If they say they can give it him and there is delay, he has no remedy whatever, except to go and ask for a licence to get it from America. And whatever promises may be held out as to the expedition with which this system of licensing will operate I say it is useless to ask people to imagine that the common experience of life is for once going to be falsified in the execution of this Bill. We know quite well, again, that similar licences are not, and cannot, be executed promptly, and the moment that the opportunity of accepting the order goes by the British manufacturer loses his market—probably to one of the very Germans whom you are seeking to keep out.
This is a matter of the utmost gravity. I do not deny the importance of our chemical industry, but I say that upon our textile trade depends far more than it is possible in a few moments to measure of the future of our national prosperity. It is not merely at home; it is in these neutral markets. One noble Lord, Lord Inchcape, asks how are we going to pay our debt to America? There is only one way. We cannot do it by exporting our goods to Germany, because the balance of trade has been against us. The only way that we can do it is by exporting our goods in abundance to the neutral countries, and getting by the operation of the cross exchanges, our debt cancelled in New York. I am quite certain that the noble Lord will agree with me there. Is this Bill going to help us to do that? Of course it will not, it will hinder us. You may say that the hindrance is necessary, but you cannot suggest that we shall not be hindered, and if, as everybody who is engaged in the industry seems to fear, it is going to impede and impair the efficiency of their trade because of the lack of expedition with which they can accept and despatch orders, to say nothing of the horrible fear that the British goods may rot be first-class when they are delivered, then I say this Bill as it stands ought to be condemned.
750 Then I am told it is essential that we should do this in order to build up once again for war—war against our old rival, the country to which we exported vast quantities of our finished products. Are we actually going to base the whole of our social and economic life for the next thirty years on the prospect of being ready immediately for war with Germany? I can only say, if that is so, something will happen before that war takes place which will render that war unnecessary, for we shall have destroyed British trade, and with it the foundations of our finance, and all that our financial credit means. I cannot help being reminded of the story of a great French physician who, having cured a patient of every possible symptom of disease that he could discover, found the patient dead, and exclaimed in horror Il est mort—guéri. If we go from one trade to the other trying to prop one. trade here and another there by penalising all the rest of our trade; if we interfere from time to time, in the belief that by State control we could manage the vast industries of this country, we shall cure a symptom here and we shall cure a symptom there, but in the end we shall kill British trade.
I say nothing as to what might be the proper course to take if this Bill came back to us again, but I do say that your Lordships must have heard this afternoon arguments, advanced by people who know, that must satisfy you that there has not been full and adequate investigation into all the causes that have led up to this measure, and that the Government can offer no justification for introducing at this late period of the Session a Bill which, according to their own statement, has been due for nearly two years. Those are the reasons for which I ask your Lordships to accept the Motion, which, although it will for the moment reject the Bill, is not intended to express your Lordships' disapproval of the measure itself, but expresses your determination to have this matter more fully investigated, and not to let a question of such vast importance be decided in such unseemly haste.
§ THE SECRETARY OF STATE FOR THE COLONIES (VISCOUNT MILNER)
My Lords, I think I should say a few words about the reasons which have induced the Government to proceed even at this late and inconvenient stage of the session with this measure, and try to answer the arguments that are advanced in favour of 751 delay. It was the desire of the Government to deal with this question of the protection of what are known as key industries in a general measure, and it was still recently in contemplation that that general measure should have a foremost place in the legislation of the coming year. It certainly was not without the greatest reluctance that the Government added to its already heavy programme of legislation for this session the measure which is now before us. The reason for doing so was that the President of the Board of Trade brought before his colleagues evidence which I believe convinced them all—quite a majority of them in the first instance being unfavourable to such a course—that if we delayed in affording protection to this industry there would be no industry to protect. All noble Lords who have been in Cabinets must be well aware that the last thing a Government desires at any time is to have a very heavy list of Bills which it is committed to passing, especially towards the close of a session, and I am quite certain that this measure would never have been introduced had it not been that we were one and all convinced that it was a matter of national necessity.
We are told that the noble Lords who are opposing this Bill are as keen as we are to see a flourishing chemical industry. They want. it as much as the Government; it is dear to their hearts they say—but this is the wrong way of doing it. Not one time in a hundred is a measure opposed on the ground that it is undesirable in itself. Ninety-nine per cent. of measures, in my experience, are opposed much more cleverly by the people who really hate the object, by saying "The object is all right, but this is not the right way to de it; you should have done it the other way."
Before the question of the actual measures to be taken for the protection of the British dye industry became a burning question, there was practically unanimous agreement that the system of licensing was the right system. It was put forward by the first Government of Mr. Asquith, it was supported by the first Coalition Government., and it was taken from the first Coalition Government by the present Government. It is not as if this was a new question. For four or five years every responsible Minister who has spoken on the matter, and every Government Committee appointed to enquire into the subject, has reported in favour of affording protection to this 752 industry, assuming that protection was needed, by the method of licence. Now when we have come forward with a proposal to that effect, for the first time I hear it said by a representative of the trade that he would much rather have a fifteen or thirty per cent. tariff. But a fifteen or thirty per cent. tariff would not serve the purpose to-day. The advantage which the German industry has in the rate of exchange at this moment is so enormous that it will defeat any tariff protection which you can afford.
Before the Government, was actually committed to the policy of defending this trade by the means of licensing, I venture to say there was practically universal agreement upon this as being the right method of procedure if protection was needed, and it was especially upheld and commended because it avoided the eternal controversy between Free Traders and Protectionists. Here we had a method of defending an industry that we were all agreed in regarding as essential to our national welfare, which was agreed to by both the great Parties in the State and by all the leading statesmen on both sides. Now when we come forward with a measure based on this principle which has been universally accepted we are told in the first place that it is a surprise, that there has not been time enough to enquire into the matter—although we have been discussing it for four or five years! In the next place we are told that we ought to have done it. by means of a tariff.
As far as the Government is concerned, the position is absolutely clear. We are pledged up to the hilt to this measure. We could not as men of honour have taken any other course than we have taken the moment we were convinced that the industry was in real danger. I do not say that because the Government is pledged to a particular course, therefore Parliament is pledged. Parliament is free to refuse, if it thinks right, to implement the pledge of the Government. Whether it is a good, or wise, or right thing to do, after people have been induced to put up millions of money on the faith of that pledge, is another question; but nobody disputes your Lordships' complete right to repudiate this whole proposal despite all its history, despite the fact that statesmen of both Parties have been pledged to it, and despite the fact that the Government has contemplated this state of the matter for 753 years. It has been represented that the pledge which the Government gave was merely a sort of casual expression of opinion such as one very eminent member of the Government on the hustings made on the subject of nationalisation. Really it is trifling to compare the two things. A single Minister in the heat of an election contest flies the "Nationalisation of Railways" kite. Is that a pledge of the Government? Is Parliament, is the country in any way committed? Is that comparable to a pledge given in the circumstances under which this pledge was given? Not only had this method of protection by licence previously received the approval of successive leading statesmen of both Parties, but the particular promise to which reference is always made—under what conditions was that given? It was made, not casually but by the President of the Board of Trade, the natural spokesman of the Government on such a subject, on the Board of Trade Vote in the House of Commons. It was made with a full explanation of the policy. It was made at the beginning of a long debate during which no single member rose to question or to oppose the plan which was then put forward. Now a great deal is being made of this prospectus but, that being the stated policy of the Government—stated over and over again and finally announced in that very formal manner by the President of the Board of Trade before the House of Commons, and unchallenged by the House—was it not perfectly justifiable, in addressing the public and asking for subscriptions, to make the assertion that this was the Government policy?
It was not a promise given to one particular company, but any company which was appealing to the public for subscriptions was perfectly entitled to quote, and to rely upon, the Government promise which was generally given. You say, "The Government announces that it means to control the importation of dyestuffs into this country by licence," and any company which was going to operate in the production of dyestuffs was perfectly entitled, in appealing to the public for subscriptions, to refer to, and to use, that promise as an inducement to people to subscribe. A great deal of prejudice has been created in the course of this discussion by suggestions that private interests have made I will not say improper profits; there has been much suggestion of company-mongering and so 754 forth, calculated to make the whole of these proceedings appear in an unfavourable light.
I am not, I cannot pretend to be, familiar with all the financial details of the history of this affair, but the main features of it are surely perfectly straightforward. Objection has been raised to-night to the amalgamation of the original company with Levinstein. I think the impression left on your Lordships' mind was that the original company was of a specially pure and exalted character, which, somehow or other, was tainted by its association with Levinstein. It was suggested that there was something wrong in that association and that interested parties made too much out of it. But the amalgamation with Levinstein was made under pressure by the dye users themselves. It was at their suggestion that this amalgamation was effected and it was they who approached the Government with the statement that they were convinced—these are their very words—.That the scheme for the amalgamation of British Dyes, Limited, and Levinstein, Limited, is the first but most important and difficult step towards freeing the country within a reasonable time from dependence on Germany for synthetic dye stuffs, and we strongly urge shareholders to accept it.This circular was signed by every colour users' association in the country—the Bradford Dyers' Association, the Bleachers' Association, the Yorkshire Dyers' Federation, and so forth.
Here let me say with regard to the question which has been considerably discussed to-night of the interest of the textile trade generally. In support of this measure we have quoted the Dye Users' Association. The statement that 90 per cent. of the Dye Users' Association were in favour of this measure is rather a misleading statement, and I do not want to insist upon it. What is the fact is that 90 per cent. of the dye users are in association and that the majority of the association are in favour of the measure.
§ VISCOUNT MILNER
At any rate, though you may question it, that is their official verdict on the question.
§ LORD EMMOTT
If I may interrupt the noble Viscount, I should like to say that I am told that the number of machines 755 represented by those who opposed was probably greater than the number of machines represented by those who voted in favour of the Bill.
§ VISCOUNT MILNER
My information is not the same. I cannot really say, but I am informed by persons upon whom I am bound to rely that this is not the case. In any event, whether it was by a show of hands or in any other way, the association was in favour of the Bill and has agreed to work it. It was said by one noble Lord, "Oh yes; that is all very well for the dye users, but they are not the people who are really concerned. It is the great body of the manufacturers in the textile industry and the merchants who really matter." Apparently the argument is that the dye users would be indifferent if the dyes were bad, and that it would be the merchants and the manufacturers who would suffer. But is that a serious argument? Can you suppose that these people, whose existence depends upon their being able to use good dyes, whose trade would be lost if they did not use them, are not the best protectors of the industry as a whole in this particular matter? They are the people of all others who are most likely to take care that the dyes are good, because if they were to use imperfect and improper dyes their whole raison d'être would be gone. In this vast agglomeration of trades which constitutes the textile industry as a whole, surely it is precisely the dye users who are the party to whom you would look, and whom you would expect to be foremost in protesting if there was anything which imperilled the supply of good and reasonably cheap dyes.
I am not at all certain to what extent the different branches of the textile industries are in favour of this Bill and arc opposed to it. All I know is that during the years that a measure of this kind has been the professed and declared policy of successive Governments and when everybody has had reason to look forward to it, there has been no serious protest on behalf of the textile industries of this country. It is only in the last month or two that we have had certain protests. I am not surprised at this, because it seems to me that it is the textile industries of this country that, above all others, are interested in the success of these measures.
Nothing to my mind could be more misleading than the attempt which has been 756 made during the debate to-night to contrast the interest of the dye-producing trade of this country and the great mass of her textile industries. What would the position of those textile industries be if we had not a strong dye-producing industry in this country? They would be absolutely at the mercy—not only in war but in peace—of the competitive nations which might possess a stronger industry of that character. It was one of the arguments of the noble Lord, Lord Emmott, that there might be a combination, even under our present circumstances, of American and German dye-producers to withhold from us certain particularly important dyes. My Lords, if they can combine to withhold certain dyes they most surely can combine to withhold all if we had no dye industry in this country at all.
Nobody is more convinced than I am of the supreme importance to this nation of maintaining its great exporting industries of which the textile are the chief, but I am equally convinced that the future of those industries is gravely imperilled unless we succeed by hook or by crook in establishing in this country a chemical industry and, as a foundation to that, a dye industry which is strong enough to hold its own against any competition. We have made great progress during the last four years in the establishment of such an industry. The figures which have been quoted here to-night as to the development of the British industry are surely surprisingly encouraging. We only produced 10 per cent. of the dyes we consumed four or five years ago. We are producing something like 80 or 90 per cent. now. We have got a long way towards the establishment of this vital industry, but here we are threatened at this critical moment, and threatened in a manner which Lord Moulton has explained much better than I can and with an eloquence which I cannot rival, with the onrush of a competition which has everything in the circumstances of the moment in its favour owing to the extraordinary state of exchange. I do not blame people who are doing it; they are entitled to do it; but it is deliberately directed to crushing this vital but still young industry in this country in its beginning.
The Government are convinced that immediate action is necessary to prevent this national disaster. The action the are taking is the kind of action which has 757 been approved over and over again by statesmen of every Party during the last four years, and I cannot believe that the criticisms that you have heard to-night, powerful as many of them are but really criticisms directed to points of infinitely minor importance, will induce your Lordships to refuse to proceed at once with the measure which is necessary for the preservation of our national industry.
This is a most important question affecting many industries, and I do not propose to abstain from calling your Lordships' attention to certain facts. The noble Lord who has just spoken clearly attached great importance to the percentage of members of the industries involved which the Government could rely upon.
I am in possession of the House, and I intend to make my remarks. The noble Viscount who introduced the Bill began by assuring us that 90 per cent. of the persons interested were in favour of the Bill. He got that remark, I think, from the President of the Board of Trade, who made the same observation on the First Reading of the Bill. It will be found in HANSARD at col. 1601. The President of the Board of Trade himself, at the end of the Second Reading, was obliged to withdraw that remark. When taxed with having said that 90 per cent. of the trade were in favour of the Bill he denied that he said that 90 per cent. of the dye-users supported the Bill. In the first place, this Bill is only concerned with the makers of synthetic dyes and intermediate products, tar-products, but the dye users will include all dye users, not necessarily those who use tar products. Further the meeting at which the resolution was carried was not largely attended. There was only about two-thirds in favour of it, and, as Lord Emmott has pointed out, it was a vote by individuals and not by persons interested to any extent in the trade.
I am sorry that your Lordships are impatient, but I think 758 there are facts which, considering the importance of the industry, must be brought before you. There is another question to which I wish to call attention. There is no doubt that the trades most interested are the great textile trades, cotton and wool. Of course the dye-user is an instrument in carrying out the efficiency of that trade, but the trade themselves, the merchants especially, are concerned in the efficiency of the products in the command they have of foreign markets. It is mainly a question of foreign markets.
What did the President of the Board of Trade say in the Grand Committee on December 14? He complained that while other people had helped him he had had no communication with the textile industry. He complained that the textile trade had not let him know their views, and he said, "Only yesterday and to-day am I learning I the views of a very important body of people." Is it not clear that a Bill introduced in this hurried way, read a first time on December 3, and brought up here on the eve of Christmas—is it not clear that the time allotted is entirely insufficient? In the Manchester Guardian on December 18 there was a report of a very large meeting of the trade held in the Memorial Hall. It was known that an important memorial had been sent to the Prime Minister, and that he had refused to entertain it in any way. At that meeting a Resolution was carried against the Bill unanimously, and that shows what was the attitude of the cotton trade of Lancashire. At that meeting it was stated that 1,141 postcards had been received from members of the trade supporting the protest against the Bill. I will not trouble your Lordships with details of the subdivisions of the trade, but it is quite sufficiently important to show that in that brief space of time 1,141 members of the trade, all important firms, had protested against the Bill. It is a mockery to suppose that this Bill can be considered satisfactorily. The Bill was only printed about December 3, and the people interested in the trade have had no opportunity of having their views stated.
I dare say very few of your Lordships have taken the trouble to read the proceedings on the Bill in the Grand Committee, but there were several members of that Grand Committee who were evidently very familiar with the technique of the trade, and anybody who reads the report of the debate will see how many difficult and technical questions were raised 759 which require careful consideration. Obviously, if your Lordships had any interest in the matter and wished to do justice to the Bill, you would wish to be in communication with the experts familiar with the trade. It is quite essential in my opinion that before you hurry the Bill through you should give an opportunity at this last minute to enable those most affected, who tell you they may be ruined,
§ Resolved in the affirmative: Bill read 2a accordingly, and committed to a Committee of the Whole House.
§ [The sitting was suspended shortly after eight o'clock and resumed at half-past nine.]